Indian regulator GIFT City is in talks with the Reserve Bank of India to allow domestic banks to settle forex transactions instantly through its real-time clearing system.
India’s regulator Gujarat International Finance Tech (GIFT) City is in talks with the country’s central bank to allow domestic lenders to settle forex transactions immediately through the tax-neutral financial centre, the regulator’s chairman said.
The move would make forex transactions faster and cheaper and ease settlement processes for foreign investors investing in India through GIFT City, which Prime Minister Narendra Modi wants to act as a financial hub for rival centers like Dubai and Singapore.
On Tuesday, GIFT City launched a real-time foreign exchange settlement system, with Standard Chartered’s India unit initially selected to handle US dollar approvals. This facility is only for bank branches in GIFT City.
New system shortens the settlement time from 24 hours to 30 seconds
The launch of the real-time system has sped up settlement timelines from nearly 24 hours earlier to 30 seconds, K. Rajaraman, chairman of the International Financial Services Centers Authority, told Reuters in an interview late on Tuesday.
Regulators are now in talks to allow Indian banks to settle their foreign exchange transactions in real time, which would give investors a wider range of options and open up a new industry for lenders.
“In the next six to eight months, we plan to allow banks in India to settle their dollar transactions through this clearing system, with necessary permission from the Reserve Bank of India,” Rajaraman said.
PROMOTING TRADING IN DERIVATIVE SERVICES IN GIFT CITY
Earlier this month, the National Stock Exchange of India announced the introduction of daily expiration contracts for GIFT Nifty, a dollar-denominated derivative of the Nifty 50 index traded on the financial hub.
This move contrasted with the stricter regulatory framework for domestic derivatives. India’s market regulator recently tightened rules on equity derivatives, citing data showing that nearly 90% of retail investors are experiencing losses.
Rajaraman said risk management measures would be implemented to prevent any spillover from the increased derivatives activity in GIFT Nifty to the domestic markets.
“This product is dollar-denominated and aimed at institutional investors,” he said.
“The problem with Indian derivatives is due to the trading of these instruments by local retail investors, a concern that is missing in GIFT City,” Rajaraman said.
Published on October 8, 2025
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