HSBC and ICICI Bank have emerged as the largest lenders to India’s overseas diaspora through GIFT City, disbursing a combined USD 19.3 billion under the Reserve Bank of India’s concessional foreign-currency non-resident deposit swap programme. 

The special facility, which operated from June through August, helped channel a surge of overseas funds into India while significantly increasing lending activity at Gujarat International Finance Tec-City. Data compiled by the International Financial Services Centres Authority showed that 20 lenders in GIFT City collectively disbursed USD 52.8 billion under the programme.

HSBC, ICICI Account For Major Share
HSBC led the lending activity with USD 10.9 billion in disbursements, while ICICI Bank extended USD 8.4 billion. Other lenders participating in the programme included Bank of Baroda, State Bank of India and Canara Bank. The RBI’s swap facility was designed to encourage banks to mobilise FCNR(B) deposits by reducing the currency-hedging costs associated with foreign-currency funding. 

The programme contributed to a sharp rise in overseas deposits, with India attracting about USD 127 billion through such channels, according to the report. HSBC has used aggressive leverage to attract NRI deposits, with its GIFT City operations offering loans of up to 19 times the original deposit in some structures. This helped the bank build a sizeable pool of foreign-currency deposits during the special window.

GIFT City Expands NRI Banking Role
The increase in lending is strengthening GIFT City’s position as a hub for international banking and wealth management. The financial centre is seeking to compete with established hubs such as Singapore and Hong Kong by attracting global Indian capital.

Banking assets at GIFT City are expected to cross USD 150 billion by the end of September, compared with about USD 120 billion at the end of August, according to IFSCA Chairperson K. Rajaraman.

The number of bank depositors at the centre also rose nearly 50 per cent to around 32,000 by the end of August from March. Three years ago, the figure was around 4,000, highlighting the rapid expansion of GIFT City’s NRI banking ecosystem. The surge in FCNR(B) deposits and lending could encourage banks to expand wealth management and international outreach as GIFT City seeks a larger role in connecting India with global capital.