HSBC Holdings Plc and ICICI Bank Ltd. in GIFT City have emerged as the biggest lenders to India’s vast diaspora under a special foreign-exchange swap program, signaling the financial hub’s growing role in channeling global capital into the country.

The two lenders in Gujarat International Finance Tec-City, known as GIFT City, disbursed a combined $19.3 billion through the central bank’s concessional swap facility for foreign-currency non-resident deposits which ran from June till the end of August, according to data compiled by the hub’s regulatory body, the International Financial Services Centres Authority.

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The Reserve Bank of India’s program drew a surge in foreign-currency funding into the country, boosting activity in GIFT City. The success of the banks could encourage other lenders operating from the center to expand their wealth management operations and draw in more money from non-resident Indians.

Prime Minister Narendra Modi is positioning GIFT City as a zone capable of competing with established financial centers such as Singapore or Hong Kong.

The RBI‘s special facility spurred activity in the hub, with HSBC disbursing $10.9 billion and ICICI Bank $8.4 billion. Others included Bank of Baroda, State Bank of India and Canara Bank, according to IFSCA. The banks did not reply to emails seeking comment. Twenty lenders in the zone gave out a combined $52.8 billion in loans under RBI’s program, IFSCA said.

Bloomberg

Biggest lenders in GIFT City

The center, in which firms including HSBC, Standard Chartered Plc and Mitsubishi UFJ Financial Group Inc. have built huge businesses, already offers exemptions from certain taxes and regulatory restrictions, boosting its appeal as an international capital raising venue.

India garnered a record $127 billion from its overseas nationals through special programs, surpassing even the most optimistic estimates and giving policymakers a formidable buffer to defend the currency against external pressures. The central bank offered to take on the risk of currency-hedging costs of FCNR deposits, prompting some lenders such as HSBC to provide loans amounting to up to 19 times the original deposit.

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“Capitalizing on the success of the foreign-currency non-resident accounts, we expect banks to aggressively expand wealth management and tap the global Indian diaspora through extensive international outreach,” K. Rajaraman, IFSCA’s chairperson said in an interview in GIFT City, located in the western state of Gujarat.

Banking assets in GIFT City are expected to top $150 billion by the end of September from $120 billion as of end-August, he said, adding that non-resident Indians would be be critical to the hub’s growth. The number of depositors at banks in the zone has risen nearly 50% to about 32,000 as of the end of August from end-March, the regulator said. Three years ago, the tally was only roughly 4,000.

Rajaraman said the pace at which existing retail customers are being brought on board in the hub is comparable with financial centers such as Singapore and Hong Kong and takes about two to three days. The due diligence for new customers in GIFT City typically takes 10 to 12 days, though that period is expected to shorten as know-your-customer requirements are being streamlined.

Assisted video KYC is already available to NRIs, while unassisted face authentication via a biometric system is expected to be enabled by the end of 2026, he said.

GIFT City’s infrastructure now enables interbank transfers to be completed within seconds at the center. A simplified tax regime and faster operating infrastructure are also helping the hub compete for international capital, according to Rajaraman.