IFSCA’s Gift To GIFT City: Two Japanese Banks Prepare to Start Their Operations

GIFT City, India's first operational smart city and International Financial Services Centre (IFSC) is proud to welcome two new Japanese members to its campus. Following the footsteps of American, Australian, and Arabic members, MUFG Bank, the Mitsubishi UFJ Financial Group, is the first Japanese bank to inaugurate its branch in Gandhinagar's GIFT City. With the aim to offer a wide range of banking services to both domestic and foreign clients, this financial institute has obtained necessary approvals from India's International Financial Services Centre Authority (IFSCA) and Japan's Financial Services Agency to open one of their branches in Gujarat's GIFT City. The presence of MUFG Bank in GIFT City is expected to enhance the city's competitiveness in the global financial ecosystem and strengthen its position as the gateway for international finance in India. This would not be MUFG’s first branch in India, as the banking institute had its first branch opened in Mumbai in the early 1950s. One of the bank officials stated, “By opening a branch at GIFT City, MUFG can financially support its domestic and foreign clients with an expanded suite of financial services and take care of their needs to carry out any international transactions.”

Background of GIFT City

GIFT City, situated in Gandhinagar, Gujarat, is notable for being India's inaugural smart city and International Financial Services Centre (IFSC). The city caters to various financial services such as banking, insurance, capital markets, and asset management. GIFT City focuses primarily on international business and creates a favorable environment for businesses wanting to expand their operations in India. GIFT City also functions as a gateway for foreign investors, thereby serving as a vital link between the Indian and global economies.

Impact of GIFT City on Boosting the Indian Startup Ecosystem

GIFT City is a hub of financial opportunities for entrepreneurs, offering a conducive environment for business growth and a culture that encourages innovation. It provides a platform for startups to save their money in foreign currency and easily transfer them outside India. Additionally, fintech firms can operate under GIFT City's regulatory sandbox. From a taxation perspective, startups can benefit from a 100% tax exemption for up to 10 years out of 15. Overall, GIFT City offers a wealth of financial alternatives and a pro-business atmosphere that can help entrepreneurs establish and grow their businesses.

What is the Role of IFSCA?

The International Financial Services Centres Authority (IFSCA) is an entity that was brought into existence as a unified regulator for IFSC (International Financial Services Centre) to develop and control the financial services market in Gujarat’s IFSC, GIFT City. This authority acts as a single-window authority for all GIFT City’s regulatory requirements, making it easier for companies to open new branches and operate in GIFT City. The IFSCA's active approach has successfully attracted the attention of major international banks, including those from Japan.

Entry of Japanese Banks into GIFT City

The decision of these banks to open their branches in GIFT City is great news for India’s first smart city in growing the relationship between the two major economies, India and Japan. These banks have been acknowledged for their robust presence in the global financial market and believe that expanding their services to India will unlock significant potential. The move is expected to bring a host of benefits, such as increased investment, job creation, and technological advancements. The arrival of MUFG Bank as the first Japanese bank to establish a branch in Gandhinagar's GIFT City is a significant development. This move not only strengthens the international presence of GIFT City but also offers a diverse range of banking services to both domestic and foreign clients. It demonstrates the attractiveness of GIFT City as a financial hub and the confidence of international financial institutions in India's potential as a global financial services destination.

GIFT City’s Financial and Banking Market

Currently, there are 10 foreign and 16 domestic banks operating in the tax-free GIFT City, and these banks will accompany the new Japanese banks. This move reinforces the city's growing significance as a prominent center for financial activities across the globe. Additionally, over 550 enterprises have already registered and started operations in GIFT City, with assets worth USD 47 billion, which has significantly contributed to the economic environment of India. The city is attracting more and more investors from across the world, and its expanding financial infrastructure is expected to continue to attract more enterprises in the future.

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GIFT City: The Global Financial Market

Gujarat's GIFT City has been witnessing an increasing number of financial institutions and enterprises, such as banking, ITeS, leasing, and family office units, establishing themselves in the city. This trend is largely due to the proactive approach of the International Financial Services Centre (IFSC) in attracting and retaining skilled professionals. The IFSC is making concerted efforts to improve social infrastructure, connectivity, and accessibility, which is attracting businesses to this emerging financial hub.

Furthermore, the IFSC is providing businesses with clarity on available tax and investment benefits as well as the applicability of regulatory reforms. With such measures, GIFT City is fast becoming a preferred destination for businesses looking to set up shop.

Recent advances in Gujarat's GIFT City have led to a flood of new investments and have demonstrated the city's rising confidence in its potential as a financial and technological powerhouse. These developments have also led to an increase in the demand for skilled professionals, which is likely to create new opportunities for growth and prosperity in the region.

Investment in GIFT City

Investing in real estate in GIFT City, Gujarat International Finance Tec-City, offers lucrative opportunities due to its emerging status as a global financial hub. The city's strategic location, world-class infrastructure, and regulatory incentives make it an attractive destination for investors. With increasing demand for office spaces, residential units, and commercial properties, real estate investments in GIFT City have the potential for high returns. If you need any guidance regarding your real estate investment in GIFT City, get in touch with RES Management and get real estate guidance from the top real estate advisors.

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