 "GIFT CITY")
The total asset size of the banking units in the International Financial Services Centre (IFSC) — GIFT City jumped over 30 per cent year-on-year (Y-o-Y) to $38.28 billion in the financial year 2022-23, according to the regulator’s annual report.
Sources of fund raising for these IFSC-banking units (IBUs) were mainly inter-bank and inter-branch borrowings, medium-term notes, retail deposits, and borrowings from multilateral institutions. Further, the volume of business in the IBUs more than doubled from $107 billion in FY22 to $258.59 billion in FY23.
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According to the Annual Report 2022-23 released by the International Financial Services Centres Authority (IFSCA), total customer credit outstanding increased by nearly 29.5 per cent from $18.49 billion by March 2022 to nearly $24 billion by the same month this year.
“Growth in commercial loans disbursed by the IBUs has been the biggest contributor for this increase in the customer credit outstanding for the IFSC. Increased borrowings by the public sector units (PSUs) from the IBUs in IFSC is another main contributor to the growth,” it said.
There were 20 IBUs operational as on March 31 compared to 15 in the previous year. Two more such IBUs were licensed but are to be made operational this financial year.
However, there has been a reduction in investments in IBUs after they were permitted to maintain liquidity coverage ratio at their parent bank.
IBUs were maintaining investment in treasury bills for compliance with the prudential requirement of LCR maintenance prior to the change.
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The regulator has recently amended its norms for facilitating acquisition finance by IBUs of foreign banks.
Further, IFSCA said that as on March 31, the cumulative listing of all ESG (environmental, social, governance) labelled debt securities on the recognised stock exchanges in the IFSC rose to $9.8 billion. Of this, nearly $2 billion were added in FY23.
In the report, IFSCA has added that the Ministry of Company Affairs may come with necessary legal framework for issuance of share capital of IFSC companies in freely convertible foreign currency.
“The existing IFSC companies may convert their share capital from INR to USD by shareholders’ approval of the capital restructuring plan through special resolution, followed by intimation to IFSCA and then filing the same with Registrar of Companies , without going through the rigour of section 61 of CA‐13,” said the report.
At present, GIFT city in Gandhinagar, Gujarat is the maiden IFSC in the country and aims to facilitate the inflow of offshore funds and investments.
