Global Banks Shift Dollar Lending to GIFT City as India’s Finance Hub Pulls Business Away from Asian Centres

Mumbai | November 17

Global banks are increasing their use of GIFT City for offshore dollar lending as Indian corporates ramp up their demand for foreign-currency funds. The trend marks a clear shift of business away from traditional Asian financial centres such as Singapore, Hong Kong and Dubai, according to various media reports.

Data from the International Financial Services Centres Authority (IFSCA) shows that banks operating in GIFT City disbursed nearly $20 billion in US-dollar loans to Indian companies in FY24. This accounted for more than one-third of all offshore dollar loans raised globally by Indian corporates, a sharp rise from 16% two years earlier. The acceleration signals that the Gujarat-based IFSC has begun to establish itself as a competitive global lending hub.

Global and Indian Banks Expand Their Loan Books

Several international banks have shifted a significant portion of their India-related lending activity to GIFT City, according to various media reports.

MUFG, which opened its IFSC branch in 2022, now books most of its foreign-currency loans for Indian companies from the hub. The GIFT City loan book represents a major share of its India exposure.

HSBC has expanded trade finance, cross-border markets and wealth offerings from its GIFT City unit. Meanwhile, State Bank of India (SBI) expects its lending portfolio in the hub to grow by about 10% annually, with corporates increasingly placing deposits and routing funding directly through the financial centre instead of long-established offshore markets.

GIFT City’s appeal to lenders is anchored in its cost advantages. Units operating in the hub enjoy zero withholding tax on interest from foreign-currency loans, a 10-year tax holiday on business income, and a regulatory environment aligned with global norms. This makes foreign-currency borrowing cheaper than in hubs where withholding taxes typically range from 10–15%. According to various media reports, the all-inclusive cost of borrowing from GIFT City can be 50–70 basis points lower, depending on the loan structure and credit rating.

Banks are also using the hub for treasury, structured finance and cash-management operations. As of June, GIFT City-based banking units manage around $94 billion in assets, nearly triple the level seen three years earlier. HSBC accounts for roughly $10 billion of this.

Indian banks are reorganising as well. Axis Bank consolidated several global branches in FY20 and moved its foreign-currency fundraising operations from Dubai to GIFT City, according to various media reports.

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India’s Rising Capex Cycle Boosts Demand for Offshore Loans

The shift to GIFT City is occurring at a time when Indian corporates are preparing for one of their largest investment cycles in decades. Forecasts indicate that companies are expected to spend around $800 billion between FY26 and FY30, followed by another $1 trillion by FY35, driving sustained demand for foreign-currency debt.

The Reserve Bank of India has proposed regulatory changes to simplify access to offshore borrowings, a move expected to further increase the use of GIFT City for external commercial borrowings.

The IFSC has also become an important hub for derivatives and market activity. A major milestone came in July 2023, when the SGX Nifty futures contract migrated from Singapore and was relaunched as GIFT Nifty. This pushed annual derivatives turnover on the NSE International Exchange above $1 trillion in FY24, up sharply from $255 billion in FY23.

Beyond financial services, the hub is attracting global capability centres (GCCs). A recent MoU between GIFT City and ANSR Global Corporation aims to bring more technology and innovation-focused GCCs to the IFSC, according to official releases. The partnership is expected to support development of enterprise technology centres and strengthen GIFT City’s position as a destination for global capability building.

Early Stages, Strong Momentum

While GIFT City has captured a substantial portion of India’s offshore lending and derivatives activity, several segments are still developing. Foreign equity issuance from the hub remains limited, liquidity in the non-deliverable rupee forward market is still building, and green bond trading has yet to gain traction.

Even so, the momentum is strong. With global and domestic banks expanding their balance sheets in the hub, corporates shifting funding routes, and new enterprises setting up operations, GIFT City is increasingly positioned as a serious competitor to established Asian financial centres. India’s international finance hub is still in its early stages—but its trajectory is unmistakably upward.