Finance Minister launches the Foreign Currency Settlement System (FCSS) at GIFT City

The Union Finance Minister launched the Foreign Currency Settlement System (FCSS) at Gujarat International Finance Tec-City (GIFT City) in October 2025. This new system enables real-time settlement of foreign currency transactions within GIFT City. It marks leap from the previous 36-48 hour delays under correspondent banking. The FCSS places GIFT City among a few global financial hubs with local foreign currency settlement infrastructure. This development is expected to enhance liquidity, reduce risks, and improve operational efficiency in international finance.

What Is the Foreign Currency Settlement System?

The FCSS is a mechanism that allows Indian banks in GIFT City to settle foreign currency trades locally. Previously, these transactions depended on foreign correspondent banks, causing delays and higher costs. The system uses a local settlement bank as a hub where member banks hold accounts for direct inter-bank settlements. Initially, it supports US dollar transactions with plans to include more currencies. The system operates under the Payment and Settlement Systems Act, 2007, and is regulated by the International Financial Services Centres Authority (IFSCA).

How Does FCSS Improve Transactions?

By bypassing the multi-leg Nostro account chain, FCSS reduces settlement time from days to seconds. Standard Chartered Bank acts as the partner bank for US dollar settlements. The Clearing Corporation of India’s subsidiary, CCIL IFSC Ltd, operates the system while Indian Financial Technology & Allied Services develops the software. This infrastructure lowers settlement risk and boosts liquidity management, making GIFT City a more attractive global financial centre.

About GIFT City

GIFT City is India’s first special economic zone designed for global finance, insurance, fintech, and capital markets. Located between Ahmedabad and Gandhinagar, it covers 886 acres. It aims to offer an international financial ecosystem within India, competing with hubs like London, Singapore, and Dubai. Established in 2007 and regulated by IFSCA since 2020, GIFT City operates under special rules that allow foreign currency transactions, tax incentives, and a liberal regulatory framework.

Purpose Behind GIFT City’s Creation

Before GIFT City, many Indian firms used foreign hubs like Singapore or Mauritius for offshore finance due to favourable tax and regulatory environments. This led to revenue loss and reduced global financial influence for India. GIFT City was created to reverse this trend by providing an onshore alternative with similar ease and flexibility. It functions almost as a separate jurisdiction under Indian sovereignty to attract international financial activity.

GIFT City’s Role in India’s Economy

GIFT City supports India’s ambition to become a global financial hub. It attracts multinational banks, investment funds, and fintech companies. This generates high-value employment and draws global capital. It also helps reduce financial outflows to offshore centres. As of 2025, GIFT City hosts nearly 1,000 entities including banks, insurers, asset managers, and capital market intermediaries.

Notable Achievements of GIFT City

The city houses India INX and NSE International Exchange, offering extended trading hours in global securities. It is home to India’s first aircraft and ship leasing units. Global firms like Morgan Stanley, HSBC, and MUFG Bank have operations here. GIFT City is also emerging as a centre for offshore derivatives and sustainable finance products such as green bonds and ESG funds.