Overview: State Bank of India (SBI) is developing GIFT City-specific products for Non-Resident Indian (NRI) customers looking to place funds in India through foreign-currency products. SBI Chairman C.S. Setty said the bank’s GIFT City International Banking Unit (IBU) has a balance sheet of around US$21 billion, with customers from markets including the US, UAE and UK.
State Bank of India’s move comes as GIFT IFSC expands its role as an international financial centre for banking, investment and other cross-border services. For NRIs, the development adds to the range of financial services available through GIFT City.
For NRIs exploring GIFT City, the choice of product and use of funds will depend on the applicable FEMA, tax and regulatory requirements.
SBI Looks to Develop More NRI Products Through GIFT City
SBI is developing products for NRI customers looking to place around US$ 50,000 to 100,000 in India through GIFT City in foreign currency, SBI Chairman C.S. Setty said, adding that it has the largest International Banking Unit in GIFT City, with a balance sheet of about US$21 billion. The GIFT City branch also has customers from the US, UAE and UK.
The chairman also pointed to opportunities in attracting retail deposits and developing products for customers using the International Financial Services Centre. He said SBI sees scope in both inbound and outbound investment through GIFT City.
Relevance of this development goes beyond SBI’s own product plans. The SBI move comes at a time when GIFT IFSC is attracting a wider range of international financial activity. Its services cover banking, insurance, capital markets, asset management and fintech, with overseas investors and the Indian diaspora among the customers it serves.”
What GIFT IFSC Offers NRIs
The GIFT IFSC framework allows Banking Units to open accounts in specified foreign currencies for eligible individuals and corporate or institutional entities, including those based outside India, subject to IFSCA rules.
For NRIs, this means GIFT City can provide banking services designed for international and foreign-currency transactions. The options are not limited to bank deposits. Depending on the customer’s needs and eligibility, GIFT IFSC also offers investment funds, capital-market services, insurance, asset management and other financial services.
IFSCA’s guidance for NRIs also covers foreign-currency banking and investment products offered through regulated entities in the IFSC.
For an NRI, the important point is to look at the purpose of the funds and the financial product being considered, rather than treating every GIFT City option in the same way.
Key Points NRIs Should Check
Before using a GIFT City financial product, NRIs should check a few basic points:
- Product type: A bank deposit, investment fund or market-linked product can have different rules and tax implications.
- Eligibility and KYC: The customer must meet the eligibility and KYC requirements of the bank, fund, insurer or other regulated entity through which the transaction is carried out.
- Foreign currency: The permitted currency, account type and transaction rules will depend on the product.
- FEMA: The source, movement and use of funds should be checked against applicable FEMA requirements.
- Tax: The tax treatment of the transaction in India may differ from the treatment in the NRI’s country of residence.
- Records: Remittance details, account statements, investment documents and tax records should be kept for future reporting and compliance.
It is also important to distinguish between banking through an IFSC Banking Unit and investing through another entity regulated in the IFSC. The rules can differ depending on the service and the structure involved.
Why GIFT City Can Matter to Businesses
GIFT IFSC is not relevant only to individual NRI investors.
Indian businesses with overseas investors, foreign shareholders or international financial arrangements can also explore whether a GIFT IFSC structure is suitable for their requirements. The business should also consider its entity structure, foreign investment rules, FEMA requirements, documentation and ongoing compliance obligations.
In such cases, GIFT IFSC is not simply a choice of banking product. The structure of the transaction and the business itself should also be considered.
SetIndiaBiz Support
The right route depends on the proposed activity, the source and use of funds, the investment structure and the regulations that apply. Reviewing these points at the outset helps businesses determine whether an Indian entity, a GIFT IFSC structure or another permitted route is suitable.
For NRIs, foreign investors and Indian businesses planning to operate, invest or structure transactions through GIFT IFSC, SetIndiaBiz’s expert team helps with the setup and compliance work involved. This includes company incorporation, entity structuring, FDI and FEMA compliance, regulatory documentation and ongoing compliance.
From choosing the appropriate Indian business structure to completing the required registrations and maintaining compliance, SetIndiaBiz supports businesses in addressing the legal and regulatory requirements connected with their proposed activity.
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FAQs
What is SBI developing for NRI customers in GIFT City?
Can NRIs open foreign-currency accounts through GIFT IFSC?
Is GIFT IFSC only for bank deposits?
No. GIFT IFSC covers a wider range of financial services, including banking, capital markets, funds, insurance, asset management and fintech. The rules vary depending on the service and the regulated entity involved.
What should an NRI check before using a GIFT City product
Can GIFT IFSC be relevant to Indian businesses with foreign investors?
SBI’s plan to develop GIFT City-specific products for NRIs adds another banking option for customers looking to use GIFT IFSC for foreign-currency transactions.
For NRIs and businesses, however, the decision goes beyond the product offered by any one bank. The purpose of the funds, the type of financial service, FEMA and tax implications, and the documentation involved will all depend on the proposed transaction and its structure.
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Author Bio
Setindiabiz Editorial Team is a multidisciplinary collective of Chartered Accountants, Company Secretaries, and Advocates offering authoritative insights on India’s regulatory and business landscape. With decades of experience in compliance, taxation, and advisory, they empower entrepreneurs and enterprises to make informed decisions.
