‘Under-a-minute settlements will transform liquidity’: How GIFT City’s new FX system is game changer

Union Finance Minister Nirmala Sitharaman last month launched the Foreign Currency Settlement System (FCSS) at the International Financial Services Centre (IFSC) in Gujarat International Finance Tec-City (GIFT City), marking a major milestone in India’s ambition to build a globally competitive financial hub. The new platform will allow entities operating within GIFT IFSC to settle foreign currency transactions in real time or near real time, reducing the current settlement lag of 36–48 hours.

With this launch, GIFT City joins an elite group of global financial centres such as Hong Kong, Tokyo, Singapore and Manila that host domestic infrastructure for multi-currency settlements. Experts say the system will significantly enhance liquidity management, reduce settlement risks, lower operational costs and boost investor confidence.

What the new system changes

Until now, banks and financial institutions at GIFT IFSC relied on correspondent banks overseas to settle transactions in US dollars, euros, yen and other global currencies. Payments were routed through multiple Nostro account relationships, often taking up to two days. The FCSS eliminates this dependency by enabling Indian banks within GIFT City to clear and settle trades entirely within India.

The system, implemented jointly by the Reserve Bank of India (RBI) and the International Financial Services Centres Authority (IFSCA), is designed to match global standards for speed and security.

Faster settlement, better liquidity

Rahul Gupta, Chief Business Officer at Ashika Group, said the FCSS would transform efficiency and confidence in GIFT City’s ecosystem. “The new Foreign Currency Settlement System enables near real-time settlement of cross-border transactions—reducing settlement from 36–48 hours to under a minute,” Gupta said. “This eliminates dependency on multiple correspondent banks, cuts operational costs and reduces settlement risk. For investors, this translates into faster capital mobility, better liquidity management and enhanced trust in India’s financial infrastructure.”

He added that the move would deliver tangible benefits to both domestic and foreign participants. “Real-time settlement allows instant confirmation of payments, more precise cash-flow forecasting and frees capital otherwise stuck in transit. Domestic players benefit from reduced counterparty risk and lower reliance on nostro/vostro accounts, while foreign investors get a simpler, single-window solution to manage multi-currency exposures,” Gupta said.

According to him, the new system narrows the gap between India and global hubs. “By enabling multi-currency settlement within its own jurisdiction, India is closing in on established centres like Singapore and Hong Kong. GIFT City’s advantage lies in pairing world-class settlement capabilities with India’s strong growth story and regulatory reforms,” he said.

Safety, regulation and future scalability

On regulatory coordination, Gupta said the IFSCA and RBI would play key roles in ensuring safety, transparency and long-term scalability. “They will set prudential standards, liquidity norms and real-time monitoring mechanisms, supported by collaboration with clearing banks, settlement institutions and global technology providers,” he noted.

He added that onboarding additional global currencies, integrating with international clearing networks and scaling transaction volumes would be critical milestones.

What GIFT City still needs

Gupta believes GIFT City’s next phase will require deeper global bank participation, fintech integration and clearer tax rules for cross-border transactions. “Partnerships with global clearing houses, rating agencies and exchanges will enhance credibility. Continued regulatory innovation—especially in derivatives, digital assets and sustainable finance—will be essential,” he said.

India’s digital ambitions

Gupta emphasised that the FCSS aligns with India’s broader digital finance strategy. “It complements initiatives like UPI, TReDS and CBDC pilots, strengthening India’s reputation as a pioneer in real-time financial systems,” he said.

With the FCSS in place, GIFT City is positioning itself as a strong regional hub for fast, secure and transparent cross-border settlements, setting the stage for deeper global integration in the years ahead.