StanChart chosen as dollar settlement bank at GIFT City

Standard Chartered Plc. Photographer: Hollie Adams/Bloomberg

Standard Chartered Plc has been picked as the bank for real-time settlement of all dollar-denominated trades in the country’s only global financial center, likely slated for end-June, according to people familiar with the matter.

Banks having units in the Gujarat International Finance Tec-City, or GIFT City, in western India have been asked to set up trading accounts with the British bank, said the people, who asked not to be identified as discussions are private.

The move aims to speed up trades and support plans by Prime Minister Narendra Modi to bring rupee-related trading onshore. The outstanding of foreign currency and interest rate derivatives of bank units at GIFT City totaled $249 billion in December, up 68% from year earlier, according to data from the IFSC regulator.

Last year, the Clearing Corp. of India Ltd., which acts as the depository for all onshore forex and bond trading, set up an unit in GIFT City to facilitate local clearing services.

A Standard Chartered spokesperson declined to comment, while emails sent to CCIL and the regulatory authority at IFSC were unanswered.

At present, settlement of trades between different banks in the hub is not instantaneous. Depending on the currency and the time a trade is initiated, time taken to settle can vary from a few hours to more than a day.

Globally too, efforts are underway to make cross-border trades faster and less complicated. Currently, such transactions rely on a network of correspondent banks, which make settlements expensive and lead to delays.