HSBC and StanChart step up GIFT City play, buy stakes in CCIL-IFSC

Source: Economic Times

Mumbai: British lenders HSBC and Standard Chartered have acquired stakes in the Clearing Corporation of India-IFSC, which is the proposed entity to operate a real-time foreign currency settlement system at GIFT City.

"Being the global bank that we are, what we do, therefore, is connect India to the rest of the world and connect the rest of the world to India and GIFT is clearly onshoring what was happening offshore," HSBC India CEO Hitendra Dave told ET.

"Following India's inclusion in global bond indices, we receive a lot of queries for participation in the Indian markets. Once we get more products rolled out, in the long run, it will be easier for institutional investors to access India through GIFT City via products like TRS (Total Return Swap) as well as for NRIs to access India through fund of funds kind of schemes and manage their global portfolios," Dave said.

Through its branch in GIFT City, HSBC executed transaction documents on May 17 for the acquisition of a 6.125% stake in the CCIL IFSC.

The indicative period for the completion of the transaction, which involves the acquisition of 6.125 million equity shares at ₹10 each, is up to six months from the date of execution of the transaction documents.

HSBC holds similar minority shareholdings in the National Payments Corporation of India and the Clearing Corporation of India through earlier investments, Dave said.

Standard Chartered Bank is also picking up a 6.125% stake in the CCIL IFSC, Sachin Shah, head of strategy and subsidiaries at the UK-based bank said, adding that the bank remains committed to the evolution of GIFT City.

The inclusion of India's sovereign debt in a JP Morgan index - announced in September last year - has sparked a flurry of overseas interest in domestic fixed-income markets, with global banks rolling out new products from the GIFT City such as certain types of derivative instruments.

Over the last few months, HSBC, and Standard Chartered Bank - the only two banks to execute these so far - have been carrying out trades in an offshore derivative instrument (ODI) called TRS through the GIFT City. Standard Chartered Bank is the only other foreign bank which has also acquired a stake in the CCIL IFSC.

On the domestic side, HDFC Bank and State Bank of India have also invested in the CCIL subsidiary. Reports said that SBI too acquired a 6.125% stake, while HDFC Bank informed exchanges on May 17 that the bank has agreed to subscribe to equity shares of face value ₹10 for a consideration aggregating to ₹ 12.25 crore over two or more tranches.