May 3, 2016

Kotak opens its IBU in GIFT City

Kotak Mahindra Bank today announced the opening of its IFSC Banking Unit (IBU) at the GIFT City. The Bank today became the 4th bank to open its IBU in GIT City which will meet the necessities of offshore banking operations from India.

The bank has now joined an elite club of banks which have opened IBUs at the GIFT City International Financial Services Centre (IFSC).

Mr. K V S Manjan, President Kotak Mahindra Bank, disclosed that the bank have earmarked USD 20 million for the IBU. The IBU is the bank’s 1st first international branch which is opened in GIFT City.

Mr. Manan stated that absence of an International branch was a handicap for the Bank and they were unable to cater to their overseas customers. The IBU at GIFT City will be a game-changer for the Bank.

GIFT City is India's first and the only IFSC and it has been designed and developed to meet the ever-growing demand of Indian corporate sector for financial funding and services in overseas markets.

The Indian economy is growing and so the Indian corporates are looking for both global and domestic expansion. For such plans, the corporates raise funds from overseas markets as they come at a very low interest rate amid the global liquidity. As per the data released by RBI data, India Inc had raised over USD 1.52 billion from overseas markets in March 2016.

Prior to GIFT City IFSC, banks needed to set up branches outside India if they aspired to cater to the foreign capital requirements of their clients. An IBU in GIFT-City helps the banks to meet their client’s requirements by undertaking offshore banking operations within India.

Mr. Mannan explained the economic benefits of the IBU and explained that this branch will allow the bank to prepare its balance sheet in US Dollars. Now, the bank will be able to borrow internationally in USD and lend USD to its customers. It will also offer ECB loans to its Indian clients. It will indulge in all activities which can cater to the international markets.

The benefit of the IBU will be that even though the transactions are non-rupee denominated only, still the Banking system will be regulated by RBI and there won’t be multiple regulators for the Banks.

Kotak is forecasting that the IBU’s Balance Sheet will be worth half a billion dollars within a year.

The major tax incentives announced in the 2016 Union Budget has ensured that the GIFT IFSC can be competitive with its global peers. Some acclaimed BFSI companies have started showing their interest to this budding global financial hub and GIFT City is well positioned to be a global IFSC.





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