IFSCA Launches Consultation on Mandatory Foreign Currency Settlement for GIFT Banking Units

What IFSCA Proposed

The IFSCA released a consultation paper dated July 7, 2026 inviting comments on a proposed circular governing the use of the Foreign Currency Settlement System (FCSS) by International Banking Units (IBUs) operating in GIFT IFSC. The draft circular formalises usage and customer-facing requirements around FCSS, ensuring the system is fully leveraged and its benefits reach end customers.

Member IBUs will be required to process their inter-bank transactions with other FCSS member IBUs exclusively through FCSS.

How the System Works

FCSS went live on October 7, 2025, and was designed to serve as a dedicated real-time settlement platform for foreign currency transactions, initially in USD, between IBUs in GIFT IFSC. The system has matured operationally and is now consistently settling USD transactions among participating member IBUs in approximately 5–6 seconds.

The IFSCA-authorized FCSS directly addresses significant delays of the traditional correspondent banking route, allowing transactions to be settled in real-time or near real-time. With this infrastructure, GIFT IFSC now joins a handful of premier international financial centers, including Tokyo and Hong Kong, that possess the capability to settle foreign currency transactions locally.

Key Requirements in Draft Circular

The draft circular proposes that member IBUs settle inter-bank transactions with other member IBUs only through FCSS, make customers aware of real-time USD payment capabilities, publicise FCSS on product sheets and websites, and provide customers the option to use FCSS through internet banking or other customer-facing interfaces.

It also requires recipient member IBUs to credit customer accounts within one hour of credit in the FCSS Settlement Ledger Account and advises non-member IBUs to onboard on FCSS.

Problem Solved

Previously, foreign currency payments between IFSC Banking Units (IBUs) had to be routed through banks in other countries, a process that took 36 to 48 hours to complete. The FCSS aims to remove dependence on traditional correspondent banking channels for inter-IBU settlements in foreign currency.

With the launch of the FCSS, GIFT IFSC joins an elite group of international financial centres such as Hong Kong, Tokyo, and Manila that have the infrastructure to settle foreign currency transactions locally.

How to Comment

Stakeholders are required to send their comments on the draft circular by July 24, 2026, submitted by email in MS Word or MS Excel format in a tabular structure. Comments should be sent to Mr. Akileshwaran N, Manager, IFSCA at [email protected] with a copy to Mr. Pavan Jindam, Deputy General Manager, IFSCA at [email protected].

Context: GIFT City and IFSC

At present, the GIFT IFSC is the maiden international financial services centre in India. Gujarat International Finance Tec-City is a central business district in Gandhinagar district, serving as India's first operational greenfield smart city and international financial services centre. GIFT City is a 359-hectare (886-acre) integrated project that creates 62 million square feet of built-up area, including 67% commercial space, 22% residential space and 11% community space.