Finance Minister Nirmala Sitharaman has launched the Foreign Currency Settlement System (FCSS) in Gujarat International Finance Tec-City (GIFT City) on Tuesday October 7, during the Global Fintech Festival 2025 held in Mumbai. The initiative marks a significant step toward enhancing international trade relations, business operations, and currency exchange. Since mostly transactions worldwide happen to be in US dollars this settlement system has to deal with the same although the future attempts to expand the foreign currency transactions. The initiative has been authorised by the International Financial Services Centres Authority (IFSCA) under the Payment and Settlement Systems Act, 2007. The new system is expected to streamline foreign currency transactions, reducing delays that previously ranged from 24 to 48 hours. Officials stated that the FCSS will enable faster and more efficient settlement of transactions between IFSC Banking Units (IBUs), strengthening India’s position as a competitive global financial hub. The launch reflects the government’s broader vision to make GIFT City a leading international financial services centre on par with Hong Kong and Tokyo.
How the Foreign Currency Settlement System (FCSS) Operates?
IFSC members will be opening accounts in the settlement bank. During the transactions Nostro chains will not be used. While initially limited to US Dollars it will soon pave its way to other foreign currencies. The Payment and Settlement Systems (PSS) Act, 2007 will govern the system's operation. Indian Financial Technology & Allied Services (IFTAS), a wholly-owned subsidiary of the Reserve Bank of India, is developing the software, and Clearing Corporation of India subsidiary IFSC Ltd is the designated operator (also known as the Payment System Operator, or PSO).
Significance of the GIFT City
Established with the vision of transforming India into a global financial powerhouse, the Gujarat International Finance Tec-City (GIFT City) has emerged as a key player in the nation’s economic landscape.GIFT City also serves as the headquarters of the International Financial Services Centres Authority (IFSCA), established in 2020 under the IFSCA Act, 2019. The authority regulates and promotes financial services, institutions, and exchanges, making GIFT City India’s only international financial hub managing global transactions.
Before its inception, India’s tax and exchange frameworks were relatively lenient, leading to revenue losses and increased capital outflows. GIFT City was envisioned to address these gaps and position India alongside leading global financial hubs such as the Dubai International Financial Centre (DIFC) and Singapore’s Marina Bay. The Centre aims to attract multinational banks, investment funds, and technology firms to GIFT City, thereby creating high-value jobs, boosting foreign investment, and curbing the outflow of financial transactions to offshore jurisdictions. The city now hosts global financial giants including Morgan Stanley, HSBC, Standard Chartered, and MUFG Bank, and has become home to several aircraft leasing units and international funds. With nearly 1,000 registered firms spanning insurance, asset management, and banking sectors, GIFT City is rapidly gaining international recognition. As India continues to strengthen its position in global finance, GIFT City stands at the forefront of this transformation bridging domestic innovation with international opportunity.
Objectives and Expectations from the Foreign Currency Settlement System
The Foreign Currency Settlement System (FCSS) was officially launched during the Global Fintech Festival 2025 held in Mumbai, where Finance Minister Nirmala Sitharaman outlined her vision for “Empowering finance for a better world powered by AI.” She highlighted that
India’s 1,800-plus Global Capability Centres (GCCs) have become hubs of high-value engineering, research and development (R&D), and innovation within the banking, financial services, and insurance (BFSI) sector. Further, India contributes 16 percent of the world’s artificial intelligence (AI) talent, and that AI-enabled GCCs in India are expected to generate nearly 35 percent of the revenue in the country’s AI services market by 2028.
Kamal Singhania, Senior Vice President of the Clearing Corporation of India Ltd (CCIL) the entity authorised to establish the FCSS in GIFT City mentioning with optimism:
We have started with the dollar as a currency, and going forward, we will add other major currencies as well.
The launch of the Foreign Currency Settlement System marks a significant milestone in India’s journey toward becoming a global financial powerhouse. As GIFT City continues to evolve with modern financial infrastructure and innovative technology, it stands poised to attract greater international investment and enhance India’s role in the global economic landscape.
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