BRICS member India on Tuesday announced the launch of a new foreign currency settlement system. The development marks a major step in enhancing India’s standing as a global financial hub. The system enables real-time settlement of foreign currency transactions within the upcoming Gujarat International Finance Tec-City (GIFT City).
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Foreign Currency Settlement System: BRICS Member India Charts a New Course
The new system will eliminate the delays that usually last two days for foreign currency settlements in the existing mechanism. GIFT City’s International Financial Services Centre (IFSC) will oversee the operations and provide real-time settlements. Several IT companies around the world, including BRICS countries, can send their currencies to India and will be converted in real-time.
“Transactions in foreign currency by entities in IFSC are today settled through correspondent banking arrangements routed via multiple Nostro banks, often with a lag of up to 36 to 48 hours,” Finance Minister Nirmala Sitharaman said at the Global Fintech Fest in Mumbai. The new foreign currency settlement system will improve liquidity management and operational resilience in the BRICS country India.
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The foreign currency settlement system launched by BRICS member India ensures compliance under the Payment and Settlement Systems (PSS) Act. India now joins a select group of financial centers like Hong Kong, Tokyo, and Manila that boast of local infrastructure. GIFT City also urges fintech firms to leverage the growing opportunities and provide support to the financial center. The launch is a feather in the cap of BRICS member India in the financial sector.
BRICS member India is building a framework to make foreign currency settlements easier. This boosts business revenues, making the country self-sustainable. The banking industry would also benefit from the development, as it plays an important role in the settlements. Overall, fintech firms would add to the mechanism and provide better financial assistance across the board.