GIFT City’s lenders bank on FDs, luring NRIs with confidence.

January 23, 2024
1 min read


– GIFT City, located in Gujarat, is attracting NRIs with flexible fixed deposit (FD) schemes.
– These FDs have shorter tenors, allowing NRIs to earn interest on deposits held for just over seven days.
– Banks in GIFT City, including HDFC, SBI, Kotak, and Federal Bank, are offering higher interest rates on these FDs.
– The move to attract NRIs is part of a larger effort to shore up retail deposits in GIFT City.
– GIFT City offers higher interest rates compared to banks in foreign countries.

Located in Gujarat, GIFT City is targeting non-resident Indians (NRIs) with flexible fixed deposit (FD) schemes. Traditionally, NRIs needed to open FDs in India through their foreign currency non-resident (FCNR) accounts, which had a minimum tenor of one year. However, FD schemes in GIFT City now allow NRIs to earn interest on even shorter tenors, of just above seven days. This advantage makes GIFT City a more attractive option for NRIs looking to invest in India.

Several major banks, including HDFC, SBI, Kotak, and Federal Bank, are offering these new FD schemes in GIFT City. The minimum tenor for these FDs is seven days, and the depositor is eligible for the interest amount as long as the deposit is held for more than seven days. As a result, NRIs have been responding positively to these new schemes, according to spokespersons from Federal Bank and RBL Bank.

Previously, GIFT City banks primarily relied on institutional depositors and borrowings from their parent companies for capital requirements. However, with new regulations and streamlined processes, banks are now vying for individual deposits. Retail deposits are considered more stable than institutional money, which can be deposited and withdrawn in bulk. This focus on retail deposits is part of an effort to strengthen GIFT City’s banking sector.

The higher interest rates offered by GIFT City banks make them more competitive compared to banks in foreign countries. For example, HDFC’s GIFT City branch offers 5.15% interest for dollar-denominated deposits held between 9 months and 12 months, while Wells Fargo in the US offers only 1.5% for a one-year certificate of deposit. The higher interest rates in GIFT City are likely to continue attracting deposits and expanding the banking sector there.

GIFT City is not only targeting NRIs with FD schemes, but it is also attracting them with insurance products denominated in foreign currency. Insurers are offering NRI-friendly insurance plans in GIFT City, as the sum assured and premiums are denominated in foreign currency, reducing the risk of depreciation. This feature makes insurance products in GIFT City more appealing to NRIs who are hesitant to buy insurance plans in India.

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