MUFG and HSBC Expand Presence in India's GIFT City, Shifting Focus from Established Asian Financial Centres

Global lenders MUFG and HSBC are increasing their activity in India’s GIFT City, reflecting a major move of US-dollar lending and finance operations from traditional Asian hubs such as Singapore, Hong Kong and Dubai, as per the news reports.  

This trend supports India’s ambition to emerge as a regional financial leader through competitive regulation and favourable tax policies. 

GIFT City Gains Momentum as Dollar Lending Hub 

Banks operating in Gujarat International Finance Tec-City (GIFT City) disbursed nearly $20 billion in dollar-denominated loans to Indian corporates in FY 2024-25. This figure represented over 33% of the total global issuance for Indian companies, rising sharply from 16% two years ago.  

Key players MUFG and HSBC are using the hub as a base for foreign currency lending, trade finance, and cross-border financial products, claiming significant portions of their Indian balance sheets from GIFT City operations. 

Tax Efficiency Driving Competitive Edge 

One of GIFT City’s primary attractions is the absence of withholding tax on interest income, which makes lending operations significantly cheaper. Compared to Hong Kong or Singapore, where withholding taxes range between 10% and 15%, borrowing from GIFT City becomes cost-effective by nearly 50 to 70 basis points depending on the company's credit profile. A 10-year tax holiday on business income further enhances its appeal to financial institutions expanding their India exposure. 

Read More: GIFT City Rolls Out Video KYC Facility for NRIs to Boost Global Onboarding! 

Growing Infrastructure and Market Participation 

Beyond lending, GIFT City’s total managed banking assets reached $94 billion by June 2025, tripling over 3 years. HSBC alone manages $10 billion in the hub. The presence of fund entities continues to expand, with nearly 200 non-resident Indian fund companies operating here. Additionally, global banks are exploring avenues like bullion trading and aircraft lease finance that were once exclusive to Dublin or Singapore. 

Challenges to Be Addressed 

Despite its rapid growth, GIFT City faces limitations in liquidity for certain segments, such as rupee non-deliverable forwards and green bond trading. Talent attraction also remains a hurdle, with 63% of surveyed executives citing a lack of networks and urban infrastructure as primary reasons for not relocating operations fully to the hub. 

Conclusion 

With increasing disbursements and broader product offerings by global banks like MUFG and HSBC, GIFT City is steadily capturing financial activity traditionally routed through established Asian hubs. 

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