How Global Treasury in GIFT City is Transforming Strategic Operations for MNCs

Why MNCs Are Choosing Global Treasury in GIFT City

Given the IFSC framework which allows corporates to transact in multiple currencies, access international capital markets, and optimise funding and liquidity management under a single jurisdiction, multinational corporations are recognising the strategic advantages of establishing a global treasury in GIFT City.

Along with that, regulatory clarity, operational flexibility, and attractive tax incentives, GIFT City international financial hub for treasury is ideal for centralising treasury functions. Another reason for MNCs folking GIFT City is that they can gain enhanced visibility over cash flows, streamline intercompany funding, and implement uniform governance policies by consolidating treasury operations. The city’s infrastructure, combined with a skilled talent pool and access to the network of global banks to open offshore bank account ensures that corporates can manage both routine treasury tasks and complex financial strategies efficiently.

Establishing a Regional Treasury Centre in GIFT City

While a global treasury in GIFT City helps centralise worldwide operations, many corporations are also choosing to set up a regional treasury centre in GIFT City to manage activities across Asia, and other strategic markets. A regional treasury centre acts as a bridge between global headquarters and local subsidiaries, consolidating processes such as intercompany funding, currency hedging, and liquidity management. These centres enable faster decision-making, improved oversight of regional cash flows, and more effective risk management tailored to specific markets.

By leveraging corporate treasury services in GIFT City, companies can optimize regional operations while ensuring compliance with international financial standards. Further, the ability to set up a treasury unit in GIFT City IFSC simplifies regulatory approvals and accelerates operational readiness.

With the dual approach of global centralisation and regional focus, corporates can achieve both strategic control and operational efficiency. It also positions GIFT City as a versatile hub for treasury operations.

Corporate Treasury Services in GIFT City

As mentioned earlier, GIFT City offers a growing for setting up a treasury services in GIFT City that enable multinational corporations to manage financial operations efficiently and effectively. These services include:

• Cash Management and Liquidity Optimisation: With centralised cash pooling and real-time visibility of global cash flows, it helps MNCs optimise working capital and reduce financing costs.
• Intercompany Financing and Funding: Companies benefit from efficient management of intercompany loans, guarantees, and settlements across subsidiaries, which supports streamlined financial control.
• Risk Management and Hedging Solutions: Using advanced financial instruments available within the IFSC framework, companies can hedge foreign exchange, interest rate, and commodity risks.
• Trade Finance and Structured Financing: By leveraging GIFT City’s international banking network, corporates can support cross-border trade and structured funding requirements.
• Investment of Surplus Funds: With access to global markets, treasury units can strategically invest surplus funds to generate returns while managing liquidity needs.

These integrated services offered by GIFT City not only support centralised treasury operations in GIFT City but also allow MNCs to implement treasury strategies efficiently.

How to Set Up a Treasury Unit in GIFT City IFSC

When it comes to establishing a treasury unit in GIFT City IFSC, it has a streamlined process and is supportive for multinational corporations. The involved steps are as follows:

Step 1 - Define GRCTC Model

The first step involves defining the GRCTC model. Companies must decide whether to operate as a Finance Company like a subsidiary or joint venture, or as a Finance Unit which functions as a branch of the parent company. It is also important to determine the scope of service recipients to ensure they are primarily group entities located outside FATF high-risk jurisdictions, unless exempted by treaty or order of the Indian government. Additionally, corporates are required to map out the treasury activities they plan to undertake, which may include foreign exchange and derivatives transactions, intercompany funding, re-invoicing, liquidity management, and investment of surplus funds. A concise business plan should also be drafted, highlighting use cases, balance sheet size, risk appetite, and the technology stack.

Step 2 - Secure Office Space and Prepare SEZ Application

The next step involves identifying and securing an office space within the GIFT Special Economic Zone (SEZ) either on lease or Letter of Intent (LOI) as well as preparing essential documents to be submitted with the application.

Step 3 - File IFSCA GRCTC Application via SWIT

Once the Letter of Approval (LOA) is obtained, the company must create an account on IFSCA’s SWIT portal and file the GRCTC application under the Finance Company Regulations, 2021. The application should be submitted along with all the required supporting documents.

Step 4 - Meet Entry Conditions

As part of this step, the company must ensure that it meets the entry conditions like maintaining a minimum owned fund of USD 0.2 million, having at least 5 (five) on-ground staff in the IFSC, including a Head of Treasury and a Compliance Officer, and adequate infrastructure like treasury platforms, connectivity, information security, and systems for audit and monitoring.

Step 5 - Respond to Queries and Obtain Registration

The company must respond promptly to any clarifications or requests seeked by IFSCA for additional information. Additionally, the list of service recipients must be updated throughout the application process and after registration given that a provisional approval may be issued initially, followed by the final Certificate of Registration once all compliance requirements are met.

Step 6 - Operationalize Banking and Currency Rails

Post registration, MNCs must operationalize banking and currency mechanisms by opening operating accounts in freely convertible foreign currencies with IFSC banks. For India-facing flows, opening a Special Non-Resident Rupee (SNRR) account with an AD Cat-I bank is required. They are also required to integrate treasury systems to manage trade booking, confirmations, settlements, reconciliation, and management information systems (MIS).

Note: When it comes to currencies, INR can only be used for administrative expenses via a separate rupee account.

Step 7 - Finalize Policies, Limits, and Controls

The company must also obtain Board-approved policies covering corporate governance, risk management, dealing limits, Anti Money Laundering (AML)/Combating the Financing of Terrorism (CFT)/Know Your Customer (KYC), business continuity planning, and outsourcing controls. They are also required to establish three lines of defense comprising the front office, risk/compliance, and internal audit and other control metrics such as counterparty limits, value-at-risk and sensitivity checks, exception thresholds, and daily or weekly reporting. All these policies should align with IFSCA’s August 2021 Corporate Governance and Disclosure Requirements.

Step 8 - Go-Live and Ensure Compliance

Finally, the treasury unit should commence operations within six months of IFSCA registration. In case an extension is required, it must be obtained. MNCs must maintain the minimum capital threshold, required on-ground staffing, and accurate books in freely convertible currency as well keep records of INR books records for compliance. It is also important to ensure timely submission of annual returns, compliance reports and audited financial statements in USD, and keep all treasury activities and service recipients aligned with the approved GRCTC framework.

Global treasury in GIFT City is quickly becoming a cornerstone for multinational corporations seeking to optimize their treasury operations in a rapidly evolving global financial landscape. As India’s first International Financial Services Centre (IFSC), GIFT City offers unparalleled advantages in terms of regulatory clarity, tax incentives, and operational flexibility, making it an ideal destination for centralised treasury operations in GIFT City.

By establishing a regional treasury centre in GIFT City, companies can manage their financial flows across key markets with enhanced efficiency. The ability to consolidate treasury functions under a single jurisdiction provides them with greater visibility, streamlined decision-making, and improved risk management, helping navigate the complexities of global finance. The robust infrastructure and access to a skilled talent pool further reinforce its role as a GIFT City international financial hub for treasury. For MNCs looking to set up a treasury unit in GIFT City IFSC, it offers a supportive environment that simplifies the regulatory process with the transparent approval framework and the flexibility to scale operations, as needed.

In summary, GIFT City is not just an operational base, it is a strategic gateway for businesses aiming to modernise their treasury functions. Whether opting for a global treasury model or a regional treasury centre, it offers an ideal platform for achieving centralised treasury operations in GIFT City, ensuring enhanced governance, efficiency, and control. Contact Gryffin Capitalist to know more.