MUMBAI: India launched a new foreign currency settlement system through its International Financial Services Centre (IFSC) at GIFT City, aiming to accelerate cross-border transactions and enhance the country's appeal as a global financial hub.

Finance Minister Nirmala Sitharaman unveiled the Foreign Currency Settlement System (FCSS) at the Global Fintech Festival in Mumbai, calling it a "major step" toward faster, more efficient global payments.

"The foreign currency settlement system will facilitate seamless, real-time transactions, enhance liquidity management, and ensure compliance," Sitharaman said.

The FCSS will enable real-time or near real-time settlement of foreign currency transactions within the IFSC, replacing the existing correspondent banking model that can take up to 48 hours.

Currently, transactions by entities in GIFT City are routed through multiple intermediaries across global banks, adding cost and time to settlements. The new system, Sitharaman said, "will ensure that transactions are not just faster, but also compliant under the Payment and Settlement Systems Act."

With the launch, GIFT IFSC joins a select group of global financial centres, including Hong Kong, Tokyo, and Manila, that have local infrastructure for foreign currency settlement.

"FCSS facilitates efficient settlement of foreign currency transactions within IFSC on a real-time basis, not 36 to 48 hours, enhancing liquidity management and operational resilience," she said.

Standard Chartered Bank's India unit has been selected as the first bank to provide U.S. dollar clearing through the new system, officials said. More banks are expected to be added as the framework expands to cover other currencies.