Mint that the response to the scheme from NRIs has been overwhelmingly good. “The response from the customers is also very good and we see good traction getting built up, as customers have the flexibility of planning their short-term cash flows starting from 7 days, which is a unique feature that customers can’t get in the FCNR (B) deposits at the domestic branches," said the Federal Bank spokesperson. Earlier, most of these banks relied mainly on institutional depositors and borrowings from their parent companies for capital requirements.
But with new regulations coming up and streamlining the process, banks have started vying for individual deposits. Banking experts said that institutional money affects a bank’s business since the deposits and withdrawal are made in bulk whereas retail deposits are more sticky. “Over the years, lending by banks has happened mostly from wholesale borrowings which means it was funded by its parent, other banks or institutions.
It is only recently that banks have started focusing on getting more retail borrowings," said Lakshmanan V., executive vice president and head of treasury, at Federal Bank. Banks began to obtain licences to set up shop at GIFT City in 2015. At that time, all GIFT entities were regulated by their respective regulators.
For instance, banks were regulated by the Reserve Bank of India (RBI) and capital market participants by the Securities and Exchange Board of India. It was not until 2019 that the IFSCA took over as the unified regulator of GIFT city. The transition from RBI (for banks) to the new regulator happened in 2020.
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