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Indian startups move dollars to GIFT City

April 03, 2023

Indian startups move dollars to GIFT City
In the aftermath of the collapse of Silicon Valley Bank (SVB), banking units at International Financial Services Centre (IFSC) in Gujarat’s Gift City emerged as one of the several options for startups and tech companies, which had their funds temporarily frozen at the beleaguered financial services provider.

Apart from Gift City, startups have also moved their funds to banks in the US, in India and with overseas locations of Indian lenders on the basis of their customer and supplier presence, several executives in the startup and banking ecosystem said.

As per the last official estimate given by minister of state for electronics & information technology Rajeev Chandrasekhar on March 17, around $200 million of the nearly $1 billion stuck in SVB that was attributable to Indian companies, was transferred to Gift City accounts. There are 21 banks who operate an IFSC banking unit, of which, 13 are Indian banks such as State Bank of India, Bank of Baroda, ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, etc.

Primarily, tech startups with little client or supplier presence in the US have been moving their money out of the US to Indian bank accounts via transfer pricing, ET has learnt. However, those who need USD bank accounts to make or collect payments are the ones that have opted for accounts in either the US banks or Gift City accounts.

“We have had over 40 companies open and send funds to Gift City accounts. We know of around $30 to $40 million that startups have transferred,” Harshil Mathur, chief executive officer of fintech company Razorpay, told ET.

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