IFSCA sets up committee to transform GIFT City into climate finance hub

In order to transform GIFT City into a “climate finance hub”, the International Financial Centers Authority (IFSCA) has set up a standing committee that will come up with a framework for launching climate finance products.

“Earlier our focus was on onshoring what was offshore. It was to attract companies that left Indian shores and bring them back to India. We have achieved this to a large extent. For instance, a number of fund managers have relocated back. Now our agenda and focus has shifted to India at 2047. Sustainable finance is going to be our biggest agenda. It is a much bigger and challenging agenda,” K Rajaraman, chairman of IFSCA told businessline.

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“We have set up a committee to transform IFSC into a climate finance hub and in the interim to suggest a transition finance framework,” he added.

The committee is expected to submit its report to the government by the end of May 2024. “We will also try to see how we can launch climate finance products from GIFT City. It could be an Alternate Investment Fund, transition bond, transition insurance, etc,” Rajaraman said.

In July 2023, Prime Minister Narendra Modi while inaugurating India’s first international bullion exchange at GIFT City had hoped that the project would become a hub for climate finance. Banks in GIFT City have already started extending “green and sustainable credit”.

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“The work has already started. We have stipulated that the 5 percent of the credit given by banks shall be green or sustainable. We have seen excellent results as all banks have put in place policies for green and sustainable lending. Secondly, many of them have started lending too. So far about $700 million has been extended as green and sustainable credit out of the $60 billion dollars of outstanding loans. Similarly, out of the $55.5 billion worth of bonds raised from GIFT City, $14 billion is green, social or sustainable or sustainable-linked bonds. So the green bond market has also taken off,” the unified regulator said.

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Apart from banks and the bond market, more climate funds are scheduled to be launched in GIFT City. “There are many fund managers who are in the process of launching climate funds. We will be supporting and deepening this ecosystem here. We will also be working with insurance companies to see how we can support climate insurance,” Rajaraman added.

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