SUMITOMO Mitsui Financial Group is hiring for its planned outpost in India’s low-tax hub, joining a cluster of global banks placing a bet on the nation’s answer to Singapore and Dubai.
Japan’s second-biggest bank plans to start its Gujarat International Finance TecCity branch likely in July with around 10 people, through a mix of hires and relocations, said Rajeev Kannan, the lender’s co-head of Asia-Pacific based in Singapore. The number could rise over time, he said. The bank’s operation will begin with booking loans, but eventually may expand to include trade finance and global markets business, he said.
“There is an opportunity to grow that, depending on how we see the growth of the market,” said Kannan, a corporate and investment banker who joined the lender in 1997. “In the future, it could become a much larger financial centre,” he said.
Prime Minister Narendra Modi, who is seeking to form a coalition government after a weaker than expected general election showing, has envisioned the special zone as a financial hub to rival offshore centres in Asia. Gift City has rolled out a number of steps to increase its allure, offering exemptions from rules and taxes that often hamper business in the rest of the country.
JPMorgan Chase, Deutsche Bank and HSBC Holdings are among banks licensed there, betting on its potential to attract more business in the world’s most populous country.
Sumitomo Mitsui’s commercial banking unit got approval to open a branch there in March. In a statement then, the bank said the operation would focus on foreign currency-denominated lending business.
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Offshore loans for Indian clients are typically booked in Singapore or in Japan, but there will be no withholding tax on such loans in Gift City, which lowers costs for borrowers, he said. Elsewhere, funds and aircraft leasing companies are also exploring a base in the hub, he said.
“A lot of the funds and investment funds which were previously hosted in Mauritius, for example, or other locations, are also now looking at Gift City as a possible location,” said Kannan, a Singapore citizen who grew up in India. He assumed his current role in 2022.
Like rival Japanese banks, Sumitomo Mitsui is seeing growth opportunities in India beyond Gift City. In 2021, the lender bought a majority stake in Fullerton India Credit for about US$2 billion, seeking to tap into demand for personal and small business loans.
Increased activity by global private equity firms, deals in infrastructure and renewable energy as well as leveraged buyouts are contributing to the firm’s growth in the country, Kannan said. BLOOMBERG