**Executive Summary**
The Foreign Currency Settlement System (FCSS) was launched by the Finance Minister on October 7, 2025, at the Global Fintech Festival in Mumbai. Authorized by IFSCA, the FCSS enables local settlement of foreign currency transactions between IFSC Banking Units (IBUs), initially for USD, with plans to add other currencies. CCIL IFSC Limited is the authorized operator, and Standard Chartered Bank is the settlement bank.
**Key Points / Main Content**
* **FCSS Overview:**
* The FCSS is a payment system authorized by IFSCA under the Payment and Settlement Systems Act, 2007.
* It allows for local settlement of foreign currency transactions between IFSC Banking Units (IBUs) instead of using the traditional correspondent banking route.
* Initially, transactions will be settled in USD, with plans to include other currencies.
* **FCSS Operation:**
* CCIL IFSC Limited, a subsidiary of Clearing Corporation of India Limited, is authorized as the operator of the FCSS system.
* Standard Chartered Bank, through its IBU, has been selected as the settlement bank via an open bidding process.
* IBUs are required to open accounts with the settlement bank.
* Transactions between member banks are settled directly through these settlement accounts on a real-time or near real-time basis.
* **Impact and Benefits:**
* Reduces settlement time compared to the correspondent banking route (36-48 hours).
* Makes transactions faster, safer, and more cost-effective.
* Reduces settlement risk.
* Strengthens India's global financial presence and supports cross-border payments.
* Indian Financial Technology & Allied Services (IFTAS) developed the FCSS system software.
* **CCIL IFSC Limited:**
* Established in May 2024 as the subsidiary of The Clearing Corporation of India.
* Acts as a Payment System Operator to strengthen market infrastructure within GIFT City.
* Set up with the support of seven leading banks (SBI, ICICI, BoB, HDFC, Standard Chartered, HSBC, BoI).
**Impact Analysis**
**IFSCA (International Financial Services Centres Authority)**
* **Impact:** As the authorising body, IFSCA enhances its regulatory influence and strengthens GIFT IFSC's position as an international financial centre.
* **Action Required:** Continued oversight and support for the FCSS to ensure its smooth operation and expansion.
**IFSC Banking Units (IBUs)**
* **Impact:** IBUs gain a more efficient and cost-effective method for settling foreign currency transactions, reducing settlement times and risks.
* **Action Required:** Open accounts with Standard Chartered Bank (settlement bank) and integrate FCSS into their transaction processes.
**CCIL IFSC Limited**
* **Impact:** CCIL IFSC Limited takes on the role of the operator of the FCSS system, enhancing its position in the financial market infrastructure.
* **Action Required:** Ensure the smooth operation of the FCSS system and provide necessary support to member banks.
**Standard Chartered Bank**
* **Impact:** Selected as the settlement bank, strengthening its presence and role in GIFT IFSC and the Indian financial system.
* **Action Required:** Manage and operate the settlement accounts for the FCSS and ensure efficient transaction processing.
**Indian Financial Technology & Allied Services (IFTAS)**
* **Impact:** As the developer of the FCSS system software, this enhances their reputation and capabilities in financial technology solutions.
* **Action Required:** Maintain and update the FCSS system software as required.
Key Entities Referenced
Foreign Currency Settlement System (FCSS): A system authorized by IFSCA that enables foreign currency transactions between IFSC Banking Units (IBUs) to be settled locally.
Payment and Settlement Systems Act, 2007: The act under which the FCSS is authorized and CCIL IFSC Limited is authorized to operate the FCSS.
IFSCA: International Financial Services Centres Authority, the regulator authorizing the FCSS.
GIFT IFSC: Gujarat International Finance Tec-City International Financial Services Centre; the location where FCSS is being implemented.
CCIL IFSC Limited: A subsidiary of Clearing Corporation of India Limited, authorized by IFSCA to be the operator of the FCSS system.
PRESS RELEASE
Hon’ble Finance Minister launches the Foreign Currency Settlement System
The Foreign Currency Settlement System (FCSS) of GIFT IFSC was launched today by Smt.
Nirmala Sitharaman, Minister of Finance and Corporate Affairs, Government of India at
the Global Fintech Festival held at Mumbai.
The FCSS, a payment system authorised by IFSCA under the Payment and Settlement
Systems Act, 2007, enables foreign currency transactions between IFSC Banking Units
(IBUs) to be settled locally instead of routing through the traditional correspondent
banking route. The system will initially settle transactions undertaken in USD with scope
for adding other foreign currencies over time. With the launch of FCSS, GIFT IFSC joins
the ranks of a handful of international financial centres, including Tokyo and Hong Kong,
which possess the infrastructure to settle foreign currency transactions locally.
The correspondent banking route has been the conventional route for settling foreign
currency transactions between banks. This requires a bank to open accounts with one or
more correspondent banks and use these accounts to make or receive payments from
other banks for settling transactions undertaken by the bank itself or those of its
customers. Confirmation messages are exchanged between the initiating bank, the
correspondent bank, and the receiving bank through the SWIFT network for initiating
and confirming such settlements. While this method is well-established and familiar to
market participants, Its primary drawback is the involvement of multiple banks in the
transaction chain, resulting in transactions through this route taking up to 36 to 48 hours
to settle
FCSS, like other foreign currency settlement systems, addresses this issue by appointing
a local commercial bank as the settlement bank, with all other member banks of the
system required to open accounts with it. Transactions between the member banks are
then settled directly through these settlement accounts. CCIL IFSC Limited (CCIL IFSC), a
subsidiary of Clearing Corporation of India Limited, has been authorized by IFSCA under
the Payment and Settlement Systems Act, 2007, to be the operator of the FCSS system.
This system will be able to settle transactions on a real-time or near real-time basis,
thereby significantly reducing the settlement time compared to the correspondent
banking route.
Indian Financial Technology & Allied Services (IFTAS), a wholly owned subsidiary of the
Reserve Bank of India, has been assigned the development of the FCSS system softwareby CCIL IFSC. Standard Chartered Bank, through its IBU, has been selected by CCIL IFSC
Ltd. as the settlement bank, based on an open bidding process.
Shri K. Rajaraman, Chairperson, IFSCA, welcomed the launch of the FCSS by the Hon’ble
Finance Minister and remarked that this marks a significant milestone in GIFT IFSC’s
journey, as it joins the league of premier global financial centres enabling efficient real
time foreign currency local settlement. He added that FCSS would make transactions
faster, safer, and more cost-effective, while reducing settlement risk. He further stated
that FCSS lays a strong foundation for innovation in cross-border payments.
Shri Hare Krishna Jena, Director of CCIL IFSC Limited described the launch of FCSS as a
significant milestone in the journey of The Clearing Corporation of India Limited, which
is celebrating its 25th year this year. He emphasized that FCSS strengthens India’s global
financial presence and showcases the country’s capability to build world-class financial
market infrastructure at GIFT IFSC.
Commenting on the development, Mr. P.D. Singh, CEO, India and South Asia, Standard
Chartered Bank said, “Standard Chartered is proud to partner with CCIL and IFSCA in
bringing its global experience and expertise in managing the dollar payments as well as
providing settlement services at GIFT IFSC. The Bank was the first foreign bank to establish
a branch at GIFT IFSC, and we see it as an important pillar in driving overall growth in the
Indian economy. We will continue to partner with IFSCA in their endeavor to make GIFT IFSC
a financial hub of global repute.”
CCIL IFSC Ltd. aims to support the evolving needs of businesses within GIFT IFSC by
offering a diverse range of products and services to banks and insurance companies to
stock exchanges, clearing corporations, and mutual funds, all in permitted foreign
currencies. In doing so, the company hopes to provide India’s financial ecosystem with
tools that are not only efficient but also globally competitive.
About CCIL IFSC Limited
CCIL IFSC Ltd., established in May 2024 as the subsidiary of The Clearing Corporation of
India, acts as a Payment System Operator to strengthen market infrastructure within
GIFT City. The company was set-up with the support of seven leading banks viz. State
Bank of India, ICICI Bank Limited, Bank of Baroda, HDFC Bank Limited, Standard
Chartered Bank, HSBC, and Bank of India.
Gandhinagar
October 7, 2025