How to Open a GIFT City Bank Account (IFSC Banking Unit)

The short answer. A GIFT City bank account is a foreign-currency account with an IFSC Banking Unit (IBU) — the GIFT City branch of an Indian or foreign bank. NRIs and OCIs can open one to hold US Dollars and other currencies in India. Resident Indians can open one too, funded under the Liberalised Remittance Scheme. Most banks handle the process online or through their NRI desk.

Who can open one

• NRIs and OCIs: can open foreign-currency accounts and deposits with an IBU, funded from an overseas bank account.
• Resident Indians: can open a Foreign Currency Account in an IFSC under the LRS. Since RBI's revision of July 2024, it can be used for all purposes permitted under LRS, not only for investing in GIFT City. An earlier rule requiring money left idle for 15 days to be sent back to India was withdrawn in 2023.

The steps

1. Choose a bank with an IBU. Several Indian and foreign banks operate in GIFT City. You can check a bank's IFSC registration in the IFSCA Directory.
2. Prepare KYC documents. Banks typically ask for a passport, PAN or Form 60, proof of address, a photograph and a FATCA/CRS self-declaration. NRIs may also be asked for proof of overseas address and a Tax Residency Certificate. Requirements differ by bank.
3. Complete the application. Many banks allow an existing customer to open the account in their app, or a new customer to apply with video KYC. Some still need signed forms.
4. Fund the account. NRIs send a wire transfer from their overseas account. Residents remit through their Indian bank under LRS, which counts towards the USD 250,000 annual limit and may attract TCS.
5. Use it. Hold foreign currency, book fixed deposits, invest in GIFT City funds, or — for residents — make other LRS payments abroad.

What to compare between banks

• Which currencies are offered. US Dollars are standard; some banks also offer Euro, Pound and others.
• Minimum balance, account charges and transfer fees.
• Whether the account can be opened fully online from your country.
• Deposit tenures and rates, if you plan to book fixed deposits. See GIFT City FDs vs NRE and FCNR deposits.
• What statements the bank issues for tax filing in your country.

Tax on interest

Interest on foreign-currency deposits with an IBU is exempt from Indian tax for non-residents and RNORs under section 10(15)(viii) of the Income-tax Act. Resident Indians are taxed on it in the normal way. Your country of residence may tax the interest even when India does not.

A bank account is not a fund investment

An IBU account holds cash and deposits. Investing in a GIFT City fund is a separate step with a Fund Management Entity, although many people use the IBU account to send and receive the money. See How to Invest in GIFT City Funds.

Sources: RBI circular on LRS remittances to IFSCs (16 Feb 2021); Cyril Amarchand Mangaldas on RBI's July 2024 revision; RBI LRS FAQs.

This article is educational only and is not banking, investment or tax advice. Bank products and rules change; confirm current terms with the bank.