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Punjab & Sind Bank is preparing to expand its international banking operations by launching an International Financial Services Centre (IFSC) Banking Unit at GIFT City in Gandhinagar by November this year. After receiving approvals from the Reserve Bank of India and the International Financial Services Centres Authority (IFSCA), the bank has begun IT integration and staffing for the new unit. The branch is expected to support foreign currency deposit mobilisation, external borrowings and foreign exchange business. Alongside this expansion, the bank has also reported improved quarterly financial performance driven by higher income and better asset quality.
Punjab & Sind Bank is set to operationalise an International Financial Services Centre (IFSC) Banking Unit (IBU) at GIFT City in Gandhinagar by November this year as part of its strategy to establish a stronger international banking presence.
The public sector lender has received the necessary regulatory approvals from the Reserve Bank of India (RBI) and the International Financial Services Centres Authority (IFSCA) to set up the IBU. Managing Director and Chief Executive Officer Swarup Kumar Saha told PTI that the unit would function as the bank's foreign branch, creating opportunities to expand its overseas business through mobilisation of Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, External Commercial Borrowings (ECBs) and foreign exchange business. He said the new branch is also expected to strengthen the bank's balance sheet.
According to Saha, the bank has already deployed staff for the unit, selected its IT vendor and started system integration. He said the bank intends to make the IBU operational by November.
Punjab & Sind Bank is aiming to mobilise around USD 25 million through FCNR(B) deposits under the RBI's special regulatory window. Saha noted that the target has been set despite the bank not having overseas branches or operations, which presents a challenge in attracting foreign currency deposits.
In addition, the bank plans to raise another USD 75 million through External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs). Together, these initiatives are expected to help the lender mobilise nearly USD 100 million from overseas markets by December.
The RBI had introduced a special measure in the past month to encourage foreign currency deposits from Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and Persons of Indian Origin (PIOs). Under this measure, the central bank removed the interest rate ceiling on fresh FCNR(B) deposits with maturities ranging from three to five years. The facility will remain available until September 30, providing banks with additional flexibility to attract foreign currency funds.
The central bank's decision followed a sharp decline in FCNR(B) deposit inflows. Net inflows fell to USD 946 million in FY26 from USD 7.1 billion in FY25, highlighting weaker overseas deposit mobilisation. RBI had also introduced similar measures in 2023 during a period of elevated dollar outflows to improve foreign currency liquidity.
The proposed IBU at GIFT City will allow Punjab & Sind Bank to undertake international banking activities from India's offshore financial centre. GIFT City has emerged as the country's key international financial hub, with several Indian and foreign banks establishing IFSC Banking Units to expand cross-border banking, trade finance and treasury operations.
The bank's international expansion plans come alongside an improvement in its financial performance. In the June quarter, Punjab & Sind Bank reported a 23 per cent increase in net profit to INR 331 crore, compared with INR 269 crore in the corresponding quarter of the previous financial year.
Its total income rose to INR 3,546 crore from INR 3,379 crore a year earlier. Interest earned increased to INR 3,213 crore from INR 2,911 crore, while net interest income grew 15 per cent to INR 1,038 crore, up from INR 900 crore in the corresponding period last year. The bank's net interest margin stood at 2.53 per cent at the end of the quarter, supported by growth in core income and lower bad debts.
Source PTI
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