JP Morgan Chase & Co. has partnered with six Indian banks to launch a blockchain-powered platform for settling interbank dollar transactions in India’s emerging international financial center.
The pilot program commenced June 5 and is expected to run for several months, as stated by Kaustubh Kulkarni, the senior country officer at JP Morgan.
India’s ambitious Gujarat International Finance Tec-City (GIFT City) is emerging as a contender against global financial hubs like Singapore and Dubai.
In a strategic move, the Reserve Bank of India (RBI) has allowed banks operating in International Financial Services Centers (IFSCs), including GIFT City, to participate in the domestic non-deliverable forward market for forex derivatives.
Traditionally, settling rupee-dollar forex contracts in dollars was limited to U.S. bank opening hours, which meant no transactions would be settled Saturdays, Sundays or public holidays.
JP Morgan’s pilot would change this through use of the Onyx JPM Coin bank account, an ethereum variant with permissioned access has been specifically developed to manage wholesale payment transactions, enabling its clients to transact 24/7.
As part of a trial conducted in a sandbox environment, JP Morgan has partnered with five Indian banks in GIFT City—HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, and IndusInd Bank—to explore the potential of seamless transactions.
A new global financial hub
This news comes following The Central Board of Direct Taxes (CBDT)’s notification in late May, stating that 21 countries have been exempted from the angel tax provisions.
The countries on the list include Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Iceland, Israel, Italy, Japan, Korea, New Zealand, Norway, Russia, Spain, Sweden, the United Kingdom, and the United States.
Notably, countries such as Singapore, Ireland, the Netherlands, and Mauritius, which are major sources of investment inflows to India, are not mentioned in the list.
According to Rakesh Nangia, Chairman of Nangia Andersen India, the government’s explicit inclusion of this list of countries aims to enhance foreign investment (FDI) inflow into India from nations with strong regulatory frameworks.
The move is seen as an effort to attract more foreign investors, and may further position India as a major global financial hub.