New Delhi, Dec 23 (NationPress) India and New Zealand have successfully finalized discussions regarding the Financial Services Annex of the Free Trade Agreement (FTA), which represents a crucial step forward in bolstering bilateral economic and strategic relationships, as stated by the Finance Ministry on Tuesday.

This Financial Services Annex signifies a substantial upgrade compared to traditional GATS (General Agreement on Trade in Services) commitments, encompassing a total of 18 articles, according to the statement.

The forward-thinking and balanced agreement enhances bilateral collaboration in financial services, featuring innovative aspects related to digital payments, fintech, data transfer, and back-office services, with the potential to establish India as a fintech hub, the statement elaborated.

At present, only two Indian banks, namely Bank of Baroda and Bank of India, have subsidiary operations in New Zealand, totaling just four branches, while there is no presence of New Zealand's banking or insurance sectors in India. This agreement is poised to be a vital catalyst for expanding India's financial services presence in New Zealand and inviting New Zealand's financial institutions into India's vibrant and expanding financial services markets.

Through the Financial Services Annex, both nations have pledged to work together on enhancing domestic payments interoperability and facilitating real-time cross-border remittances and merchant payments via integrated Fast Payment Systems (FPS).

This provision directly fortifies India's digital payments ecosystem and fintech sector, boosts remittance flows from the Indian diaspora, creates opportunities for Indian payment service providers, and leverages India's technological capabilities in digital payment systems like UPI and NPCI.

The two countries have also agreed to enhance joint efforts in financial services innovation. The agreement includes specific measures for learning from each other's Regulatory Sandbox and Digital Sandbox frameworks for cross-border applications.

Such provisions position India as a fintech hub within this bilateral partnership, fostering knowledge transfer and regulatory learning with a developed economy while creating collaboration avenues for Indian fintech firms and supporting India's regulatory sandbox initiatives.

India and New Zealand acknowledge each party's authority to uphold legislative and regulatory standards concerning the transfer, processing, and safeguarding of financial data, aiming to facilitate financial service suppliers in establishing cross-border digital operations while maintaining strict regulatory control over data sovereignty and consumer privacy protections.

The agreement also aims to protect Indian financial institutions from arbitrary or discriminatory credit assessment practices in the New Zealand market. This aspect guarantees equitable treatment with New Zealand's domestic institutions, eases market access for Indian banks, insurance companies, and other financial service providers, while preventing any discriminatory regulatory actions that might limit operational capabilities of Indian financial institutions.

Additionally, both nations have committed to supporting the provision of back-office and financial services support functions, leveraging India's premier information technology and business process services expertise. This will facilitate cost-effective delivery of financial services through centralized back-office operations in India, thereby supporting growth in India's financial services, IT, and business process outsourcing sectors.

The specific commitments represent progressive cooperation from both sides, including comprehensive commitments on Market Access and National Treatment in critical banking and insurance sectors. India's sectoral offers reflect a forward-looking liberalization strategy, showcasing enhanced Foreign Direct Investment (FDI) limits in banking and insurance, alongside a liberalized bank branch licensing framework that permits up to 15 bank branches to be established over a four-year timeline.

This marks a substantial increase from the previously offered GATS limits of 12 branches. These offers will empower Indian financial service providers to expand into New Zealand, thereby reinforcing India's position in financial services exports and fostering progressive sectoral growth. Furthermore, they position New Zealand's financial institutions competitively within India's rapidly growing financial services sector, the statement concluded.