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Business and Cash Management in India

Our company started a technology start-up business in India because it offered lower costs for experienced engineering labor.  The India company is principally a R&D company working under the terms of a service agreement for a US company.  To cover expenses there we have from time to time  been wiring money to India using a repetitive telephone wire service offered by a major US bank.

It seems that the receiving bank in india is now unwilling to accept international receipts due to Central Indian RBI banking regulations designed to counter currency laudering and terrorism.  They require that an overseas bank provides a KYC (Know Your customer) certification with each remittance to prove that the remitter is not a terrorist, and they require the certification to be delivered bank to bank by SWIFT!

Our bank says that their policy does not allow them to deliver certifications via SWIFT, and even if they were allowed to certify by other means, they are not sympathetic to having to deliver a KYC certification with every successive wire transfer.

I am hoping that there is simply a misunderstanding because this situation makes it impossible to send money to India.

Has anyone out there actually faced and managed to work their way through this problem? If so, please let me know how you did it, and what part of the story is being misrepresented to me.... I cant believe that it is this hard to send money to India.

Answers

Bob Scarborough
Title: CEO
Company: Tensoft, Inc.
(CEO, Tensoft, Inc.) |

We handled this from the India side. The India company set themselves up as a foriegn trade organization, and they invoice us monthly. The invoices are sent to the appropriate authorities in India - and when we pay we enter the invoice number we are paying as a reference. This requires no change from the bank - most wire services allow for reference information associated with the wire.

Some 'profit' is required in this model - so most folks use a cost plus 5% or so model. We do annual budgets, add the fee, pay monthly to invoice, and true up the required payments at year end.

Chris Hopkins
Title: Director, US Corporate FX
Company: Westen Union Business Solutions
(Director, US Corporate FX, Westen Union Business Solutions) |

Simon- There are means to send local INR to your beneficiary in India via SWIFT. There are organizations in the marketplace with the infrastructure and capabilities to meet these needs. There are specific details that need to be indicated on the SWIFT wire that wouldn’t normally be indicated like IFSC Code required (Indian Financial System Code is a domestic routing code and must match the address of the destination bene bank branch). Full bank address is required – Reason for payment required etc..

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