EMI or Bank for Indian Local Corporate Account

[MoneyMoney]

Hi Everybody,

I have a Hong Kong and a Cyprus company. Both of them have quite large partners in India. Because Indian banks are charging a lot for foreign transfer, SWIFT etc. It's really costly to cooperate with them.

Is there any service that would allow either of the companies to get a local account in India for INR and USD currencies?

 

[Sols]

Maybe. You can try approaching Indian banks present in Hong Kong and go through them, if you have staff in Hong Kong for the Hong Kong company. The banks might ask that you form a branch or subsidiary in India, though.

Be careful about getting money stuck in India. The local currency is practically useless unless you have a reason to spend it. Converting to foreign currency is very limited.

Sometimes it's best to not meet your customers on their home turf. USD SWIFT works, stick with that. Only take INR if you have a clear path towards repatriation/spending of the funds.

 

[MoneyMoney]

Maybe. You can try approaching Indian banks present in Hong Kong and go through them, if you have staff in Hong Kong for the Hong Kong company. The banks might ask that you form a branch or subsidiary in India, though.

Be careful about getting money stuck in India. The local currency is practically useless unless you have a reason to spend it. Converting to foreign currency is very limited.

Sometimes it's best to not meet your customers on their home turf. USD SWIFT works, stick with that. Only take INR if you have a clear path towards repatriation/spending of the funds.

Understand. My company does have a team in HK and we have an account at DBS Bank in HK. But, as you said, they requested us to open an Indian branch if we wanted to get an account at the Indian DBS as well.

Thanks for the advice about the INR.

I agree that it is worse to work with the customers in their local space, especially in developing countries. But with transferring in USD, it does often become a problem. Their banks don't have an issue sending USD within India, but they are always problematic when making transfers outside India. Requesting tens of documents, holding the transactions, maybe because we are doing just 1 transfer with them per month in a value around 100K USD. We tried SWIFT in INR but it is quite hard to work with INR in Hong Kong. It seems the Indian banks are not really willing to lose any USD funds. But, because we tried using an intermediary in India for USD, and that worked fine, I thought it could be possible that some Indian bank could provide a local USD account, and then there would be less trouble transferring funds since it would be intra-company.

 

[wellington]

Might help, but i use WISE (EUR->INR) (invoices priced in $ -> INR) transaction is EUR->INR).

Funds usually in their bank instantly.

 

[Sols]

My company does have a team in HK and we have an account at DBS Bank in HK. But, as you said, they requested us to open an Indian branch if we wanted to get an account at the Indian DBS as well.

Try Indian banks in Hong Kong. There are a lot of them. They might be able to offer INR accounts in India for you, if you make it worth their while (i.e. you let them screw you over on the exchange rate).

I agree that it is worse to work with the customers in their local space, especially in developing countries. But with transferring in USD, it does often become a problem. Their banks don't have an issue sending USD within India, but they are always problematic when making transfers outside India. Requesting tens of documents, holding the transactions, maybe because we are doing just 1 transfer with them per month in a value around 100K USD. We tried SWIFT in INR but it is quite hard to work with INR in Hong Kong. It seems the Indian banks are not really willing to lose any USD funds. But, because we tried using an intermediary in India for USD, and that worked fine, I thought it could be possible that some Indian bank could provide a local USD account, and then there would be less trouble transferring funds since it would be intra-company.

TBH, this is a problem India created for itself. It's one of the reasons India is struggling to become the leading economy India says it's about to become for the last 10–20 years. Growing as an international economy with a tightly controlled currency is harder.

If USD is difficult, you can try HKD, SGD, EUR, AUD, or other currency if your Indian counterparties are OK with it. USD is subject to US banking regulations which can increase the amount of paperwork required for transactions. HKD is semi-pegged to USD and is quite popular for pseudo-USD transactions.

But basic KYC checks are common for higher value crossborder transaction. It won't make that much of a difference sending INR vs USD in terms of AML compliance checks.