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B2C Vendors
Startup
Collections Payments
B2B Employees
Capital Infusion
USD
Beneficiary
Local Indian Bank Nostro Account
Company
Account with Corr Bank
(India) INR
FDI Fund Flow
Remitter
Foreign Bank
Company
Account in USA
(USA)
USD
Beneficiary
Foreign Bank
Company
Account in India
(India)
FDI SWIFT Flow
Remitter MT109
Local USA Bank Vostro Account
Company
Account with Corr Bank
(USA)
Beneficiary
Local Indian Bank Nostro Account
Company
Account with Corr Bank
(India) MT109
MT109
MT199 MT199
KYC KYC
Request
Beneficiary
Foreign Bank
Company
Account in India
(India)
# For startups, Fixed Deposit / Mutual Fund is the most common form of security
External Commercial Borrowings
• ECBs are loans in India made by non-resident lenders in
foreign currency to Indian borrowers.
• These non lenders can be the parent entity, venture
capital / private equity firms
• As per new norms (Jan 2019), any company eligible for
FDI can also raise ECBs
• ECB can be raised for working capital, purchase of assets,
ODIs
• ECB cannot be used to purchase shares in Indian
companies
• Cheaper loan when pegged to LIBOR (now IBOR, Inter
Bank Offered Rate), EURIBOR with respect to INR rate
of interest
Convertible Note
980
100 Marketplace
Marketplace
Nodal (T+2)
880
Seller
Payment Gateway Nodal Fund Flow
1000
Payment PG Nodal
Customer Gateway PG Charges
(T+2)
20
1000
980
100 Marketplace
Marketplace
Nodal (T+2)
880
Seller
Typical Nodal Businesses
Marketplace Nodal Wallet Nodal PG Nodal
Example Amazon Amazon Pay PayU
Majority Fund Seller Customer Company using the PG
Ownership services
Minority Fund Marketplace Wallet owns PG provider owns the
ownership transaction charges MDR
Settlement T+2 T+2 T+2 (Nodal to Current)
T+3 (Nodal to Nodal)
Transaction T + Product delivery Non ambiguous Non ambiguous
Completion time + Expiration of
return policy
Definition of T T can be ambiguous T is clear T is clear
Exception Where delivery vs - -
payment (DvP) is
immediate
Thanks for your time!