Capital Account Transactions

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About Capital Account Transactions

Capital Account Transactions

  • These involve the movement of capital into or out of a country and are regulated by the Foreign Exchange Management Act (FEMA), 1999.

Foreign Direct Investment (FDI):

  • Definition: Investment by a foreign entity in an Indian company through equity instruments.
    Routes:

  • Automatic Route – No prior approval needed.

  • Government Route – Prior approval required.

  • Sectors: Most sectors are open, but some have caps or restrictions (e.g., defence, telecom).
    Benefits: Brings capital, technology, and management expertise.

Overseas Direct Investment (ODI):

  • Definition: Indian entities investing in joint ventures (JV) or wholly owned subsidiaries (WOS) abroad.
    Form: Equity, loans, or guarantees.
    Routes:

  • Automatic Route – Up to a prescribed limit.

  • Approval Route – Beyond limits or in restricted sectors.

  • Purpose: Expansion, diversification, gaining global presence.

External Commercial Borrowings (ECB):

  • Definition: Loans raised by Indian entities from non-resident lenders (e.g., foreign banks, financial institutions).
    Purpose: Often used for expansion, infrastructure, or working capital.
    Regulations: Governed by the RBI ECB Framework (Track I, II, III).
    Limits: Subject to sector-specific limits, all-in-cost ceilings, and end-use restrictions.

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Benefits of Capital Account Transactions

End-to-End Regulatory Support:

HDFC Bank ensures full compliance with RBI, FEMA, SEBI regulations and provides guidance on:

  • FDI reporting via FIRMS (Form FC-GPR, FC-TRS, etc.)

  • ODI forms and reporting.

  • ECB registration, drawdown, and repayment reporting.

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Specialized Capital Account Desk:

HDFC has a dedicated team of capital account experts handling Structuring of investments, Liaising with RBI/AD Bank, Documentation and remittance handling. It offers personalized advice to suit complex transaction needs.

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Fast and Transparent Processing:

Digital tools for submitting documents and tracking status. Quick turnaround for remittances and filings, especially for:

  • FDI inflow registration and allotment.

  • ODI investment remittance.

  • ECB drawdowns and LRN (Loan Registration Number) tracking.

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Single-Window Access

  • FDI: Equity inflow, convertible instruments, share subscription.

  • ODI: Investments in overseas JVs/WOS, guarantees, loans.

  • ECB: External borrowing in foreign currency or INR.

Contacless Payment

Strong Global Correspondent Banking Network

  • Supports seamless cross-border remittances in 22 currencies.

  • Ideal for managing FDI inflows and ECB repayments through a global network reliable correspondent banking partners.

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Assistance with Approvals and Filings

  • Support in obtaining - RBI approvals where automatic route is not available, Unique Identification Numbers (UINs) for ODI and Loan Registration Numbers (LRNs) for ECB.

  • Also helps in revising or regularizing past filings.

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Integrated Forex and Hedging Services

  • Offers competitive forex rates for FDI/ODI/ECB remittances.

  • Can provide hedging strategies to manage currency risk linked to cross-border borrowings or investments.

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Customized Solutions for businesses

  • Startups and VC/PE-backed firms: Assistance with foreign capital inflows via SAFE/CCPS instruments.

  • Mid to large corporates: ECB structuring, offshore investments via holding companies, etc.

  • Multinational subsidiaries: ODI for expanding global footprint, reinvested earnings, etc.

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Relationship-Driven Banking

  • A dedicated Certified Trade Specialist coordinates with internal teams (legal, forex, treasury) to offer a holistic solution.

  • Ensures continuity and fast resolution of queries.

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Transparent Pricing and Fee Structures

  • Competitive charges on capital account transactions.

  • Custom pricing for high-volume clients or long-term partnerships.

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Self-Help Tool

Fees & Charges

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Frequently Asked Questions

Capital Account Transactions at HDFC Bank include activities like Direct Investments by Residents in Joint Ventures (JV)/Wholly Owned Subsidiaries (WOS), Foreign Direct Investments in India (FDI), and External Commercial Borrowings (ECB). These transactions help diversify your business in global markets through investments (FDI/ODI) or borrowings (ECB).

Yes, there are restrictions on Capital Account Transactions at HDFC Bank. These transactions must adhere to criteria like the minimum maturity period, maximum all-in-cost ceiling, permitted and non-permitted end-uses, etc.

Changes in currency value can affect the cost of foreign investments and borrowings. For instance, if the Indian Rupee depreciates against the foreign currency, the cost of External Commercial Borrowings in Rupees increases, impacting the borrower’s repayment capacity.

Yes, individuals can participate in Capital Account Transactions at HDFC Bank.

Yes, you can modify or cancel capital transactions after initiation. HDFC Bank provides a dedicated helpdesk to manage and resolve queries related to such transactions.