What is the Interest Equalisation Scheme in India?

In international trade, access to affordable finance is a crucial factor that impacts the&nbsp; profitability of exporters. Recognising this, governments often institute schemes to support exporters in accessing finance at competitive rates.&nbsp;

Interest Equalisation Scheme (IES) is one such scheme that provides pre and post-shipment credit to exporters at subsidised interest rates. It allows exporters easy access to credit and reduces their cost of borrowing.

Key Features of the Interest Equalisation Scheme

The Government of India launched The Interest Equalisation Scheme (IES) on 1st April 2015. Initially, the scheme was valid for five years until March 31, 2020. However, it has undergone several extensions in response to evolving circumstances, including the challenges posed by the COVID-19 pandemic.

According to a recent notification from the Reserve Bank of India, the government has extended the scheme until June 30, 2024. This extension offers specific benefits to various categories of exporters. Manufacturers and merchant exporters dealing with specified 410 <a href="https://mpeda.gov.in/exporters/?page_id=1840">HS lines</a> will be entitled to a 2% interest equalisation rate. Additionally, MSME manufacturers exporting under any HS line will receive a higher rate of 3%.

Eligible Exporters and Industries by HS code

Exporters can identify eligibility based on industry classification using Harmonised System (HS) codes. These codes categorise export products into specific industries, determining their eligibility for the scheme. The scheme extends to specific export products meeting predefined criteria, ensuring that it targets industries with significant export potential. 	

Official channels, such as the Indian trade portal, provide a comprehensive list of eligible exporters and industries and the corresponding interest equalisation rates. Below are some covered sectors:

Criteria for Export Products under the Scheme&nbsp;

Exports under the scheme must originate from India. The Rules of Origin in the Foreign Trade Policy 2015-20 outlines the minimum processing criteria to qualify as ‘originating from India.’ These include:

New applicants can successfully register for the scheme by following these steps:&nbsp;

One significant advantage of the Interest Equalization Scheme is its ability to lower borrowing costs for eligible exporters.&nbsp;

For example, XYZ Exporters, a medium-sized enterprise specialising in the export of textiles, is seeking export credit. If it takes credit from banks, it will have to pay the base interest + 3%-5% above the base rate. However, if it’s eligible for the Interest Equilisation Scheme, it can get export credit at a subsidized 3% interest rate.&nbsp;

The concessional interest rate enables them to lower their overall financing expenses and improve their profitability.&nbsp;

Furthermore, XYZ Exporters could offer more competitive pricing in the international market, attracting more customers and expanding their market share. They could redirect saved funds toward business expansion initiatives, product diversification, or enhancing operational efficiency.

Interest Equalisation Scheme in India provides exporters access to affordable finance. By subsidising interest rates on bank loans, the scheme effectively reduces borrowing costs, empowering exporters to optimise their financial resources and expand their business operations.&nbsp;

For eligible exporters, the time is now to explore the IES's benefits and take proactive steps toward gaining them. By initiating the registration process, engaging with relevant authorities, and adhering to the scheme's guidelines, exporters can unlock opportunities to lower financial burdens, improve competitiveness, and drive sustainable growth.



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Skydo is a leading cross-border <a href="https://www.skydo.com/?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=demo_click">B2B payment gateway</a> tailored for Indian businesses, spanning freelancers, sole proprietorships, and companies alike. We're dedicated to making B2B payment processing seamless, compliant, and cost-effective.

At the heart of our operations lie four fundamental pillars: regulatory compliance, secure money handling, data security, and prompt fund availability. These pillars are paramount in fostering trust and security, ensuring that businesses can conduct <a href="https://www.skydo.com/blog/future-of-cross-border-payments-2030-and-beyond?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">cross-border payments</a> with confidence.

Let's explore how Skydo simplifies cross-border payments while prioritizing trust and security.

Skydo has received the in-principle Payment Aggregator – Cross Border (PA-CB) approval from the Reserve Bank of India. This approval indicates that Skydo meets the regulatory requirements set by the RBI to operate as a payment aggregator for cross-border transactions. It covers key aspects such as transaction security, fund flow management, data protection, and user grievance redressal. For users, this means that Skydo’s processes align with RBI’s standards for safety, transparency, and compliance in handling international payments.

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Ensuring the safety of your funds is our utmost priority at Skydo. We take security seriously and have implemented strong measures similar to those top financial institutions use to protect your funds.&nbsp;

We've partnered with respected financial institutions like <a href="https://www.dbs.com/in/index/default.page">DBS</a>, <a href="https://www.bankingcircle.com/">Banking Circle</a> and <a href="https://www.currencycloud.com/">Currencycloud</a> (a Visa entity) known for their commitment to security and reliability. These partnerships guarantee the safety of your funds and provide added assurance about how Skydo handles your finances as a payment partner.

At Skydo, safeguarding your <a href="https://www.skydo.com/blog/a-quick-guide-to-using-the-skydo-platform?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">privacy</a> is paramount, and we use a multi-layered approach to ensure the security of your data.

With these robust data security measures in place, Skydo ensures that your information is safeguarded at every step, giving you peace of mind while using our platform.

At Skydo, we understand the urgency of accessing your <a href="https://www.skydo.com/blog/seamlessly-accept-international-payments-in-india">funds</a> without delay. That's why we ensure that once we receive your funds, they are swiftly brought back to India within 12 hours. Following this, the conversion process takes place, and your funds are promptly transferred to your bank account.

This streamlined approach minimizes the risk associated with potential bank collapses and ensures quicker access to your funds when you need them the most.

Skydo is committed to providing you with a seamless and secure experience for cross-border payments. Our focus on regulatory compliance, secure money handling, data security, and prompt fund availability ensures transparency and trustworthiness in every transaction.

Delve deeper into what <a href="https://www.skydo.com/?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=demo_click">Skydo</a> offers and consider us for your cross-border payment requirements. With Skydo, you can confidently handle your transactions with the utmost reliability, security, and professionalism.&nbsp;

Trust Skydo for a reliable and secure solution for your B2B payment processing.



Why Skydo is Your Trusted International Payment Partner?

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On October 31, 2023, the Reserve Bank of India (RBI) issued a master circular on the import of goods and services titled <a href="https://m.rbi.org.in//Scripts/NotificationUser.aspx?Id=12561&amp;Mode=0">Regulation of Payment Aggregator – Cross Border</a>.&nbsp;&nbsp;

According to the circular, the RBI will regulate all Indian entities facilitating online cross-border payments for the import and export of permissible goods and services. Moreover, these entities will be collectively termed Payment Aggregators Cross Border (PA-CB).

The circular comprises guidelines to streamline the existing cross-border payment framework in India. Previously, cross-border transactions were carried out through Online Payment Gateway Service Providers (<a href="https://www.skydo.com/blog/online-payment-gateway-service-provider-opgsp?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">OPGSPs</a>) as per a circular issued by RBI in 2015.

OPGSPs operate by partnering with an Authorised Dealer (Category I) Bank (AD Bank) and notifying the RBI. According to RBI guidelines, no formal license is needed to function as an OPGSP.

Hence, RBI has issued a circular to establish a concise and clear framework for cross-border payments. RBI will now oversee all cross-border payments in India related to the import and export of goods. The circular applies to PA-CB, PAs, authorised banks and OPGSPs.&nbsp;The PA-CB circular also denotes that there can’t be any new OPGSP.

This blog discusses the key provisions related to the latest RBI circular on the import of goods and services, RBI guidelines for payment gateway, and OPGSP guidelines.

Master Circular on Import of Goods and Services: RBI Bank Guidelines

The following are the key guidelines mentioned in the circular.

The following entities need to adhere to RBI guidelines/instructions provided in the circular.

Here are the key developments included in the new PACB circular.

Categories of Authorisation as per PA-CB Activity&nbsp;

Based on the cross-border payment activity undertaken by the PA-CBs, they can seek authorisation for one of the following three categories.

PA-CB, facilitating cross-border payments for Indian exporters, has to open an Export Collection Account (ECA) with an AD bank.&nbsp;

ECAs can be opened in either Indian currency or foreign currency. In the case of the latter, various ECAs have to be opened for different currencies.

The PA-CBs will credit all export proceeds in the respective ECAs. Additionally, export PA-CBs need to follow the below guidelines:

Similar to export PA-CBs, import PA-CBs have to open an Import Collection Account (ICA) with an AD bank.&nbsp;

They will collect the payment from importers in an escrow account managed by the payment aggregator. It will then be transferred to ICA and will eventually be transferred to the bank account of the foreign merchants.

These entities are allowed to directly onboard foreign merchants, e-commerce marketplaces, or other overseas entities that offer payment aggregation services.&nbsp;

Here are the guidelines Import PA-CBs need to follow.

Those PA-CB who engage in both import and export activities have to comply with the requirements for both Import PA-CB and Export PA-CB.

They also need to ensure that the maximum value per unit of exported or imported goods or services should be ₹25,00,000.

Non-banks who want to provide PA-CB services will have to seek authorisation from RBI. However, before seeking RBI authorisation, it is necessary to register with the Financial Intelligence Unit-India (FIU-IND).&nbsp;

However, RBI has issued the following net-worth criteria for non-banks providing PA-CB services.

The accounts of existing non-bank PA-CB who are unable to meet the net worth requirement will be closed by banks by 31 July 2024.

Snapshot Comparison Between OPGSP Circular (2015) and PA-CB Circular (2023)&nbsp;

Here are the key differences between the OPGSP Circular (2015) and the PA-CB Circular (2023)

Here is the process of seeking approval from RBI for existing or new PA-CBs.

Step 1: Draft the application through Form A, which includes the following parts.

Step 3: The RBI will process the application.

(RBI may raise queries related to various aspects such as shareholding, product processes, etc.)&nbsp;

Step 4: In principle approval from RBI.

Step 5: Filing of system Audit Report

(RBI may raise queries related to SAR audit observations)&nbsp;

Step 6: Final authorisation(state additional conditions that must be complied with)&nbsp;

The evolving cross-border payments environment and the emergence of several OPGSPs and other fintech entities encouraged RBI to issue the circular. Its main purpose is to ensure seamless and more transparent cross-border payment transactions.

Even though regulatory authorities are constantly working on making cross-border payment transactions seamless, transparent, secure, and quicker, businesses often face difficulties in receiving timely payments.&nbsp;

Skydo aims to simplify the cross-border payment landscape for businesses by automating various tasks and helping businesses open foreign bank accounts. <a href="https://www.skydo.com/?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=demo_click">Join Skydo today</a> to streamline your invoicing and financial management activities!

Q1. RBI’s master circular on the import of goods and services and cross-border payments applies to which entities?

Ans. AD banks, PAs, and PA-CBs involved in the online processing/settlement of cross-border payment transactions related to the import and export of goods and services have to comply with the guidelines mentioned in the circular.

Q2. What are various compliances according to RBI payment aggregator guidelines for cross-border payments?

Ans. All PA-CBs have to follow the guidelines provided in the circular dated October 31, 2023. Additionally, they also have to follow the various guidelines for payment aggregators mentioned under a circular issued by RBI on March 17, 2020.&nbsp;The circular includes guidelines related to customer grievance redressal and compliance with Baseline Technology Guidelines to ensure fraud prevention and risk management.

Q3. How can PA-CB seek authorisation for facilitating cross-border payment transactions?

Ans. AD banks do not need to seek authorisation to facilitate cross-border payment transactions. However, a non-bank PA-CB can seek authorisation from RBI by sending the application to the Department of Payment and Settlement Systems (DPSS), RBI, Central Office (CO), by April 30, 2024. PA-CB entities must fulfil the minimum net worth criteria before applying to RBI.

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As an exporter or freelancer dealing with global clients, using the wrong purpose code can cause major problems—like transaction cancellations or even RBI investigations.

But before we dive into the consequences, let’s first break down what is a purpose code and why it’s so important.

A purpose code is a specific alphanumeric code assigned to transactions, indicating the nature and purpose of the fund transfer.&nbsp;

There are two types of purpose codes, purpose code for inward remittance and purpose code for outward remittance. By assigning a purpose code to a transaction, exporters clarify the intended use of the funds, aiding regulatory authorities in monitoring and regulating <a href="https://www.skydo.com/blog/how-you-can-streamline-international-transactions-for-your-business?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">cross-border financial flows</a>&nbsp;and ensuring&nbsp; regulatory compliance

When Do You Need to Use the Purpose Code?

Purpose codes are mandatory for <a href="https://www.skydo.com/blog/seamlessly-accept-international-payments-in-india?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Indian exporters</a> engaging in international transactions. These codes are required when receiving or making payments for goods and services across borders.

Purpose codes differ based on whether you are receiving or making an international transfer.

These purpose codes are used when you are receiving an international transfer. These purpose codes signify the purpose for which you are receiving the transfer. Purpose codes for inward remittance start with P followed by the respective numericals.

For example, P0802 is a purpose code for inward remittance that is used when an exporter receives a foreign payment in exchange for software consultancy or implementation service, provided to a foreign client. You can find some of the popular<a href="https://www.skydo.com/blog/rbi_purpose_code_for_inward_remittance"> purpose codes for inward remittance right here.</a>

2. Purpose Code for Outward remittance&nbsp;

As the name suggests, these purpose codes are used while making an international transfer.&nbsp;These purpose codes signify the purpose for which you are making the transfer. Purpose codes for outward remittance start with S followed by the respective numericals.

For example,&nbsp;S0301 is a purpose code for outward remittance that is used when sending money abroad for business travel.

The RBI assumes a key role in overviewing and regulating international transactions. The key aspects of the RBI's role include:

Compliance Requirements for Indian Exporters

Indian exporters engaging in <a href="https://www.skydo.com/blog/real-time-tracking-of-international-payments?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">international transactions</a> must adhere to specific compliance requirements related to purpose codes. Key considerations include:

Significance of Purpose Code for Inward Remittance

For exporters, sharing the correct purpose code with their banks is crucial for receiving international payments especially concerning countries like China. . An incorrect purpose code can result in delays or even cancellation of the transaction. And, while it is not very common, in some instances, sharing the incorrect purpose code can also lead to compliance issues later on for exporters, highlighting the importance of adherence to regulations.

Beyond these practical reasons, purpose codes are instrumental in monitoring global payments and preventing suspicious activities. Here’s how:

Facilitating Accurate Tracking of Foreign Exchange Transactions

The purpose codes provide a standardized framework for financial institutions and regulatory bodies to track the flow of funds precisely.&nbsp;

Role in Preventing Financial Fraud and Ensuring Transparency

Purpose codes ensure that financial transactions align with the intended purposes declared by Indian exporters. It also helps detect and prevent illicit activities such as money laundering and fraudulent financial practices.&nbsp;

Finding the right purpose code for inward remittance can be confusing due to technical jargon and overlapping descriptions. Having assisted over 3,000 customers, we understand this challenge well.

Consider the following factors when selecting the appropriate purpose code

Factors influencing the choice of Purpose Code

Steps Involved in Determining the Appropriate Purpose Code

It’s important to choose the right code to avoid legal complications, delays or freezing of payments, and penalties from the regulator. You can check out the <a href="https://www.skydo.com/blog/rbi_purpose_code_for_inward_remittance">purpose code finder tool</a> to know the correct purpose code for inward remittance.&nbsp;

Common Challenges Faced by Indian Exporters Regarding Purpose Code

How to Ensure Compliance With Purpose Codes

Tips for Avoiding Errors and Ensuring Compliance

For Indian exporters, RBI Purpose Codes are key to transparent and compliant cross-border transactions. They ensure that funds are used correctly and regulatory requirements are met, while incorrect usage can lead to transaction rejections.

To navigate these complexities, follow best practices: train your team, use the best digital tools, and stay updated on regulatory changes.

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The Directorate General of Foreign Trade (DGFT) is committed to facilitating exports and imports, focusing on efficient, transparent, and accountable delivery systems. Hence, the DGFT has implemented an upgraded Electronic Bank Realisation Certificate (eBRC) system to enhance trade facilitation for exporters.

The enhanced eBRC system is based on the streamlined processing of electronic Inward Remittance Messages (IRMs) transmitted directly by banks to DGFT. Under this system, exporters are empowered to self-certify their eBRCs based on the IRMs received. This move intends to reduce transaction time and costs for exporters, simplify the reconciliation process for banks, and promote a more business-friendly environment.

Pilot launch of the improved e-BRC system

The DGFT had proposed a soft launch of the enhanced eBRC system from November 15, 2023. For this, banks will set individual cut-off dates based on their readiness after completing User Acceptance Testing (UAT). Both the upgraded and legacy eBRC systems will run simultaneously until all the banks transition to the improved system.

Banks have been asked to transition through mandatory API integration for prompt data exchange by January 31, 2024. The DGFT website will host a list of banks with their respective IRM cut-off dates.

Streamlined Workflow of the Enhanced e-BRC System

Previously, the Bank Realization Certificate (BRC) was processed manually. Exporters were required to submit a physical copy of the BRC to the relevant Regional Authority of the Directorate General of Foreign Trade (DGFT). Subsequently, export transaction details from the BRC were manually entered, resulting in a time-consuming and complex procedure for claiming export incentives.

DGFT introduced the eBRC Module to promote paperless trade—a unified platform facilitating the direct electronic transmission of <a href="https://www.skydo.com/blog/forex-and-its-impact?https://www.skydo.com/blog/forex-and-its-impact">Foreign Exchange</a> Realization Information from Banks to DGFT’s server. Incorporating digital certificates adds an extra layer of security to this process.

With the implementation of the eBRC system, exporters are no longer compelled to visit their banks for a Bank Realization Certificate. This has significantly streamlined the process of claiming export incentives and benefits from DGFT and other relevant export agencies, making it more accessible for exporters.

The revamped eBRC system follows a structured workflow:

The enhanced Electronic Bank Realisation Certificate (e-BRC) system offers several benefits for exporters and stakeholders, including:

The enhanced e-BRC system offers a more modern, efficient, and user-centric approach to the certification process, contributing to a smoother export documentation experience for businesses.

<a href="https://economictimes.indiatimes.com/news/economy/foreign-trade/pilot-launch-of-upgraded-electronic-bank-realisation-certificate-system-for-exporters-from-nov-15/articleshow/105185227.cms">According to Sanjay Budhia, the Chairman of the CII National Committee on EXIM and Managing Director of Patton Group</a>, "This will help exporters and banks optimize their resources and cut costs. Over the years, DGFT has almost completely automated its processes, and now, with this new step, exporters can fully focus on enhancing exports and achieve our targeted goal of USD 2 trillion of exports by 2030."

To read more about e-BRC, check out <a href="https://www.skydo.com/blog/what-is-e-BRC?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">this</a> blog.

Ans: You can follow the below steps to check the status of your e-BRC:

Q2. How to download eBRC from the DGFT website?

Ans: You can follow the below steps to download your e-BRC from the DGFT website:

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TechX, a growing software company, recently expanded internationally. However, they unintentionally violated data protection and payment laws by neglecting <a href="https://www.skydo.com/blog/ensuring-financial-compliance-5-tips-to-safeguard-your-businesss-finances?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">compliance requirements</a>. Unaware of complex regulations, their negligence enabled data theft and scrutiny from regulatory bodies. This resulted in the revocation of their license, barring further exports.

These incidents showcase the critical need for tech exporters to prioritise global compliance. Though regulations may seem like jargon. But following them is vital for smooth international trade, mitigating reputational risks, and succeeding globally.

With complicated guidelines, global compliance is tricky yet acts as a protective guard amid competitive pressures. Mastering it is essential for tech export companies.

Compliance in the tech export industry refers to following the laws, regulations, and industry standards to ensure ethical and legal business practices. It encompasses various aspects, such as data protection, payment laws, and industry-specific regulations.&nbsp;

According to experts in the field, compliance is crucial for tech exporters as it helps build trust and credibility among stakeholders, including customers, partners, and regulatory bodies.&nbsp;

Compliance protects sensitive data, fosters transparency in financial transactions, and helps navigate the ever-changing regulatory landscape. This way, tech exporters can create a secure and reliable environment, mitigate risks, and establish themselves as responsible players in the industry.

Implementing data protection measures in India requires a proactive approach. Small businesses often handle customer data, and a failure to comply with data protection regulations can have severe consequences, especially considering limited resources and brand reputation.&nbsp;

Customers often choose a company that prioritises data security and respects privacy. This way, ensuring data protection compliance can provide a competitive advantage over non-compliant competitors.

Several regulations and frameworks govern data protection practices in India, providing a framework for businesses to follow.

Experts also emphasise the importance of implementing privacy policies and consent mechanisms that align with Indian data protection laws. Businesses must ensure that individuals are adequately informed about the purpose and nature of data processing and have the right to access, rectify, and delete their personal information.&nbsp;

The Reserve Bank of India (RBI) governs payment systems and regulates transactions in India. The Foreign Exchange Management Act (FEMA) also plays a significant role in regulating <a href="https://www.skydo.com/blog/future-of-cross-border-payments-2030-and-beyond?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">cross-border transactions</a> and foreign exchange transactions.

Non-compliance with payment laws can have severe implications for tech exporters. The RBI and guidelines set by FEMA can initiate inquiries and impose penalties for violations. These penalties may include monetary fines, suspension of payment licenses, or even imprisonment in extreme cases. Non-compliance can disrupt business operations, cause reputation loss, and strained relationships with business partners and customers.

A budding e-commerce brand, Company B, faces industry-specific regulations related to consumer protection, data privacy, and online transactions. They prioritise transparency by clearly outlining terms and conditions, refund and privacy policies.&nbsp;

Additionally, Company B invests in <a href="https://www.skydo.com/?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">secure payment gateways</a> and encryption technologies to protect customer data. They create a trustworthy user environment and build long-term customer relationships by complying with industry regulations.

To comply with changing regulations, tech exporters can follow these steps:

Global compliance software and tools offer features such as automated regulatory monitoring, document management, risk assessment, and audit trails. These tools help exporters stay updated on changing regulations, maintain documentation, and ensure adherence to compliance requirements.&nbsp;

Expert recommendations and authoritative reviews can guide tech exporters in selecting the most appropriate compliance software and tools. 

Agencies for Providing Guidance on Regulatory Compliance

Numerous local, state, and federal agencies oversee laws and regulations applicable to organisations. These entities, and occasionally additional groups, offer guidance to assist companies in comprehending and adhering to the applicable laws and regulations. This list encompasses some of these agencies and groups:

1. Directorate General of Foreign Trade (DGFT)&nbsp;

The DGFT is the nodal agency for administering India's foreign trade policy. They offer extensive guidance on r<a href="https://www.getsignify.com/blog/regulatory-compliance-in-manufacturing-ensuring-product-quality-and-safety">egulatory compliance</a> for export businesses, including:

2. Export Inspection Council of India (EIC)

The EIC oversees the quality and standards of exported goods. They offer:

The BIS sets national standards for various products and services. They play a vital role in:

The Customs Department facilitates smooth import and export clearance. They offer:

EPCs are industry-specific organisations that promote exports from India. They offer:

Moreover, If you're working with clients in the US, it's important to know about these local market agencies. They can have a big impact on your success and help you navigate the ins and outs of the market.

Understanding regulations, seeking legal counsel, and leveraging technology tools are crucial. Compliance ensures a trustworthy environment, mitigates risks, and protects customer data. It is an ongoing requirement in a changing landscape, providing a strategic advantage for tech exporters to build credibility and achieve long-term success.

Ans: Regulatory requirements are the rules, laws, and guidelines established by government authorities or regulatory bodies that businesses and individuals must adhere to in their operations. These regulations aim to ensure fair practices, protect consumers, maintain market stability, and address specific industry concerns. Failure to comply with regulatory requirements may result in legal consequences, fines, or other penalties, emphasising the importance of understanding and adhering to these standards within a given jurisdiction.

Q2. Which compliance talks about regulatory aspects?

Ans: Various laws and regulations governing specific industries or financial transactions primarily address the regulatory aspects concerning compliance. Concerning international payments, adherence to legal requirements such as import-export codes (IEC), GST regulations, and client agreements plays a crucial role.&nbsp;

Ensuring compliance with these measures is essential for businesses to operate transparently and within the legal framework, minimising risks and promoting financial integrity.

Ans: Global compliance refers to businesses' adherence to the diverse legal, regulatory, and ethical standards across international jurisdictions. It encompasses laws related to taxation, data protection, trade, and industry-specific regulations.&nbsp;

Achieving global compliance ensures that a company operates within the legal framework of each country it engages with, fostering trust, mitigating risks, and facilitating cross-border business transactions while maintaining ethical and legal standards on a global scale.

Ans: Regulatory compliance refers to the adherence of individuals or organisations to laws, rules, and regulations set by governing bodies. It ensures that businesses operate ethically, transparently, and within the legal framework of their industry or jurisdiction.&nbsp;

Compliance may involve meeting industry-specific standards, financial reporting requirements, data protection laws, and other regulations.

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A powerful empire crumbles, not from external forces, but from within. Like the parasite that silently multiplies and destroys, unchecked financial non-compliance can undermine even the mightiest businesses.

A <a href="https://www.pwc.com/gx/en/issues/upskilling/global-culture-survey-2021.html">survey report</a> found that 67% of firms believe business compliance is becoming more complex. With recession looming over the global economy, businesses cannot afford to take any risks when complying with financial regulations. The fallout from non-compliance can be severe, resulting in hefty fines, legal action, and damage to a company's reputation.&nbsp;

To avoid this, staying current with financial regulations and requirements is important. Let's drill down the five ways to make your business financially compliant this year.

Tip 1: Stay Updated With Existing Laws + Regulatory Changes

A recent study conducted by PwC revealed that <a href="https://brandfolder.com/resources/compliance-challenges-for-financial-services/">40% of CEOs</a> are worried about the constant changes impacting their organisation, as they fear it may result in non-compliance with laws and regulations.&nbsp;

The utilisation of compliance calendars is a valuable asset in such circumstances. These calendars are frequently offered at no cost and serve the purpose of aiding individuals in monitoring important dates and obligations, such as tax deadlines, financial report filings, and various regulatory business compliance requirements including <a href="https://vakilsearch.com/gst/registration">registering GST online.</a>

Moreover, you can access different resources like government websites ( such as the <a href="https://www.rbi.org.in/">RBI</a>, <a href="https://www.sec.gov/">Securities and Exchange Commission</a>, <a href="https://www.ftc.gov/">Federal Trade Commission</a>, <a href="https://www.mca.gov.in/content/mca/global/en/home.html">MCA</a> and <a href="https://www.sebi.gov.in/">SEBI</a>), professional organisations, and <a href="https://legal.economictimes.indiatimes.com/etnewsletter.php">industry newsletters</a> to stay informed and updated. Your proactive approach saves you from potential fines and disruptions in your supply chain, and your customers appreciate your reliable and compliant business practices.

Tip 2: Implement Robust Financial Management Systems

Have you heard the story of the Roman Empire? They had lots of money from winning wars, but when they stopped winning, things got bad. They spent too much and messed up their money, which caused lots of problems and helped lead to their downfall. This shows us the importance of being careful and managing money well.

Like the Romans, we must also understand our money situation, especially when things change. Financial management systems can help us do just that. They give us a clear picture of how we're doing and help us make better money decisions. Believe me. We don't want to end up like the Romans!

As <a href="https://www.linkedin.com/in/mrdeepshah/">Deep Shah</a>, Co-founder of <a href="https://www.linkedin.com/company/twiseidiot/mycompany/">The Wise Idiot</a>, explained - “The three major benefits of using financial management systems are: time-saving (since it's directly linked to my bank account, enabling faster payments and reconciliation or even GST filing), ease of use (with intuitive UI and cloud-based technology), and easy analysis (almost every report I need is already templated and ready).”

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