P0702 Purpose Code: Investment banking – brokerage, under writing commission etc.

Purpose code P0702 is used when an Indian investment bank or broking firm receives fees from abroad for capital markets work.

What is the P0702 purpose code?

Purpose code P0702 covers fee income from investment banking, meaning capital markets work rather than the everyday movement of money and credit. Brokerage and underwriting commission are the examples the description names, and the closing "etc" leaves room for the advisory and transaction work that sits alongside them. This code exists because the intermediation code excludes investment banking explicitly, so the two split a single institution's fee income between them depending on which side of the business earned it. Under RBI FEMA guidelines, this inward payment is classified under Financial Services and reported accordingly.

When to use P0702 purpose code?

Use P0702 when your Indian institution earns fees from an overseas client or counterparty for investment banking work, whether that is brokerage on securities transactions, underwriting commission on an issue, or advisory fees on a capital markets transaction. It is the correct RBI receipt code for that side of a financial institution's income. Where the same institution also earns intermediation fees, those report separately.

When to use a different code:

• Use P0701 when the fees are financial intermediation such as bank charges, collection charges, or letter of credit charges
• Use P0703 when the fees are auxiliary services such as custodial, depository, or regulatory charges
• Use the matching S-code when you are paying a foreign vendor rather than receiving money

Who typically uses P0702 purpose code

Indian investment banks, merchant banks and broking firms earning fees from overseas clients and counterparties, including firms executing securities transactions for foreign investors and institutions underwriting issues with international participation. The recipient is the firm being paid for the work.

Examples of transactions covered under P0702 purpose code

• Brokerage received from an overseas client on securities transactions executed in India
• Underwriting commission earned on an issue with international participation
• Advisory fees received from a foreign client on a capital markets transaction
• Placement fees paid from abroad on a securities issue

When NOT to use P0702 purpose code

• The fees are financial intermediation such as bank charges, collection charges, or letter of credit charges (use P0701)
• The fees are auxiliary services such as custodial, depository, or regulatory charges (use P0703)
• The commission is on placing insurance rather than securities (use P0605, in the insurance group)
• You are paying a foreign vendor rather than receiving (use the matching S-code)

Documents required for P0702 purpose code

To receive a payment under P0702, keep the following documents ready so your bank or platform can verify the transaction and report it correctly under FEMA.

How is a P0702 Purpose Code declared?

Declaring the code is pretty straightforward. Here's how the payment gets tagged and reported.

1. Do the work: Execute the transactions, underwrite the issue, or provide the advisory service under the mandate.
2. Raise your fee note: Bill the overseas client or counterparty for the brokerage, commission, or fees due.
3. Declare the purpose: State the purpose of the inward remittance, on your bank's form or through your platform.
4. Submit supporting documents: Provide the engagement letter and fee statement so the bank can verify the transaction.
5. Get your FIRA: Once processed, your FIRA is issued as proof and the payment is reported under FEMA.
6. With a traditional bank you handle each step of your payment journey. But with a platform built for cross-border payments, you can preselect a default purpose code so that the payments land smooth.

Common mistakes to avoid while using P0702 purpose code

A few common slips can hold up your payment or cause compliance issues. Here's what to watch for.

1. Coding all of an institution's fees together: Using one code for a firm doing both intermediation and investment banking, when the two report separately and the split is written into the intermediation code's description.
2. Confusing securities brokerage with insurance brokerage: Applying P0702 to commission earned on placing insurance, which belongs under P0605 in the insurance group. Both are commission for placing business, and the code follows what was placed.
3. Code and document mismatch: The code not matching what your engagement letter describes, which flags the payment.
4. Incomplete documents: Missing the mandate or fee statement, so the bank cannot establish the basis for the fees and holds funds until provided.
5. Missing PAN or KYC: Incomplete verification stops the bank from releasing the payment.
6. Using an inward code for an outward payment: Applying a receipt code to money you're sending out instead of the matching outward code.

How Skydo simplifies inward remittance under P0702 Purpose Code

With a bank, you declare the purpose code on your own for every single payment. With Skydo, you can preselect your code once and every payment gets tagged automatically.

1. Preselect the code once: Set P0702 as your default and Skydo tags every incoming payment for you, so there's no form to fill on each one.
2. No repeat declarations: A bank makes you restate the purpose for every remittance. Skydo does it in the background, the same way each time.
3. Instant, free FIRA: Your remittance proof is generated and stored on every payment, ready for your CA, GST, and audits, with no request and no fee.
4. Zero FX markup: You get the live mid-market rate with a flat, visible fee, instead of a markup hidden inside the bank's rate.
5. Settled in 24 hours: Your payment reaches your Indian bank within a day, fully reported and compliant.