KYC report on FDI

This query is : Resolved

SWAMY KARLAPUDI (Querist)
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11 December 2010 sir,

Our company (pvt ltd) first time received foreign direct investment into equity shares.

we got FIRC certificate from our banker.
but how to get KYC report on foreign investor. As per my knowledge, this KYC report shall be issued by AD banker of our foreign investor.

Our banker saying that we should get it from outside agents like Dun and Broadstreet.

How to get KYC certificate, please let me know, and we required it immediately.

Please reply...

Rasesh

Rasesh (Expert)
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19 December 2010 Contact D&B or other such agencies. They will be able to help u in the matter.

SWAMY KARLAPUDI

SWAMY KARLAPUDI (Querist)
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20 December 2010 Contacted D&B, clarified, they will give a confidential report on foreign investor.

But KYC report should be given by the banker of foreign investor, through whom the funds were transferred to Indian banker.

The D&B report will be different, no related in this case, I think.

Pls clarify how to get KYC report?

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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02 August 2024 When a company in India receives foreign direct investment (FDI) into equity shares, it is essential to comply with the Know Your Customer (KYC) norms laid down by the Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA). Here’s how you can obtain the KYC report for the foreign investor:

### **Steps to Obtain KYC Report for Foreign Investor**

1. **Understand the Requirement**:
- **KYC Report**: The KYC (Know Your Customer) report provides details about the foreign investor, including their identity, ownership structure, and financial health. It helps ensure compliance with regulatory requirements and anti-money laundering norms.

2. **Role of the AD Bank**:
- **Authorized Dealer (AD) Bank**: The AD bank in India (the bank where the FDI funds were received) is responsible for ensuring that the KYC norms are followed. They play a crucial role in the FDI process and are required to verify the KYC details of the foreign investor.

3. **Request KYC Report from Foreign Investor’s Banker**:
- **Foreign Investor’s Banker**: The KYC report should be obtained from the banker of the foreign investor (the bank through which the funds were transferred). This is because the foreign investor’s bank maintains detailed records and performs due diligence on its clients.
- **Bank’s Role**: Contact the foreign investor and request their bank to provide a KYC certificate. This bank is typically an Authorized Dealer (AD) in the foreign investor’s country.

4. **Documentation and Formalities**:
- **Request Letter**: You may need to provide a formal request letter to the foreign investor's bank, detailing why the KYC report is needed and for what purpose (i.e., compliance with FDI regulations).
- **Documentation**: Ensure you have all necessary documentation, such as the Foreign Inward Remittance Certificate (FIRC) and investment details, to support your request.

5. **Using D&B or Similar Reports**:
- **Dun & Bradstreet (D&B) Report**: While D&B and other similar agencies can provide confidential reports on foreign investors, these reports typically do not satisfy the KYC requirements set by RBI and FEMA. They provide general business information and are not substitutes for the KYC certificate from the investor’s bank.

6. **Compliance with Regulatory Requirements**:
- **RBI and FEMA Regulations**: Ensure that you comply with all the requirements set by the RBI and FEMA for FDI transactions. The KYC report is an integral part of this compliance process.
- **Consult AD Bank**: If you face difficulties in obtaining the KYC report, consult with your AD bank in India for guidance. They may offer assistance or provide alternative solutions.

### **Contact Points**

1. **Foreign Investor**: Reach out to the foreign investor and inform them of the need for a KYC report from their banker.
2. **Foreign Investor’s Banker**: Contact the bank where the foreign investor maintains their account and request the necessary KYC documentation.

### **Summary**

- **Obtain KYC Report**: The KYC report should be provided by the foreign investor’s banker, not from external agencies like D&B.
- **AD Bank’s Role**: Your AD bank in India can guide you on the process and requirements for obtaining the KYC report.
- **Compliance**: Ensure you follow all regulatory requirements as per RBI and FEMA norms for FDI transactions.

For immediate assistance, consider contacting your legal or compliance team to facilitate communication with the foreign investor’s bank and ensure that all regulatory requirements are met effectively.