Successful repatriation of Overdue Funds

US-Headquartered Quick-Service Restaurant Chain, with an Indian subsidiary, encountered significant operational challenges when a non-operational bank account crisis led to potential FEMA non-compliance risks. During routine financial oversight for the Indian subsidiary of a multinational corporation, Nexdigm uncovered a critical issue related to the subsidiary's bank account operations. The absence of an authorized signatory, coupled with the subsidiary's reliance on the head office for payments, resulted in accumulating liabilities in the Indian entity’s financial records.

Nexdigm implemented a structured and proactive approach to resolve the crisis:

• Nexdigm promptly alerted the HO about potential FEMA risks, specifically the possibility of the payables being classified as Deemed External Commercial Borrowing (ECB).
• The team shared circulars and updates on AntiMoney Laundering (AML) regulations to highlight potential impacts.
• Persuaded HO to prioritize the issue by deploying a dedicated support team.

Nexdigm’s expert intervention led to the successful resolution of a complex financial compliance challenge with substantial benefits for the client. The overdue funds, totaling USD 0.9 million (INR 75 million), were repatriated after a prolonged accumulation period of 4.5 years, achieving full compliance with FEMA regulations. The process, completed within a turnaround time of 13 months, incurred no penalties and faced no instances of non-compliance. Furthermore, Nexdigm ensured the operational status of the subsidiary’s bank account, allowing the Indian subsidiary to independently manage its expenses without further regulatory risks.