China will build a differentiated capital regulatory system for commercial banks, dividing them into three tiers based on their total assets and risk profile, and matching them with different capital regulatory programs, said the China Banking and Insurance Regulatory Commission.

On Saturday, the CBIRC issued the draft for comments on the administrative measures for the capital of commercial banks in conjunction with the People's Bank of China, the country's central bank.

The CBIRC said revisions were made to the current administrative measures, which were rolled out in 2012, to further Improve commercial bank capital regulations, promote banks to enhance their risk management capabilities, and Improve the quality and efficiency of banks to serve the real economy.

Banks with a large asset size or relatively larger cross-border business are classified as Tier 1, and the capital regulatory measures for them will be in line with international rules. Tier 1 banks are required to disclose a complete set of reports, in order to enhance risk information transparency and market discipline.

Banks with relatively smaller asset and cross-border business sizes are classified as Tier 2. They are subject to relatively simplified capital regulatory measures and disclosure requirements, according to the CBIRC.

Banks with assets of less than 10 billion yuan ($1.46 billion) each are classified as Tier 3. The CBIRC said it will further simplify capital measurement for Tier 3 banks and guide them to focus on serving the county economy and small businesses.

Once implemented, the revised administrative measures will help Improve the risk management level of banks in China, maintain the stability of the banking system, and better prevent financial risks, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance Co. 

The new regulations will put differentiated supervision on bank capital into practice, lower compliance costs for small and medium-sized banks, and Improve banks' ability to serve the real economy, especially by reducing the capital occupation of local government bonds and high-quality enterprises.

The new regulations will also help China's banking sector to align with international rules such as the Basel III Accord, and promote the continuous expansion and deepening of the financial industry opening-up in China, Dong said.

The Basel Committee on Banking Supervision, the primary global standard setter for the prudential regulation of banks, has been pushing forward regulatory reforms in response to the financial crisis of 2007-09, issuing a series of prudential regulatory requirements as the minimum capital regulatory standards which apply to internationally active banks.

The CBIRC revised the administrative measures for the capital of commercial banks based on the real situation of China's banking sector and the latest achievements of international regulatory reforms. This will help banks to continuously Improve the precision of risk measurement and guide them to better serve the real economy, said an official with the CBIRC in a written reply to media questions. The reply was published on the regulator's website on Saturday.

It is projected that after the revised administrative measures are implemented, the overall level of capital adequacy in the Chinese banking sector will remain stable without significant fluctuations. However, the capital adequacy ratios of individual banks are estimated to change slightly due to differences in asset types, reflecting the requirements of differentiated supervision, the official said.

The new regulations are scheduled to be officially implemented on Jan 1, 2024, with sufficient transitional time for commercial banks, said Dong with Merchants Union Consumer Finance.

However, financial regulators should minimize the impact of overlapping regulatory requirements on China's banking sector by fully considering factors such as additional capital requirements for global and domestic systemically important banks, leverage ratio requirements, and countercyclical capital buffer requirements, he said.

At the same time, efforts should be made to accelerate the establishment of a long-term mechanism for commercial banks to replenish capital so that they can meet the new regulatory requirements as soon as possible. Financial regulators should also strengthen coordination and continue to support replenishment of bank capital, he said.

Analysing financial institutions’ quarterly reports can be a headache-inducing mess of acronyms and obfuscating lingo, making it nigh on impossible to determine what numbers to pay attention to and what numbers to ignore.

Thankfully, Proactive is here to help.

In the following guide, we explain in simple terms all the key sector-specific ratios, regulatory jargon and a few generic ratios that you’ll likely come across.

Industry-specific ratios

AQR (asset quality ratio) is a financial metric used to evaluate the quality of a bank's loan portfolio. It measures the amount of non-performing loans (NPLs) in relation to total loans. 

The AQR is an important indicator of a bank's asset quality, financial health, and credit risk. 

A high AQR ratio indicates that a bank has a significant number of NPLs, which can be a sign of weak underwriting standards or economic conditions.

CET1 (common equity tier 1) ratio is a regulatory measure that assesses a bank's capital adequacy and ability to absorb losses. 

It represents the proportion of a bank's risk-weighted assets that are supported by CET1 capital, which is the highest-quality form of capital that a bank holds. 

Regulators use CET1 ratio as a benchmark to ensure that banks hold sufficient capital to manage risks and maintain financial stability. 

High CET1 ratios are typically viewed as a sign of a bank's financial strength, while low ratios can indicate financial weakness and increase the risk of failure.

NII (net interest income) is the difference between the interest income generated by their assets (loans, investments, etc.) and the interest expense incurred from their liabilities (deposits, borrowings, etc.). 

A higher NII indicates that a financial institution is earning more income from its core operations, while a lower NII indicates that it may be struggling to generate revenue.

NIM (Net interest margin) is a financial metric that represents the difference between the interest income earned by a financial institution from its assets, such as loans, and the interest expense paid on its liabilities, such as deposits. 

NIM is important for financial institutions because it measures the profitability of its core business activities, which is to generate income from lending and investing activities.

In general, a higher NIM indicates that the bank is able to generate more profit from its lending and investing activities, which is a sign of a well-managed and profitable bank.

PCL (provision for credit losses) is a financial term used by financial institutions to describe the amount of money set aside to cover potential losses due to borrowers who are unable to repay their loans. 

A higher PCL indicates that the bank is being proactive in protecting itself against potential credit losses, while a lower PCL indicates that the bank may be taking on more risk in its loan portfolio.

Pro forma CET1 ratio is important for financial institutions because it helps them to assess their capital position under different scenarios and plan accordingly.

CET1 ratio represents the proportion of a bank's risk-weighted assets that are supported by its CET1 capital, while pro forma CET1 ratio is a hypothetical calculation that takes into account potential changes to the bank's balance sheet or regulatory requirements.

RoTE (Return on Tangible Equity) is a financial metric that measures a company's profitability relative to its tangible equity. 

Tangible equity represents the portion of a company's equity that is tangible, such as common stock and retained earnings, minus intangible assets such as goodwill.

For financial institutions, RoTE is an important performance indicator because it provides a measure of their efficiency in deploying equity to generate profits while managing risks.

The RoTE target for a bank can vary depending on a range of factors, such as the bank's size, business model, risk profile, and prevailing market conditions. However, a good RoTE target for banks typically ranges between 10-15%. 

Regulatory requirements

CCLB (countercyclical leverage ratio buffer) is a regulatory requirement that requires financial institutions to maintain an additional buffer of capital during periods of economic expansion to protect against potential losses during periods of economic contraction. 

CCLB is designed to ensure that banks are better prepared for future economic downturns and that they have enough capital to absorb losses.

In general, a higher CCLB indicates that the bank has a stronger capital position and is better able to withstand potential losses during economic downturns.

CCyB (countercyclical capital buffer) is a regulatory tool that requires banks to maintain an additional buffer of capital during periods of excessive credit growth to protect against potential losses during periods of economic downturn. 

CCyB is important for financial institutions because it helps to ensure that they are better prepared for future economic downturns and have enough capital to absorb losses. 
In general, a higher CCyB indicates that the bank has a stronger capital position and is better able to withstand potential losses during economic downturns.

G-SII ALRB (additional leverage ratio buffer) is a regulatory requirement that applies to global systemically important banks (G-SIBs) and requires them to maintain an additional buffer of capital to protect against potential losses. 

This buffer is designed to increase the resilience of G-SIBs and limit the risk of failure. 

In general, a higher G-SII ALRB indicates that the bank has a stronger capital position and is better able to withstand potential losses.

MREL (minimum requirement for own funds and eligible liabilities) is a regulatory requirement for banks and other financial institutions to maintain a minimum level of equity and eligible liabilities to absorb losses and protect depositors in the event of a financial crisis. 

In general, a higher MREL indicates that the bank has a stronger capital position and is better able to absorb losses during economic downturns, which is a sign of a well-managed and financially sound bank.

Non-industry-specific ratios to watch out for

CIR (cost-to-income ratio) is a financial metric that measures a bank's operating expenses as a percentage of its operating income. 

It is an important indicator of a bank's efficiency and profitability, and is closely monitored by investors and analysts

A lower CIR typically indicates that the bank is able to generate profits while keeping costs under control, which is a sign of a well-managed and profitable bank. A good figure for CIR varies depending on the bank's size, business model, and industry, but in general, a CIR below 50% is considered a good benchmark for banks.

LTV (loan-to-value) ratio is a financial metric that represents the amount of a loan compared to the value of the asset that it is secured against.

LTV is important for financial institutions because it helps to assess the risk of the loan and the borrower's ability to repay it. 

A lower LTV indicates a lower risk for the lender since the loan is more secured by the asset.

Profit before impairments is a financial metric that represents a bank's pre-tax operating profit, before factoring in provisions for loan losses or other impairments. 

For financial institutions, profit before impairment is important because it provides a measure of the bank's core operating performance and underlying profitability. 

A higher profit before impairment indicates that the bank is generating strong earnings from its core business activities, which is a sign of a well-managed and profitable bank.

TNAV (tangible net asset value) per share is a financial metric used to determine the value of a company's tangible assets, such as property, equipment, and inventory, minus its liabilities, and divided by the number of outstanding shares. 

For financial institutions, TNAV per share is important because it provides a measure of the company's underlying value and financial strength.

In general, a higher TNAV per share indicates that the company has a strong financial position and is able to generate sustainable returns for its shareholders.

The Climate Change (Management) Carbon market regulations policy framework will be ready for submission to the National Executive Council before the end of March 2023.

Minister of Environment, Conservation and Climate Change, Simon Kilepa made this known in a press statement on Friday, February 17.

Mr Kilepa said the country stands the chances of participating in the carbon markets and to do that it requires a workable regulatory framework to guide its operations.

“Recently, we have experienced an influx of interest in project level Reducing Emissions from Deforestation and forest Degradation (REDD+) in the country targeting the voluntary carbon markets,” he said.

“This has been happening in the absence of a regulatory framework, posing significant risks of governance, transparency and standards.”

The absence of the regulatory framework has prompted the Ministry to impose a moratorium on Voluntary Carbon Markets in March 2022.

The moratorium is to allow for an establishment of a proper regulatory framework to guide its operations in the country.

Mr Kilepa commended the former Minister for Environment, Conservation and Climate Change, Wera Mori, for his leadership on imposing the moratorium to ensure the country’s carbon market is guided in a structured manner.

The drafting of the Carbon Market Regulations took place last year (2022) in consultation with key stakeholders and with the support of relevant state-line agencies and partners.

The regulations provides for procedures relating to the application and approval process for insurance of permits for climate change mitigation activities that are intended to participate in carbon
markets .

It also provides for generation, sale and transfer of carbon credits, the framework for benefit sharing, reporting requirements, and any other area necessary for the operation of carbon trading mechanism.

Further to that, the revised Climate Change Management Act 2022 which will be presented to Parliament as a bill for legislation this year captures provisions of the regulation.

Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations.

Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro.

Breaking — President Biden plans to name Federal Reserve Vice Chair Lael Brainard to lead the National Economic Council, filling a gap left by longtime economic advisor Brian Deese, Victoria Guida and Ben White reported late Tuesday night.

With inflation still raging, Brainard’s departure leaves a huge hole at the Fed on payments, central bank digital currency and the Community Reinvestment Act. Brainard was also a potential leader for a softer approach to the labor market as the Fed deliberates on when and how to stop its rate hike campaign. All Fed-watching eyes will turn now to her replacement.

Gossip focuses on San Francisco Fed President Mary Daly, New York Fed President John Williams, former Obama adviser Betsey Stevenson and Morgan Stanley global chief economist Seth Carpenter, among others, according to people connected to the Fed and the White House. This parlor game is only just getting started. — Victoria Guida

The Senate Banking Committee certainly has a knack for timing.

The powerful committee will hear testimony at 10:30 a.m. Tuesday on how Congress should set rules for crypto markets, which lost roughly half their value over the last year. Following FTX’s collapse, stalwarts like Gemini, Genesis, Kraken and now Paxos — the company behind the global exchange Binance’s dollar-pegged stablecoin — face an onslaught of legal challenges that threaten their businesses.

The regulatory offensive, led by SEC Chair Gary Gensler, has already created an existential crisis for the industry.

So what should you keep an eye on during the hearing? Tim Scott and stablecoin policy.

Scott, the committee’s new ranking member, has mostly avoided crypto policy scrums until recently. The South Carolina Republican earlier this month said he’d like to develop “a bipartisan regulatory framework" for crypto. A Senate Banking Republican aide on Monday told MM that Scott’s opening statement and questions will likely focus on promoting innovation and protecting consumers.

The latter, in particular, could provide some indication on where Scott might find common ground with Committee Chair Sherrod Brown (D-Ohio), an industry skeptic who last year requested Treasury Secretary Janet Yellen assist in identifying policy gaps to address the risks posed to consumers, investors and the financial system.

Senate Banking’s former top Republican, retired Sen. Pat Toomey of Pennsylvania, was a key crypto industry ally who frequently blasted regulators and Congress for failing to tailor rules to accommodate startups. Your MM hosts will be watching closely to see if Scott — who’s believed to be preparing a presidential bid – strikes a more neutral tone on digital asset policy than his predecessor.

Stablecoins — One area where we’ve seen bipartisan cooperation on crypto policy — albeit in the House — is around stablecoins, dollar-pegged digital tokens used to buy and sell cryptocurrencies.

Yellen and federal regulators have warned for more than a year that the businesses behind stablecoins could become a risk to the financial system if they remain unregulated. Those warnings are going to be top of mind for lawmakers after New York Department of Financial Services Superintendent Adrienne Harris on Monday ordered Paxos to stop issuing Binance USD stablecoins. The company also faces a potential SEC enforcement action alleging that BUSD is an unregistered security. (Paxos “categorically disagrees” with that claim and is “prepared to vigorously litigate if necessary,” according to a statement).

Two of the committee's witnesses — Duke Law School Professor Lee Reiners and Linda Jeng, a former Fed official and Georgetown law adjunct who leads global policy at the Crypto Council For Innovation — have submitted written testimony that dive into some of the thornier aspects of stablecoin regulation.

With House lawmakers plugging away on their own stablecoin bill, Tuesday’s hearing will offer an opportunity for Senate lawmakers to weigh in.

IT’S TUESDAY — Send your thoughts and news tips to Sam at [email protected] and Zach Warmbrodt at [email protected]. You can also find us on Twitter @samjsutton and @zachary 

All eyes are on the Labor Department’s consumer price index release at 8:30 a.m. this morning. The median forecast for annual headline inflation is around 6.2 percent and for core to come in at 5.4 percent, which would signal a further slowing of inflation. Stocks climbed on Monday in anticipation of the data.

Beyond that … Yellen is speaking at the National Association of Counties legislative conference at 9:45 a.m. followed by President Joe Biden at 11 a.m. … World Bank President David Malpass will participate in a panel on global trade at 10:30 a.m.

CRYPTO UNITES WARREN, BANKS — Our Zachary Warmbrodt: “Sen. Elizabeth Warren is branding herself as the scourge of crypto. And she's not doing it alone … Her budding partnership with GOP lawmakers reflects broader forces that are poised to unite progressives and conservatives, watchdog groups and bankers, who share common cause in wanting to derail the unfettered growth of crypto.”

CHINA — Our Gavin Bade: “The uproar over a suspected Chinese spy balloon — and three other unidentified flying objects — has brought an abrupt halt to Beijing’s nascent Washington charm offensive, emboldening Biden administration officials and lawmakers looking to crack down on Beijing’s economy.”

— The WSJ’s Jason Douglas and Stella Yifan Xie: “The world is counting on an economic bounceback from China to power global growth and help keep recession at bay. Don’t bank on it.”

— Bloomberg’s Bill Allison: “Republican politicians are stoking outrage and raising cash over the alleged Chinese spy balloon that crossed the US before it was shot down.”

Coinbase CEO Brian Armstrong was left with some free time in Dirksen Senate Building Monday after a meeting on the Hill fell through at the last minute. (Looking at you, Super Bowl hangovers!)

Armstrong, who made headlines last week for decrying a potential ban on the income-generating practice known as staking, is one of the SEC’s most vocal critics. He and his team, including Coinbase Chief Policy Officer Faryar Shirzad, are making their D.C. rounds in the first half of this week as Congress continues to map a path forward on cryptocurrency legislation.

The agenda: “What we're here to do is to see if we can get regulatory clarity in the U.S. and sensible crypto regulation passed,” Armstrong told our Eleanor Mueller. “My hope was that in the wake of FTX, that we'd see some urgency because we need consumer protection, obviously. So we want to bring this industry into the regulatory theater and get even more clarity that bills here in the United States [are going to pass] — because otherwise this stuff is going to go offshore.”

Cautiously optimistic?: “I've been coming to D.C. maybe twice a year for the last six years,” Armstrong said. “I'm hoping this is the year where you finally get some traction."

CHILD LABOR LAWS — WaPo’s Jacob Bogage: “As local economies grapple with a tightening labor market, some state legislatures are looking to relax child labor protections to help employers meet hiring needs.”

WEAKNESS — Reuters’s Caroline Valetkevitch: “U.S. companies' earnings woes are likely to extend beyond the weak fourth quarter, as a booming labor market weighing on margins looks set to hurt results in the first half of this year.”

A BRIGHT SPOT FOR TECH — NYT’s Steve Lohr: “The economic outlook is uncertain. Contingency plans are in place. Some initiatives are being trimmed back or slowed down. But business investment in technology remains remarkably resilient, and that trend appears likely to continue in 2023."

OIL FALLS — Bloomberg’s Jake Lloyd-Smith: “Oil fell on a US plan to sell more crude from its reserves, offsetting a lift from Russian output cuts and rising Chinese demand.”

Bank capital rebuttal — Better Markets President and CEO Dennis Kelleher responded to Monday’s MM lead item about big banks trying to head off capital increases.

He pointed to Better Markets’ latest report that makes the case that higher capital requirements would protect the economy. He rejected the claim that “nothing really suggests” higher capital requirements are needed.

“This is especially important now as the number, size, complexity and risk of too-big-to-fail banks continues to increase significantly,” he told MM. “Fortunately, the Fed well understands this and that the best way to prevent bank failure, contagion, crash and taxpayer bailouts is to ensure they have the quantity, quality and ready availability of capital to absorb their own losses, which should be no less than 20 percent.” — Zachary Warmbrodt

Japan’s economy returned to growth in the three months through December, but with the momentum still weak the central bank’s new governor will face challenges in steering monetary policy through uncertain terrain. — Bloomberg’s Erica Yokoyama

© Provided by Benzinga

Simplifya, a regulatory and operational compliance software platform serving the cannabis industry, announced the availability of the Simplifya Market Guide for financial institutions working with Shield Compliance. Shield’s purpose-built Bank Secrecy Act and Anti Money Laundering technology platform enables banks and credit unions serving the cannabis industry to manage compliance, onboard clients, and deliver payment solutions with greater efficiency and value to the financial institution.

Trending: North Korea Forcing Pregnant Women To supply Birth In Warehouses And Hotels Amid COVID-19: Report

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Simplifya Market Guide is a next-gen automated solution for licensed cannabis operators and the businesses that serve them, providing comprehensive and user-friendly cannabis market summaries for all 50 states. The platform delivers a suite of regulatory overviews and key market information to Shield Compliance and its financial institution customers on subjects such as: banking and lending guidance; tax structure and rates; requirements for investors; insurance guidelines; license types and structure; supply chain dynamics; governing law; policy movement; state insights and more.

“With many credit unions, banks, and lenders operating in numerous states with active cannabis markets, Simplifya Market Guide places up-to-date, comprehensive and easy-to-use regulatory and market snapshots in the hands of Shield Compliance financial institutions,” stated Simplifya CEO and co-founder Marion Mariathasan. “Our collaboration with Shield Compliance will help financial institutions, service providers and lenders save time and money and better manage risk and uncertainty, while improving the financial transparency of marijuana-related businesses – all of which are incredibly important to the health of this sector, particularly during this time of economic downturn.”

Benzinga's Cannabis Capital Conference Is Back

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Photo: Benzinga edit with photo by Kindel Media on Pexels

© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Startups are a huge part of India's growth story - not just in material terms, but also aspirational ones. Each time we hear of another Indian startup breaking into the Unicorn club, it chips away at the 'safe' middle class mindset that most of us grew up with. Today's Indian wants to be an entrepreneur, a provider of jobs rather than a job seeker, a creator of value, a problem solver.

The Indian government has been quick to both spot, and enable this mood. Through numerous programs, the government has been working to Improve the business ecosystem overall. In particular, the startup ecosystem through a number of initiatives and policy drivers that are encapsulated under the Startup India umbrella.

Despite the government's efforts, there is one area where startups continue to struggle - a lack of investment from banks. Since banks categorise startups as 'high risk', they cannot risk investing depositors' funds in them.

This is where venture capital (VC) funding comes in as the solution. Startups in India can now turn to both domestic and international VC funding for support. To further enable this, the Indian government has relaxed the Foreign Direct Investment (FDI) norms to boost VC funding and foreign investment in startups.

Navigating Startup Funding Through FDI

Before a startup can receive FDI in India, it must comply with several regulations set forth by the Reserve Bank of India (RBI). The first step is to register with the Department for Promotion of Industry and Internal Trade (DPIIT) in order to avail of the benefits granted to startups under Indian law. Startups must also comply with the provisions of the Companies Act and Foreign Exchange Management Act (FEMA) with respect to the issuance of shares to private investors and regulatory reporting. Moreover, the RBI requires that money enter India for FDI purposes only through banking channels, with banks having Nostro accounts with overseas banks or NRI accounts in India, as specified by RBI.

Of course, there are a number of other nitty gritties. IDFC FIRST Bank's Structured Solutions team divides the funding process into three stages:

Stage 1: The Pre-Flight Checklist

These are the items startups need to check before they sign the dotted line with an overseas investor.

●     Are they eligible under the automatic route or do they need government approval?

●     Does the startup need special consent from the RBI?

●     Have they previously raised funds? If so, have they taken RBI acknowledgement on those funds?

●     What is the type of instrument they propose to use - equity, Compulsory Convertible Debentures (CCD), convertible notes or credit notes?

●     Has their paid up capital been enhanced?

●     Do they have the complete investor profile, and have they filled up the beneficial ownership declaration?

●     Are the owners of the startup participating in any overseas investments?

This may seem like a lot of paperwork (and it is!), but if you know what you're doing, this can go pretty quickly. Startups can check their eligibility for automatic routes here. If the startup has never raised funds before, particularly through FDI, the paperwork is rather straightforward. They need to assess the various benefits of each of the instruments, and decide on which ones they're using. They then need to file information about their investor and the beneficial ownership declaration, which is an India specific requirement. This is often where the investor needs a little hand-holding. However, if the startup has previously raised funds and issued shares, the paperwork needs a more practised hand.

Stage 2: In Flight Checks

These questions relate to the process of the transfer itself.

●     Details of the remitting bank and mode of transfer

●     Does the remitter know of India's 6 pointer KYC requirements? Has the remitting bank been informed of this as well?

●     Has the investor finalised their investor declaration?

●     Has the remittance and timely credit of funds been confirmed? Has the Foreign Inward Remittance Certificate (FIRC) been issued?

The pressure point here is the 6 pointer KYC - since this is an India specific requirement, foreign investors are often puzzled by it. Similarly, the investor declaration can be problematic when it comes to certain details.

Stage 3: Post flight checks

Once the monies have been received, the transaction needs to be logged with all the right regulatory agencies.

●     Have they met all the RBI reporting requirements?

●     Have they filed these reports in time?

It looks simple, right? Unfortunately, it isn't. Based on whether the startup falls under the automatic or government approved route, the mode of investment used, the amount, the location and nationality of the investor, whether the investor is a person or a consortium or an institution, details of the investor and beneficial ownership declaration and the timing of the FIRC, the reports and the timing of the reports the RBI needs can differ.

Each business is unique, as is each funding round.

The Challenges

The trouble most startups have is that they are often navigating these with an army of advisors, each of whom is focused on just one aspect of the paperwork. The overall ownership rests with the startup founder(s) who usually don't come from regulatory backgrounds and the potential for missteps is huge. They don't know what they don't know! Moreover, most startups are partnered with banks who deeply understand the small business regulatory ecosystem. They may not be fluent in the ins and outs of the startup regulatory requirements.

For instance, DPIIT registered startups inherit several exemptions, but also have to file certain paperwork to ensure that these exemptions are applicable/enforced. They may also be eligible for certain benefits, which are not applicable to small businesses, and therefore, not on the bank's radar. Convertible Notes (CN), for instance, is a financial instrument available to startups alone, and one that suits their specific needs. If the bank isn't focused on startups, their knowledge of the regulations surrounding CNs is likely to be just a step up from the entrepreneurs themselves.

Loss of benefits aside though, these gaps in knowledge can also lead to some serious consequences: RBI imposes significant penalties, sometimes even several years down the line. Compliance issues with RBI involve hearings with the compounding authority, which then involves not just time and stress, but also expenses in legal and expert fees. They can also cripple the business down the line, preventing them from listing themselves on public exchanges, until these compliance issues are resolved.

The IDFC FIRST Bank Advantage

This is where IDFC FIRST Bank's focus on startups makes them the strongest partner in the business when it comes to navigating FDI. By way of a startup focused offering that guides startups through the regulatory aspects of raising funds through FDI, and helping them with pre-compliance and timely reporting; IDFC FIRST reduces the complexity and hassle involved with what should be a joyous time for any business.

By dedicating a single Relationship Manager (RM) to each startup, IDFC FIRST Bank ensures that all necessary parties are involved, and the paperwork is humming along as it should. The Structured Solutions group is focused on the ins and outs of the regulation involved in the receipt of money, and in helping startups navigate compliance issues if and when they arise.

The process begins with the Pre-Flight Checklist, continues through the real transfer, and the Post Flight Checks mentioned above, ensuring that all compliances, reporting, KYC, India specific forms and requirements are met. A team of in-house experts pre-vets all the documentation to prevent instances of rejections, omissions and mistakes. They also help the startup with all the system logins and handholding they need to file their documentation to RBI.

On the investor side, the bank also handholds them in navigating their part of the process, helping them with their banking systems. Overall, this helps not only with the timelines from a compliance standpoint, but also with the transfer itself, as the bank knows how to navigate common hiccups that occur when foreign banks undertake these transfers for the first time.

Conclusion

For most startups, securing funding becomes a reason to celebrate not just because of the receipt of funds themselves, but for the validation of their business idea and business model. It gives them the ability to take their fledgeling idea closer to their ultimate aspiration.

By helping startups navigate this regulatory terrain with confidence, IDFC FIRST Bank ensures that the securing of funds remains a source of joy and pride, instead of becoming something that trips up a great business idea.

Moneycontrol journalists were not involved in the creation of this article.

TORONTO, Feb. 13, 2023 (GLOBE NEWSWIRE) -- Today, FAIR Canada published a new comprehensive guide on how to bring a complaint against a bank, investment dealer or a mutual fund dealer. Written in plain language, the guide is designed to help Canadians resolve complaints that involve a loss of money or being overcharged fees.

“Most regulators are ill-equipped to help Canadians get their money back when dealing with a bank or investment dealer. So, it is important that Canadians understand the steps they need to take if they want to be financially compensated. Unfortunately, navigating Canada’s fragmented and complex complaint-handling process can be a real challenge in itself,” said Jean-Paul Bureaud, Executive Director, FAIR Canada. “Our new guide fills a void by presenting all the critical information in one place, in an easy-to-follow format for main street investors and bank customers.”

FAIR Canada is committed to empowering financial consumers and this guide is an important part of that objective. Whether you are an experienced investor or new to the financial world, the guide is a resource you can trust to help you navigate the process and seek financial compensation. To learn more about making a complaint, read our Complaint Guide.

About FAIR Canada

FAIR Canada champions the rights of individual investors in Canada through advocacy, education, and regulatory advancements. We are the trusted, independent voice on significant issues that affect individual investors. As Canada’s only non-profit, investor-focused organization, we provide informed, objective comment on regulatory issues that have an impact on investor fairness and protection. Learn more about investor rights at FAIRCanada.ca and connect with us on Twitter and LinkedIn.

For further information contact:

Jean-Paul Bureaud
Executive Director, FAIR Canada
jp.bureaud@faircanada.ca

Andrea David
Communications Specialist, FAIR Canada
andrea.david@faircanada.ca

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