Opening a Business Account in India: A US Business Guide

India offers enormous opportunities for US businesses looking to expand in a range of sectors, with government level support for investment coming from overseas. Navigating a new business environment isn’t easy, and many US businesses looking to expand to India get professional agent support when launching their new endeavour - both to register a local Indian entity and complete other essential administration like setting up an Indian business account.

This guide walks through some of the key things to know as you’re on your journey to set up shop in India, and open a business account there.

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When do US Businesses Need a Business Account in India?

If you’re planning to set up operations in India and register an entity there, the chances are that you’ll need a local Indian business account to allow you to manage your company finances and remain legally compliant.

You can get support with opening a business account in India through a company formation agent or similar, or through services like the Indian government’s Invest in India program¹. This offers everything from pre-investment advice to aftercare support, making it easier to hit the ground running in a very different market.

Understanding Your Business Needs in India

Before you start planning your business bank account application it helps to think through what you’ll actually need once you have an Indian registered business. By looking at the types of transaction you expect to be making frequently you can select an account which has low fees and easy access services for the most important transaction types, keeping down your overall costs and admin.

While many businesses do need a local bank account, you might also benefit from a specialist account from a provider like Wise Business for international transfers and currency conversions. Wise uses the mid-market exchange rate and can provide quick, convenient and secure payments to and from India, with low, transparent fees which can often work out cheaper overall than bank costs. More on that later.

Wise stands out in this space because it uses a peer-to-peer model that provides the mid-market exchange rate (the same one you'll see on Google) with transparent fees. Their business accounts support BatchTransfers and provide detailed reporting for accounting purposes.

Comparing Top Options for US Businesses Opening a Business Account in India

India has plenty of banks to choose from, which offer business services divided by company size and stage. This allows you to review several providers and their account types, to find a perfect match. Here are a few popular options to consider, including Indian banks and specialist services.

Traditional Indian Banks: US Businesses

Let’s start with Indian banks with a branch network - handy if you’re depositing cash or need a face to face service when you transact.

State Bank of India (SBI) Business Account

State Bank of India (SBI) Business Account² options include current accounts, transaction accounts and deposit accounts with a range of products for SMEs as well as other services for larger and more established corporations requiring complex financial tools. SBI has a huge branch network, which includes over 1200 branches which offer dedicated SME lending services which can be appealing if you need capital for your new venture.

ICICI Bank Business Account

The core ICICI Bank Business Account³ for SMEs is a current account which also offers full digital banking services, working capital and loans, and payment services which operate every day of the year. The account also offers easy tools for paying GST, which can help with maintaining your business accounts.

HDFC Bank Business Account

HDFC Bank has a Business Current Account⁴ for SME customers, as well as payment solutions and business credit cards. There are also specialist services for companies involved in import and export including remittance and letter of credit services. As a very large local bank, there are also a full range of additional and wholesale banking services should you need them.

Axis Bank Business Account

Axis Bank offers SME Business Current Accounts⁵, alongside dedicated digital management tools, payment services, treasury, trade finance, loans and working capital arrangements - everything a new business in India could want. There are a selection of different current accounts to allow you to find the right fit for your specific business banking needs.

DBS Bank India Business Account

DBS Bank India⁶ - a wholly-owned subsidiary of DBS Singapore - offers SME and corporate banking services including current accounts for business use. You can also get loans, working capital and a range of additional support depending on your specific business needs.

Fintech Solutions: Streamlining Your Indian Business Finances

Using an Indian bank isn’t your only option for managing your finances in INR. Fintech providers offer specialist account products which can be ideal for cross border transactions and transfers, as well as for currency exchange and managing your money across currencies.

Wise Business Account for India Transactions

You can open an account with Wise Business in the US if you have yet to start doing business in India, or you could open a local Wise Business account in India if that’s more suitable. Both offer ways to send and receive payments internationally which can be really helpful.

If you’re US based you can use Wise to send money to India, while continuing to manage your money in USD on a day to day basis. Wise uses the mid-market rate for currency conversion with low fees, which makes this an economical choice.

How to Open a Business Bank Account in India: Key Steps for US Companies

The exact steps you need to take to open a bank account for your business in India depends on factors including the specific bank and your entity type. We’ll walk through the common steps - you may also choose to have a professional agent act on your behalf for this process, to make it stress free.

Step 1: Research and select banks or providers which may meet your needs

Not all Indian banks will be able to offer you a suitable account as restrictions may apply based on your residency, business type and turnover for example. This means that doing some research is essential - look at popular Indian banks like those listed in this guide, and also specialist services like Wise Business to find the best fit.

Step 2: Gather the documents needed to apply

Indian banks will all require a suite of supporting documents, which can vary but may include the following:

• Business Certificate of Incorporation, Certificate of Registration, Memorandum of Association and Articles of Association
• Proof of business address, as well as business Permanent Account Number (PAN) and contact information
• Board Resolution confirming agreement to open account
• List of director names, and beneficial owners holding more than 10% in the company either directly or indirectly - ID documents and address information also needed
• Photographs and ID documents for all authorised signatories

Step 3: Apply through an agent or in person

Indian banks may offer digital account opening options, but this might only be available if you have a PAN number. If you do not have this you're likely to need to go to a branch in person, or using an agent as support, to apply and hand over your documents for checking.

Step 4: Upon approval get account collateral and start to transact

The bank staff will need to check all your documents to assess your suitability for the account - you’ll also need to deposit an opening balance in many cases. Once this is done you can get your account collateral like a debit card and checkbook, and start to transact.

Managing Funds: US to India Business Account Transfers

As you set up your Indian business, the chances are that you’ll need to send some money from the US to India to pay for services, place an account deposit, or cover payroll for your new international team or contractors. Sending money from the US to India can end up being expensive thanks to fees for transfers which may not be easy to see or account for.

Don't get caught out - here’s what to look for when sending money from the US to India, to keep your costs as low as possible.

Understanding Currency Exchange Rates and Fees

When you send money internationally there are costs involved. However, banks may not make these costs very obvious, which can mean they come as a surprise to some customers.

The key to understanding this is to look at the exchange rate you're offered when you send a payment from the US to India. Banks commonly add a fee into the rate used for currency conversion, which is a percentage charge known as a markup, margin or spread. This covers their costs and risk - but also can mean you’re spending more than you think.

Banks often quote their transfer fees as zero - Bank of America as an example has no charges for an outgoing digital wire in a foreign currency⁷. But the costs are often simply added to the rate used for conversion, which can be tricky to spot.

Best Methods for Transferring Money from the USA to India

If you need to send money from the US to India you’ll be looking for the cheapest method for a secure and convenient payment. Using a specialist service instead of your bank can mean you unlock a better exchange rate, keeping costs lower overall.

The Wise Business Advantage: Transparent and Cost-Effective Transfers

Before you send money to India with your bank, take a look at Wise Business which offers payments to India and 140+ other countries which use the mid-market exchange rate with low, transparent fees. Wise does not wrap its costs into the rate, but lists them as a separate item so you can see and compare your options more easily - making accounting and planning easier, and keeping down your costs in the end.

Key Considerations for US Businesses with an Indian Business Account

Let’s round out this guide with a few more considerations for US business owners who want to establish a base in India.

Navigating RBI Regulations and Compliance

The Reserve Bank of India (RBI) is India’s central bank and sets many of the regulations around financial management and compliance for businesses in India. This means that as a business owner you’ll need to review the RBI regulations which relate to your specific business transactions to make sure you remain compliant.

Getting local advice on this can help, but common requirements which impact US businesses include the need to choose an RBI approved payment gateway to take customer payments, and to comply with data protection rules.

Tax Implications for US Businesses in India

Nb https://www.maheshwariandco.com/faq/tax-implications-for-foreign-businesses/ - didn’t add as a source as its not an official government source (couldn’t find the gov doc, so have kept the wording a little vague but used this detail as guidance)

Before you trade in India make sure you understand how your local profits will be taxed, and the implications on your US business taxes too. Look into corporate tax rates for foreign businesses, dividend distribution taxes which can apply when disbursing profits and withholding taxes which are needed on some income types.

As tax is a complex area, you’ll want to work with a tax accountant familiar with both India and the US from a compliance perspective, to ensure you remain compliant while making use of the US tax convention with India⁸ where possible to limit your exposure to tax demands.

Save Money on USD to INR Transfers With Wise Business

Breaking down the costs of past international money transfers can help you plan future cross-border payments. The transfer fees are only one component of that. US banks might charge up to $50 for an outgoing wire transfer, and Indian banks could charge a receiving fee of up to $25. Those fees may or may not include mark-ups on the exchange rate.

Tax liability should also be a consideration when planning your wire transfers. Currency gains and losses affect your earnings, so work with your accountant to optimize the timing of your transfers and their effect on your financial reporting. Some companies establish foreign exchange policies to standardize their approach.

Transferring money from the USA to Indian business accounts requires careful attention to regulatory requirements, cost considerations, and operational efficiency. While traditional banking remains reliable, digital alternatives like Wise offer compelling advantages.

Get a Wise Business account 100% online

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in 40+ currencies. You can get major currency account details for a one-off fee to receive overseas payments like a local. You can also send money to 140+ countries.

Read the guide on how to open a Wise Business account

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Sources:

1. Invest in India
2. State Bank of India (SBI) Business Account
3. ICICI Bank Business Account
4. HDFC Bank Business Account
5. Axis Bank Business Account
6. DBS Bank India
7. Bank of America business fees
8. US tax convention with India