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Strength

The advent of new low cost online escrow services that are properly licensed and government regulated
clearly trumps the escrow services provided by banks, which are far more expensive.

Very trustworthy (hence, preferred) method of transactions in most of the international businesses,
where seller and buyer do not know each other. A significant growth area, considering that this method
is still in its infancy in India

Hardly any competition in the online escrow services in India. Hence, ideal area of fast growth and high
returns

Weakness
In spite of the some positive steps by the government, a greater freedom in setting up escrow accounts
is still desired. Hence, entry of the new players might still be slightly challenging.

Entering the market without an established, trusted brand name would make it tough to procure
necessary registrations, certifications and will take a lot of effort to create a brand from scratch.

Opportunities
The use of escrow accounts for transactions in real estate has loads of growth opportunity in India,
considering that this is one of the most preferred ways of dealings in other country. Increase in FDI limit
would make this area much more lucrative.

Possible growth of the consumer base due to very low cost online escrow services as it means that even
low cost transactions can benefit from use of escrow.

Possible areas, where such services will flourish: Telecom, Software, Intellectual Property, Domain
Names, etc.

Threats
Already in place escrow services by ICICI Bank, JP Morgan, HSBC India, and potentially around 95
Category I Dealer Banks, which are allowed to enter this market.

EscrowTech India: established in 2005, incorporated in 1992 and is one of the best known & highly
respected software and technology escrow companies in the world.

Escrow India: Already established Internet Escrow Company, working on the lines of Escrow.com,
operated by D&B. (http://www.escrowindia.com/)

Some small companies namely Intelligere, Escrow Infotech, eCloser, ICFreelancer.com, etc.

Legal Implications
In May 2011, Reserve Bank of India has liberalized opening of Escrow Accounts for Foreign Direct
Investment.
Keeping in mind the time lag involved in the due diligence process and finalizing of agreements, and
facilitating operational flexibility:
Reserve Bank of India (RBI) has now permitted Category I Authorized Dealer Banks* to open and
maintain Non-Interest Bearing Escrow Accounts in Indian Rupees on behalf of Residents and/or Non-
Residents.
SEBI authorized Depository Participants** to open and maintain Escrow Account for the Securities

Conclusion
As already stated that transaction through escrow accounts is one of the most preferred methods in
international business and is still underutilized in India, the growth possibilities is enormous. As online escrow
services are really economic, in comparison to that of Banks, competition from the latter does not create much
of a challenge. With the relaxation of conditions by the RBI, it is easier for certain groups to enter this market.
So, if the group of entrepreneurs in question has proper access to such group, then this is a very profitable
market for them to enter and grow into.








--* RBI authorized around 95 Category I Dealer Banks in India (http://www.rbi.org.in/Scripts/CategoryI.aspx)
-- ** Depository Participants (DP): Agent of the depository (provider of facility for holding securities in book
entry or electronic form) who is authorized to offer depository services to investors
Financial institutions, banks, custodians and stockbrokers complying with the requirements prescribed by SEBI/
Depositories can be registered as DP.