Sunday, 28 December 2014
Following is a bullet point analysis of the recent SEBI decision in the matter of MVL Limited under the SEBI CIS Regulations, holding that MVL was guilty of operating a collective investment scheme without adequate registrations as per the applicable regulations and Section 11AA of the SEBI Act. This decision is of high importance for real estate developers, investors in real estate sector and also for public at large.
Specific issues identified with the documentation
1. Application form
a. Plans are tentative and subject to change;
b. No specific unit identified;
c. No option for buyback/lease by the allottee.
2. Assured return agreement
a. No specific unit identified either by unit number, floor or otherwise.
3. Other issues
a. Layout, plans, maps and charts not part of the agreements;
b. MVL shall manage the maintenance and upkeep;
c. Search for competent tenant for first lease by MVL only;
d. Buy back was found to be not an option but was applicable for all allottees;
e. High returns promised of up to 96%;
1. Condition 1:
The contributions, or payments made by the investors, by whatever name called, are pooled and utilized solely for the purposes of the scheme or arrangement
i. No unit identified, location not identified;
ii. Floor not specified;
iii. Manner of possession, sale etc. by allottee not specified;
iv. Total project cost was Rs. 216 crores and loan taken was 128 crores.
Therefore, the balance was funded by the monies collected from allottees .
Therefore, first condition satisfied, since money taken was used for the scheme.
2. Condition 2:
The contributions or payments are made to such scheme or arrangement by the investors with a view to receive profits, income, produce or property, whether movable or immovable from such scheme or arrangement
i. MVL offers assured return;
ii. No unit identified;
iii. Allottees invested for profit only.
Therefore, second condition satisfied
3. Condition 3:
The property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors;
i. MVL manages and carries out construction;
ii. MVL shall manage maintenance;
iii. The possession will be handed over only after sale deed.
Therefore, third condition satisfied
4. Condition 4:
The investors do not have day to day control over the management and operation of the scheme or arrangement
i. Construction managed by MVL;
ii. Allottee cannot lease etc. Without consent of MVL.
Therefore, fourth condition satisfied
Other Important Factors
1. The projects were uniformly priced at different locations and floors which is not possible in a real estate transaction;
2. MVL continuously defaulted in making assured return payments to allottees and even suggested them to cancel the allotment. SEBI received a number of complaints.
Multiple investments in companies carrying on same business activities by Strategic Investors would require CCI approval
The Competition Commission of India (CCI) has recently opined that “an acquisition of shares or voting rights, even if it is of less than 25 per cent, may raise competition concerns if the acquirer and the target are either engaged in business of substitutable products/services or are engaged in activities at different stages or levels of the production chain. Such acquisitions need not necessarily be termed as an acquisition made solely as an investment or in the ordinary course of business, and thus would require competition assessment, on a case to case basis, under the relevant provisions of the Act”.
Though the aforesaid order appears to have the effect of limiting the exemptions granted in Schedule I of the CCI (Procedure in regard to the transaction of Business relating to Combinations) Regulations, 2011 (“Combination Regulations”), in fact it has only provided clarity to the provisions of point 1 of Schedule I of the Combination Regulations.
Point 1 of Schedule I of the Combination Regulations exempts from the requirements of merger control filing (which otherwise would qualify the threshold limits prescribed under the Act) an acquisition of shares or voting rights, solely as an investment or in the ordinary course of business in so far as the total shares or voting rights held by the acquirer directly or indirectly, does not entitle the acquirer to hold 25% or more of the total shares or voting rights of the investee company or in accordance with execution of any document including a shareholders’ agreement or articles of association, not leading to acquisition of control of investee company.
Thus, even as the provisions stand today or prior to the aforesaid order, an acquisition of “control”, whether by way of shareholding of more than 25% of the paid up capital of the investee company or by exercising any rights under an agreement would tantamount to exercise of control over the affairs of the investee company would not be exempt from the requirement of a merger control filing. The term “control” is not defined in the Competition Act, 2002 (the “Act”) or the Combination Regulations. However, it appears that the definition of the term “control” as adopted by various other regulators such as SEBI, DIPP/FIPB and MCA would be relevant here. Accordingly, “control” would include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of a shareholders agreements or voting agreements or in any other manner.
Furthermore, it appears from the Order that the CCI has further clarified that the assessment of acquisition of “control” would become more relevant if the acquirer and the target are either engaged in business of substitutable products/services or are engaged in activities at different stages or levels of the production chain. Thus, if the acquisition of “control” by the acquirer over the target is within the same or similar industry/business sector, the likely hood of an appreciable adverse effect on competition in the relevant industry/ business sector is higher and accordingly the same would require an assessment by the CCI.
The principle outlined in the aforesaid Order would, amongst others, largely regulate strategic investments by private equity firms focusing investment in a particular industry/business sector, as also mentioned in certain press statements made by the Chairman of CCI. As per recent news articles, “According to the Competition Commission of India (CCI), chairman, Ashok Chawla now the firms will need CCI approval while making multiple investments in a sector, even if the transactions don't breach the prescribed thresholds.”
The aforesaid appears to be a concerted effort by the CCI to restrict growth of monopolistic environment in a particular industry/business sector, which could be an outcome of acquisition of “control” by a single investor in multiple companies operating within the target sector.
 CCI Order No. C-2014/08/202 dated 10 November 2014
DCBR.CO.BPD .(PCB). No 1/14.01.062/2014-15
|November 05, 2014||Designated Director – Amendment to Section 13(2) of Prevention of Money Laundering Act (PMLA)||In an earlier circular, UCBs were advised that they may nominate a Director on their Boards as ‘Designated Director’ to ensure compliance with the obligations under the Prevention of Money Laundering Amendment Act, 2012. In this connection, it is clarified that UCBs can also designate a person who holds the position of senior management or equivalent as a ‘Designated Director’. However, in no case, the Principal Officer should be nominated as the ‘Designated Director’.|
DNBR (PD) CC.No. 002/03.10.001/2014-15
|November 10, 2014||Revised Regulatory Framework for NBFC||With an intent to review the entire regulatory framework for the NBFC sector over time, certain changes to the regulatory framework are sought to be made to a) address risks wherever they exist, b) address regulatory gaps and arbitrage arising from differential regulations, both within the sector as well as vis-a-vis other financial institutions, c) harmonise and simplify regulations to facilitate a smoother compliance culture among NBFCs, and d) strengthen governance standards. In doing so, certain important recommendations made by the Working Group on Issues and Concerns in the NBFC Sector (Chairperson: Smt. Usha Thorat) and the Committee on Comprehensive Financial Services for Small Businesses and Low Income Households (Chairman: Dr. Nachiket Mor), have been drawn upon. The changes now introduced to the regulatory framework are delineated in the said circular.|
DNBR (PD) CC.No. 003/22.10.91/2014-15
|November 10, 2014||Review of the Non-Banking Financial Company – Factors (Reserve Bank) Directions, 2012||It has been decided that an NBFC for registering as NBFC-Factor shall ensure that its financial assets in the factoring business constitute at least 50 per cent of its total assets and its income derived from factoring business is not less than 50 per cent of its gross income.|
|FEMA.326/RB-2014||November 12, 2014||Foreign Exchange Management (Transfer or Issue of any Foreign Security) (Fifth Amendment) Regulations, 2014||The Reserve Bank of India has amended the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004|
A.P. (DIR Series) Circular No. 38
|November 20, 2014||Acquisition/Transfer of Immovable property – Payment of taxes||It has been observed that doubts persist regarding requirement of payment of taxes while undertaking property transactions under Foreign Exchange Management (Acquisition and Transfer of immovable property in India) Regulations, 2000. In this connection, it is clarified that transactions involving acquisition of immovable property under these regulations shall be subject to the applicable tax laws in India.|
|FEMA.327/RB-2014||November 24, 2014
||Foreign Exchange Management (Deposit) (Amendment) Regulations, 2014||The Reserve bank of India has further amended the Foreign Exchange Management (Deposit) Regulations, 2000|
A.P. (DIR Series) Circular No. 41
|November 25, 2014||Routing of funds raised abroad to India||It has come to our notice that some Indian companies are accessing overseas market for debt funds through overseas holding / associate / subsidiary / group companies. It has also been reported that such borrowings are raised at rates exceeding the ceiling applicable in terms of extant FEMA regulations and that the funds so raised are routed to the Indian companies which accounts for sole/major operations of the group. Different modalities/structures are resorted to for channeling such funds for Indian operations including investment in rupee bonds floated by the Indian company. On review of the matter in light of the existing regulatory framework, certain clarifications in this regard has been issued by the Reserve Bank of India.|
|November 27, 2014||Supervisory Action Framework for Urban Co-operative Banks (UCBs)||Supervisory Action Framework (SAF) for UCBs was introduced. Having regard to the improvements witnessed by the sector and the need for ensuring more timely supervisory responses, it has been decided to review and revise the supervisory action framework. The main features of this revision are as indicated in the said circular.|
|_____||November 27, 2014||Guidelines for Licensing of Payments Banks||The Reserve Bank of India has released Guidelines for Licensing of payment banks with an objective to increase financial inclusion by providing small savings account and remittance services to migrant labour workforce, low income households, small businesses etc. The eligibility criteria, scope of activities and other such conditions relating to payment banks are outlined in the said guidelines.|
|_____||November 27, 2014||Guidelines for Licensing of Small Finance Banks in the Private Sector||The Reserve Bank of India has released Guidelines for Licensing of Small Finance Banks in the Private Sector with an objective of setting up small finance banks. The eligibility criteria, scope of activities and other such conditions are contained in the said guidelines.|
|G.S.R. 772(E)||November 03, 2014||Company Law Board (Fees on
Applications and Petitions) Amendment
|The Central Government has further amended the Company Law Board (Fees on Applications and Petitions) Rules, 1991|
|General Circular 42/2014||November 12, 2014||Clarification on matters relating to the Companies(Cost Records and Audit) Rules,2014||The Government has received clarification as regards Rules 5 (1) and 6 (2) of the Companies (Records and Audit) Rules, 2014 regarding maintenance of cost records and filing of notice of appointment of the Cost Auditor in Form CRA-2 in electronic mode. In this regard, it has been clarified that considering delay in availibility of Form CRA-2 in electronic mode, it has been decided to extend the date of filing of the said Form without any penalty/late fees upto 31st January, 2015. It is also clarified with regard to the Companies who have already filed Form 23C need not file fresh form CRA-2 for the financial year 2014-2015.|
|General Circular 43/2014||November 13, 2014||Issue of Foreign Currency Convertible Bonds (FCCBs) and Foreign Currency Bonds (FCBs) - Clarification regarding applicability of provisions of Chapter III of the Companies Act, 2013.||It has been clarified that the issue of FCCBs and FCBs by companies is regulated by the Ministry of Finance's regulations contained in Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipts Mechanism) Scheme 1993 and RBI through its various directions/regulations. Accordingly, unless otherwise provided in the said Scheme or the directions/regulations issued by RBI, provisions of Chapter III of the Companies Act, 2013 shall not not apply to an issue of a FCCB or FCB made exclusively to persons resident outsde India in accordance with the abovementioned regulations.|
|General Circular 44/2014||November 14, 2014||Extension of Company Law Settlement Scheme,2014 (CLSS-2014) up to 31/12/2014.||The Company Law Settlement Sheme, 2014 (CLS-2014) has been extended upto 31st December, 2014.|
|General Circular 45/2014||November 18, 2014||Extension of time for holding Annual General Meeting (AGM) under section 96(1) of the Companies Act, 2013-Companies registered in State of Jammu and Kashmir.||The extension of time has been granted to the Companies registered in the State of Jammu & Kashmir who could not hold their AGMs (other than first AGM) owing to unprecedented floods and the devastation caused thereof for the financial year 2013-14 to hold their AGM upto 31/12/2014.|
|CIR/MRD/DP/31/2014||November 12, 2014||Consolidated Account Statement (CAS) for all securities assets||Pursuant to the Interim Budget announcement in 2014 to create one record for all financial assets of every individual, SEBI had extensive deliberations with the Depositories, AMFI and RTAs of Mutual Funds (MF-RTAs) to implement it with respect to financial assets of securities market. As a first step in this direction, it has been decided to enable a single consolidated view of all the investments of an investor in Mutual Funds (MF) and securities held in demat form with the Depositories. The Depositories and the Asset Management Companies (AMCs)/ MF-RTAs shall put in place systems to facilitate generation and dispatch of single Consolidated Account Statements (CAS) for investors having MF investments and holding demat accounts. AMCs/ RTAs shall share the requisite information with the Depositories on monthly basis to enable generation of CAS. The manner in which such consolidation of accounts shall be done is also specified in the said circular.|
|G.S.R. 819(E)||November 19, 2014||Securities Contracts (Regulation) (Third Amendment) Rules, 2014||The Central Government has further amended the Securities Contracts (Regulation) Rules,1957.|
|CIR/IMD/FIIC/ 20 /2014||November 24, 2014||Conditions for issuance of Offshore Derivative Instruments under SEBI (Foreign Portfolio Investor) Regulations, 2014||With a view to align the applicable eligibility and investment norms between Foreign Portfolio Investor (FPI) regime and subscription through the Offshore Derivative Instruments (ODI) route, certain clarifications and conditions subject to which FPI shall issue ODIs have been prescribed.|
With the rapid growth of e-commerce business in India, the sector has caught the eyes of the regulators off late. Where, on the one side e-commerce business appears to be one of the most promising sectors in India for foreign investors, as also supported by the Google's annual online shopping growth trends report envisaging the online shopper base in India to reach 100 million by 2016, on the other hand the regulators are harping on whether the existing players are compliant of FDI policies.
The regulator's attention has been attracted mainly due to two reasons, one being the more than required importance given to the question whether retail sector of our country should be thrown open for foreign investment or not and second, whether those who are waiting for it to open would use e-commerce as a via media to bank on the opportunity that exists in our country as far as retail sector is concerned. This has lead to creative structures which the e-commerce companies follow in order to take advantage of the business opportunities which exists in the market and yet remain compliant with the prevailing laws.
As per the FDI Policy of the country, “e-commerce activities refer to the activity of buying and selling by a company through the e-commerce platform”. Such companies are permitted to engage only in Business to Business (B2B) e-commerce and not in retail trading. The FDI Policy further clarifies that the existing restrictions on FDI in domestic trading are applicable to e-commerce as well.
Foreign investment in retail trading in India is categorised under two heads viz. “single brand product retail trading” and “multi-brand product retail trading”. Foreign investment in single brand product retail trading though permitted up to 49% under the automatic route, it entails compliance of certain conditions. For instance, products to be sold should be of a ‘single brand’ only (i.e. products which are branded during manufacturing), products to be traded in India should also be sold under the same brand internationally, etc. As regards foreign investment in multi-brand retail trading, the same is permitted only up to 51% under the government approval route. In addition to seeking the government approval, certain conditions are also required to be met with, such as minimum foreign investment must be USD 100 million, at least 50% of total FDI brought in the first tranche must be invested in back-end infrastructure within three years, restriction on areas in which sales outlets can be opened etc. Certainly, one can imagine the difficulty of an ecommerce venture being complaint with such conditions.
With such regulations governing retail trading in India which are also applicable on domestic retail trading through e-commerce, it is intriguing how the existing foreign funded e-commerce companies (appearing to be engaged in multi-brand product retail trading) have structured their existence. Broadly, there are two models that have been adopted by these companies in India - Marketplace Model and Inventory Model.
In order to avoid huge entry cost of procuring government approval and complying with the minimum capitalisation requirements and other conditions applicable on multi-brand product retail trading, these companies enter the market as a “trading platform” rather than a trader. In this model, the company operates as a purely “online marketplace” which facilitates online sale of goods between buyers and sellers. Sellers enter into an arrangement with the company to canvass their products on the trading platform for securing the sale of their products through the company’s trading platform. In this model, the company also provides supporting services in the nature of advertising services, logistic services, management services etc. and earns ‘service fee’ from the sellers in the form of a commission on per sale basis or any other form of agreed service fee. In this model, though the entire sale process is channelized by the marketplace company, the title of the goods to be sold passes on directly from the seller to the ultimate consumers. Since there is no restriction in foreign investment in service sector (including technical services), these companies are operating well within the letter of the law.
This model is slightly more intricate and operates under a thin line of differentiating itself from multi-brand retail product trading. In this model, two distinct companies are set up where the promoters and directors of the two companies are completely unrelated. One of the companies is wholly owned and controlled by Indian individuals/entities and operates as the B2C entity. The other company, being FDI funded, operates as the “marketplace” company (as detailed above) and as a B2B wholesale company. The B2B entity procures inventory from various vendors and sells the same on B2B wholesale basis to the B2C entity. The B2C Company then utilises the “trading platform” services and other logistical services provided by the B2B Company for sale of products to the ultimate consumers.
The above model provides maximum value to the foreign investors of the B2B Company, as the revenues generated from wholesale trading as well as the trading platform services rest in the books of the B2B Company.
The two company model is also adopted by companies operating under the “marketplace model” where an “unrelated” retail entity is formed which utilises the trading platform services of the foreign funded company for sale of its products. In this case, the scope of services to be provided by the marketplace entity enlarges to a great extent as a facilitator of procurement of goods in the name of retail entity and sale of such goods to the ultimate consumers through the retail entity. The service fee charged by the marketplace entity in this model covers up nearly 80-90% of the revenue earned by the retail entity on sale of products.
Though the above models have been up and running for quite some time now and appear to be well within the “letter of the law”, the regulators are now probing into the legitimacy of these structures and are lifting the corporate veil to ascertain the bona fides of “unrelated” entities, arms’ length transactions etc.
One other aspect which is still obscure is “international retail trading” by FDI funded e-commerce companies in India. The FDI policy specifically states that “existing restrictions on FDI in domestic trading would be applicable to e-commerce as well”. A probable interpretation of the same could be that only the restrictions on FDI in domestic trading would be applicable to e-commerce activities and consequently there will be no restriction if the e-commerce activity is being carried out with respect to “international” trading. Accordingly, though the number of companies which have entered into this market is less, such companies operate their international market place business through a separate entity incorporated in India and having a separate website under the same/similar “domain name” with certain suffixes to reflect the international character.
In this model, two separate companies are incorporated in India, each funded by similar foreign investors. One company operates the Indian marketplace website (under the models mentioned above) and the other company operates an international marketplace website. On placing a request for an international order, the Indian website directs the customers to the international website which clearly states that “deliveries of products will be everywhere in the world except India”. Further, various terms and conditions on such international website clearly stipulate that orders on the website can be made only by a person resident outside India, for delivery outside India as well as all payments should be made in US Dollars only.
Plausibly, this business activity is not yet prominent as the same is an outcome of a very lenient and convenient interpretation of the provisions of the FDI Policy and basing a business structure on such interpretation may not be feasible in the long run. In light of the past instances of the DIPP and RBI rectifying such errors in the FDI Policy by merely ‘deleting’ certain words or providing express clarifications on certain erroneously mentioned words with retrospective effect, it may not be prudent to base a prospective business structure on such interpretation when the intent of the law is quite apparent otherwise.
At a very nascent stage and besides being under the scanner of regulators, the growing number of consumers resorting to “online shopping” demonstrates mounting projections for e-commerce industry in India. The e-commerce industry of India is yet another example where the industry demands will shape up the regulations and require the regulator to take a pragmatic view and finally the policy and industry will speak the same language using same words.
Friday, 14 November 2014
|G.S.R. 722(E)||October 14, 2014||The Companies (Audit and Auditors) Amendment Rules, 2014.||The Central Government has made following rules to amend the Companies (Audit & Auditors) Rules, 2014.|
|G.S.R. 723(E)||October 14, 2014||The Companies (Accounts) Amendment Rules, 2014.||The Central Government has made following rules to amend the Companies (Accounts) Rules, 2014.|
|General Circular lto. 38/2O14||October 14, 2014||Right of persons other than retiring directors to stand for directorship - Refund of deposit under section 160 of the Companies Act, 2013 in certain cases.||Clarity had been sought by the
companies registered under the 2013 Act, about the manner in which the amount
of deposit of rupees one lakh received by them under sub-section (l) of
section 160 of the Companies Act, 2013 (Act) is to be handled if the depositor
fails to secure more than twenty five per cent of the total valid votes. It
is clarified that in such cases, the Board of directors of a section 8
company is to decide as to whether the deposit made by or on behalf of the
person failing to secure more than twenty-five percent of the valid votes is
to be forfeited or refunded.
|General Circular No. 39/2014||October 14, 2014||Clarification on matters relating to Consolidated Financial Statement.||Government has received representations from stakeholders seeking clariflcations on the manner of presentation of notes in Consolidated Financial Statement (CFS) to be prepared under Schedule III to the Companies Act, 2013(Act). It is clarified that Schedule lll to the Act read with the applicable Accounting Standards does not envisage that a company while preparing its CFS merely repeats the disclosures made by it under stand-alone accounts being consolidated. In the CFS, the company would need to give all disclosures relevant for CFS only.|
|General Circular No. 37/2014||October 14, 2014||Clarification with regard to Trust/trustee as a partner in the Limited Liability Partnerships (LLPS).||Clarifications have been sought on whether a trust or a trustee representing a trust in the case of "Real Estate Investment Trust" (REIT) or "lnfrastructure Investment Trust" (lnvlTs) or such other trusts set up under the regulations prescribed under the Securities & Exchange Board of India Act, 1992, can become a partner in an LLP. It has been clarified that for the purposes of these trusts it is not barred for a trustee, being a body corporate, to hold partnership in an LLP in its name without the addition of the statement that it is a trustee.|
|General Circular 41/2014||October 15, 2014||Company Law Settlement Scheme, 2014 (CLSS-2014) - Clarification u/s 164(2) of the Companies Act, 2013||Clarification has been sought regarding immunity from disqualification of directors pursuant to Sec. 164 (2) (a) of the 2013 Act will be applicable to companies who have filed their balance sheets and annual returns on or after 01/04/2014, but beofre coming into force of CLSS 2014 with effect from 15/08/2014. It has been clarified that in case of such companies the disqualification under Section 164 (2) (a) will be applicable only for prospective defaults, if any, by such companies.|
|General Circular 40/2014||October 15, 2014||Company Law Settlement Scheme, 2014 (CLSS-2014)||The Company Law Settlement Scheme , 2014 (CLSS) has been extended upto November 25, 2014 consdering the requests received from various stakeholders.|
|G.S.R. 741(E)||October 24, 2014||Notification dated: 24.10.2014 - Amendment in Schedule VII of the Companies Act, 2013||The Central Government has made further amendments to Schedule VII of the Companies Act, 2013.|
|CIR/IMD/DF/18/2014||October 01, 2014||Master Circular for Mutual Funds||In order to enable the industry and other users to have an access to all the applicable circulars at one place, Master Circular for Mutual Funds has been prepared.|
|No. LAD-NRO/GN/2014-15/15/1671||October 08, 2014||Securities and Exchange Board of India (Stock Brokers and Sub-brokers) (Amendment) Regulations, 2014||SEBI has made the following regulations to amend SEBI (Stock Broker & Sub-Brokers Regulations, 1992.|
|CIR/IMD/FIIC/19/2014||October 09, 2014||Clarification on Government Debt Investment Limits||The Government debt investment limits have been clarified by the SEBi vide this circular.|
|CIR/ MIRSD/ 4/ 2014||October 13, 2014||Single registration for Stock Brokers & Clearing Members||SEBI has issued guidelines for the purpse of implementing the revised registration requirements.|
|CIR/MRD/DP/29/2014||October 21, 2014||Modification of client codes of non-institutional trades executed on stock exchanges (All Segments)||SEBI had issued circular CIR/DNPD/6/2011 dated July 05, 2011 pertaining to client code modifications of non-institutional trades on stock exchanges. SEBI has partially modified the said circular.|
|CIR/MRD/DP/30/2014||October 22, 2014||Revision of proprietary position limits of non-bank stock brokers for currency derivatives contracts||SEBI has issued the clarification with regard to the proprietary positions limits of stock brokers in the exchange traded currency derivatives contracts.|
|No. LAD-NRO/GN/2014-15/16/1729||October 28, 2014||Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014||Securities and Exchange Board of
India hereby makes the following regulations
to provide for regulation of all schemes by companies for the benefit
of their employees involving dealing
in shares, directly or indirectly, with a view to facilitate smooth operation
of such schemes while preventing any
possible manipulation and matters connected therewith or incidental thereto. SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999 are thereby repealed.
UBD.CO.LS (PCB) Cir.No.20/07.01.000/2014-15
|October 13, 2014||Review of norms for classification of Urban Co-operative Banks (UCBs) as Financially Sound and Well Managed (FSWM)||RBI has modified the norms for classification of UCBs as Financially Sound and Well Managed banks and has included additional criterion for the same.|
A.P. (DIR Series) Circular No.36
|October 16, 2014||Foreign Exchange Management Act, 1999 (FEMA) Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules) - Compounding of Contraventions under FEMA, 1999||The Foreign Exchange (Compounding Proceedings) Rules, 2000 notified by the Government of India vide G.S.R.No.383 (E) dated 3rd May 2000, as amended from time to time regarding delegation of powers to the Regional Offices of the Reserve Bank of India to compound the contraventions of FEMA has been further modified to delegate further powers to Regional Offices as detailed out in the notification.|
|October 21, 2014||Framework for Revitalising Distressed Assets in the Economy – Review of the Guidelines on Joint Lenders’ Forum (JLF) and Corrective Action Plan (CAP)||The Reserve Bank has reviewed the Framework based on the representations received from banks and the Indian Banks’ Association (IBA) on difficulties faced by them in its effective implementation and it has been decided to introduce certain changes in the Framework as given in the notification.|
UBD.BPD. (PCB). Cir No.24/13.05.000/2014-15
|October 29, 2014||Undertaking of Activity by UCBs as PAN Service Agents (PSA)||Earlier RBI had permitted only Financially Sound and Well Managed UCBs to act as PAN Service Agent with prior approval of RBI. With a view to expanding the scope of fee-based services offered by UCBs, it has now been decided to permit all UCBs to act as PAN Service Agent (PSA) by entering into a tie-up with any agency authorised by Income Tax Department, Government of India.|
|F.No10/22/2012-IPR-III||October 22, 2014||IPR Think Tank||Department of Industrial Policy
and Promotion has constituted an IPR Think Tank to draft the National
Intellectual Property Rights Policy and to advice the Department of
Industrial Policy and Promotion on IPR issues. The Press Release also
contains the composition and terms of reference of the IPR Think Tank.
Tuesday, 11 November 2014
|September 01, 2014||Timelines for Credit Decisions||The Reserve Bank of India (RBI)
on Monday asked banks to put in a place a timeline for credit decisions for
all loans to eliminate “inordinate delays” by banks in convey their credit
decisions to borrowers. The system must be put in place within 30 days.
|September 01, 2014||Inoperative Accounts||There may be instances where the customer has given a mandate for crediting dividend on shares to Savings Bank account and there are no other operations in the Savings Bank account. Some doubts have arisen whether such an account is to be treated as inoperative account after two years. In this regard clarificatio has been issued by RBI.|
UBD. CO. BPD. PCB. Cir. No. 12 /09.19.900/2014-15
|September 03, 2014||Guidelines for transfer of Assets and Liabilities of Urban Cooperative Banks to Commercial Banks- Modification||With a view to ensuring that the process of consolidation by way of non-disruptive exit of weak entities by a scheme of transfer of assets and liabilities of UCBs to commercial banks is undertaken in a transparent manner without affecting the financial health of the acquiring entities and the banking system as a whole, it has been decided to modify the existing guidelines for transfer of assets and liabilities of UCBs to commercial banks by stipulating the certain conditions|
DBOD. AML. No. 3356/14.01.001/2014-15
|September 04, 2014||Simplification of KYC Norms - Creating Public Awareness||The Reserve Bank of India, in the recent times, has been taking several measures to simplify KYC requirements to help the common man open bank accounts. It is, however, observed that despite such measures the general public is still facing problems in opening a bank account as these measures have not been given adequate publicity and the common man still lacks awareness on the basics of opening a bank account. In order to address these issues, create public awareness and give wide publicity to these KYC simplification measures, Reserve Bank has issued a Press Release together with a poster and a booklet comprising a few common questions relating to Know Your Customer (KYC) norms for opening bank accounts which are available in RBI's website|
A.P. (DIR Series) Circular No.28
|September 08, 2014||Risk Management and Inter Bank Dealings: Hedging Facilities for Foreign Portfolio Investors (FPIs)||In order to enhance the hedging facilities for the FPIs holding securities under the Portfolio Investment Scheme (PIS) it has been decided to permit FPIs to hedge the coupon receipts arising out of their investments in debt securities in India falling due during the following twelve months subject to the condition that the hedge contracts shall not be eligible for rebooking on cancellation. The contracts can however be rolled over on maturity provided the relative coupon amount is yet to be received.|
DBOD. APPT.BC.No. 40 /29.39.001/2014-15
|September 09, 2014||Upper age limit for Whole Time Directors on the Boards of Banks||the Companies Act, 2013 [Section 196(3)] which prescribe that ‘no company shall appoint or continue the employment of any person as Managing Director, Whole Time Director or Manager who is below the age of 21 years or has attained the age of 70 years’. In view of the above, it has been decided that the upper age limit for MD & CEO and other WTDs of banks in the private sector should be 70 years, i.e. beyond which nobody should continue in the post. Within the overall limit of 70 years, individual bank’s Boards are free to prescribe a lower retirement age for the WTDs, including the MD & CEO, as an internal policy.|
|September 09, 2014||Guidelines on Wilful Defaulters
Clarification regarding Guarantor, Lender and Unit
|Master Circular on Wilful Defaulters DBOD.No.CID.BC.3/20.16.003/2014-15 dated July 1, 2014 has been amended by RBI.|
|September 09, 2014||RRBs/StCBs/CCBs - KYC Norms / AML Standards / CFT / Obligation of banks under PMLA, 2002 – Client Due Diligence measures||It is advised that while the requirements of client due diligence measures applied when establishing anaccount-based relationship and on-going due diligence would continue as indicated Master Circular, it has been decided to dispense with the requirement of‘positive confirmation’.|
|September 09, 2014||Need for Bank Branches / ATMs to
be made accessible to persons with disabilities
||It has been advised that State / Central Co-operative Banks(StCBs / DCCBs) have to take necessary steps to provide all existing ATMs/futureATMs with ramps so that wheel chair users / persons with disabilities can easily accessthem. Care may also be taken to make arrangements in such a way that the height of the ATMs do not create an impediment in their use by wheelchair users. Certain more guidelines have been stated in this regard.|
|RBI/2014-15/234 A.P. (DIR Series) Circular No.31||September 17, 2014||Foreign Direct Investment (FDI) in India - Issue of equity shares under the FDI Scheme against legitimate dues||The extant guidelines for issue of shares/convertible debentures to non resident under the automatic route have been reviewed in consultation with the Government of India and, accordingly, it has been decided to permit issue of equity shares against any other funds payable by the investee company, remittance of which does not require prior permission of the Government of India or Reserve Bank of India under FEMA, 1999 or any rules/ regulations framed or directions issued thereunder provided two conditions as metioned in the circular is satisfied.|
|September 30, 2014||StCBs/CCBs - Instruments for Augmentation of Capital Funds - Modification||Circular RPCD.RCB.BC.73/07.51.012/2013-14 dated January 7, 2014 has been modifed by the RBI.|
|September 30, 2014||Secondary market transactions in Government Securities - Short Selling||Circular IDMD.No.03/11.01.01(B)/2005-06 dated February 28, 2006 guidelines relating to short selling has been reviewed .|