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Core Investment Companies

D. Miscellaneous:

24. Would Current Liabilities also form part of Outside Liabilities? What will be the treatment of DTL, Advance Tax Due and Provision for Income Tax? Will they be Outside Liabilities?

Ans: Anything that has to be repaid to any other legal entity/ person will be an outside liability.

Foreign Investment in India

Q.25: Within how many days from the date of receipt of the consideration should the capital instrument be issued ? +

Answer: The capital instrument has to be issued by the Indian company within sixty days from the date of receipt of the consideration.

FAQs on Non-Banking Financial Companies

Classification of NBFCs into sub-groups

25. For arriving at the composition of assets and income in the equipment leasing and hire purchase finance activities, please clarify whether the ratio should be correlated to the gross assets/gross income or net assets/net income ? +

The NBFCs are entitled to depreciation benefits as a lessor on the assets leased out by them. The Guidance Note on Accounting for Leases issued by ICAI may entail creation of lease equalisation account/lease adjustment account. As per accounting practice, the entire amount of lease rentals is shown as gross lease income on the credit side of the profit and loss account. The income from equipment leasing, therefore, has to be computed on the basis of gross lease income net of depreciation on assets leased out and the lease equalisation account, if any. In the case of hire purchase finance, only the component of finance charges is taken to the Profit and Loss Account and therefore, such finance charges will be taken as hire purchase finance income. The composition of assets in the equipment leasing and hire purchase finance activities has to be worked out as a percentage of the total assets net of depreciation and net of lease adjustment account, if any, as disclosed in the audited Balance Sheet of the company. Hire purchase assets should be taken as stock on hire less unmatured finance charges. The sum total of debit balance in Profit and Loss Account, deferred revenue expenditure and intangible assets like Goodwill will also be excluded from the total assets.

Annual Return on Foreign Liabilities and Assets (FLA) under FEMA 1999

Some Useful Definitions

Q25. What is meant by “Residence of Enterprises”? +

Ans: An enterprise is said to have a centre of economic interest and to be a resident unit of a country (economic territory) when the enterprise is engaged in a significant amount of production of goods and/or services in that centre or when it owns land or buildings located in that centre. The enterprise must maintain at least one production establishment in the country and must plan to operate the establishment indefinitely or over a long period of time.

External Commercial Borrowings (ECB) and Trade Credits

G. END-USES

25. Can ECB be availed of for making contribution in an LLP? +

No, it is not permitted.

Business restrictions imposed on Paytm Payments Bank Limited vide Press Releases dated January 31 and February 16, 2024

Merchants using Paytm Payments Bank to receive payments

21. I am a merchant and I accept payments using a Paytm QR code, Paytm soundbox or Paytm POS terminal, linked to another bank account (not with Paytm Payments Bank). Can I continue to use this set-up even after March 15, 2024? +

Yes. If your receipt and transfer of funds is linked to any bank account other than Paytm Payments Bank, you can continue to use this arrangement even after March 15, 2024.

Government Securities Market in India – A Primer

25. What are the day count conventions used in calculating bond yields? +

Day count convention refers to the method used for arriving at the holding period (number of days) of a bond to calculate the accrued interest. As the use of different day count conventions can result in different accrued interest amounts, it is appropriate that all the participants in the market follow a uniform day count convention.

For example, the conventions followed in Indian market are given below.

Bond market: The day count convention followed is 30/360, which means that irrespective of the actual number of days in a month, the number of days in a month is taken as 30 and the number of days in a year is taken as 360.

Money market: The day count convention followed is actual/365, which means that the actual number of days in a month is taken for number of days (numerator) whereas the number of days in a year is taken as 365 days. Hence, in the case of T-Bills, which are essentially money market instruments, money market convention is followed.

In some countries, participants use actual/actual, some countries use actual/360 while some use 30/actual. Hence the convention changes in different countries and in different markets within the same country (eg. Money market convention is different than the bond market convention in India).

Retail Direct Scheme

Nomination related queries

25. What happens if one of the joint nominees to a Government security dies? +

In such cases where a nomination in respect of a Government security has been made in favour of two and either or any of the nominees is dead, the surviving nominee will be entitled to the Government security and payment thereon.

Domestic Deposits

II. Deposits of Non-Residents Indians (NRIs)

25. Whether banks can pay interest on NRE and FCNR(B) deposits for the intervening Saturday, Sunday and holidays between the date of maturity and payment? +

Yes. Whenever the due dates fall on Saturday/Sunday/non-business working day/holidays, banks are permitted to pay interest on NRE and FCNR(B) deposits at the originally contracted rate for the intervening period between the due date and date of payment so that no interest loss is suffered by the depositors.

Indian Currency

C) Different Types of Bank Notes and Security Features of banknotes

5. What is the need for printing different series of banknotes? +

Central banks the world over change the design of their banknotes and introduce new security features primarily to make counterfeiting difficult and to stay ahead of counterfeiters. India also follows the same policy.