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Indian Currency

D) Soiled and Mutilated Banknotes

2. Can soiled and mutilated banknotes be exchanged for value? +

Yes. Such banknotes can be exchanged for value.

Foreign Investment in India

Q.32: Whether RBI’s approval is required for transfer of shares from NRI or an OCI to a non-resident other than an NRI or an OCI ? +

Answer: No

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

Some Useful Definitions

Q32. Whether, any assets or liabilities for Indian party (i.e. domestic assets and liabilities) are to be included in the FLA return? +

Ans: Any domestic liabilities or assets (even if it is in foreign currency) should not be reported in the FLA return.

External Commercial Borrowings (ECB) and Trade Credits

H. REFINANCING OF ECB

32. Is refinancing of ECBs raised from foreign equity holders and utilised for working capital/ general corporate purpose/ repayment of Rupee loans permitted? +

Yes. However, the new ECB lenders should also be foreign equity holders as defined in the ECB framework and subject to applicable refinancing guidelines.

Core Investment Companies

Core Investment Companies (CICs)

32. Should Net assets include operating assets? +

Ans: Net assets have been defined in Notification No. DNBS.(PD) 219/CGM(US)-2011 dated January 05, 2011 (para3(1)e) specifically for the purpose of defining a CIC. As such they will only include the items specifically mentioned therein, irrespective of whether any of these qualify as operating assets or not.

FAQs on Non-Banking Financial Companies

Credit Rating

32. When a companys Rating is downgraded, does it have to bring down its level of public deposits immediately or over a period of time? +

If Rating of an NBFC is downgraded, it has to bring down deposits to the level to which it is entitled to as per the new Credit Rating within a period of one year.

Government Securities Market in India – A Primer

32. What are the various websites that give information on G-Secs? +

32.1. RBI financial market watch - /en/web/rbi/financial-markets/other-links/financial-market-watch

This site provides links to information on prices of G-Secs on NDS-OM, money market and other information on G-Secs like outstanding stock etc.

32.2. NDS-OM market watch https://www.ccilindia.com/OMHome.aspx

This site provides real-time information on traded as well as quoted prices of G-Secs, both in Order matching and Reporting segment. In addition, prices of When Issued (WI) (whenever trading takes place) segment are also provided.

32.3. Reported deals on NDS-OM: https://www.ccilindia.com/OMRPTDeals.aspx

This site provides information on prices of G-Secs in OTC market as reported. One can see chronological traded price levels and quantity in various securities.

32.4 FBIL – www.fbil.org.in

Financial Benchmark India Private Ltd (FBIL) was jointly promoted by Fixed Income Money Market & Derivative Association of India (FIMMDA), Foreign Exchange Dealers’ Association of India (FEDAI) and Indian Banks’ ‘Association (IBA). It was incorporated on 9th December 2014 under the Companies Act 2013. It was recognised by Reserve bank of India as an independent Benchmark administrator on 2nd July 2015.

The company is run by a Board of Directors, assisted by an oversight committee. The main object of the company is to act as the administrators of the Indian interest rate and foreign exchange benchmarks and to introduce and implement policies and procedures to handle the benchmarks. It also will make policies for possible cessation of any benchmark and to follow steps for ensuring orderly transition to the new benchmarks. FBIL will review each benchmark to ensure that the benchmarks accurately represent the economic realities of the interest that it intends to measure. It will take up/consider such other benchmarks as may be required from time to time by periodically assessing the emerging needs of the end -users.

32.5 FIMMDA - http://www.fimmda.org/

This site provides a host of information on market practices for all the fixed income securities including G-Secs. Accessing information from this site requires a valid login and password which are provided by FIMMDA to the eligible entities.

FAQs on Non-Banking Financial Companies

33. Rating Agencies use different symbols for their Investment Grade Rating. Is it possible for the common man to understand the strength of the company on the basis of these symbols ? +

Reserve Bank of India has specified the minimum level of investment grade Rating for eligibility for acceptance of deposits from public by Equipment Leasing/Hire Purchase Finance Companies. However, the Rating Agencies have been advised to bring about uniformity in their Rating Levels for the common man to understand the meaning of a particular Rating.

Government Securities Market in India – A Primer

Annex 1 +

Specimen of a G-Sec

Domestic Deposits

III. Advances

33. Whether banks are permitted to charge interest below their declared BPLR under consortium arrangement to offer rate comparable to leader bank? +

No. The banks need not charge a uniform rate of interest even under a consortium arrangement. Each member bank should charge rate of interest on the portion of the credit limits extended by them to the borrowers subject to their BPLR.