FAQ Page 1 - আরবিআই - Reserve Bank of India
Indian Currency
B) Banknotes
All banknotes issued by RBI are backed by assets such as gold, Government Securities and Foreign Currency Assets, as defined in Section 33 of RBI Act, 1934.
Core Investment Companies
Core Investment Companies (CICs)
Ans: Public funds are not the same as public deposits. Public funds include public deposits, inter-corporate deposits, bank finance and all funds received whether directly or indirectly from outside sources such as funds raised by issue of Commercial Papers, debentures etc. However, even though public funds include public deposits in the general course, it may be noted that CICs/CICs-ND-SI cannot accept public deposits.
All you wanted to know about NBFCs
B. Entities Regulated by RBI and applicable regulations
Foreign Investment in India
FAQs on Non-Banking Financial Companies
Inter-corporate deposits (ICDs)
Annual Return on Foreign Liabilities and Assets (FLA) under FEMA 1999
Procedure for submission of the FLA return
Ans: Any query regarding filling of FLA return should be sent by email. We will revert back to you within one or two working days.
External Commercial Borrowings (ECB) and Trade Credits
F. LEVERAGE CRITERIA AND BORROWING LIMIT
Government Securities Market in India – A Primer
"When, as and if issued" (commonly known as ‘When Issued’) security refers to a security that has been authorized for issuance but not yet actually issued. When Issued trading takes place between the time a Government Security is announced for issuance and the time it is actually issued. All 'When Issued' transactions are on an 'if' basis, to be settled if and when the actual security is issued. RBI vide its notification FMRD.DIRD.03/14.03.007/2018-19 dated July 24, 2018 has issued When Issued Transactions (Reserve Bank) Directions, 2018 applicable to ‘When Issued’ transactions in Central Government securities.
Both new and reissued Government securities issued by the Central Government are eligible for ‘When Issued’ transactions. Eligibility of an issue for ‘When Issue’ trades would be indicated in the respective specific auction notification. Participants eligible to undertake both net long and short position in ‘When Issued’ market are (a) All entities which are eligible to participate in the primary auction of Central Government securities,(b) However, resident individuals, Hindu Undivided Families (HUF), Non-Resident Indians (NRI) and Overseas Citizens of India (OCI) are eligible to undertake only long position in ‘When Issued’ securities. (c) Entities other than scheduled commercial banks and Primary Dealers (PDs), shall close their short positions, if any, by the close of trading on the date of auction of the underlying Central Government security.
When Issued transactions would commence after the issue of a security is notified by the Central Government and it would cease at the close of trading on the date of auction. All ‘When Issued’ transactions for all trade dates shall be contracted for settlement on the date of issue. When Issued’ transactions shall be undertaken only on the Negotiated Dealing System-Order Matching (NDS-OM) platform. However, an existing position in a ‘When Issued’ security may be closed either on the NDS-OM platform or outside the NDS-OM platform, i.e., through Over-the-Counter (OTC) market. The open position limits are prescribed in the directions. All NDS-OM members participating in the ‘When Issued’ market are required to have in place a written policy on ‘When Issued’ trading which should be approved by the Board of Directors or equivalent body.
"Short sale" means sale of a security one does not own. RBI vide its notification FMRD.DIRD.05/14.03.007/2018-19 dated July 25, 2018 has issued Short Sale (Reserve Bank) Directions, 2018 applicable to ‘Short Sale’ transactions in Central Government dated securities. Banks may treat sale of a security held in the investment portfolio as a short sale and follow the process laid down in these directions. These transactions shall be referred to as ‘notional’ short sales. For the purpose of these guidelines, short sale would include 'notional' short sale.
Entities eligible to undertake short sales are (a) Scheduled commercial banks, (b) Primary Dealers, (c) Urban Cooperative Banks as permitted under circular UBD.BPD (PCB). Circular No.9/09.29.000/2013-14 dated September 4, 2013 and (d) Any other regulated entity which has the approval of the concerned regulator (SEBI, IRDA, PFRDA, NABARD, NHB). The maximum amount of a security (face value) that can be short sold is (a) for Liquid securities: 2% of the total outstanding stock of each security, or, ₹ 500 crore, whichever is higher; (b) for other securities: 1% of the total outstanding stock of each security, or, ₹ 250 crore, whichever is higher. The list of liquid securities shall be disseminated by FIMMDA/FBIL from time to time. Short sales shall be covered within a period of three months from the date of transaction (inclusive of the date). Banks undertaking ‘notional’ short sales shall ordinarily borrow securities from the repo market to meet delivery obligations, but in exceptional situations of market stress (e.g., short squeeze), it may deliver securities from its own investment portfolio. If securities are delivered out of its own portfolio, it must be accounted for appropriately and reflect the transactions as internal borrowing. It shall be ensured that the securities so borrowed are brought back to the same portfolio, without any change in book value.
Business restrictions imposed on Paytm Payments Bank Limited vide Press Releases dated January 31 and February 16, 2024
National Common Mobility Card (NCMC) issued by Paytm Payments Bank
Coordinated Portfolio Investment Survey – India
Some important definitions and concepts
Ans: Debt securities with original maturity of more than one year is classified as long-term debt securities. These include bonds, debentures, and notes that usually give the holder the unconditional right to a fixed cash flow or contractually determined variable money income.
Annual Return on Foreign Liabilities and Assets (FLA) under FEMA 1999
Procedure for submission of the FLA return
Ans: Please follow the below given step to revise the FLA return for a previous year:
Visit https://flair.rbi.org.in/fla/faces/pages/login.xhtml → Login to FLAIR → Click on MENU tab on the left-hand side of the homepage → ONLINE FLA FORM → FLA ONLINE FORM → “Please click here to get the approval to fill revised FLA form for current year after due date /previous year” → select "Year" and click on → Click “Request”.
Your request status will be visible in the table below available on the screen. After sending request to RBI through FLA portal, entities need to wait for at least one working day for approval. Entities can check the status of their request in “Multiple Year Enable Screen” under menu on the left corner. Once approved by DSIM, RBI, the entity can revise FLA return for selected year.
External Commercial Borrowings (ECB) and Trade Credits
G. ALL-IN-COST
Government Securities Market in India – A Primer
The time value of money functions related to calculation of Present Value (PV), Future Value (FV), etc. are important mathematical concepts related to bond market. An outline of the same with illustrations is provided in Box II below.
Time Value of Money Money has time value as a Rupee today is more valuable and useful than a Rupee a year later. The concept of time value of money is based on the premise that an investor prefers to receive a payment of a fixed amount of money today, rather than an equal amount in the future, all else being equal. In particular, if one receives the payment today, one can then earn interest on the money until that specified future date. Further, in an inflationary environment, a Rupee today will have greater purchasing power than after a year. Present value of a future sum The present value formula is the core formula for the time value of money. The present value (PV) formula has four variables, each of which can be solved for: Present Value (PV) is the value at time=0 ![]() The cumulative present value of future cash flows can be calculated by adding the contributions of FVt, the value of cash flow at time=t ![]() An illustration Taking the cash flows as;
Assuming that the interest rate is at 10% per annum; The discount factor for each year can be calculated as 1/(1+interest rate)^no. of years The present value can then be worked out as Amount x discount factor The PV of ₹100 accruing after 3 years:
The cumulative present value = 90.91+82.64+75.13 = ₹ 248.69 Net Present Value (NPV) Net present value (NPV) or net present worth (NPW) is defined as the present value of net cash flows. It is a standard method for using the time value of money to appraise long-term projects. Used for capital budgeting, and widely throughout economics, it measures the excess or shortfall of cash flows, in present value (PV) terms, once financing charges are met. Formula Each cash inflow/outflow is discounted back to its present value (PV). Then they are summed. Therefore ![]() Where In the illustration given above under the Present value, if the three cash flows accrues on a deposit of ₹ 240, the NPV of the investment is equal to 248.69-240 = ₹ 8.69 |
Core Investment Companies
Core Investment Companies (CICs)
Ans: Indirect receipt of public funds means funds received not directly but through associates and group entities which have access to public funds.
Retail Direct Scheme
Nomination related queries
Domestic Deposits
II. Deposits of Non-Residents Indians (NRIs)
Indian Currency
C. Different Types of Bank Notes and Security Features of banknotes
The details are as under:
i. Ashoka Pillar Banknotes:
The first banknote issued by independent India was the one rupee note issued in 1949. While retaining the same designs the new banknotes were issued with the symbol of Lion Capital of Ashoka Pillar at Sarnath in the watermark window in place of the portrait of King George.
The name of the issuer, the denomination and the guarantee clause were printed in Hindi on the new banknotes from the year 1951. The banknotes in the denomination of ₹1000, ₹5000 and ₹10000 were issued in the year 1954. Banknotes in Ashoka Pillar watermark Series, in ₹10 denomination were issued between 1967 and 1992, ₹20 denomination in 1972 and 1975, ₹50 in 1975 and 1981, and ₹100 between 1967-1979. The banknotes issued during the above period, contained the symbols representing science and technology, progress, orientation to Indian Art forms. In the year 1970, banknotes with the legend "Satyameva Jayate", i.e., truth alone shall prevail were introduced for the first time. In October 1987, ₹500, banknote was introduced with the portrait of Mahatma Gandhi and the Ashoka Pillar watermark.
ii. Mahatma Gandhi (MG) Series 1996
The details of banknotes issued in MG Series – 1996 is as under:
Denomination | Month and year of introduction |
₹5 | November 2001 |
₹10 | June 1996 |
₹20 | August 2001 |
₹50 | March 1997 |
₹100 | June 1996 |
₹500 | October 1997 |
₹1000 | November 2000 |
All the banknotes of this series bear the portrait of Mahatma Gandhi on the obverse (front) side, in place of symbol of Lion Capital of Ashoka Pillar, which has also been retained and shifted to the left side next to the watermark window. This means that these banknotes contain Mahatma Gandhi watermark as well as Mahatma Gandhi's portrait.
iii. Mahatma Gandhi series – 2005 banknotes
MG series 2005 banknotes were issued in the denomination of ₹10, ₹20, ₹50, ₹100, ₹500 and ₹1000 and contain some additional/new security features as compared to the 1996 MG series. The year of introduction of these banknotes is as under:
Denomination | Month and year of Introduction |
₹50 and ₹100 | August 2005 |
₹500 and ₹1000 | October 2005 |
₹10 | April 2006 |
₹20 | August 2006 |
The Legal tender of banknotes of ₹500 and ₹1000 of this series was subsequently withdrawn w.e.f. the midnight of November 8, 2016.
iv. Mahatma Gandhi (New) Series (MGNS) – Nov 2016
The Mahatma Gandhi (New) Series, introduced in the year 2016, highlights the cultural heritage and scientific achievements of the country. The banknotes in the series are more wallet friendly, being of reduced dimensions and hence expected to incur less wear and tear. For the first time, designs for banknotes has been indigenously developed on themes reflecting the diverse history, culture and ethos of the country as also its scientific achievements. The colour scheme is sharp and vivid to make the banknotes distinctive.
The first banknote from the new series was introduced on November 8, 2016 and is a new denomination, ₹2000-with the theme of Mangalyaan. Subsequently, banknotes in this series in denomination of ₹500, ₹200, ₹100, ₹50, ₹20 and ₹10 have also been introduced.
All you wanted to know about NBFCs
B. Entities Regulated by RBI and applicable regulations
Foreign Investment in India
Answer: There are no restrictions under FEMA for investment in Rights shares issued at a discount by an Indian company under the provisions of the Companies Act, 2013. The offer on rights basis to the persons resident outside India shall be:
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in case of shares of a company listed on a recognized stock exchange in India, at a price, as determined by the company; and
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in case of shares of a company not listed on a recognized stock exchange in India, at a price, which is not less than the price at which the offer on right basis is made to resident shareholders.