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Core Investment Companies

A. Definitions:

8. Whether the investment of a company in its subsidiary's subsidiary (step down subsidiary) will be taken into account for determining not less than ninety percent of its net assets.

Ans: All direct investments in group companies, as appearing in the CICs balance sheet will be taken into account for this purpose. Investments made by subsidiaries in step down subsidiaries or other entities will not be taken into account for computing 90 percent of net assets.

Indian Currency

A) Basics of Indian Currency/Currency Management

9. Where can I sell my old banknotes and coins?

Reserve Bank of India does not deal in matters pertaining to buying/ selling of old banknotes and coins. RBI has issued a press release dated August 04, 2021, on “RBI cautions the public not to fall prey to fictitious offers of buying/ selling of Old Banknotes and Coins”. This press release is also available on our website under Currency Management > Press release at the following link.

https://website.rbi.org.in/en/web/rbi/-/press-releases/rbi-cautions-the-public-not-to-fall-prey-to-fictitious-offers-of-buying-selling-of-old-banknotes-and-coins-51999

FAQs on Priority Sector Lending (PSL)

K. PSLCs

Query 24: Can PSLCs be issued for a limited period i.e., for one reporting quarter and multiples thereof?

Clarification: The duration of the PSLCs will depend on the date of issue. All PSLCs will be valid till the end of the FY i.e. March 31st and expire on the next day i.e. April 1st.

Query 25: What are the transaction charges/fees for usage of PSLC module on e-Kuber portal? What are the tax implications of PSLC trading?

Clarification: As per the extant guidelines, no transaction charges/fees are applicable for usage of the PSLC module on e-Kuber portal. The tax implications on account of trading in PSLCs may be determined by the banks in accordance with the applicable tax laws.

Query 26: Does Export Credit form a part of PSLC-General and can banks’ surplus in Export Credit be sold as PSLC-General?

Clarification: 'Export Credit' can form a part of underlying assets against the PSLC - General. However, any bank issuing PSLC-General against 'Export Credit' shall ensure that the underlying 'Export Credit' portfolio is eligible for priority sector classification as per the criteria set for domestic banks.

Coordinated Portfolio Investment Survey – India

Important points to remember while participating in CPIS

Q9. What are the points the reporting entities should remember while filling the survey schedule?

Ans: The reporting entities should follow the below-mentioned points for filling and submitting the survey schedule:

i. The company must use the latest survey schedule, which is in .xls format, without incorporating any macros.

ii. The company is required to save the survey schedule in Excel 97-2003 workbook, i.e., in .xls format by following the below-mentioned steps:

Go to Office Button / File → Save As → Save As type
Select “Excel 97-2003 Workbook” and Save the survey schedule in .xls format.

iii. The company is requested not to incorporate any macro in the survey schedule while submitting the same.

iv. Survey schedule submitted in any other format (other than .xls format) will be rejected by the system.

v. Ensure that all information furnished in the survey schedule are complete and no information is missed out.

vi. After filling required details, the responding entities have to fill the declaration present in the survey schedule, which helps in validating that the information entered by the entity are reconfirmed before submission to RBI. This helps to avoid data entry errors, missed data and other errors.

Government Securities Market in India – A Primer

9. Who are the major players in the G-Secs market? +

Major players in the G-Secs market include commercial banks and PDs besides institutional investors like insurance companies. PDs play an important role as market makers in G-Secs market. A market maker provides firm two way quotes in the market i.e. both buy and sell executable quotes for the concerned securities. Other participants include co-operative banks, regional rural banks, mutual funds, provident and pension funds. Foreign Portfolio Investors (FPIs) are allowed to participate in the G-Secs market within the quantitative limits prescribed from time to time. Corporates also buy/ sell the G-Secs to manage their overall portfolio.

Foreign Investment in India

Q.9: For an FPI investment, once the investment is classified as FDI (basis total holding), if the FDI holding comes back to <10%, will the holdings be classified as FPI again ? +

Answer: Once an FDI always an FDI.

Domestic Deposits

I. Domestic Deposits

9. How and when banks are required to pay interest on the deposits maturing on holiday/ non-business working day/ Sunday? +

Banks should pay interest at the originally contracted rate on the deposit amount for the holiday/ Sunday/ non-business working day intervening between the date of expiry of the specified term of the deposit and the date of payment of the proceeds of the deposits on the succeeding working day.

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

Eligible entities and requirements to submit the FLA return

Q9. If an entity did not receive FDI or made overseas investment in any of the previous year(s) including the current year, do we need to submit the FLA return? +

Ans: If the Indian entity does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year, they need not submit the FLA return.

External Commercial Borrowings (ECB) and Trade Credits

D. RECOGNISED LENDERS/ INVESTORS

9. Can Indian banks participate in the process of issuance of Rupee denominated bonds overseas in any other manner? +

Indian banks cannot subscribe to RDBs issued overseas in primary market but can be arrangers/ underwriters/ market makers/ traders subject to compliance with prudential norms.

FAQs on Non-Banking Financial Companies

Definition of public deposits

9. The deposits from a foreign citizen are not to be treated as public deposit. What is the status of the deposits from an NRI ? +

An NRI can be an Indian national or a foreign national of Indian origin. If the depositor is an NRI holding a foreign passport, he is to be treated as foreign national despite the fact he is of Indian origin. It is for the depositor to disclose to the company that he is a foreign citizen and for the company to keep on its record an evidence that it had received deposit from a foreign citizen to claim the exemption from the Non-Banking Financial Companies (Reserve Bank) Directions, 1998 on Acceptance of Public Deposits.

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

Bank Accounts with Paytm Payments Bank

9. The instalment (EMI) for my loan is automatically paid through my account with Paytm Payments Bank. Can this continue? +

Auto debit mandates will continue to get executed till there is balance available in your account. However, after March 15, 2024, credit or deposit in your accounts will not be allowed. Therefore, to avoid inconvenience, it is suggested that you make alternative arrangements for setting up EMI payments through another bank before March 15, 2024.

Targeted Long Term Repo Operations (TLTROs)

Q9: Whether sale from HTM on account of buy-back by the issuers in respect of specified securities acquired under TLTRO scheme will be reckoned for computation of the regulatory limit applicable for disclosure? +

Ans: Sale from HTM on account of buy-back by the issuers pertaining to specified securities acquired under TLTRO scheme is exempt from the disclosure threshold stipulated in para 2 of RBI Master Circular DBR.No.BP.BC.6/21.04.141/2015-16 dated July 1, 2015.

Remittances (Money Transfer Service Scheme (MTSS) and Rupee Drawing Arrangement (RDA))

Money Transfer Service Scheme (MTSS)

9. Who is an Overseas Principal ? +

The Overseas Principal should be a registered entity, licenced by the Central Bank / Government or financial regulatory authority of the country concerned for carrying on Money Transfer Activities. The country of registration of the Overseas Principal should be AML compliant. The Overseas Principal should obtain necessary authorisation from the Department of Payment and Settlement Systems, Reserve Bank of India under the provisions of the Payment and Settlement Systems Act (PSS Act), 2007 to commence/ operate a payment system.

Biennial survey on Foreign Collaboration in Indian Industry (FCS)

Details of survey launch

Q9. Which entities can participate in the FCS survey? +

Ans.: Companies, who have inward FDI along with foreign technical collaboration (FTC) agreements can participate in this survey.

Retail Direct Scheme

Account opening related queries

9. What documents do I need for opening a Retail Direct Gilt (RDG) account? +

The following documents are mandatory to open the RDG account

PAN
Mobile number
E-mail address
Scanned copy of your signature
Bank account details (by uploading a cancelled cheque or manually entering the details on the portal)
Aadhaar number with mobile number linked to it

In addition, you may be required to provide an address proof to complete your Know Your Customer (KYC) process. The following documents are accepted as an address proof - Passport, Driving License, Voter ID, Aadhaar, NREGA job card duly signed by the State Government, Letter issued by the National Population Register containing your name and address.

Housing Loans

9. What is pre-EMI interest? +

Sometimes loan is disbursed in installments, depending on the stages of completion of the housing project. Pending final disbursement, you may be required to pay interest only on the portion of the loan disbursed. This interest called pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement up to the date of commencement of EMI.

However, many banks offer a special facility whereby customers can choose the installments they wish to pay for under construction properties till the time the property is ready for possession. Anything paid over and above the interest by the customer goes towards Principal repayment. The customer benefits by starting EMI payment earlier and hence repays the loan faster. Please check with your banker whether this facility is available before availing of the loan.

Indian Currency

B) Banknotes

1. What is the meaning of "I promise to pay" clause on the banknotes? +

As per Section 26 of Reserve Bank of India Act, 1934, the Bank is liable to pay the value of banknote. This is payable on demand by RBI, being the issuer.

The promissory clause printed on the banknotes i.e., "I promise to pay the bearer the sum of Rupees …” denotes the obligation on the part of the Bank towards the holder of the bank note.

All you wanted to know about NBFCs

B. Entities Regulated by RBI and applicable regulations

9. Does the Reserve Bank regulate all financial companies? +

No, the Reserve Bank does not regulate all financial companies. Depending upon the nature of activities, the financial companies may fall under the regulatory purview of other Regulators like SEBI, IRDAI, Government, etc. To name a few, the Merchant Banking Companies/Alternative Investment Fund Company/stock-exchanges/stock brokers/sub-brokers are regulated by Securities and Exchange Board of India, and Insurance companies are regulated by Insurance Regulatory and Development Authority. Similarly, Chit Fund Companies are regulated by the respective State Governments and Nidhi Companies are regulated by Ministry of Corporate Affairs, Government of India. Companies that do financial business but are regulated by other regulators are given specific exemption by the Reserve Bank from its regulatory requirements for avoiding duality of regulation. The categories of NBFCs which are exempted from certain provisions of the RBI Act, 1934 are specified in the ‘Master Direction - Exemptions from the provisions of RBI Act, 1934 dated August 25, 2016.