FAQ Page 1 - আরবিআই - Reserve Bank of India
Housing Loans
This is a table that gives details of the periodic principal and interest payments on a loan and the amount outstanding at any point of time. It also shows the gradual decrease of the loan balance until it reaches zero. (See annex)
Indian Currency
A) Basics of Indian Currency/Currency Management
The Reserve Bank presently manages the currency operations through its 19 Issue Offices located at Ahmedabad, Bengaluru, Belapur, Bhopal, Bhubaneswar, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Jammu, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, New Delhi, Patna, Thiruvananthapuram and a currency chest at its Kochi office. Further, a wide network of currency chests maintained and managed by scheduled banks are part of currency management architecture. The Issue Offices receive fresh banknotes from the currency printing presses which in turn send fresh banknote remittances to the currency chests. Direct remittances by the presses to the currency chests also happens.
The Reserve Bank offices located at Hyderabad, Kolkata, Mumbai and New Delhi (Mint Linked Offices) receive coins from the mints. These offices then send the coins to the other offices of the Reserve Bank who in turn send the same to Currency Chests and Small Coin Depots. The banknotes and rupee coins are stocked at the currency chests and small coins at the small coin depots. The bank branches receive the banknotes and coins from the Currency Chests and Small Coin Depots for further distribution among the public.
Government Securities Market in India – A Primer
8.1 There is an active secondary market in G-Secs. The securities can be bought / sold in the secondary market either through (i) Negotiated Dealing System-Order Matching (NDS-OM) (anonymous online trading) or through (ii) Over the Counter (OTC) and reported on NDS-OM or (iii) NDS-OM-Web (para 8.5) and (iv) Stock exchanges (para 8.6)
i. NDS-OM
In August 2005, RBI introduced an anonymous screen-based order matching module called NDS-OM. This is an order driven electronic system, where the participants can trade anonymously by placing their orders on the system or accepting the orders already placed by other participants. Anonymity ensures a level playing field for various categories of participants. NDS-OM is operated by the CCIL on behalf of the RBI (Please see answer to the question no.19 about CCIL). Direct access to the NDS-OM system is currently available only to select financial institutions like Commercial Banks, Primary Dealers, well managed and financially sound UCBs and NBFCs, etc. Other participants can access this system through their custodians i.e. with whom they maintain Gilt Accounts. The custodians place the orders on behalf of their customers. The advantages of NDS-OM are price transparency and better price discovery.
8.2 Gilt Account holders have been given indirect access to the reporting module of NDS-OM through custodian institutions.
8.3 Access to NDS-OM by the retail segment, comprising of individual investors having demat account with depositories viz. NSDL and/or CDSL, desirous of participating in the G-Sec market is facilitated by allowing them to use their demat accounts for their transactions and holdings in G-Sec. This access would be facilitated through any of the existing NDS-OM primary members, who also act as Depository Participants for NSDL and/or CDSL. The scheme seeks to facilitate efficient access to retail individual investor to the same G-Sec market being used by the large institutional investor in a seamless manner.
ii. Over the Counter (OTC)/ Telephone Market
8.4 In the G-Sec market, a participant, who wants to buy or sell a G-Sec, may contact a bank / PD/financial institution either directly or through a broker registered with SEBI and negotiate price and quantity of security. Such negotiations are usually done on telephone and a deal may be struck if both counterparties agree on the amount and rate. In the case of a buyer, like an UCB wishing to buy a security, the bank's dealer (who is authorized by the bank to undertake transactions in G-Secs) may get in touch with other market participants over telephone and obtain quotes. Should a deal be struck, the bank should record the details of the trade in a deal slip (specimen given at Annex 5). The dealer must exercise due diligence with regard to the price quoted by verifying with available sources (See question number 14 for information on ascertaining the price of G-Secs). All trades undertaken in OTC market are reported on the Reported segment of NDS-OM within 15 minutes, the details of which are given under the question number 15.
iii. NDS-OM-Web
8.5 RBI has launched NDS-OM-Web on June 29, 2012 for facilitating direct participation of gilt account holders (GAH) on NDS-OM through their primary members (PM) (as risk controller only and not having any role in pricing of trade). The GAH have access to the same order book of NDS-OM as the PM. GAH are in a better position to control their orders (place/modify/cancel/hold/release) and have access to real time live quotes in the market. Since notifications of orders executed as well as various queries are available online to the GAH, they are better placed to manage their positions. Web based interface that leverages on the gilt accounts already maintained with the custodian Banks/PDs provides an operationally efficient system to retail participants. NDS OM Web is provided at no additional cost to its users. PMs, however, may recover the actual charges paid by them to CCIL for settlement of trades or any other charges like transaction cost, annual maintenance charges (AMC) etc. It has been made obligatory for the Primary Members to offer the NDS-OM-Web module to their constituent GAHs (excluding individual) for online trading in G-sec in the secondary market. Constituents not desirous of availing this facility may do so by opting out in writing. On the other hand, individual GAHs desirous of the NDS-OM-Web facility may be provided the web access only on specific request.
iv. Stock Exchanges
8.6 As advised by SEBI, the stock exchanges (like NSE, BSE, MCX) have been asked to create dedicated debt segment in their trading platforms. In compliance to this, stock exchanges have launched debt trading (G-Secs as also corporate bonds) segment which generally cater to the needs of retail investors. The process involved in trading of G-Secs in Demat form in stock exchanges is as follows:
a. The Gilt Account Holder (GAH), say XYZ provident fund, approaches his custodian bank, (say ABC), to convert its holding held by custodian bank in their CSGL account (to the extent he wishes to trade, say ₹ 10,000), into Demat form.
b. ABC reduces the GAH’s security balance by ₹ 10,000 and advises the depository of stock exchange (NSDL/CSDL) to increase XYZ’s Demat account by ₹ 10,000. ABC also advises to PDO, Mumbai to reduce its CSGL balance by ₹ 10,000 and increase the CSGL balance of NSDL/CSDL by ₹ 10,000.
c. NSDL/CSDL increases the Demat balance of XYZ by ₹ 10,000.
d. XYZ can now trade in G-Sec on stock exchange.
v. Regulations applicable to prevent abuse
8.7 RBI vide FMRD.FMSD.11/11.01.012/2018-19 dated March 15, 2019 issued directions to prevent abuse in markets regulated by RBI. The directions are applicable to all persons dealing in securities, money market instruments, foreign exchange instruments, derivatives or other instruments of like nature as specified from time to time.
vi. Guidelines for Value free transfer (VFT) of Government Securities
8.8 VFT of the government securities shall mean transfer of securities from one SGL/CSGL to another SGL/CSGL account, without consideration. Such transfers could be on account of posting of margins, inter-depository transfers of government securities arising from trades in exchanges between demat account holders of different depositories, gift/inheritance and change of custodians etc. VFT would also be required in the case of distribution of securities to the beneficiary demat/gilt accounts on allotment after participation in the non-competitive segment of the primary auction.
RBI vide notification IDMD.CDD.No.1241/11.02.001/2018-19 dated November 16, 2018 issued separate guidelines for VFT to enable more efficient operations in the Government securities market. Value Free Transfers between SGL/CSGL accounts not covered by these guidelines will require specific approval of the Reserve Bank. The guidelines prescribes list of permitted transactions for VFT and application for permission for VFT for any other purpose may be submitted to Public Debt Office, Mumbai Regional Office, RBI, Fort, Mumbai
All you wanted to know about NBFCs
A. Definitions
Foreign Investment in India
External Commercial Borrowings (ECB) and Trade Credits
D. RECOGNISED LENDERS/ INVESTORS
Remittances (Money Transfer Service Scheme (MTSS) and Rupee Drawing Arrangement (RDA))
Money Transfer Service Scheme (MTSS)
Core Investment Companies
Core Investment Companies (CICs)
Ans: As there would be a separate application form for CICs-ND-SI, they would have to apply afresh.
FAQs on Non-Banking Financial Companies
Definition 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
Coordinated Portfolio Investment Survey – India
Details for survey launch
Ans: In case the reporting entity does not receive the soft-form of the survey schedule, they may download the same from RBI website (www.rbi.org.in) under the head ‘Regulatory Reporting’-→ ‘List of Returns’-→ ‘CPIS – Survey Schedule’[ or under the head ‘Forms’ (available under ‘More Links’ at the bottom of the home page) and sub-head ‘Survey’] or send a request to the email: cpis@rbi.org.in. .
FAQs on Master Directions on Priority Sector Lending Guidelines
H. Weaker Sections
Clarification: As per extant guidelines, priority sector loans are eligible for classification as loans to minority communities as per the list notified by the GoI from time to time. The same may be read with Master Circular- Credit Facilities to Minority Communities which under para 2.2 states “In the case of a partnership firm, if the majority of the partners belong to one or the other of the specified minority communities, advances granted to such partnership firms may be treated as advances granted to minority communities. Further, if the majority beneficial ownership in a partnership firm belongs to the minority community, then such lending can be classified as advances to the specified communities. A company has a separate legal entity and hence advances granted to it cannot be classified as advances to the specified minority communities.”
Remittances (Money Transfer Service Scheme (MTSS) and Rupee Drawing Arrangement (RDA))
Money Transfer Service Scheme (MTSS)
Biennial survey on Foreign Collaboration in Indian Industry (FCS)
Details of survey launch
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
The following documents are mandatory to open the RDG account
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PAN
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Mobile number
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E-mail address
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Scanned copy of your signature
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Bank account details (by uploading a cancelled cheque or manually entering the details on the portal)
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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
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
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.
Government Securities Market in India – A Primer
All you wanted to know about NBFCs
B. Entities Regulated by RBI and applicable regulations
No. Housing Finance Companies, Merchant Banking Companies, Stock Exchanges, Companies engaged in the business of stock-broking/sub-broking, Venture Capital Fund Companies, Nidhi Companies, Insurance companies and Chit Fund Companies are NBFCs but they have been exempted from the requirement of registration under Section 45-IA of the RBI Act, 1934 subject to certain conditions.
Housing Finance Companies are regulated by National Housing Bank, Merchant Banker/Venture Capital 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.
It may also be mentioned that Mortgage Guarantee Companies have been notified as Non-Banking Financial Companies under Section 45 I(f)(iii) of the RBI Act, 1934. Core Investment Companies with asset size of less than ₹ 100 crore, and those with asset size of ₹ 100 crore and above but not accessing public funds are exempted from registration with the RBI.
Foreign Investment in India
Domestic Deposits
I. Domestic Deposits
Annual Return on Foreign Liabilities and Assets (FLA) under FEMA 1999
Eligible entities and requirements 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
Core Investment Companies
Core Investment Companies (CICs)
Ans: These would include real estate or other fixed assets which are required for effective functioning of a company, but should not include other financial investments/loans in non group companies.
FAQs on Non-Banking Financial Companies
Definition 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
Targeted Long Term Repo Operations (TLTROs)
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.
Coordinated Portfolio Investment Survey – India
Important points to remember while participating in CPIS
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:
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Go to Office Button / File → Save As → Save As type
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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.
FAQs on Master Directions on Priority Sector Lending Guidelines
I. Investment by Banks in securitized assets / Transfer of Assets through Direct Assignment/ Outright Purchase
Biennial survey on Foreign Collaboration in Indian Industry (FCS)
Details of survey launch
Ans.: In case the company does not have any FTC during the survey reference period, then they have to submit the survey schedule of FCS survey by filling Part I and II of the form.
Foreign Investment in India
Core Investment Companies
Core Investment Companies (CICs)
Ans: While such accounts could be taken into account in view of the fact that developments after balance sheet date are also taken into account, all NBFCs including CICs-ND-SI would mandatorily have to finalise their accounts as on March 31 of the year, and submit annual auditors certificate based on this figure.
Retail Direct Scheme
Account opening related queries
Government Securities Market in India – A Primer
While undertaking transactions in securities, UCBs should adhere to the instructions issued by the RBI. The guidelines on transactions in G-Secs by the UCBs have been codified in the master circular DCBR. BPD (PCB).MC.No. 4/16.20.000/2015-16 dated July 1, 2015 which is updated from time to time. This circular can also be accessed from the RBI website under the Notifications – Master circulars section. The important guidelines to be kept in view by the UCBs relate to formulation of an investment policy duly approved by their Board of Directors, defining objectives of the policy, authorities and procedures to put through deals, dealings through brokers, preparing panel of brokers and review thereof at annual intervals, and adherence to the prudential ceilings fixed for transacting through each of the brokers, etc.
The important Do’s & Don’ts are summarized in the Box I below.
Do’s & Don’ts for Dealing in G-Secs Do’s
Don’ts
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Targeted Long Term Repo Operations (TLTROs)
FAQs pertaining to TLTRO 2.0
Ans: Based on the feedback received from banks and taking into account the disruptions caused by COVID-19, it has been decided to extend the time available for deployment of funds under the TLTRO 2.0 scheme from 30 working days to 45 working days from the date of the operation. Funds that are not deployed within this extended time frame will be charged interest at the prevailing policy repo rate plus 200 bps for the number of days such funds remain un-deployed. The incremental interest liability will have to be paid along with regular interest at the time of maturity.
Housing Loans
The security for a housing loan is typically a first mortgage of the property, normally by way of deposit of title deeds. Banks also sometimes ask for other collateral security as may be necessary. Some banks insist on margin / down payment (borrowers contribution to the creation of an asset) to be maintained / made also.
Collateral security assigned to your bank could be life insurance policies, the surrender value of which is set at a certain percentage to the loan amount, guarantees from solvent guarantors, pledge of shares/ securities and investments like KVP/ NSC etc. that are acceptable to your banker. Banks would also require you to ensure that the title to the property is free from any encumbrance. (i.e., there should not be any existing mortgage, loan or litigation, which is likely to affect the title to the property adversely).
Indian Currency
B) Banknotes
Banknotes in India are currently being issued in the denomination of ₹10, ₹20, ₹50, ₹100 ₹200, ₹500, and ₹2000. These notes are called banknotes as they are issued by the Reserve Bank of India. The printing of notes in the denominations of ₹2 and ₹5 has been discontinued and these denominations have been coinised as the cost of printing and servicing these banknotes was not commensurate with their life. However, such banknotes issued earlier can still be found in circulation and these banknotes continue to be legal tender. ₹1 notes are issued by the Government of India from time to time and such notes including those issued in the past also continue to be legal tender for transactions.
All you wanted to know about NBFCs
B. Entities Regulated by RBI and applicable regulations
NBFCs are categorized a) in terms of the type of liabilities into Deposit and Non-Deposit accepting NBFCs, b) non deposit taking NBFCs by their size into systemically important and other non-deposit holding companies (NBFC-NDSI and NBFC-ND) and c) by the kind of activity they conduct. Within this broad categorization the different types of NBFCs are as follows:
I. Asset Finance Company (AFC) : An AFC is a company which is a financial institution carrying on as its principal business the financing of physical assets supporting productive/economic activity, such as automobiles, tractors, lathe machines, generator sets, earth moving and material handling equipments, moving on own power and general purpose industrial machines. Principal business for this purpose is defined as aggregate of financing real/physical assets supporting economic activity and income arising therefrom is not less than 60% of its total assets and total income respectively.
II. Investment Company (IC) : IC means any company which is a financial institution carrying on as its principal business the acquisition of securities,
III. Loan Company (LC): LC means any company which is a financial institution carrying on as its principal business the providing of finance whether by making loans or advances or otherwise for any activity other than its own but does not include an Asset Finance Company.
IV. Infrastructure Finance Company (IFC): IFC is a non-banking finance company a) which deploys at least 75 per cent of its total assets in infrastructure loans, b) has a minimum Net Owned Funds of ₹ 300 crore, c) has a minimum credit rating of ‘A ‘or equivalent d) and a CRAR of 15%.
V. Systemically Important Core Investment Company (CIC-ND-SI): CIC-ND-SI is an NBFC carrying on the business of acquisition of shares and securities which satisfies the following conditions:-
(a) it holds not less than 90% of its Total Assets in the form of investment in equity shares, preference shares, debt or loans in group companies;
(b) its investments in the equity shares (including instruments compulsorily convertible into equity shares within a period not exceeding 10 years from the date of issue) in group companies constitutes not less than 60% of its Total Assets;
(c) it does not trade in its investments in shares, debt or loans in group companies except through block sale for the purpose of dilution or disinvestment;
(d) it does not carry on any other financial activity referred to in Section 45I(c) and 45I(f) of the RBI act, 1934 except investment in bank deposits, money market instruments, government securities, loans to and investments in debt issuances of group companies or guarantees issued on behalf of group companies.
(e) Its asset size is ₹ 100 crore or above and
(f) It accepts public funds
VI. Infrastructure Debt Fund: Non- Banking Financial Company (IDF-NBFC) : IDF-NBFC is a company registered as NBFC to facilitate the flow of long term debt into infrastructure projects. IDF-NBFC raise resources through issue of Rupee or Dollar denominated bonds of minimum 5 year maturity. Only Infrastructure Finance Companies (IFC) can sponsor IDF-NBFCs.
VII. Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI): NBFC-MFI is a non-deposit taking NBFC having not less than 85% of its assets in the nature of qualifying assets which satisfy the following criteria:
a. loan disbursed by an NBFC-MFI to a borrower with a rural household annual income not exceeding ₹ 1,00,000 or urban and semi-urban household income not exceeding ₹ 1,60,000;
b. loan amount does not exceed ₹ 50,000 in the first cycle and ₹ 1,00,000 in subsequent cycles;
c. total indebtedness of the borrower does not exceed ₹ 1,00,000;
d. tenure of the loan not to be less than 24 months for loan amount in excess of ₹ 15,000 with prepayment without penalty;
e. loan to be extended without collateral;
f. aggregate amount of loans, given for income generation, is not less than 50 per cent of the total loans given by the MFIs;
g. loan is repayable on weekly, fortnightly or monthly instalments at the choice of the borrower
VIII. Non-Banking Financial Company – Factors (NBFC-Factors): NBFC-Factor is a non-deposit taking NBFC engaged in the principal business of factoring. The financial assets in the factoring business should constitute at least 50 percent of its total assets and its income derived from factoring business should not be less than 50 percent of its gross income.
IX. Mortgage Guarantee Companies (MGC) - MGC are financial institutions for which at least 90% of the business turnover is mortgage guarantee business or at least 90% of the gross income is from mortgage guarantee business and net owned fund is ₹ 100 crore.
X. NBFC- Non-Operative Financial Holding Company (NOFHC) is financial institution through which promoter / promoter groups will be permitted to set up a new bank .It’s a wholly-owned Non-Operative Financial Holding Company (NOFHC) which will hold the bank as well as all other financial services companies regulated by RBI or other financial sector regulators, to the extent permissible under the applicable regulatory prescriptions.
Domestic Deposits
I. Domestic Deposits
Annual Return on Foreign Liabilities and Assets (FLA) under FEMA 1999
Eligible entities and requirements to submit the FLA return
Ans: If an entity has received only share application money and does not have any foreign direct investment or overseas direct investment outstanding as on end-March of the latest FY, it is not required to fill the FLA return.
External Commercial Borrowings (ECB) and Trade Credits
D. RECOGNISED LENDERS/ INVESTORS
Remittances (Money Transfer Service Scheme (MTSS) and Rupee Drawing Arrangement (RDA))
Money Transfer Service Scheme (MTSS)
Coordinated Portfolio Investment Survey – India
What to report under CPIS?
Ans: A consolidated data at the entity level, covering all the branches/offices in India, should be furnished.
FAQs on Non-Banking Financial Companies
Definition 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
FAQs on Master Directions on Priority Sector Lending Guidelines
J. PSLCs
Clarification: The banks are required to submit a request to FIDD, CO (fiddplan@rbi.org.in) to obtain registration for PSLC trading by submitting a) DEA Fund Code b) Customer identification number and c) RBI Current account number.
Clarification: All PSLCs will be valid till end of FY i.e. March 31st and will expire on next day i.e. April 1st.
Clarification: The duration of the PSLCs will depend on the date of issue with all PSLCs being valid till end of FY i.e. March 31st and expiring on next day i.e. April 1st.