Monetary and Credit Information Review
Volume IX MONETARY AND CREDIT INFORMATION REVIEW POLICY Interest Subvention extended to Housing Loans The Government of India has extended the scheme of 1 per cent interest subvention to housing loans up to Rs.15 lakh where the cost of the house does not exceed Rs.25 lakh. The scheme will remain in force up to March 31, 2013. The National Housing Bank (NHB) is the sole nodal agency for implementation of the scheme for scheduled commercial banks, regional rural banks and housing finance companies. Banks have been advised to implement the scheme vigorously, submit their claims to NHB expeditiously and extend the benefits of the scheme to all eligible borrowers/ beneficiaries. Banks have also been advised to give wide publicity to the scheme. The cash reserve ratio (CRR) required to be maintained by scheduled commercial banks has been reduced by 25 basis points from 4.75 per cent to 4.50 per cent of their net demand and time liabilities (NDTL) with effect from the fortnight beginning September 22, 2012. Bank Finance to Factoring Companies Banks can now extend financial assistance to support the factoring business of factoring companies provided - (a) The companies qualify as factoring companies and carry out their business under the provisions of the Factoring Regulation Act, 2011 and notifications issued by the Reserve Bank in this regard from time to time. (b) The companies derive at least 75 per cent of their income from factoring activity. (c) The receivables purchased/financed, irrespective of whether on ‘with recourse’ or ‘without recourse’ basis, form at least 75 per cent of the assets of the factoring company. (d) The assets/income referred to above would not include the assets/income relating to any bill discounting facility extended by the factoring company. (e) The financial assistance extended by the factoring companies is secured by hypothecation or assignment of receivables in their favour. With a view to improving banks’ ability to manage their non-performing assets (NPAs) and restructured accounts in an effective manner and considering that almost all branches of banks have been fully computerised, the Reserve Bank has advised banks to:
PAYMENT SYSTEM Issue of CTS 2010 Standard Cheques To ensure time-bound migration to CTS-2010 standard cheque formats, all banks have been advised to -
It may be recalled that in December 2011, banks providing cheque facility to their customers were advised to issue only ‘CTS-2010’ standard cheques in a time bound action plan not later than September 30, 2012. It is, however, observed that non- CTS-2010 standard cheque forms continue to be issued by many banks even in regions which form part of the northern (New Delhi) and southern (Chennai) CTS grids. Adherence to CTS-2010 standards has inherent advantages as the security features in cheque forms help the presenting banks to identify the genuineness of the drawee banks’ instruments while handling them in the image based scenario. The homogeneity in the security features act as deterrent against frauds, and the fixed field placement specifications facilitate straight-throughprocessing at drawee banks’ end through the use of optical/ image character recognition technology.
The Reserve Bank has clarified that non-bank entities seeking authorisation from the Reserve Bank for setting up white label ATMs, and wishing to infuse capital can do so provided, they submit a certificate from a chartered accountant that additional capital has been infused to satisfy the criterion of networth of Rs. 100 crore. The certificate should be submitted by the existing chartered accountant who has audited the entity’s last balance sheet or a chartered accountant who has conducted a limited review of the accounts of the last quarter/half-year. The Reserve Bank has been receiving queries from non bank entities, whether infusion of capital to satisfy the criteria of net worth of Rs 100 crore would be considered if the capital is infused after the entities’ balance sheet has been audited. FEMA The extant foreign direct investment (FDI) policy has been reviewed and it has been decided to permit FDI up to - (a) 100 per cent in single-brand product retail trading by only one non-resident entity, whether owner of the brand or otherwise, under the government route. (b) 51 per cent in multi-brand retail trading under the government route. (c) 49 per cent by foreign airlines in the capital of indian companies in civil aviation sector, operating scheduled and non-scheduled air transport, under the automatic/government route. (d) 49 per cent in power exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010, under the government route. FDI limits in companies engaged in providing broadcasting carriage services under the automatic/government route have been reviewed and the same would be subject to the terms and conditions as stipulated in Press Note No. 7 (2012 Series) dated September 20, 2012 issued by the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Government of India. Trade Credits for Import into India Companies in the infrastructure sector, where “infrastructure” is as defined under the extant guidelines on external commercial borrowings (ECBs), are now allowed to avail of trade credit up to a maximum period of five years for import of capital goods, as classified by the Directorate General of Foreign Trade (DGFT), subject to the following conditions : (i) the trade credit must be abinitio contracted for a period not less than fifteen months and should not be in the nature of short-term roll overs; and (ii) authorised dealer (AD) banks are not permitted to issue letters of credit/guarantees/letter of undertaking (LoU)/letter of comfort (LoC) in favour of overseas supplier, bank and financial institution for the extended period beyond three years. The all-in-cost ceilings of trade credit will be as below:
The all-in-cost ceilings include arranger fee, upfront fee, management fee, handling/processing charges, out of pocket and legal expenses, if any. Bridge Finance for Infrastructure Sector As per the extant guidelines, Indian companies in the infrastructure sector, have been allowed to import capital goods by availing of short term credit (including buyers’/suppliers’ credit) in the nature of ‘bridge finance’, under the approval route, subject to certain conditions. On a review, it has been decided to allow refinancing of such bridge finance (if in the nature of buyers’/suppliers’ credit) availed of, with an ECB under the automatic route, subject to the conditions that - (i) the buyers’/suppliers’ credit is refinanced through an ECB before the maximum permissible period of trade credit; (ii) the AD evidences the import of capital goods by verifying the bill of entry; (iii) the buyers’/suppliers’ credit availed of complies with the extant guidelines on trade credit and the goods imported conform to the DGFT policy on imports; and (iv) the proposed ECB complies with all the other extant guidelines relating to availment of ECB. Borrowers may approach the Reserve Bank under the approval route only at the time of availing of bridge finance which will be examined subject to conditions. The designated AD - Category I bank should monitor the end-use of funds. Banks in India will not be permitted to provide any form of guarantees for the ECB. All other conditions of ECB, such as, eligible borrower, recognised lender, all-in-cost, average maturity, end-use, maximum permissible ECB per financial year under the automatic route, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged and should be complied with. Rupee Loans/Rupee Capital Expenditure The maximum permissible limit of ECB that can be availed of by an individual company has been enhanced to 75 per cent of the average foreign exchange earnings realised during the immediate past three financial years or 50 per cent of the highest foreign exchange earnings realised in any of the immediate past three financial years, whichever is higher. In case of special purpose vehicles (SPVs), which have completed at least one year of existence from the date of incorporation and do not have sufficient track record/past performance for three financial years, the maximum permissible ECB that can be availed of would be limited to 50 per cent of the annual export earnings realised during the past financial year. The maximum ECB that can be availed by an individual company or group, as a whole, under this scheme would be restricted to USD 3 billion. Issue of IDRs - Limited Two Way Fungibilty It has now been decided to allow limited two way fungibility for indian depository receipts (IDRs) similar to the limited two way fungibility facility available for american depository receipts (ADRs)/global depository receipts (GDRs) subject to the following terms and conditions: (i) Conversion of IDRs into underlying equity shares would be governed by the conditions mentioned in A. P. (DIR Series) Circular No. 5 dated July 22, 2009. (ii) Fresh IDRs would continue to be issued in terms of the provisions of A.P. (DIR Series) Circular No. 5 dated July 22, 2009. (iii) Re-issuance of IDRs would be allowed only to the extent of IDRs that have been redeemed/converted into underlying shares and sold. (iv) There would be an overall cap of USD 5 billion for raising of capital by issuance of IDRs by eligible foreign companies in Indian markets. This cap would be akin to the caps imposed for foreign institutional investor (FII) investment in debt securities and would be monitored by the Securities and Exchange Board of India (SEBI). The issuance, redemption and fungibilityof IDRs would also be subject to SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended from time to time as well as other relevant guidelines issued in this regard by the Government, SEBI and the Reserve Bank from time to time. Foreign Investment by QFIs - Hedging Facilities Qualified foreign investors (QFIs) have been allowed to hedge their currency risk on account of their permissible investments (in equity and debt instruments). The details of such hedging facility are - Purpose
Operational Guidelines/Terms/Conditions (a) QFIs may hedge the currency risk on account of their permissible investments with the AD Category-I bank with whom they are maintaining the rupee account opened for the purpose of investment. (b) The eligibility for cover may be determined on the basis of the declaration of the QFI with periodic review undertaken by the AD Category I bank based on the investment value as provided/certified by QDP of the QFI at least at quarterly intervals, on the basis of market price movements, fresh inflows, amounts repatriated and other relevant parameters to ensure that the forward cover outstanding is supported by underlying exposures. (c) If a hedge becomes naked in part or in full owing to contraction of the market value of the portfolio, for reasons other than sale of securities, the hedge may be allowed to continue till the original maturity, if so desired. (d) The contracts, once cancelled cannot be rebooked. The forward contracts may, however, be rolled over on or before maturity. (e) The cost of hedge should be met out of repatriable funds and/ or inward remittance through normal banking channel. (f) All outward remittances incidental to the hedge are net of applicable taxes. (g) For IPO related transient capital flows -
Liaison/Branch/Project Office in India The Reserve Bank has clarified that permission to establish offices in India by foreign non-government organisations/non-profit organisations/foreign government bodies/departments, by whatever name called, are under the government route. Accordingly, such entities are required to apply to the Reserve Bank for prior permission to establish an office in India, whether project office or otherwise. Steps Taken to Increase Availability of Credit to Rural Areas The Government has taken several policy measures from time to time to increase the availability of institutional credit to farmers. These, inter-alia, include :
Source : Parliament Questions Edited and published by Alpana Killawala for the Reserve Bank of India, Department of Communication, Central Office, Shahid Bhagat Singh Marg, Mumbai - 400 001 and printed by her at Onlooker Press, 16, Sassoon Dock, Colaba, Mumbai - 400 005. |
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Issue 3 September 2012
ಈ ಪುಟವನ್ನು ಹಂಚಿಕೊಳ್ಳಿ:
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