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Government Securities Market in India – A Primer

Annex 5 +

Specimen of Deal slip

Domestic Deposits

III. Advances

37. What rate of interest is chargeable on loans/ advances granted to Staff Members of the banks or Staff Members of Co-operative Credit Societies? +

The interest rate directives on advances granted by banks will not be applicable to loans or advances or other financial accommodation made or provided or renewed by a scheduled bank, inter alia, to its own employees. Where the advances are provided by the bank to co-operative credit societies formed by the bank’s staff members for lending to constituents (i.e. staff of the bank), the interest rate directives of the RBI will not apply in such advances.

Retail Direct Scheme

Investment and Account holdings related queries

37. Is markup a fee charged for investing through the Retail Direct portal? +

No. Markup is not a fee charged by RBI. It is refundable depending upon the price at which the bids are allotted in the auction.

Indian Currency

D) Soiled and Mutilated Banknotes

7. Have guidelines been issued to deposit/exchange mutilated/soiled banknotes of new notes issued under Mahatma Gandhi (New) Series? +

Guidelines for the exchange of mutilated/torn notes are available in our Master Circular on “Facility for Exchange of Notes & Coins” DCM(NE) No.G-2/08.07.18/2019-20 dated July 01, 2019 which is available on our website www.rbi.org.in under Notifications>Master Circulars>Issuer of Currency. Mutilated notes can be exchanged at all bank branches in terms of RBI (Note Refund) Amendment Rules, 2018.

Foreign Investment in India

III. Investment in other securities

Q.38: Where can a Foreign Venture Capital Investor (FVCI) invest ? +

Answer: A SEBI registered Foreign Venture Capital Investor may make investment in terms of schedule 7 of FEMA 20(R) as per the conditions prescribed therein.

FAQs on Non-Banking Financial Companies

Liquid Asset requirement

38. Whether a part of the liquid assets can be held in the form of investments in bonds of and deposits with the scheduled commercial banks ? +

No. An NBFC is required to invest in approved securities a part of the deposits, for compliance with the provisions of section 45IB of the RBI Act. The term `approved securities has been defined in the RBI Act itself which means the Government securities and Government guaranteed bonds. Hence it is not permissible for the NBFCs to maintain a part of the securities in the form of investments in bonds of and deposits with banks.

Government Securities Market in India – A Primer

Annex 6 +

Important Excel functions for bond related calculations

Core Investment Companies

Core Investment Companies (CICs)

38. There is an apparent anomaly in the definition of ‘public funds’ as the moment public deposits is included in the definition of ‘public funds’ and CICs will be deemed to have raised public deposits and will therefore become an NBFC subject to exposure norms? +

Ans: Even though public funds include public deposits in the general course, it may be noted that CICs cannot accept public deposits. It may further be reiterated that no NBFC can accept public deposits without specific permission of the Bank even if it holds a CoR from the Bank.

Retail Direct Scheme

Investment and Account holdings related queries

38. Why do I have to pay a markup during my primary auction bid? +

In the non-competitive segment of primary auctions, the price at which the securities are allotted is the weighted average price of the successful competitive bids in the auction. Since this weighted average price can be calculated only after the auction is over, the price of the security through the non-competitive segment is unknown during the time of bidding. To cover for this uncertainty, a markup is applied in case the weighted average price comes out to be higher.