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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.

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.