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Indian Currency

D) Soiled, Mutilated and Imperfect Banknotes

4. Can soiled, mutilated and imperfect banknotes be exchanged for value?

Yes. Such banknotes can be exchanged for value.

Foreign Investment in India

Q.33: Whether Pricing Guidelines apply for Indian company buying back shares in a scheme of merger/ de-merger/ amalgamation of Indian companies approved by NCLT/ competent authority for Buyback of shares/ Reduction of Capital by an Indian company ? +

Answer: Yes. Also, FC-TRS is required to be filed by the Indian company.

Retail Direct Scheme

Investment and Account holdings related queries

33. What is the process for bidding in primary auctions through the Retail Direct platform? +

After logging into the Primary Market Retail Direct platform, select the ‘Primary Market’ option beside the Dashboard, at the top of the page.
Select a security to bid from the ‘Auction Watch’ and enter the bid amount in the ‘Bid Entry’ window.
Individuals can fund their bid either at the time of bidding or at a later time, but before the closure of bidding/subscription window. Bids which are not funded as on the date of submission of bids to RBI will be cancelled.
For making payment for the bids, retail clients can use services like UPI (Transfer or Block) and Net Banking to transfer funds to a designated current account using Payment Gateways linked to the Online Portal.
Based on the allotment advice received as a part of the auction result, the allotments will be made to the individual investors.
In case of full allotment, each bidder will be allocated the entire Face Value for which bids were submitted. In case of partial allotment, a pro-rata allotment will be made to the bidder based on the partial allocation percentage determined in the auction.

For further details on the biding process, you may refer to the User Manual in the Help section of the Retail Direct Portal.

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

Some Useful Definitions

Q33. What is Direct Investment abroad by Indian companies? +

Ans: If the reporting Indian company invests in equity and/or participating preference shares of overseas company, under the Overseas Direct Investment Scheme in India, i.e. investment in Joint venture or wholly owned subsidiaries abroad, then it is considered as direct investment abroad of the Indian company.

NOTE: Registration guidelines and section-wise FAQs for further guidance to be file the FLA return are available in the FAQs section of the FLAIR portal (https://flair.rbi.org.in/fla/faces/pages/login.xhtml).

External Commercial Borrowings (ECB) and Trade Credits

I. HEDGING UNDER ECB FRAMEWORK

33. Can an entity raising INR ECB including issuance of Rupee denominated bonds overseas, assume foreign currency risk on account of liabilities arising out of such ECBs? +

Any entity raising INR ECB (including issuance of Rupee denominated bonds overseas) is not permitted to convert the liability arising out of such ECBs into a foreign currency liability in any manner or assume foreign currency risk in any manner by either entering into a derivative contract or otherwise.

FAQs on Non-Banking Financial Companies

Credit Rating

33. Rating Agencies use different symbols for their Investment Grade Rating. Is it possible for the common man to understand the strength of the company on the basis of these symbols ? +

Reserve Bank of India has specified the minimum level of investment grade Rating for eligibility for acceptance of deposits from public by Equipment Leasing/Hire Purchase Finance Companies. However, the Rating Agencies have been advised to bring about uniformity in their Rating Levels for the common man to understand the meaning of a particular Rating.

Government Securities Market in India – A Primer

Annex 1 +

Specimen of a G-Sec

Domestic Deposits

III. Advances

33. Whether banks are permitted to charge interest below their declared BPLR under consortium arrangement to offer rate comparable to leader bank? +

No. The banks need not charge a uniform rate of interest even under a consortium arrangement. Each member bank should charge rate of interest on the portion of the credit limits extended by them to the borrowers subject to their BPLR.

Indian Currency

D) Soiled, Mutilated and Imperfect Banknotes

5. Where are soiled/mutilated banknotes accepted for exchange?

All banks are authorized to accept and exchange soiled banknotes for full value. They shall extend the facility of exchange of soiled/mutilated notes to non-customers also.

All branches of commercial banks are authorised to adjudicate mutilated banknotes (which are legal tender) and pay value for these, in terms of the Reserve Bank of India (Note Refund) Rules, 2009 [as amended by Reserve Bank of India (Note Refund) Amendment Rules, 2018].

Small Finance Banks (up to two years from the commencement of their banking business) and Payment Banks may exchange mutilated and imperfect/defective notes at their option.

All you wanted to know about NBFCs

C. Residuary Non-Banking Companies (RNBCs)

33. What is the rate of interest that an RNBC must pay on deposits and what should be maturity period of deposits taken by them?

The minimum interest an RNBC should pay on deposits should be 5% (to be compounded annually) on the amount deposited in lump sum or at monthly or longer intervals; and 3.5% (to be compounded annually) on the amount deposited under daily deposit scheme. Interest here includes premium, bonus or any other advantage, that an RNBC promises to the depositor by way of return. An RNBC can accept deposits for a minimum period of 12 months and maximum period of 84 months from the date of receipt of such deposit. They cannot accept deposits repayable on demand.