FAQ Page 1 - आरबीआय - Reserve Bank of India
All you wanted to know about NBFCs
B. Entities Regulated by RBI and applicable regulations
Foreign Investment in India
FAQs on Non-Banking Financial Companies
Ceiling on deposits
Annual Return on Foreign Liabilities and Assets (FLA) under FEMA 1999
Eligible entities and requirements to submit the FLA return
Ans: No, balance sheet or profit and loss (P&L) accounts are not required to be submitted along with the FLA return.
External Commercial Borrowings (ECB) and Trade Credits
F. LEVERAGE CRITERIA AND BORROWING LIMIT
Government Securities Market in India – A Primer
Primary Market
16.1 Once the allotment process in the primary auction is finalized, the successful participants are advised of the consideration amounts that they need to pay to the Government on settlement day. The settlement cycle for auctions of all kind of G-Secs i.e. dated securities, T-Bills, CMBs or SDLs, is T+1, i.e. funds and securities are settled on next working day from the conclusion of the trade. On the settlement date, the fund accounts of the participants are debited by their respective consideration amounts and their securities accounts (SGL accounts) are credited with the amount of securities allotted to them.
Secondary Market
16.2 The transactions relating to G-Secs are settled through the member’s securities / current accounts maintained with the RBI. The securities and funds are settled on a net basis i.e. Delivery versus Payment System-III (DvP-III). CCIL guarantees settlement of trades on the settlement date by becoming a central counter-party (CCP) to every trade through the process of novation, i.e., it becomes seller to the buyer and buyer to the seller. 16.3 All outright secondary market transactions in G-Secs are settled on a T+1 basis. However, in case of repo transactions in G-Secs, the market participants have the choice of settling the first leg on either T+0 basis or T+1 basis as per their requirement. RBI vide FMRD.DIRD.05/14.03.007/2017-18 dated November 16, 2017 had permitted FPIs to settle OTC secondary market transactions in Government Securities either on T+1 or on T+2 basis and in such cases, It may be ensured that all trades are reported on the trade date itself.
Business restrictions imposed on Paytm Payments Bank Limited vide Press Releases dated January 31 and February 16, 2024
FASTag issued by Paytm Payments Bank
Coordinated Portfolio Investment Survey – India
Some important definitions and concepts
Ans: Equity consists of all instruments and records that acknowledge claims on the residual value of a corporation or quasi-corporation, after the claims of all creditors have been met. Equity may be split into listed shares, unlisted shares, and other equity. Both listed and unlisted shares are equity securities. Equity securities are commonly called shares or stocks. Other equity is equity that is not in the form of securities.
Domestic Deposits
II. Deposits of Non-Residents Indians (NRIs)
Biennial survey on Foreign Collaboration in Indian Industry (FCS)
Some other important points to be noted
Ans.: Please read the definitions of foreign subsidiary, foreign associate, Pure Technical Collaboration and accordingly select the type of reporting company. Further, if you have chosen “Others” in identification of reporting company, please specify.
Core Investment Companies
Core Investment Companies (CICs)
Ans: CICs having asset size of below Rs 100 crore are exempted from registration and regulation from the Reserve Bank, except if they wish to make overseas investments in the financial sector.
Retail Direct Scheme
Know Your Customer (KYC) related queries
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Upload a scanned copy of your PAN card.
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Download the XML version of your Aadhaar from the UIDAI website and upload it. Use the 4-digit pin specified while downloading XML version.
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Provide address details, scanned copy of your signature, bank account details and nominee details.
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Complete the video KYC by choosing a time slot for later or immediately, depending on the availability at that point of time.
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Authenticate the user agreement form by Aadhaar using the OTP sent on your mobile number linked to Aadhaar.
Targeted Long Term Repo Operations (TLTROs)
FAQs pertaining to On Tap TLTRO/ reversal of TLTRO/ TLTRO 2.0 transactions
Ans: Banks can use either of the alternatives. However, the request of the bank will be subject to availability of funds as on date of application i.e., funds cannot be guaranteed in case the total amount of ₹1,00,000 crore is already availed.
Housing Loans
- At the time of sourcing the loan, banks are required to provide information about the interest rate applicable, the fees / charges and any other matter which affects your interest and the same are usually furnished in the product brochure of the banks. Complete transparency is mandatory.
- The banks will supply you authenticated copies of all the loan documents executed by you at their cost along with a copy each of all enclosures quoted in the loan document on request.
A bank cannot reject your loan application without furnishing valid reason(s) for the same.
Indian Currency
B) Banknotes
With a view to enhancing operational efficiency and cost effectiveness in banknote printing, non-sequential numbering was introduced in 2011 consistent with international best practices. Packets of banknotes with non-sequential numbering contain 100 notes which are not sequentially numbered.
Core Investment Companies
Core Investment Companies (CICs)
Ans: CICs are prohibited from contributing capital to any partnership firm or to be partners in partnership firms including Limited Liability Partnerships (LLPs) or any association of person similar in nature to partnership firms.
All you wanted to know about NBFCs
B. Entities Regulated by RBI and applicable regulations
The Bank has issued detailed directions on prudential norms, vide Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, Non-Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 and Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015. Applicable regulations vary based on the deposit acceptance or systemic importance of the NBFC.
The directions inter alia, prescribe guidelines on income recognition, asset classification and provisioning requirements applicable to NBFCs, exposure norms, disclosures in the balance sheet, requirement of capital adequacy, restrictions on investments in land and building and unquoted shares, loan to value (LTV) ratio for NBFCs predominantly engaged in business of lending against gold jewellery, besides others. Deposit accepting NBFCs have also to comply with the statutory liquidity requirements. Details of the prudential regulations applicable to NBFCs holding deposits and those not holding deposits is available in the section ‘Regulation – Non-Banking – Notifications - Master Circulars’ in the RBI website.
Foreign Investment in India
FAQs on Non-Banking Financial Companies
Inter-corporate deposits (ICDs)
Domestic Deposits
II. Deposits of Non-Residents Indians (NRIs)
External Commercial Borrowings (ECB) and Trade Credits
F. LEVERAGE CRITERIA AND BORROWING LIMIT
Government Securities Market in India – A Primer
Coordinated Portfolio Investment Survey – India
Some important definitions and concepts
Ans: The following are included under equity securities:
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Ordinary shares.
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Stocks.
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Participating preference shares.
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Shares/units in mutual funds and investment trusts
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Depository receipts (e.g., American Depository Receipts) denoting ownership of equity securities issued by non-residents.
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Securities sold under repos or “lent” under securities lending arrangements.
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Securities acquired under reverse repos or securities borrowing arrangements and subsequently sold to a third party should be reported as a negative holding.
Business restrictions imposed on Paytm Payments Bank Limited vide Press Releases dated January 31 and February 16, 2024
FASTag issued by Paytm Payments Bank
Annual Return on Foreign Liabilities and Assets (FLA) under FEMA 1999
Procedure for submission of the FLA return
Ans: Entities can submit the FLA return through the online web-based portal Foreign Liabilities and Assets Information Reporting (FLAIR) system, having address https://flair.rbi.org.in/fla/faces/pages/login.xhtml.
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To access the URL https://flair.rbi.org.in/fla/faces/pages/login.xhtml, any of the browsers viz, Internet Explorer, Google chrome, Firefox etc. can be used, as all of these would support this application.
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The entity has to register on the portal by clicking Registration for New Entity Users.
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The entity has to fill the details in the FLA user registration form, upload the documents mentioned (Verification Letter and Authority Letter) and click submit to complete the registration.
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After successful registration, user id and default password will be sent to the authorized person’s mail id. Using this user id and password, entities can login to the FLAIR portal and file the FLA Return.
- Please note: The excel-based format and email-based reporting system has been replaced by the web-based format for submission of annual FLA return from June 2019.
Biennial survey on Foreign Collaboration in Indian Industry (FCS)
Some other important points to be noted
Ans.: In the FCS form, industry codes are given as per the National Industrial Classification (NIC) (2 digit) codes. Please specify, if you have chosen “Other” industry codes, like Other manufacturing, Other services activities.
Retail Direct Scheme
Know Your Customer (KYC) related queries
Targeted Long Term Repo Operations (TLTROs)
FAQs pertaining to On Tap TLTRO/ reversal of TLTRO/ TLTRO 2.0 transactions
Ans: There is no restriction with respect to primary/ secondary market investments in specified securities under the on Tap TLTRO scheme.
Housing Loans
If you have a complaint against only scheduled bank on any of the above grounds, you can lodge a complaint with the bank concerned in writing in a specific complaint register provided at the branches as per the recommendation of the Goiporia Committee or on a sheet of paper. Ask for a receipt of your complaint. The details of the official receiving your complaint may be specifically sought. If the bank fails to respond within 30 days, you can lodge a complaint with the Banking Ombudsman. (Please note that complaints pending in any other judicial forum will not be entertained by the Banking Ombudsman). No fee is levied by the office of the Banking Ombudsman for resolving the customer’s complaint. A unique complaint identification number will be given to you for tracking purpose. (A list of the Banking Ombudsmen along with their contact details is provided on the RBI website).
Complaints are to be addressed to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located. Complaints can be lodged simply by writing on a plain paper or online at www.bankingombudsman.rbi.org.in or by sending an email to the Banking Ombudsman. Complaint forms are available at all bank branches also.
Complaint can also be lodged by your authorised representative (other than a lawyer) or by a consumer association / forum acting on your behalf.
If you are not happy with the decision of the Banking Ombudsman, you can appeal to the Appellate Authority in the Reserve Bank of India.
Indian Currency
B) Banknotes
Fresh banknotes issued by Reserve Bank of India till August 2006 were serially numbered. Each of these banknote bears a distinctive serial number along with a prefix consisting of numerals and letter/s. The banknotes are issued in packets containing 100 pieces.
The Bank adopted the "STAR series" numbering system for replacement of defectively printed banknote in a packet of 100 pieces of serially numbered banknotes. The Star series banknotes are exactly similar to the other banknotes, but have an additional character viz., a *(star) in the number panel in the space between the prefix.
Core Investment Companies
Core Investment Companies (CICs)
Ans: The term used in the CIC circulars is block sale and not block deal which has been defined by SEBI. In the context of the circular, a block sale would be a long term or strategic sale made for purposes of disinvestment or investment and not for short term trading. Unlike a block deal, there is no minimum number/value defined for the purpose.
All you wanted to know about NBFCs
B. Entities Regulated by RBI and applicable regulations
Foreign Investment in India
Answer: Please refer to regulation 11 of FEMA 20(R).
Particulars | Listed Company | Un-Listed Company |
Issue by an Indian company or transferred from a resident to non-resident - Price should not be less than | The price worked out in accordance with the relevant SEBI guidelines | The fair value worked out as per any internationally accepted pricing methodology for valuation on an arm’s length basis, duly certified by a Chartered Accountant or a SEBI registered Merchant Banker or a practicing Cost Accountant. |
Transfer from a non-resident to resident - Price should not be more than | The price worked out in accordance with the relevant SEBI guidelines | The fair value as per any internationally accepted pricing methodology for valuation on an arm’s length basis, duly certified by a Chartered Accountant or a SEBI registered Merchant Banker. |
The pricing guidelines shall not be applicable for investment by a person resident outside India on non-repatriation basis.
FAQs on Non-Banking Financial Companies
Inter-corporate deposits (ICDs)
Domestic Deposits
II. Deposits of Non-Residents Indians (NRIs)
Annual Return on Foreign Liabilities and Assets (FLA) under FEMA 1999
Procedure for submission of the FLA return
Ans: You will receive the system-generated acknowledgement of FLA data submitted by you at the time of final submission itself. No separate mail will be sent in this regard.
External Commercial Borrowings (ECB) and Trade Credits
F. LEVERAGE CRITERIA AND BORROWING LIMIT
Coordinated Portfolio Investment Survey – India
Some important definitions and concepts
Ans: The following are not included under equity securities:
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Equity securities issued by a nonresident enterprise that is related to the resident owner of those securities should be excluded from this survey.
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Non-participating preference shares.
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Securities acquired under reverse repos.
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Securities acquired under borrowing arrangements.
Business restrictions imposed on Paytm Payments Bank Limited vide Press Releases dated January 31 and February 16, 2024
National Common Mobility Card (NCMC) issued by Paytm Payments Bank
Biennial survey on Foreign Collaboration in Indian Industry (FCS)
Some other important points to be noted
Ans.: Yes, it is mandatory. Here the person authorised to fill the form owns the responsibility of information furnished and declares its accuracy including CIN number. It is a final check for all the details which are filled-up in the survey schedule of FCS survey.
Government Securities Market in India – A Primer
Delivery versus Payment (DvP) is the mode of settlement of securities wherein the transfer of securities and funds happen simultaneously. This ensures that unless the funds are paid, the securities are not delivered and vice versa. DvP settlement eliminates the settlement risk in transactions. There are three types of DvP settlements, viz., DvP I, II and III which are explained below:
Delivery versus Payment (DvP) is the mode of settlement of securities wherein the transfer of securities and funds happen simultaneously. This ensures that unless the funds are paid, the securities are not delivered and vice versa. DvP settlement eliminates the settlement risk in transactions. There are three types of DvP settlements, viz., DvP I, II and III which are explained below:
i. DvP I – The securities and funds legs of the transactions are settled on a gross basis, that is, the settlements occur transaction by transaction without netting the payables and receivables of the participant.
ii. DvP II – In this method, the securities are settled on gross basis whereas the funds are settled on a net basis, that is, the funds payable and receivable of all transactions of a party are netted to arrive at the final payable or receivable position which is settled.
iii. DvP III – In this method, both the securities and the funds legs are settled on a net basis and only the final net position of all transactions undertaken by a participant is settled.
Liquidity requirement in a gross mode is higher than that of a net mode since the payables and receivables are set off against each other in the net mode.
Retail Direct Scheme
Know Your Customer (KYC) related queries
Housing Loans
REVERSE MORTGAGE LOAN
The scheme of reverse mortgage has been introduced recently for the benefit of senior citizens owning a house but having inadequate income to meet their needs. Some important features of reverse mortgage are:
- A homeowner who is above 60 years of age is eligible for reverse mortgage loan. It allows him to turn the equity in his home into one lump sum or periodic payments mutually agreed by the borrower and the banker.
- The property should be clear from encumbrances and should have clear title of the borrower.
- NO REPAYMENT is required as long as the borrower lives, Borrower should pay all taxes relating to the house and maintain the property as his primary residence.
- The amount of loan is based on several factors: borrower’s age, value of the property, current interest rates and the specific plan chosen. Generally speaking, the higher the age, higher the value of the home, the more money is available.
- The valuation of the residential property is done at periodic intervals and it shall be clearly specified to the borrowers upfront. The banks shall have the option to revise the periodic / lump sum amount at such frequency or intervals based on revaluation of property.
- Married couples will be eligible as joint borrowers for financial assistance. In such a case, the age criteria for the couple would be at the discretion of the lending institution, subject to at least one of them being above 60 years of age.
- The loan shall become due and payable only when the last surviving borrower dies or would like to sell the home, or permanently moves out.
- On death of the home owner, the legal heirs have the choice of keeping or selling the house. If they decide to sell the house, the proceeds of the sale would be used to repay the mortgage, with the remainder going to the heirs.
- As per the scheme formulated by National Housing Bank (NHB), the maximum period of the loan period is 15 years. The residual life of the property should be at least 20 years. Where the borrower lives longer than 15 years, periodic payments will not be made by lender. However, the borrower can continue to occupy.
- From FY 2008-09, the lump sum amount or periodic payments received on reverse mortgage loan will not attract income tax or capital gains tax.
Note- Reverse mortgage is a fixed interest discounted product in reverse. It does not take into account the changes in interest rates as yet.
Important – This part is fine printed to help you practice reading the fine print. The loan agreement documentation runs into nearly 50 pages and its language is complex. If you thought everyone signs the same agreements with the bank, where is the need to read? You are not taking an informed decision. If you thought somebody would have pointed this to me if there was any problem, then maybe they did but you could not read or listen to it. Think again! Borrowers' and lenders' rights may not be expressed clearly in a transparent manner in all the loan agreements. The home loan agreement may not be provided to you in advance so that this could be read and understood before you sign the agreement. Every method may be used to delay handing over a copy to the borrower in sufficient time. Some areas you may focus are a) check the “reset clause” incorporated by some banks in their home loan agreements that allows them to change the interest rate in the future, even on fixed rate loans. Banks may set their reset clauses for 3 or 2 year intervals. They say a lender cannot have an agreement that a fixed rate is set for the entire tenure of 15 to 20 years as this will cause an asset-liability mismatch. Talk to your bank. b) Please seek clarifications on the term “exceptional circumstances” (if stated in the loan agreement) under which loan rates can be unilaterally changed by your bank. c) A common person thinks that default ideally means non-payment of one or more loan installments. In some loan documentation it can include divorce and death (in individual case) and even involvement in civil litigation or criminal offence. d) Does the loan agreement say that disbursement of the loan may be made directly to the builder or developer and in the case of a ready-built property to the vendor thereof and/or in such other manner as may be decided solely by bank? It is the borrower whose original property papers are retained with the bank, so why disburse to the builder. Possession of property has been delayed in some cases when the cheque was issued in the name of the builder and the builder refused to pay delay penalty to the borrower e) Does the agreement enable assignment of your loan to a third party? You take into account reputation and credibility of the bank before entering into a loan agreement with it. Are you comfortable with third party takes over or should you also be allowed to move your home loan from one bank to another in that case? Look for ambiguous clauses and discuss with the banker. Some agreements say changes in employment etc. have to be informed well in advance without quantifying the term “well in advance”. f) In one case the loan documentation says “issuance of pre-approval letter should not be construed as a commitment by the bank to grant the housing loan and processing fees is not re-fundable even if the home loan is not processed”. This is never ending it seems. The above are only indicative instances of what has been observed / reported/ indicated by various sources. However, our main objective was to get you into the habit of reading the fine print. If you have read this, you would have understood the importance of reading fine print in any document and we have achieved our objective. I only wish I could have made the print smaller as in the real cases.
Indian Currency
B) Banknotes
In terms of Section 25 of the RBI Act, the design, form and material of bank notes shall be such as may be approved by the Central Government after consideration of the recommendations made by Central Board.
Core Investment Companies
Core Investment Companies (CICs)
Ans: No, CICs/ CICs-ND-SI cannot accept deposits. That is one of the eligibility criteria.
All you wanted to know about NBFCs
B. Entities Regulated by RBI and applicable regulations
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NBS-1 Quarterly Returns on deposits in First Schedule.
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NBS-2 Quarterly return on Prudential Norms is required to be submitted by NBFC accepting public deposits.
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NBS-3 Quarterly return on Liquid Assets by deposit taking NBFC.
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NBS-4 Annual return of critical parameters by a rejected company holding public deposits. (NBS-5 stands withdrawn as submission of NBS 1 has been made quarterly.)
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NBS-6 Monthly return on exposure to capital market by deposit taking NBFC with total assets of ₹ 100 crore and above.
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Half-yearly ALM return by NBFC holding public deposits of more than ₹ 20 crore or asset size of more than ₹ 100 crore
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Audited Balance sheet and Auditor’s Report by NBFC accepting public deposits.
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Branch Info Return.
B. Returns to be submitted by NBFCs-ND-SI
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NBS-7 A Quarterly statement of capital funds, risk weighted assets, risk asset ratio etc., for NBFC-ND-SI.
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Monthly Return on Important Financial Parameters of NBFCs-ND-SI.
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ALM returns:
(i) Statement of short term dynamic liquidity in format ALM [NBS-ALM1] -Monthly,
(ii) Statement of structural liquidity in format ALM [NBS-ALM2] Half yearly,
(iii) Statement of Interest Rate Sensitivity in format ALM -[NBS-ALM3], Half yearly -
Branch Info return
C. Quarterly return on important financial parameters of non deposit taking NBFCs having assets of more than ₹ 50 crore and above but less than ₹ 100 crore
Basic information like name of the company, address, NOF, profit / loss during the last three years has to be submitted quarterly by non-deposit taking NBFCs with asset size between ₹ 50 crore and ₹ 100 crore.
There are other generic reports to be submitted by all NBFCs as elaborated in Master Circular on Returns to be submitted by NBFCs as available on www.rbi.org.in → Notifications → Master Circulars → Non-banking and Circular DNBS (IT) CC.No.02/24.01.191/2015-16 dated July 9, 2015 as available on www.rbi.org.in → Notifications.
Foreign Investment in India
FAQs on Non-Banking Financial Companies
Inter-corporate deposits (ICDs)
Annual Return on Foreign Liabilities and Assets (FLA) under FEMA 1999
Procedure for submission of the FLA return
Ans: An AIF needs to register on the FLAIR portal. Since there is no provision for online filing of FLA return for AIF in the prescribed format as of now, they need to send a mail requesting for the latest format for filing of FLA Return for AIF after completing registration process on the portal. Thereafter FLA Team will send the excel based format for filling FLA return by AIF via mail to them. They need to fill the excel format and send us the same on email. Email based acknowledgement form will be sent to them by FLA Team on receiving the filled-in FLA form.