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Foreign Exchange Facilities for Residents (As on June 30, 2004)

22. Is one required to follow complete export procedure when a gift parcel is sent outside India?

A person resident in India is free to send (export) any gift article of value not exceeding Rs. 1,00,000 provided export of that item is not prohibited under the extant EXIM Policy.

22. What are the securities that can be traded on NDS-OM Web Module? +

All central government securities, state government securities and treasury bills are tradable on the NDS-OM Web Module. The complete list of securities is available on the NDS-OM Web Module.

22. What are the advantages of ECS Debit Scheme to the banking system? +

The banking system has many benefits from ECS Debit such as – Freedom from paper handling and the resultant disadvantages of handling, receiving and monitoring paper instruments presented in clearing. Ease of processing and return for the destination bank branches. Destination bank branches can debit the customers’ accounts after matching the account number of the customer in their database and due verification of existence of valid mandate and its particulars. With core banking systems in place and straight-through-processing, this process can be completed with minimal manual intervention. Smooth process of reconciliation for the sponsor banks. Cost effective.

22. While coming into India how much foreign exchange can be brought in? +

A person coming into India from abroad can bring with him foreign exchange without any limit. However, if the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in exceeds USD 10,000/- or its equivalent and/or the value of foreign currency exceeds USD 5,000/- or its equivalent, it should be declared to the Customs Authorities at the Airport in the Currency Declaration Form (CDF), on arrival in India.

22. What is the position of Papua New Guinea Paper Banknotes? +

As per the Public Notice (https://www.bankpng.gov.pg/wp-content/uploads/2014/08/Full-page_-potrait_Paper-Bank-Notes2.pdf) issued by Bank of Papua New Guinea on their website www.bankpng.gov.pg Papua New Guinea paper banknotes ceased to be legal tender on June 30, 2012 and only polymer banknotes are legal tender in Papua New Guinea. Further, Bank of Papua New Guinea has also shared the following range of serial numbers of banknotes which were never issued (and were sold to a recycler in Europe) and are therefore, not legal tender in Papua New Guinea:

Denomination	Prefix	Serial Number
Denomination	Prefix	Low	High
K2	ABJ - AJS	000001	003000
K10	AC - AY	030000	031000
K10	NBP- NES	160000	173000
K20	BPNG	0000001	3000000
K50	HTT - HUU	080000	090000
K100	BPNG	0000001	6000000

(Published on receipt of request from Bank of Papua New Guinea)

22. What will be position in respect of price based auctions ? +

The non competitive bidders will pay the weighted average price which will emerge in the auction.For example, on December 5, 2001 RBI held a price based auction of an existing security 10.71% GOI 2016 maturing on 19 April, 2016. The cut off price emerged in the auction was Rs. 121.92. The weighted average price was Rs. 121.99. Thus the non competitive bidders will pay the weighted average price of Rs. 121.99. In addition, they have to pay accrued interest as indicated below.

22. Auction of IIBs would be yield based or price based? +

As is the case with fixed rate conventional bonds, IIBs would be issued through yield based auction and subsequent reissues will be through price based auction.
Investors would be required to bid for real yield in case of IIBs as against nominal yield in case of fixed rate G-Sec.

22. Whether interest rate stipulations applicable to loans in rupees under FCNR(B) scheme are applicable to loans denominated in foreign currency ? +

No. Interest rate stipulations applicable to loans in rupees under FCNR(B) scheme are not applicable to loans denominated in foreign currency which are governed by the instructions issued by Exchange Control Department.

Q.22 What is the concept of net worth ? +

Net worth means paid-up capital and free-reserves of the Indian company.

22. How do I contact RBI to address my queries on PMGKDS? +

Queries about the scheme shall be forwarded to e-mail.

22. Query If a customer opens a BSBDA but does not close his existing Savings Bank Account within 30 days, are banks then free to close such savings bank accounts? +

Response

While opening the BSBDA customers’ consent in writing be obtained that his existing non-BSBDA Savings Banks accounts will be closed after 30 days of opening BSBDA and banks are free to close such accounts after 30 days.

22. Whether TDS will be applicable? +

Existing taxation applicable to Government of India securities will be applicable to these securities.
Sub-section (iv) of the Section 193 of the Income Tax Act, 1961 stipulates that no tax shall be deducted from any interest payable on any security of the Central Government or a State Government, provided that nothing contained in this clause shall apply to the interest exceeding rupees ten thousand payable on 8% Savings (Taxable) Bonds, 2003 during the financial year.
As per the above Section, TDS shall not be deducted from any interest payable on IINSS-C, until and unless notified by the Government of India otherwise.

Q.22. Whether a branch office (BO) or project office (PO) can send outward remittances, permissible under FEMA, through any AD Category I bank or it has to be through the designated AD Category I bank only? +

Ans. Wherever the BO or PO is required to remit funds outside India, within the applicable guidelines under FEMA, they may do so not necessarily through the designated AD Category I bank but through any AD Category I bank of its choice subject to obtaining no objection certificate (NOC) from the designated AD Category I bank. The remittances have to be for transactions settling on Cash / Tom / Spot basis only. The remittance has to be through banking channel in either of the two methods:

(1) The designated AD category I bank will transfer equivalent INR amount to the transaction handling bank. The transaction handling bank can remit the amount to the overseas parent office of BO / PO through SWIFT. However, the transaction handling bank will have to ensure KYC compliance and the necessary documentation. It will also be required to share the SWIFT message along with the details like UIN No, beneficiary and remittance details with the designated AD category I bank.

(2) The designated AD category I bank will transfer equivalent INR amount to the transaction handling bank. The transaction handling bank will then credit the NOSTRO account of the designated AD Category I bank which in turn will remit the amount to the final beneficiary.

22. Can a Government securities holder choose to nominate and donate the proceeds of investment to institutions, trusts, etc.? +

Yes. One can donate the proceeds of his/her investments in Government securities to institution/trust by naming such institution/trust as their nominee subject to the condition that such institution/trust shall be eligible to invest in the particular loan as per the specific Government Loan Notification.

Q.22. Paragraph 2 (C) (iv) provides that the general principle is that no financial services entity held by the NOFHC would be allowed to engage in any activity that a bank is permitted to undertake departmentally. In the event a Promoter Group has more than one legal entity that undertakes business activities that can be departmentally undertaken by the bank, we request a clarification in relation to what is the quantum of time that will be afforded to fold these activities into the bank post commencement of business by the bank? +

At the time of making applications, the Promoters/Promoter Group will have to furnish a road map and methodologies they would adopt to comply with all the requirements of the corporate structure indicated in para 2 (C)(ii) and (iii) of the guidelines and realign the business between the entities to be held under the NOFHC [para 2(C)(iv) of the guidelines] within a period of 18 months. After the ‘in-principle approval’ is accorded by RBI for setting up of the bank, the actual setting up of NOFHC and the bank, re-organization of the Promoter Group entities to bring the regulated financial services entities under the NOFHC as well as realignment of business among the entities under the NOFHC have to be completed within a period of 18 months from the date of in-principle approval or before commencement of banking business, whichever is earlier.

Q 22. Clarification on remittance by sole proprietor under LRS. +

Ans. In a sole proprietorship business, there is no legal distinction between the individual / owner and as such the owner of the business can remit USD up to the permissible limit under LRS. If a sole proprietorship firm intends to remit the money under LRS by debiting its current account then the eligibility of the proprietor in his individual capacity has to be reckoned. Hence, if an individual in his own capacity remits USD 250,000 in a financial year under LRS, he cannot remit another USD 250,000 in the capacity of owner of the sole proprietorship business as there is no legal distinction.

22. How will I get the redemption amount? +

Both interest and redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond.

22. Post-implementation of the resolution plan, will the required provisioning change with the change in the outstanding balance of residual debt, which may arise in case of any non-fund based facility getting devolved subsequently into fund-based facility?

The lending institutions shall make provisions on the residual debt at the time of implementation of the Resolution Plan, as stipulated in the relevant Resolution Framework. If any non-fund based facility gets devolved subsequently, the devolved amount shall be reckoned as residual debt⁴ and shall attract provisions as per Paragraph 40⁵ and 41⁶ of RF 1.0, and consequently, the assessment of monitoring period should be updated accordingly. The entire provisions (including the provisions on the devolved amount) shall be held, until the same is reversed in terms of the provisions contained in the relevant Resolution Framework.

¹ Para 19. Lenders to the borrower which are other than the lending institutions as per this circular may also sign the ICA, if they so desire. If such lenders sign the ICA, they shall be fully bound by the stipulations of the ICA

² As defined in the Prudential Framework dated June 07, 2019.

³ Para 45. In case of resolution of other exposures, the provisions maintained by the ICA signatories may be reversed as prescribed in Para 44. However, in respect of the non-ICA signatories while half of the provisions may be reversed upon repayment of 20 percent of the carrying debt, the other half may be reversed upon repayment of another 10 per cent of the carrying debt, subject to the required IRAC provisions being maintained.

⁴ As at the time of implementation of the Resolution Plan

⁵ In other cases where a resolution plan is implemented under this facility, the lending institutions, which had signed the ICA within 30 days of invocation, shall keep provisions from the date of implementation, which are higher of the provisions held as per the extant IRAC norms immediately before implementation, or 10 percent of the total debt, including the debt securities issued in terms of para 30, held by the ICA signatories post-implementation of the plan (residual debt).

⁶ However, lending institutions which did not sign the ICA within 30 days of invocation shall, immediately upon the expiry of 30 days, keep provisions of 20 per cent of the debt on their books as on this date (carrying debt), or the provisions required as per extant IRAC norms, whichever is higher. Even in cases where the invocation lapses on account of the thresholds for ICA signing not being met, in terms of para 18, such lending institutions which had earlier agreed for invocation but did not sign the ICA shall also be required to hold 20 percent provisions on their carrying debt.

22. If the company is providing service to subsidiary/associates abroad, but subsidiary is not providing any services to India. Where does it report this in ITES survey schedule? +

Ans.: Since the company has a subsidiary, so it has to fill the Part-D of the form that pertains to the information on subsidiaries abroad. If, during the year, subsidiary of the company has not made any sale of Computer Software and ITES then accordingly the amount would be 0 (zero) in Part-D.

22. Whom should I approach for raising dispute/complaint related to NEFT transaction?

Ans: You may approach grievance redressal cell of your bank with details of the disputed transaction. In case your grievance is not resolved within 30 days, you may make a complaint under “The Reserve Bank-Integrated Ombudsman Scheme (RB-IOS 2021)”. The RB-IOS 2021 provides a single reference point for customers to file complaints against the RBI regulated entities specified therein. The RB-IOS, 2021 is available at the following path on the RBI website: /documents/87730/39016390/RBIOS2021_121121.pdf.