No, the definition of “companies in the group” is only for the purpose of determining the applicability of prudential norms on multiple NBFCs in a group.

Central banks the world over change the design of their banknotes and introduce new security features primarily to make counterfeiting difficult and to stay ahead of counterfeiters. India also follows the same policy.

Ans: The period of 10 years was specified as a prudential measure not necessarily in alignment with a provision of the Companies Act. Moreover, the issue here is not public deposits but Outside Liabilities.

Ans: No, investments made by branches of your bank located outside India should not be included in CPIS.

While the primary auctions are conducted generally on specified days of the week as given in the table below, these days may differ due to holidays or other considerations. Half yearly indicative calendars are published on RBI website for Government of India’s dated securities and Sovereign Gold Bonds whereas quarterly indicative calendars are published for Treasury Bills and State Development loans. For details visit /en/web/rbi

Ans:

Foreign Subsidiary: An Indian entity is called as a Foreign Subsidiary if a non-resident investor owns more than 50% of the voting power/equity capital OR where a non-resident investor and its subsidiary(s) combined own more than 50% of the voting power/equity capital of an Indian enterprise.

Foreign Associate: An Indian entity is called as Foreign Associate if non-resident investor owns at least 10% and no more than 50% of the voting power/equity capital OR where non-resident investor and its subsidiary(s) combined own at least 10% but no more than 50% of the voting power/equity capital of an Indian enterprise.

Special Purpose Vehicle: A special purpose Vehicle (SPV) is a legal entity (usually a limited company of some type or, sometimes, a limited partnership) created to fulfil narrow, specific or temporary objectives. SPV have little or no employment, or operations, or physical presence in the jurisdiction in which they are created by their parent enterprises, which are typically located in other jurisdictions (economies). They are often used as devices to raise capital or to hold assets and liabilities and usually do not undertake significant production.

Yes, prior approval would be required in all cases of acquisition/ transfer of shareholding of 26 per cent or more of the paid up equity capital of an NBFC.

The security features in MG Series 2005 and MG (New) Series banknotes are as under:

i. Security Thread: The silver-coloured machine-readable security thread in ₹10, ₹20 and ₹50 denomination banknotes is windowed on front side and fully embedded on reverse side. The thread fluoresces in yellow on both sides under ultraviolet light. The thread appears as a continuous line from behind when held up against light. ₹100 and above denomination banknotes have machine-readable windowed security thread with colour shift from green to blue when viewed from different angles. It fluoresces in yellow on the reverse and the text will fluoresce on the obverse under ultraviolet light.

ii. Intaglio Printing: The portrait of Mahatma Gandhi, Reserve Bank seal, Guarantee and promise clause, Ashoka Pillar emblem, RBI’s Governor's signature and the identification mark for the visually impaired persons are printed in intaglio in denominations ₹100 and above.

iii. See through register: On the left side of the note, a part of the numeral of each denomination is printed on the obverse (front) and the other part on the reverse. The accurate back-to-back registration makes the numeral appear as one when viewed against light.

iv. Water Mark and electrotype watermark: The banknotes contain the portrait of Mahatma Gandhi in the watermark window with a light and shade effect and multi-directional lines. An electrotype mark showing the denominational numeral in each denomination banknote also appears in the watermark widow and these can be viewed better when the banknote is held against light.

v. Colour Shifting Ink: The numeral 200, 500 & 2000 on the ₹200, ₹500, and ₹2000* banknotes are printed in a colour-shifting ink. The colour of these numerals appears green when the banknotes are held flat but would change to blue when the banknotes are held at an angle.

vi. Fluorescence: The number panels of the banknotes are printed in fluorescent ink. The banknotes also have dual-coloured optical fibres. Both can be seen when the banknotes are exposed to ultra-violet lamp.

vii. Latent Image: In the banknotes of ₹20 and above in the MG-2005 Series, the vertical band next to the (right side) Mahatma Gandhi’s portrait contains a latent image, showing the denominational value. The value can be seen only when the banknote is held horizontally, and light allowed to fall on it; otherwise, this feature appears only as a vertical band. In the MG (New) Series banknotes, the latent image exists in denominations ₹100 and above.

viii. Micro letterings: This feature appears at different places on the banknotes and can be seen better under a magnifying glass.

ix. Additional Features introduced since 2015:

• New Numbering Pattern

The numerals in both the number panels of the banknotes are in ascending size from left to right while the first three alpha-numeric characters (prefix) will remain constant in size.

• Angular Bleed Lines and Increase in the size of Identification Marks

Angular Bleed Lines have been introduced in banknotes - 4 lines in 2 blocks in ₹100, 4 angular bleed lines with two circles in between in ₹200, 5 lines in 3 blocks in ₹500, 7 in ₹2000*. In addition, the size of the identification marks in denominations ₹100 and above have been increased by 50 percent.

Information about the above security features present in the Indian banknotes denomination-wise is also available on the website www.rbi.org.in>>press releases. Alternately, information can also be accessed from https://website.rbi.org.in/web/rbi/-/notifications/master-circular-detection-and-impounding-of-counterfeit-notes-11610.

*₹2000 denomination notes continue to be legal tender. For more details, please refer to our press release 2023-2024/851 dated September 01, 2023 (https://rbi.org.in/web/rbi/-/press-releases/withdrawal-of-%E2%82%B92000-denomination-banknotes-status-56301).

Ans: The term used in the CIC Master Direction is block sale and not block deal which has been defined by SEBI. In the context of the Master Direction, 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.

Ans: Yes, it should be included.

An illustrative list of Intermediary Agencies is as under;

1. State Sponsored organizations for on-lending to Weaker Sections@

2. Distributors of agricultural inputs/ implements.

3. State Financial Corporations (SFCs)/ State Industrial Development Corporations (SIDCs) to the extent they provide credit to weaker sections.

4. National Small Industries Corporation (NSIC).

5. Khadi and Village Industries Commission (KVIC)

6. Agencies involved in assisting the decentralized sector.

7. Housing and Urban Development Corporation Ltd. (HUDCO)

8. Housing Finance Companies approved by National Housing Bank (NHB) for refinance.

9. State sponsored organization for SCs/STs (for purchase and supply of inputs to and/or marketing of output of the beneficiaries of these organizations).

10. Micro Finance Institutions/ Non-Government Organizations (NGOs) on lending to SHGs.

@ ‘Weaker Sections’ in Priority Sector includes following:

1. Small and marginal farmers with land holdings of 5 acres and less, landless labourers, tenant farmers and share-croppers;

2. Artisans, village and cottage industries where individual credit requirements do not exceed Rs.25,000/-.

3. Small and marginal farmers, sharecroppers, agricultural and non-agricultural labourers, rural artisans and families living below the poverty lines are the beneficiaries. The family income should not exceed Rs.11,000/- per annum.

4. Scheduled Castes and Scheduled Tribes.

5. Beneficiaries are persons whose family income from all sources does not exceed Rs.7200/- per annum in urban or semi urban areas or Rs.6400/- per annum in rural areas. They should not own any land or the size of their holding does not exceed one acre in the case of irrigated land and 2.5 acres in the case of unirrigated land (land holding criteria do not apply to SC/ST).

6. Beneficiaries under Scheme of Liberation and Rehabilitation of Scavengers (SLRs).

7. Advances granted to Self-Help Groups (SHGs) for reaching the rural poor.

G-Secs are credit risk free instruments in domestic currency. However, there are market risks if you sell before maturity. You may refer to ‘Government Securities Market- A primer’, published on RBI website, to understand various risks associated with government securities.

Ans: Participating preference shares are those shares which have one or more of the following rights:

(a) To receive dividend, out of surplus profit after paying the dividend to equity shareholders.

(b) To have share in surplus assets remaining after the entire capital is paid in case of winding up of the company.

On the other hand, non-participating preference shares are those shares which do not have any of the above said rights.

Reserve Bank of India has deregulated interest rates to be charged to borrowers by NBFCs. The rate of interest to be charged by the company is governed by the terms and conditions of the loan agreement entered into between the borrower and the NBFCs. However, the NBFCs have to be transparent and the rate of interest and manner of arriving at the rate of interest to different categories of borrowers should be disclosed to the borrower or customer in the application form and communicated explicitly in the sanction letter and on their websites, Key Facts Statement, etc., to enable the borrower to take an informed decision.

In addition to the security features listed above, banknotes issued after introduction of MG series-2005 have the year of printing on the reverse of the banknotes which is not present in the pre-2005 series.

Ans: Adjusted net worth (ANW) is a concept akin to capital requirement wherein the ANW should not be less than 30% of the risk weighted assets (RWA). In cases where asset size is aggregated, all the CICs within the group will be registered as CIC and ANW will be applicable individually.

Ans: No, it should not be included, as it will be considered as resident to resident transaction.

Ans: If the Indian entity has issued the shares to non-resident entities under the FDI scheme in India, then it is a FDI and should be reported under the Foreign Direct Investment in India (Liabilities) of the return.

1. The NBFCs in the category of equipment leasing and hire purchase finance companies having Rating of less than the Investment Grade as mentioned below are no longer entitled to accept fresh public deposits :

The Loan and Investment Companies having Rating of less than `A’ are no longer entitled to accept fresh deposits.

It may be added that A- is not equivalent to A; AA- is not equivalent to AA and AAA- is not equivalent to AAA.

The returns on Government securities are dependent on various features of the securities. You may refer to ‘Government Securities Market- A primer’, published on RBI website, to understand the factors affecting the returns on government securities.

Yes. The banks are free to determine the rates of interest without reference to BPLR and regardless of the size, in respect of following loans:

(i) a. Loans for purchase of consumer durables.

b. Loans to individuals against shares and debentures/ bonds

c. Other non-priority sector personal loans.

d. Advances/ overdrafts against domestic/ NRE/ FCNR(B) deposits with the bank, provided that the deposit/s stands/ stand either in the name(s) of the borrower himself/ borrowers themselves, or in the names of the borrower jointly with another person.

e. Finance granted to intermediary agencies (excluding those of housing) for on lending to ultimate beneficiaries and agencies providing input support.

f. Finance granted to housing finance intermediary agencies for on lending to ultimate beneficiaries

g. Discounting of Bills

h. Loans/Advances/Cash Credit/Overdrafts against commodities subject to Selective Credit Control

Any lien or freeze (full or partial) marked as per the instructions of any law enforcement or judicial authorities on the account/wallet of a customer with Paytm Payments Bank will continue to be governed by the orders passed by such authorities

IRF may be used to hedge interest rate risk associated with single asset/ liability or a group of assets/ liabilities. Hence, NBFCs are permitted to use duration-based hedging for managing interest rate risk.

The Mahatma Gandhi (New) Series banknotes have a sharp colour contrast scheme to facilitate identification by the partially visually challenged. The banknotes from ₹100 denomination onwards, have angular bleed lines (4 lines in 2 blocks in ₹100, 4 angular bleed lines with two circles in between in ₹200, 5 lines in 3 blocks in ₹500, 7 in ₹2000*) and identification mark for the benefit of the visually challenged. There is an identification mark on the front side of each note which is in raised print (intaglio) and has different shapes for different denominations for e.g. Horizontal rectangle for ₹2000, circle for ₹500, raised Identification mark H for ₹200, triangle for ₹100. Further, in these denominations, numerals are prominently displayed in the central area of the notes in raised print.

*₹2000 denomination notes continue to be legal tender. For more details, please refer to our press release 2023-2024/851 dated September 01, 2023 (https://rbi.org.in/web/rbi/-/press-releases/withdrawal-of-%E2%82%B92000-denomination-banknotes-status-56301).

Ans: The total assets of all NBFCs (Including Standalone Primary Dealer (SPD), Infrastructure Debt Fund-Non-Banking Financial Company (IDF-NBFC) and NBFCs which will always remain in Base Layer, viz., NBFC-Peer to Peer Lending Platform (NBFC-P2P), NBFC-Account Aggregator (NBFC-AA), Non-Operative Financial Holding Company (NOFHC) and NBFC without public funds and customer interface) in a Group, including all the registered Core Investment Companies (CICs) and unregistered CICs with asset size less than ₹100 crore which have raised public funds, shall be consolidated to determine the threshold for classification of other group NBFCs (NBFC- Investment and Credit Company (NBFC-ICC), NBFC- Micro Finance Institution (NBFC-MFI), NBFC- Factor and NBFC- Mortgage Guarantee Company (NBFC-MGC)) into middle layer. However, the consolidation of asset of unregistered CICs for the above purpose would not change the status of unregistered CICs.

Ans: Under FLA return, calculation of market value of equity capital for unlisted companies is done using the Own Funds at Book Value (OFVB) method, in accordance with IMF’s guidelines under the compilation of CDIS data for a country. It is calculated as follows:

Market value of equity capital held by Non- resident at OFBV for current year/previous year

= (Net worth of the company for current year/previous year) * (% non-resident equity holding for current year/previous year)

where, Net worth of the company

= (Paid up Equity & Participating Preference share capital of company + Reserves & Surplus - Accumulated losses)

The bank has been directed to allow withdrawal or transfer to another bank account of the customer, upto the available balance in the account / wallets.

As per extant guidelines, NBFCs with asset size of ₹1,000 crore and above are permitted to participate in IRF as trading members duly subject to provisions of ‘Rupee Interest Rate Derivatives (Reserve Bank) Directions, 2019’ dated June 26, 2019 (as amended from time to time). While trading members of stock exchanges are permitted to execute trades on their own account as well as on account of their clients, only banks, SPDs and All India Financial Institutions (AIFIs) have been allowed to act as market-makers. Hence, currently, NBFCs as trading members are permitted to execute only their proprietary trades and are not allowed to undertake transactions on behalf of clients.

Mobile Aided Note Identifier (MANI) is a mobile application launched by the Reserve Bank for aiding visually impaired persons to identify the denomination of Indian Banknotes. The free of cost application, once installed, does not require internet and is capable of identifying the denominations of Mahatma Gandhi Series and Mahatma Gandhi (New) series banknote by checking front or reverse side/part of the note including half folded notes at various holding angles and in a broad range of light conditions (normal light/day light/low light etc).

Note: This mobile application does not authenticate a note as being either genuine or counterfeit.

Ans: Yes. As per the present directions for CICs, they are permitted to make investments in money market instruments, including money market mutual funds. Since Liquid Funds are also mutual funds with the underlying being money market instruments; CICs are permitted to invest their surplus funds in Liquid Fund Schemes also.

Ans: If the Indian reporting entity is listed, then their closing share price as on reference period, i.e., end-March of previous and current year is used for valuation of non-resident equity investment.

For dated G-Sec, T-Bills and SDLs – The following limits apply if you purchase these securities through the non-competitive segment of primary auctions:

For Sovereign Gold Bonds (SGBs) – An individual may not subscribe to more than 4 kg of SGBs per fiscal year. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the Secondary Market.

The business restriction dated March 11, 2022, prohibiting Paytm Payments Bank from onboarding any new customers for any of its services continues to be in force. Hence, Paytm Payments Bank cannot onboard any new customers after March 11, 2022.

Residuary Non-Banking Company is a class of NBFC which is a company and has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner and not being an Investment and Credit Company, a housing finance company, an insurance company, a factor, a mutual benefit company, a mutual benefit financial company and a miscellaneous non-banking company. These companies are required to maintain investments as per directions of the Reserve Bank, in addition to liquid assets. The functioning of these companies is different from those of NBFCs in terms of method of mobilization of deposits and requirement of deployment of depositors' funds as per Directions. Besides, Prudential Norms Directions are also applicable to these companies.

The processes and systems followed for production of Indian banknotes are at par with the best practices adopted globally. In line with the same, banknote quality is maintained well within the various tolerance parameters for dimension, placement of design, print features etc. A press release issued by RBI in this regard can be accessed at the following link: https://rbi.org.in/web/rbi/-/press-releases/rbi-clarifies-on-quality-control-measures-in-currency-note-printing-41364.

Yes, activities such as trading or rendering services to the group companies are not restricted for CICs, provided such activities are carried out purely in the nature of a non-financial activity, and they do not lead the CIC to carry on any other financial activity not permitted under the extant instructions within the group or on behalf of the group entities. Such activities should not ultimately render creation of any financial asset which the CICs are not permitted to hold within/outside the group. Further, CICs cannot enter into commodity derivative contracts or hold any non-financial assets other than real estate or other fixed assets which are required for effective functioning of the CIC outside the group within the limit of 10% of net assets.

Ans: A related party is a person or entity that is related to the entity that is preparing its financial statements (referred to as the ‘reporting entity’).

A person or a close member of that person’s family is related to a reporting entity if that person:

(i) has control or joint control over the reporting entity.

(ii) has significant influence over the reporting entity; or

(iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.

In the definition of a related party, an associate includes subsidiaries of the associate and a joint venture includes subsidiaries of the joint venture. Therefore, for example, an associate’s subsidiary and the investor that has significant influence over the associate are related to each other.

There are two ways to buy Government securities through Retail Direct platform:

1. By placing a bid in the primary auctions of dated G-Sec, T-Bills and SDLs (Non-competitive segment only, i.e., by only entering the desired amount of securities, without entering a price). For Sovereign Gold Bonds (SGBs), you may place a bid during the subscription windows announced by RBI on its website. For step-by-step details on bidding in auctions, you may refer to the User Manual on the Retail Direct Portal.

2. By placing a buy quote in the secondary market portal.

While that there is no ceiling on raising of deposits by RNBCs, it is mandated that every RNBC has to ensure that the amounts deposited with it are fully invested in approved investments. In other words, in order to secure the interests of depositor, such companies are required to invest 100 per cent of their deposit liability into highly liquid and secure instruments, namely, Central/State Government securities, fixed deposits with scheduled commercial banks (SCB), Certificate of Deposits of SCB/FIs, units of Mutual Funds, etc.

(i) A ‘soiled note’ means a note which has become dirty due to normal wear and tear and includes a two-piece note pasted together wherein both the pieces presented belong to the same note and form the entire note with no essential feature missing.

(ii) “Mutilated banknote” is a banknote, of which a portion is missing, or which is composed of more than two pieces.

(iii) “Imperfect banknote” means any banknote, which is wholly or partially, obliterated, shrunk, washed, altered or indecipherable but does not include a mutilated banknote.

The number of layers of CICs within a Group (including the parent CIC) shall be restricted to two, irrespective of the extent of direct or indirect holding/ control exercised by a CIC in the other CIC. For instance, if a group consists of a parent CIC namely HCo which is holding 100 per cent equity capital in three other CICs namely A, B and C, the layers in the group shall  be as follows.

1. HCo shall be considered as first layer of CIC
2. A,B and C shall be considered as second layer of CICs.
3. Any cross holdings, directly or indirectly through other entities in the group, by CICs in the second layer in any other CIC in the group shall be considered as creation of third layer of CIC/s in the group structure which is a violation of the extant instructions. However, investment by second layer CICs in non-CIC group companies is not a violation to the extant CIC regulations. Further, no restriction is placed on number of CICs in a horizontal layer.

Reserve Bank of India has been continuously making efforts to make good quality banknotes available to the members of public. To help RBI and the banking system towards this objective, the members of public are requested to ensure the following:

• Not to staple the banknotes;

• Not to write/put rubber stamp or any other mark on the banknotes;

• Not to use banknotes for making garlands/toys, decorating pandals and places of worship or for showering on personalities in social events, etc.

The Reserve Bank of India has issued a press release on March 12, 2008, appealing members of public not to use banknotes for making garlands, decorating pandals and places of worship or for showering on personalities in social events, etc. Press Release issued in this regard is available at the following link:
https://rbi.org.in/web/rbi/-/press-releases/respect-your-banknotes-rbi-appeals-to-public-18026.

Ans: Any domestic liabilities or assets (even if it is in foreign currency) should not be reported in the FLA return.

Yes. Such banknotes can be exchanged for value.

1. After logging into the Primary Market Retail Direct platform, select the ‘Primary Market’ option beside the Dashboard, at the top of the page.

2. Select a security to bid from the ‘Auction Watch’ and enter the bid amount in the ‘Bid Entry’ window.

3. 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.

4. 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.

5. Based on the allotment advice received as a part of the auction result, the allotments will be made to the individual investors.

6. 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.

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).

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.

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.

The term ‘deposit’ is defined under Section 45 I(bb) of the RBI Act, 1934. ‘Deposit’ includes and shall be deemed always to have included any receipt of money by way of deposit or loan or in any other form but does not include:
i. amount raised by way of share capital, or contributed as capital by partners of a firm;
ii. amount received from a scheduled bank, a co-operative bank, a banking company, Development bank, State Financial Corporation, IDBI or any other institution specified by RBI;
iii. amount received in ordinary course of business by way of security deposit, dealership deposit, earnest money, advance against orders for goods, properties or services;
iv. amount received by a registered money lender other than a body corporate;
v. amount received by way of subscriptions in respect of a ‘Chit’.
Para 3(xiii) of the Master Direction – Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 (as amended from time to time) defines a ‘public deposit’ as a ‘deposit’ as defined under Section 45I(BB) of the RBI Act, 1934 and further excludes the following:
a. amount received from the Central/ State Government or any other source where repayment is guaranteed by Central/ State Government or any amount received from local authority or foreign government or any foreign citizen/ authority/ person;
b. any amount received from financial institutions specified by RBI for this purpose;
c. any amount received by a company from any other company;
d. amount received and held pursuant to an offer made in accordance with the provisions of the Companies Act, 2013, towards subscription to any securities, including share application money or advance towards allotment of securities pending allotment, to such extent and for such period as permissible under the Companies (Acceptance of Deposit) Rules, 2014 and as amended from time to time;
e. amount received from directors of a company or from its shareholders by private company or by a private company which has become a public company, provided that the director or shareholder furnishes a declaration in writing that the amount is not given out of funds acquired by borrowing or accepting from others;
f. amount raised by issue of bonds or debentures secured by mortgage of any immovable property or other asset of the company subject to conditions;
fa. any amount raised by issuance of non-convertible debentures with a maturity more than one year and having the minimum subscription per investor at ₹1 crore and above, provided it is in accordance with the guidelines issued by the Bank.
g. the amount brought in by the promoters by way of unsecured loan;
h. amount received from a mutual fund;
i. any amount received as hybrid debt or subordinated debt, the minimum maturity of which is not less than 60 months provided there is no option for recall by the issuer within the period;
j. amount received from a relative of the director of an NBFC;
k. any amount received by issuance of Commercial Paper in accordance with the guidelines issued by the Bank;
l. any amount received by a NBFC-Middle Layer and above, by issuance of ‘perpetual debt instruments’ in accordance with the guidelines issued by the Bank;
m. any amount raised by the issue of infrastructure bonds by an Infrastructure Finance Company as specified in the notification issued by Central Government under Section 80CCF of the Income Tax Act, 1961.
Thus, the directions exclude from the definition of public deposit, amounts raised from certain set of informed lenders who can make independent decision.

The value of an imperfect note may be paid for full value/half value under rules as specified in Part III of Reserve Bank of India (Note Refund) Rules, 2009 [As amended by Reserve Bank of India (Note Refund) Amendment Rules, 2018] available in our website under www.rbi.org.in → Publications → Occasional.

For dated G-Sec, T-Bills and SDLs, the amount per unit will be based on the indicative price of the security, the accrued interest and a mark-up.

For SGBs, the funding will be based on the Issue Price declared by RBI for that particular issue.

Users may refer to Master Direction on Risk Management and Inter-bank dealings dated July 5, 2016, as amended from time to time.

Banks, including co-operative banks, can accept deposits. NBFCs (including Housing Finance Companies), which have been issued Certificate of Registration by the Reserve Bank with a specific licence to accept deposits, are entitled to accept public deposit. In other words, not all NBFCs registered with the Reserve Bank are entitled to accept deposits but only those that hold a deposit accepting Certificate of Registration, can accept deposits. Further, these deposit accepting NBFCs can accept deposits, only to the extent permissible. Companies authorized by Ministry of Corporate Affairs under the Companies (Acceptance of Deposits) Rules framed by Central Government under the Companies Act can also accept deposits upto a certain limit. Cooperative Credit Societies can accept deposits from their members but not from the general public. The Reserve Bank regulates the deposit acceptance only of banks, cooperative banks and NBFCs.

It is not legally permissible for other entities to accept public deposits. Unincorporated bodies like individuals, partnership firms, and other association of individuals are prohibited from carrying on the business of acceptance of deposits as their principal business. Such unincorporated bodies are prohibited from accepting deposits even if they are carrying on financial business.

Further, The First Schedule of the ‘The Banning of Unregulated Deposit Schemes Act, 2019’ may be referred for the list of regulated deposit schemes.

The details are available on our website at the following link: www.rbi.org.in >> Currency Management >>Notifications.

A summary of the old (2009) and amended NRR (2018) is as under:

Note Refund Rules - Amended

All NBFCs are not entitled to accept public deposits. Only those NBFCs that hold a deposit accepting Certificate of Registration, and have a minimum investment grade credit rating of ‘BBB–‘ from any of the SEBI-registered credit rating agencies, are allowed to accept/ hold public deposits up to a limit of 1.5 times of their Net Owned Funds. Presently, the maximum rate of interest an NBFC can offer is 12.5%. The interest may be paid or compounded at rests not shorter than monthly rests. The NBFCs are allowed to accept/ renew public deposits which are repayable after 12 months but not later than 60 months. They cannot accept deposits repayable on demand.

However, as a matter of public policy, Reserve Bank has decided that only banks should be allowed to accept public deposits and as such, has, since 1997, not issued any Certificate of Registration (CoR) to new NBFCs for acceptance of public deposits.

Answer: Foreign Portfolio Investors (FPIs), Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), Foreign Central Banks, Multilateral Development Bank, Long term investors like Sovereign Wealth Funds (SWFs), Multilateral Agencies, Endowment Funds, Insurance Funds and Pension Funds which are registered with SEBI Long Term Investors may invest in other securities as specified in Schedule 5 to Notification No FEMA 20.

Non-payable banknotes are retained by the receiving banks and sent to the Reserve Bank where they are destroyed.

A company which does not have financial assets which are more than 50% of its total assets and does not derive at least 50% of its gross income from such assets is not an NBFC. Its principal business would be non-financial activity like agricultural operations, industrial activity, purchase or sale of goods or purchase/construction of immovable property, and will be a non-banking non-financial company. Acceptance of deposits by a Non-Banking Non-Financial Company are governed by the rules and regulations issued by the Ministry of Corporate Affairs.

Guidelines for the exchange of mutilated/torn notes are available in our Master Direction on “Facility for Exchange of Notes & Coins” DCM (NE) No.G-5/08.07.18/2025-26 dated April 01, 2025 available on our website www.rbi.org.in under Notifications>Master Directions>Issuer of Currency. Mutilated notes can be exchanged at all bank branches in terms of Reserve Bank of India (Note Refund) Rules, 2009 [As amended by Reserve Bank of India (Note Refund) Amendment Rules, 2018].

The Reserve Bank's overarching concern while regulating/ supervising any financial entity is protection of depositors' interest. Depositors place deposit with any entity on trust unlike an investor who invests in the shares of a company with the intention of sharing the risk as well as return with the promoters. Protection of depositors' interest, thus, is supreme in financial regulation. Further, the deposits of NBFCs do not have insurance from the Deposit Insurance and Credit Guarantee Corporation.

The presence or absence of a serial number or other specific feature is not a determining factor when assessing damaged banknotes for value under the Reserve Bank of India (Note Refund) Rules, 2009 [as amended by Reserve Bank of India (Note Refund) Amendment Rules, 2018].

The facility for opting for LSF shall be available up to three years from the due date of reporting/ submission. (Ref: A.P. (DIR Series) Circular No.16 dated September 30, 2022).

The Reserve Bank publishes the list of NBFCs that hold a valid Certificate of Registration for accepting deposits on its website (www.rbi.org.in) under Regulation → Non-Banking → NBFCs. Members of the public are advised to check the list before placing deposits with NBFCs.

NBFCs can accept deposits from NRIs subject to compliance with Foreign Exchange Management (Deposit) Regulations 2016 (as amended from time to time) and also subject to the condition that the rate of interest on these deposits shall not exceed the rate specified by the Reserve Bank for such deposits with scheduled commercial banks.

Banknotes returned from circulation are received at the Issue Offices of the Reserve Bank of India. The Reserve Bank of India, inter alia, uses highly sophisticated Currency Verification & Processing Systems (CVPS) machines and Shredding and Briquetting Systems (SBS) machines to verify these notes for genuineness, arithmetical accuracy and segregation of notes into fit for reissue and destruction of soiled (unfit) notes.

Yes. Extant norms permit both ECB principal and interest to be converted into equity subject to applicable conditions as given under Paragraph 7.4 of the Master Direction No. 5 on ‘External Commercial Borrowings, Trade Credits and Structured Obligations dated March 26, 2019.

All Bank notes including Mahatma Gandhi (New) series notes with writing or colour/ oil stains on them continue to be legal tender, provided they are decipherable. Such notes can be deposited or exchanged in any bank branch.

However, a claim in respect of bank notes which carries any extrinsic words or visible representations intended to convey or capable of conveying any message of a political or religious character or furthering the interest of any person or entity will be rejected as per Reserve Bank of India (Note Refund) Rules, 2009 [As amended by Reserve Bank of India (Note Refund) Amendment Rules, 2018].

A suspected forged note, counterfeit note or fake note is any note which does not possess the characteristics of genuine Indian currency note.

A forged note can be identified on the basis of the security features which are present in a genuine Indian currency note. These features are easily identifiable by seeing, touching and tilting the note. The information regarding security features present in the Indian banknotes is available on the website www.rbi.org.in>>Currency Management>>paisaboltahai at https://rbi.org.in/web/rbi/rbi-kehta-hai/know-your-banknotes

Banks can purchase letter of allotment in respect of PSU bonds subject to the following conditions.

1. The transactions (other than interbank transactions) should be undertaken only through recognized Stock Exchanges and registered brokers.

2. While purchasing the bonds, the bank should ensure that it gets a clear title to the security and the security is tradable in the secondary market.

3. The bank should prescribe its internal guidelines with the approval of the Board for undertaking such transaction.

AD banks can issue SBLC on behalf of their customers for availing short term trade credit from overseas lenders in foreign currency subject to such SBLCs complying with the provisions contained in Department of Banking Regulation Master Circular No. DBR. No. Dir. BC.11/13.03.00/2015-16 dated July 1, 2015 on “Guarantees and Co-acceptances”, as amended from time to time.

NBFCs that ought to have sought registration from the Reserve Bank but are functioning without doing so are committing a breach of law. Such companies are liable for action as envisaged under the RBI Act, 1934. To identify such entities, the Reserve Bank has multiple sources of information. These include market intelligence, complaints received from affected parties, industry sources, and exception reports submitted by statutory auditors in terms of Master Direction - Non-Banking Financial Companies Auditor’s Report (Reserve Bank) Directions, 2016 (as amended from time to time). Further, the State Level Co-ordination Committees (SLCC) is convened by the Reserve Bank in all the States/UTs on quarterly basis. The SLCC is now chaired by the Chief Secretary/ Administrator of the concerned State/UT and has, as its members, apart from the Reserve Bank, the Regional Directorate of the MCA/ ROC, local unit of SEBI, NHB, Registrar of Chits, ICAI, Economic Intelligence Unit of the State Police and officials from Law and Home Ministries of the State Government. As all the relevant financial sector regulators and enforcement agencies participate in the SLCC, it is possible to quickly share the information and agree on an effective course of action to be taken against entities indulging in unauthorized and suspect businesses involving funds mobilization from public.

Counterfeiting banknotes / using forged or counterfeit banknotes as genuine banknotes / possession of forged or counterfeit banknote / making or possessing instruments or materials for forging or counterfeiting banknotes/making or using documents resembling banknotes are offences under various sections including Sections 178 to 182 the Bhartiya Nyaya Sanhita (BNS), 2023 and are punishable in the Courts of Law by fine or imprisonment ranging from seven years to life imprisonment or both, depending on the offence.

The Government of India has framed Investigation of High-Quality Counterfeit Indian Currency Offences Rules, 2013 under Unlawful Activities (Prevention) Act (UAPA), 1967. The Third Schedule of the Act defines High Quality Counterfeit Indian Currency Note. Activity of production, smuggling or circulation of High-Quality Counterfeit Indian Notes has been brought under the ambit of the BNS, 2023.

Mere possession of a forged note does not attract punishment. Possession of any forged or counterfeit banknotes, knowing or having reason to believe the same to be forged or counterfeit and intending to use the same as genuine or that it may be used as genuine are offences under Section 180 of the Bhartiya Nyaya Sanhita (BNS), 2023 and are punishable in the Courts of Law by fine or imprisonment upto seven years or both.