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Biennial survey on Foreign Collaboration in Indian Industry (FCS)

Some important definitions and concepts

Q14. What is a foreign associate? +

Ans.: An Indian company 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.

Retail Direct Scheme

Know Your Customer (KYC) related queries

14. How does the CKYC process work? +

Enter your PAN card number and date of birth to retrieve details available in CKYC.
Provide address details, scanned copy of your signature, bank account details and nominee details.
Authenticate the user agreement form using Aadhaar by submitting the OTP sent on your mobile number linked to Aadhaar.

Targeted Long Term Repo Operations (TLTROs)

FAQs pertaining to TLTRO 2.0

Q14: Para 1 of the press release dated April 17, 2020 on TLTRO 2.0 states that the objective of TLTRO 2.0 is to channel liquidity to small and mid-sized corporates, including NBFCs and MFIs. However, in para 2 it has been stated that the funds availed under TLTRO 2.0 will have to be deployed in investment grade bonds, commercial paper (CPs) and non-convertible debentures (NCDs) of Non-Banking Financial Companies (NBFCs) and MFIs. Is the current tranche of TLTRO 2.0 is targeted only for NBFCs and MFIs?

Ans: The funds availed under TLTRO 2.0 are to be deployed in investment grade bonds, commercial paper (CPs) and non-convertible debentures (NCDs) of Non-Banking Financial Companies (NBFCs) and MFIs in the manner outlined in the press release dated April 17, 2020.

Housing Loans

14. What are Switch over charges/ balances transfer charges? +

When other banks reduce the interest rate, you may prefer to close your account with the bank with whom you are banking, to avail of the loan from the bank offering reduced rates of interest. You have to pay pre-payment charges for doing so. In order to ensure that their customers do not approach other banks for availing reduced interest rates, banks allow customers to switch over from a higher interest loan to a lower interest loan by paying a switch over fees which is lesser than the pre-payment charges. Generally switchover fee is taken as percentage of the outstanding loan amount.

Keep up-dating yourself on various changes in the home loan market. Visit the branch, discuss with the officials to get the best out of any changes in the home loan scenario.

Indian Currency

B) Banknotes

6. How many languages appear in the language panel of Indian banknotes? +

Fifteen languages are appearing in the language panel of banknotes in addition to Hindi prominently displayed in the centre of the note and English on the reverse of the banknote.

Coordinated Portfolio Investment Survey – India

What to report under CPIS?

Q15. What information should be reported in the CPIS, if balance sheet of the entity is not audited before the due date of submission? +

Ans: If the entity’s accounts are not audited before the due date of submission, then they should report in the survey based on unaudited (provisional) account.

Government Securities Market in India – A Primer

15. How are the G-Secs transactions reported? +

15.1 Transactions undertaken between market participants in the OTC / telephone market are expected to be reported on the NDS-OM platform within 15 minutes after the deal is put through over telephone. All OTC trades are required to be mandatorily reported on the NDS-OM reported segment for settlement. Reporting on NDS-OM is a two stage process wherein both the seller and buyer of the security have to report their leg of the trade. System validates all the parameters like reporting time, price, security etc. and when all the criterias of both the reporting parties match, the deals get matched and trade details are sent by NDS-OM system to CCIL for settlement.

15.2 Reporting on behalf of entities maintaining gilt accounts with the custodians is done by the respective custodians in the same manner as they do in case of their own trades i.e., proprietary trades. The securities leg of these trades settles in the CSGL account of the custodian. Funds leg settle in the current account of the PM with RBI.

15.3 In the case of NDS-OM, participants place orders (amount and price) in the desired security on the system. Participants can modify / cancel their orders. Order could be a ‘bid’ (for purchase) or ‘offer’ (for sale) or a two way quote (both buy and sell) of securities. The system, in turn, will match the orders based on price and time priority. That is, it matches bids and offers of the same prices with time priority. It may be noted that bid and offer of the same entity do not match i.e. only inter-entity orders are matched by NDS-OM and not intra-entity. The NDS-OM system has separate screen for trading of the Central Government papers, State Government securities (SDLs) and Treasury bills (including Cash Management Bills). In addition, there is a screen for odd lot trading also essentially for facilitating trading by small participants in smaller lots of less than ₹ 5 crore. The minimum amount that can be traded in odd lot is ₹ 10,000 in dated securities, T-Bills and CMBs. The NDS-OM platform is an anonymous platform wherein the participants will not know the counterparty to the trade. Once an order is matched, the deal ticket gets generated automatically and the trade details flow to the CCIL. Due to anonymity offered by the system, the pricing is not influenced by the participants’ size and standing.

All you wanted to know about NBFCs

B. Entities Regulated by RBI and applicable regulations

15. What are the regulations applicable on non-deposit accepting NBFCs with asset size of less than ₹ 500 crore? +

The regulation on non-deposit accepting NBFCs with asset size of less than ₹ 500 crore would be as under:

(i) They shall not be subjected to any regulation either prudential or conduct of business regulations viz., Fair Practices Code (FPC), KYC, etc., if they have not accessed any public funds and do not have a customer interface.

(ii) Those having customer interface will be subjected only to conduct of business regulations including FPC, KYC etc., if they are not accessing public funds.

(iii) Those accepting public funds will be subjected to limited prudential regulations but not conduct of business regulations if they have no customer interface.

(iv) Where both public funds are accepted and customer interface exist, such companies will be subjected both to limited prudential regulations and conduct of business regulations.

Foreign Investment in India

Q.15: Whether cash is a permissible mode of payment for making foreign direct investment in Indian company. +

Answer: No, refer to Para 7.13 of Master Direction-Foreign Investment in India.

FAQs on Non-Banking Financial Companies

Ceiling on deposits

15. Whether an NBFC with entitlement of accepting public deposits as per the revised Regulations and holding deposits much above the level, can still accept fresh deposits ? If so, what are the conditions ? +

All the Rated Companies have been allowed 3 years time to regularise their excess deposits by repayment or otherwise. During this period, while a company can accept fresh deposits and renew such maturing deposits subject to reducing the excess holding of public deposits by one-third at the end of every calendar year beginning December 1998. However in such a case, the company should not exceed the level of public deposits outstanding as at the close of business on January 1, 1998. The unrated and underrated NBFCs are not entitled to accept fresh deposits.

Domestic Deposits

I. Domestic Deposits

15. What are the guidelines for renewal of overdue deposits? +

All aspects concerning renewal of overdue deposits may be decided by individual banks subject to their Board laying down a transparent policy in this regard and the customers being notified of the terms and conditions of renewal including interest rate, at the time of acceptance of deposit. The policy should be non-discretionary and non-discriminatory.

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

Eligible entities and requirements to submit the FLA return

Q15. If an entity issues the shares to non-resident on non-repatriable basis, whether that entity is required to submit the FLA return? +

Ans: Shares issued by reporting entities to non-resident on non-repatriable basis should not be considered as foreign investment; therefore, entities which have issued the shares to non-resident only on non-repatriable basis, is not required to submit the FLA return.

External Commercial Borrowings (ECB) and Trade Credits

F. LEVERAGE CRITERIA AND BORROWING LIMIT

15. Should the proposed ECB be added to all outstanding ECBs for the purpose of ECB liability to equity ratio? +

Yes, apart from ECB raised for refinancing where the proposed ECB amount may not be taken into account to avoid double counting.

Core Investment Companies

Core Investment Companies (CICs)

15. Whether NBFCs already registered with the Bank as category “B” company whose asset size is below Rs. 100 crore, but fulfilling the CIC criteria, can seek voluntary deregistration (as such companies are not otherwise required to get registered with the Bank under the new norms)? If so, which source should be relied upon viz certificate from Statutory auditor or audited balance sheet for one year or more? +

Ans: Yes, CICs presently registered with the Bank but fulfilling the criteria for exemption under Notification No 220 dated January 05, 2010 can seek voluntary deregistration. Both audited balance sheet and auditors certificate are required to be submitted for the purpose.

Business restrictions imposed on Paytm Payments Bank Limited vide Press Releases dated January 31 and February 16, 2024

FASTag issued by Paytm Payments Bank

15. I have a FASTag issued by Paytm Payments Bank. Can I continue to use it to pay toll after March 15, 2024? +

Yes. You can continue to use your FASTag to pay toll upto the available balance. However, no further funding or top ups will be allowed in the FASTags issued by Paytm Payments Bank after March 15, 2024. It is suggested that you procure a new FASTag issued by another bank before March 15, 2024 to avoid any inconvenience

Biennial survey on Foreign Collaboration in Indian Industry (FCS)

Some important definitions and concepts

Q15. What is Pure Technical Collaboration? +

Ans.: An Indian company is said have Pure Technical Collaboration if the company has only foreign technical collaboration and have not received any foreign direct investment.

Retail Direct Scheme

Know Your Customer (KYC) related queries

15. Who should do video KYC? +

In case your data does not exist in the CKYC database, you will have to opt for the video KYC method.

Housing Loans

15. Do you get a tax benefit on the loan? +

Yes. Resident Indians are eligible for certain tax benefits on both principal and interest components of a loan under the Income Tax Act, 1961. Under the current laws, you are entitled to an income tax rebate for interest repayment up to Rs. 1,50,000 /- per annum. Moreover, you can get added tax benefits under Section 80 C on repayment of principal amount up to Rs. 1,00,000 /- per annum.

Targeted Long Term Repo Operations (TLTROs)

FAQs pertaining to On Tap TLTRO/ reversal of TLTRO/ TLTRO 2.0 transactions

Q15: If a bank opts for repayment of funds availed under TLTRO/ TLTRO 2.0, whether the investments made by the bank by utilizing these funds will continue to be allowed for classification under held to maturity (HTM) even in excess of 25 percent of total investment permitted to be included in the HTM portfolio? +

Ans: Banks can submit their request for exercising the repayment option till October 28, 2020. On repayment of funds availed under TLTRO/ TLTRO 2.0, the associated securities shall be shifted out of the HTM category. The shifting of the TLTRO/ TLTRO 2.0 investments out of HTM shall be in addition to the shifting of investments permitted at the beginning of the accounting year and subject to adherence to the guidelines contained in the Master Circular – Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks dated July 1, 2015. These investments under TLTRO/ TLTRO 2.0 against which funds are being repaid will not be exempted from reckoning under the large exposure framework (LEF) and computation of adjusted non-food bank credit (ANBC) for the purpose of determining priority sector targets/sub-targets.

Indian Currency

B) Banknotes

7. Is it possible to have two or more banknotes with the same serial number? +

Yes, it is possible to have two or more banknotes with the same serial number, but they would either have a different Inset Letter or year of printing or signature of a different Governor of RBI. An Inset Letter is an alphabet printed on the Number Panel of the banknote. There can be notes without any inset letter also.