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Core Investment Companies

D. Miscellaneous:

25. While instruments that are compulsorily convertible into equity shares within a period not exceeding 10 years from the date of issue are excluded from Outside Liabilities, in terms of the Companies Act such instruments are excluded from the definition of ‘public deposit’ if they are convertible with a period of 20 years?

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.

Coordinated Portfolio Investment Survey – India

updated: دسمبر 01, 2023

Special instructions for banks

Q25. Should portfolio investments assets made by branches of the banks outside India be included in CPIS?

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

Indian Currency

C) Different Types of Bank Notes and Security Features of banknotes

5. What is the need for printing different series of banknotes? +

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.

FAQs on Non-Banking Financial Companies

Classification of NBFCs into sub-groups

26. Whether the classification of NBFCs into sub-groups as equipment leasing/hire purchase finance/loan/investment companies is still relevant when the overall ceiling on borrowing have been abolished? +

The NBFCs in the category of equipment leasing and hire purchase finance companies are allowed higher leveraging of their NOF for accepting public deposits as compared to the loan and investment companies. As a result, the classification into sub-groups of the NBFCs is relevant only for the purpose of ceiling on public deposits.

Retail Direct Scheme

Investment and Account holdings related queries

26. What is the periodicity of Primary market auctions? +

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

S. No.	Government security	Primary auction usually held on
1	Government of India Treasury Bills (T-Bills)	Wednesdays
2	Government of India dated securities (dated G-Sec)	Fridays
3	State Development Loans (SDLs)	Tuesdays
4	Sovereign Gold Bonds (SGB)	Weekly windows announced by RBI in its press release

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

Some Useful Definitions

Q26. What are definitions of “Foreign Subsidiary”, “Foreign Associate” and “Special Purpose Vehicle” +

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.

External Commercial Borrowings (ECB) and Trade Credits

G. END-USES

26. Can an eligible borrower raise fresh foreign currency ECB for repayment of existing Rupee denominated ECB? +

Refinancing of Rupee denominated ECB with Foreign Currency denominated ECB is not permitted.

Government Securities Market in India – A Primer

26. How is the yield of a T- Bill calculated? +

It is calculated as per the following formula

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

Money Transfer through UPI/ IMPS

26. Can I withdraw my money from my Paytm Payments Bank account through UPI/ IMPS after March 15, 2024? +

Yes. You can withdraw your money from Paytm Payments Bank account through UPI/ IMPS upto the balance available in your account.

Foreign Investment in India

Q.26: What if the Capital Instruments are not issued within the stipulated time period ? +

Answer: If the capital instruments are not issued by the Indian company within sixty days from the date of receipt of the consideration, the amount so received has to be refunded to the person concerned by outward remittance, through banking channels or by credit to his NRE/ FCNR (B) accounts, as the case may be, within fifteen days from the date of completion of sixty days.

Domestic Deposits

III. Advances

26. What is the meaning of the word ‘Free’ in the lending rate prescription? +

Banks are free to fix Benchmark Prime Lending Rate (BPLR) for credit limits over Rs.2 lakhs with the approval of their respective Boards. BPLR has to be declared and made uniformly applicable at all the branches. The banks may authorize their Asset-Liability Management Committee (ALCO) to fix interest rates on Deposits and Advances, subject to their reporting to the Board immediately thereafter. The banks should also declare maximum spread over the BPLR with the approval of the ALCO/Board for all advances.

All you wanted to know about NBFCs

B. Entities Regulated by RBI and applicable regulations

26. Whether acquisition/ transfer of shareholding of 26 per cent or more of the paid-up equity capital of an NBFC within the same group i.e., intra group transfers require prior approval of the Bank?

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.

Core Investment Companies

D. Miscellaneous:

26. If a company is unlisted, would the terms of block deals apply? What is the minimum number/value of shares transferred for it to be defined as a block deal/block sale?

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.

Coordinated Portfolio Investment Survey – India

updated: دسمبر 01, 2023

Special instructions for banks

Q26. Should portfolio investment assets made by branches of your bank located in IFSC zone of India to the rest of the world (i.e., excluding India) be included in CPIS?

Ans: Yes, it should be included.

Indian Currency

C) Different Types of Bank Notes and Security Features of banknotes

6. What are the Security Features of banknotes in circulation? +

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://website.rbi.org.in/web/rbi/-/press-releases/withdrawal-of-%E2%82%B92000-denomination-banknotes-status-56301).

Foreign Investment in India

Q.27: What are the instructions for transfer of shares against deferred payment ? +

Answer: In case of transfer of shares between a resident buyer and a non-resident seller or vice-versa, not more than twenty five per cent of the total consideration can be paid by the buyer on a deferred basis, within a period not exceeding eighteen months from the date of the transfer agreement. The amount deferred can also be either in the form of an indemnity or an Escrow. In all cases, the pricing guidelines should be complied with.

Retail Direct Scheme

Investment and Account holdings related queries

27. What are the risks of investing in Government Securities? +

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.

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

Some Useful Definitions

Q27. What are participating and non-participating preference shares? +

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.

External Commercial Borrowings (ECB) and Trade Credits

G. END-USES

27. Can ECB proceeds be used by eligible resident borrowers for investment in their overseas JV/WOS as per the extant overseas investment guidelines? +

Yes. ECB proceeds can be utilized for overseas investment as permitted under the overseas investment guidelines.

FAQs on Non-Banking Financial Companies

Time frame for compliance of regulations

27. How will the NBFCs meet the stipulation of bringing down their deposit portfolio in alignment with the new regulations? +

The NBFCs have been permitted to regularise their excess public deposits by 1/3rd every year so as to pay off/regularise by obtaining/improving their Credit Rating or by augmenting NOF or by substituting public deposits by other form of debt the entire excess by 31st December, 2000. While the companies having the prescribed minimum level of Rating can accept fresh public deposit and renew such maturing deposit, the NBFCs which are unrated or rated below the minimum grade can only renew the maturing deposits. Within this period, the NBFCs are expected to augment their NOF, obtain or improve their Credit Rating, substitute public deposits by borrowings from other avenues. RBI does not intend to order the NBFCs to prematurely repay their deposits. The NBFCs may repay their deposits only on maturity. If the deposits accepted before January 2, 1998 are maturing after December 31, 2000 and the concerned NBFC holds these deposits in excess of its entitlements, this would not tantamount to violation of the RBI directions. It should, however, report the matter to the concerned Regional Office of Reserve Bank of India.