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Targeted Long Term Repo Operations (TLTROs)

Q7: Under TLTRO scheme, the specified eligible instruments will have to be acquired up to fifty per cent from primary market issuances and the remaining fifty per cent from the secondary market. Is this limit fungible between primary and secondary market? +

Ans: The deployment of funds availed under TLTRO in primary market cannot exceed fifty percent of the amount availed. Apart from the above stipulation, the limits are fungible between primary and secondary market deployment.

Housing Loans

7. How does tenure affect cost of loan? +

The longer the tenure of the loan, the lesser will be your monthly EMI outflow. Shorter tenures mean greater EMI burden, but your loan is repaid faster. If you have a short-term cash flow mismatch, your bank may increase the tenure of the loan, and your EMI burden comes down. But longer tenures mean payment of larger interest towards the loan and make it more expensive.

FAQs on Non-Banking Financial Companies

Definition of public deposits

7. What is the status of optionally fully convertible debentures in `public deposits? +

A. Optionally Fully Convertible Debentures (OFCDs), which were brought within the purview of Regulations in the year 1996, have now (in 1998) been taken out of the Regulations. Any money raised by issue of OFCDs is not to be treated as public deposit.

Domestic Deposits

I. Domestic Deposits

7. Whether banks can refuse premature withdrawal of term deposits? +

Banks may not normally refuse premature withdrawal of term deposits of individuals and Hindu Undivided Families (HUF), irrespective of the size of the deposit. However, the bank at its discretion, may disallow premature withdrawal of large deposits held by entities other than individuals and Hindu Undivided Families. Banks should notify such depositors of its policy of disallowing premature withdrawals in advance i.e. at the time of acceptance of deposits.

Framework for Compromise Settlements and Technical Write-offs

B. TECHNICAL WRITE-OFF

7. The circular also permits the lenders to undertake technical write-offs of amount outstanding relating to borrowers in default. Doesn’t such a practice encourage default behavior, as the costs of default are borne entirely by the lenders and defaulting borrowers do not face any consequences? +

No. As defined in the circular, technical write-off refers to cases where the NPAs remain outstanding at borrowers’ loan account level, but are derecognised by the lenders only for accounting purposes. Technical write-off is a normal banking practice undertaken by the lenders to cleanse the balance sheets of bad debts which are either considered unrecoverable or whose recovery is likely to consume disproportionate resources of the lenders. However, such technical write-offs do not entail any waiver of claims against the borrower and thus the lenders’ right to recovery is not undermined in any manner. Therefore, the defaulting borrowers are not benefited in any manner and their legal obligation as well as the costs of such defaults for them remain unchanged vis-à-vis the position prior to technical write-offs.

The circular only provides clarity on definition of technical write-off and a broad guidance on the process to be followed by the lenders for technical write-offs, which will ensure consistency in the approach followed by various lenders.

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

Eligible entities and requirements to submit the FLA return

Q7. If an old/new entity wants to fill the previous year FLA form, can they do so? +

Ans: Yes, entities can fill the FLA return even after due date, after taking approval from RBI. But in that case, penalty clause may be invoked on the entity for late submission.

Retail Direct Scheme

Scheme related queries

7. What are the facilities available on the RBI Retail Direct Portal? +

The RBI Retail Direct Online Portal will facilitate the following:

Buying Government securities through primary auctions (non-competitive segment only).
Buying and selling Government securities in the secondary market.
Buying and selling Sovereign Gold Bonds (SGBs) in the primary and secondary market.
Investor services such as account statement, nomination facility, pledge/lien, gift transactions, grievance redressal, and managing profile like contact details etc.

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

Bank Accounts with Paytm Payments Bank

7. My monthly electricity bill is paid automatically from my bank account with Paytm Bank Limited? Can this continue? +

Withdrawal/debit mandates (such as National Automated Clearing House (NACH) mandates) will continue to get executed till there is balance available in your account. However, after March 15, 2024, credit or deposit in your accounts will not be allowed. Therefore, to avoid inconvenience, it is suggested that you make alternative arrangements through another bank, before March 15, 2024

Government Securities Market in India – A Primer

7. How and in what form can G-Secs be held? +

7.1 The Public Debt Office (PDO) of RBI, acts as the registry and central depository for G-Secs. They may be held by investors either as physical stock or in dematerialized (demat/electronic) form. From May 20, 2002, it is mandatory for all the RBI regulated entities to hold and transact in G-Secs only in dematerialized (SGL) form.

a. Physical form: G-Secs may be held in the form of stock certificates. A stock certificate is registered in the books of PDO. Ownership in stock certificates cannot be transferred by way of endorsement and delivery. They are transferred by executing a transfer form as the ownership and transfer details are recorded in the books of PDO. The transfer of a stock certificate is final and valid only when the same is registered in the books of PDO.

b. Demat form: Holding G-Secs in the electronic or scripless form is the safest and the most convenient alternative as it eliminates the problems relating to their custody, viz., loss of security. Besides, transfers and servicing of securities in electronic form is hassle free. The holders can maintain their securities in dematerialsed form in either of the two ways:

SGL Account: Reserve Bank of India offers SGL Account facility to select entities who can hold their securities in SGL accounts maintained with the Public Debt Offices of the RBI. Only financially strong entities viz. Banks, PDs, select UCBs and NBFCs which meet RBI guidelines (please see RBI circular IDMD.DOD.No. 13/10.25.66/2011-12 dt Nov 18, 2011) are allowed to maintain SGL with RBI.
Gilt Account: As the eligibility to open and maintain an SGL account with the RBI is restricted, an investor has the option of opening a Gilt Account with a bank or a PD which is eligible to open a CSGL account with the RBI. Under this arrangement, the bank or the PD, as a custodian of the Gilt Account holders, would maintain the holdings of its constituents in a CSGL account (which is also known as SGL II account) with the RBI. The servicing of securities held in the Gilt Accounts is done electronically, facilitating hassle free trading and maintenance of the securities. Receipt of maturity proceeds and periodic interest is also faster as the proceeds are credited to the current account of the custodian bank / PD with the RBI and the custodian (CSGL account holder) immediately passes on the credit to the Gilt Account Holders (GAH).

7.2 Investors also have the option of holding G-Secs in a dematerialized account with a depository (NSDL / CDSL, etc.). This facilitates trading of G-Secs on the stock exchanges.

Indian Currency

A) Basics of Indian Currency/Currency Management

7. Where can one find information regarding notes/coins supplied by RBI or currently in circulation?

The information about indent and supply of notes and coins or currency/coins in circulation is available on our website www.rbi.org.in, at the following link https://rbi.org.in/web/rbi/publications/reports/annual_report.

Foreign Investment in India

Q.7: What is meant by capital on a fully diluted basis ? +

Answer: Fully diluted basis means the total number of shares that would be outstanding if all possible sources of conversion are exercised.

Biennial survey on Foreign Collaboration in Indian Industry (FCS)

Details of survey launch

Q7. How do I know whether my response has been submitted successfully or not?

Ans.: After sending the duly filled in survey schedule (excel based) to the generic email IDs of the Reserve Bank as per the instruction in the survey schedule, the respondent will receive the system-generated acknowledgement. No separate mail will be sent in this regard. If some error is mentioned in the acknowledgement, then the respondent is required to resubmit the form by rectifying the mentioned error. After corrections, the respondent should receive a successful processing acknowledgement email.

Core Investment Companies

A. Definitions:

7. Whether definition of group companies should include LLPs and partnerships in the group? Whether investments in a group entity other than a Company, say partnership firms, LLPs, Trusts, Association of Persons, etc by CICs could be regarded as investments in Group Companies for the purpose of calculating 90% investment in Group Companies

Ans: LLPs and Partnerships are not companies as per Section 3 of Companies Act 2013. Hence, they cannot be included in the definition of Group Company.

Only investments in companies registered under Section 3 of the Companies Act 2013 would be regarded as investments in Group companies for the purpose of calculating 90% investment in Group companies. Moreover, in view of the loose structure and regulatory framework of LLPs/ Partnerships, CICs are prohibited from contributing capital to any partnership firm or to be partners in partnership firms including LLPs

Portfolio Investment Positions (PIP) by Counterpart Economy (formerly CPIS) – India

Details for survey launch

Q7. What is the due date for participating in PIP?

Ans: In general, the due date for participating in PIP for end-March and end-September position is July 07 and December 31 of that year respectively.

Remittances [Money Transfer Service Scheme (MTSS) and Rupee Drawing Arrangement (RDA)]

Rupee Drawing Arrangement (RDA)

7. Can the remittance be credited to the bank account of the beneficiary even if the bank does not have any tie-up with a non-resident Exchange House ? +

Yes, foreign inward remittances received by the AD Category-I Bank having RDA with a Non Resident Exchange House may be credited directly to the account of the beneficiary held with a bank other than the AD Category-I Bank through electronic mode, such as, NEFT, IMPS, etc.Money Transfer Service Scheme (MTSS)

All you wanted to know about NBFCs

B. Entities regulated by RBI and applicable regulations

7. What are the powers of the Reserve Bank with regard to 'Non-Bank Financial Companies’, that is, companies that meet the Principal Business Criteria or 50-50 criteria?

The Reserve Bank has been empowered under the RBI Act 1934 to register, determine policy, issue directions, inspect, regulate, supervise and exercise surveillance over NBFCs that fulfil the principal business criteria or 50-50 criteria of principal business. The Reserve Bank can penalize NBFCs for violating the provisions of the RBI Act or the directions or orders issued by the Reserve Bank under RBI Act. The penal action may also include cancellation of the Certificate of Registration issued to the NBFC.

FAQs on Priority Sector Lending (PSL)

J. PSLCs

Query 22: How can banks register for PSLC trading?

Clarification: The banks are required to submit a request to Financial Inclusion and Development Department, Central Office, RBI at fiddpsd@rbi.org.in to obtain registration for PSLC trading by submitting a) DEA Fund Code b) Customer identification number and c) RBI Current Account number.

FAQs on Non-Banking Financial Companies

Definition of public deposits

8. Whether secured debentures could be partly secured for the purpose of exemption from NBFC Directions ? What happens if the value of security behind the secured debentures declines after the date of issue ? +

For the purpose of exemption from NBFC Directions, (1998) on Acceptance of Public Deposits, the debentures are required to be fully secured on the date of issue and to the fullest satisfaction of the trustees.

Framework for Compromise Settlements and Technical Write-offs

C. GENERAL

8. What are the key objectives that the above circular seeks to achieve? +

The circular is intended to achieve the following objectives:

It rationalises the existing regulatory guidance to banks on compromise settlements, consolidating various instructions issued over the years. It also tightens some of the related provisions and ensures greater transparency.
By providing a clear regulatory framework, it enables other regulated entities, particularly cooperative banks, to undertake compromise settlements as part of the normal resolution efforts.
It provides clarity on definition of technical write-off and provides a broad guidance on the process to be followed by the regulated entities for technical write-offs, which is a normal banking practice.
As a disincentive to both the lenders and the borrowers, it introduces the concept of cooling period for normal cases of compromise settlement during which the lender undertaking settlement shall not take any fresh exposure on the borrower entity. In case of borrower accounts classified as wilful defaulter or fraud, the debarment to obtain fresh finance, as explained at (2) above, will apply.

Retail Direct Scheme

Account opening related queries

8. What is the procedure for opening a Retail Direct Gilt (RDG) account? +

Eligible Investors may login to https://rbiretaildirect.org.in and register using the Registration link to begin the account opening process.
To open an account, the investor will have to furnish details like full name, PAN, mobile number, e-mail address, residential address, savings bank account number, etc. and specify a login name. Mobile number and email address will be authenticated using OTP and all further customer requests and services will be OTP based.
For joint accounts, the PAN, e-mail address and phone number of both holders will be required.
Once these details have been provided, you will get a reference number to track your application.
You may now initiate your Know Your Customer (KYC) verification process.
In case of joint accounts, the KYC verification will be done for both the holders.
It will be mandatory for the investor to fill in the nomination details at the time of opening of the account.
The savings bank account of the customer will be linked to their Retail Direct account by crediting a token amount into their bank account and verifying the same.
Once the KYC is successful, an RDG account will be opened in the name of the investor(s).
Information related to account number, login id & password to access the Online Portal will be made available to the customer on their registered e-mail id.
In case of KYC failures, the individual can make new application or resubmit application after making necessary changes.