Reserve Bank of India decided to withdraw from circulation all banknotes issued prior to 2005 as they have fewer security features as compared to banknotes printed after 2005. It is a standard international practice to withdraw old series notes. The RBI has already been withdrawing these banknotes in a routine manner through banks. It is estimated that the volume of such banknotes (pre-2005) in circulation is not significant enough to impact the general public in a big way. The exchange facility for pre-2005 banknotes is available only at the following offices of the Reserve Bank: Ahmedabad, Bengaluru, Belapur, Bhopal, Bhubaneswar, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Jammu, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, New Delhi, Patna, Thiruvananthapuram, and Kochi. This, however, does not imply that banks cannot accept deposits of pre-2005 banknotes for crediting to the customers’ accounts. Please refer to our Press Release no. 2016-17/1565 dated December 19, 2016 in this regard which can be accessed at the following link https://rbi.org.in/en/web/rbi/-/press-releases/banks-should-accept-pre-2005-banknotes-in-deposit-rbi-clarifies-38951.

Ans: The Directions on CICs have not restricted them from making overseas investment. Such investment will be governed by the provisions of Chapter IX of Master Direction DoR(NBFC).PD.003/03.10.119/2016-17 dated August 25, 2016. Similarly, presently CICs can raise funds through ECB. The same would be governed by the instructions contained in the ECB Policy issued by Foreign Exchange Department of the Reserve Bank. Lending to NBFCs/ CICs by banks will be governed by the provisions as applicable to banks and specifically contained in the instructions on ‘bank finance to NBFCs’ issued by Department of Banking Regulation of the Reserve Bank.

Ans: When actual market values are not available, an estimate is required. Alternative methods of approximating market value of shareholders’ equity in a direct investment enterprise include the following:

1. Recent transaction price: Unlisted instruments may trade from time to time, and recent prices, within the past year, at which they were traded may be used. Recent prices are a good indicator of current market values to the extent that conditions are unchanged. This method can be used as long as there has been no material change in the corporation’s position since the transaction date. Recent transaction prices become increasingly misleading as time passes and conditions change.

2. Net asset value: Appraisals of untraded equity may be conducted by knowledgeable management or directors of the enterprise or provided by independent auditors to obtain total assets at current value less total liabilities (excluding equity) at market value. Valuations should be recent (within the past year) and should preferably include intangible assets.

3. Present value and price-to-earnings ratios: The present value of unlisted equity can be estimated by discounting the forecast future profits. At its simplest, this method can be approximated by applying a market or industry price-to-earnings ratio to the (smoothed) recent past earnings of the unlisted enterprise to calculate a price. This method is most appropriate in which there is a paucity of balance sheet information but earnings data are more readily available.

4. Market capitalization method: Book values reported by enterprises can be adjusted at an aggregate level by the statistical compiler. For untraded equity, information on “own funds at book value” can be collected from enterprises, and then adjusted with ratios based on suitable price indicators, such as the ratio of market capitalization to book value for listed companies in the same economy with similar operations. Alternatively, assets that enterprises carry at cost (such as land, plant, equipment, and inventories) can be revalued to current period prices using suitable asset price indices.

5. Own funds at book value: This method for valuing equity uses the value of the enterprise recorded in the books of the direct investment enterprise, as the sum of (a) paid-up capital (excluding any shares on issue that the enterprise holds in itself and including share premium accounts); (b) all types of reserves identified as equity in the enterprise’s balance sheet (including investment grants when accounting guidelines consider them company reserves); (c) cumulated reinvested earnings; and (d) holding gains or losses included in own funds in the accounts, whether as revaluation reserves or profits or losses. The more frequent the revaluation of assets and liabilities, the closer the approximation to market values. Data that are not revalued for several years may be a poor reflection of market values.

6. Apportioning global value: The current market value of the global enterprise group can be based on the market price of its shares on the exchange on which its equity is traded, if it is a listed company. Where an appropriate indicator may be identified (e.g., sales, net income, assets, or employment), the global value may be apportioned to each economy in which it has direct investment enterprises, on the basis of that indicator, by making the assumption that the ratio of net market value to sales, net income, assets, or employment is a constant throughout the transnational enterprise group. (Each indicator could yield significantly different results from the others).

A depositor wanting to place deposit with an NBFC must take the following precautions before placing deposits:

1. That the NBFC is registered with the Reserve Bank and specifically authorized by the Reserve Bank to accept deposits. The list of deposit taking NBFCs entitled to accept deposits is available on the web site of the Reserve Bank of India (www.rbi.org.in) under ‘Regulation → Non-Banking’. The depositor should check the above list to know about NBFCs permitted to accept public deposits therein.

2. NBFCs have to prominently display the Certificate of Registration (CoR) issued by the Reserve Bank at place of business. This CoR should also reflect that the NBFC has been specifically authorized by the Reserve Bank to accept deposits. Depositors must scrutinize the CoR to ensure that the NBFC is authorized to accept deposits.

3. The maximum interest rate that an NBFC can pay to a depositor should not exceed 12.5% currently. The Reserve Bank keeps altering the interest rates depending on the macro-economic environment and publishes the change in the interest rates on its website (www.rbi.org.in) under ‘notifications’.

4. The depositor must insist on a proper receipt for every amount of deposit placed with the NBFC. The receipt should be duly signed by an officer authorized by the NBFC and should state the date of the deposit, the name of the depositor, the amount in words and figures, rate of interest payable, maturity date and amount.

5. In the case of brokers/agents, etc., collecting public deposits on behalf of NBFCs, the depositors should satisfy themselves that the brokers/agents are duly authorized by the NBFC.

6. The depositor must bear in mind that public deposits are unsecured and Deposit Insurance facility is not available to depositors of NBFCs.

7. The Reserve Bank of India does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the NBFC.

The NBFCs have been allowed sufficient time to achieve the ratio of 60 per cent of its net assets and derive its net income from these activities taken together. Therefore NBFCs are not expected to face much difficulty in achieving these norms.

Ans: The other capital component (receivables and payables, except equity and participating preference shares investment) of direct investment covers the outstanding liabilities or claims arising due to borrowing and lending of funds, investment in debt securities, trade credits, financial leasing, share application money etc., between direct investors and DIEs and between two DIEs that share the same direct Investor. Non-participating preference shares owned by the direct investor are treated as debt securities & should be included in ‘other capital’.

No. A deposit has to run for a minimum stipulated period, which is at present one year for both FCNR(B) and NRE deposits, to be eligible to earn interest.

Yes. A Government securities holder may nominate any one as a nominee provided that the nominee should be eligible to invest in the particular loan as per the specific Government Loan Notification.

Yes. You can continue to withdraw using the AePS authentication, upto the balance available in your account.

Both old and new design notes usually circulate together for a while. The old design notes are then gradually withdrawn from circulation when they become unfit to be re-issued.

Ans: Anything that has to be repaid to any other legal entity/ person will be an outside liability.

Ans: Queries/clarifications on PIP may be sought from the RBI at the following address:

International Investment Position Division (IIPD)
Department of Statistics and Information Management (DSIM)
Reserve Bank of India
C-9/5 th Floor, Bandra - Kurla Complex, Bandra East
Mumbai, Maharashtra – 400 051
Email : cpis@rbi.org.in

If an NBFC defaults in repayment of deposit, the depositor can approach the Company Law Board (now National Company Law Tribunal) or Consumer Forum or file a civil suit in a Court of Law to recover the deposits. Further, at the level of the State Government, the State Legislations on Protection of Interest of Depositors (in Financial Establishments) empowers the State Governments to take action even before the default takes place or complaints are received from depositors. If there is perpetration of an offence and if the intention is to defraud, the State Government can even attach properties. NBFCs are also advised to lay down an appropriate grievance redressal mechanism as indicated in reply to question 26 below.

The NBFCs are entitled to depreciation benefits as a lessor on the assets leased out by them. The Guidance Note on Accounting for Leases issued by ICAI may entail creation of lease equalisation account/lease adjustment account. As per accounting practice, the entire amount of lease rentals is shown as gross lease income on the credit side of the profit and loss account. The income from equipment leasing, therefore, has to be computed on the basis of gross lease income net of depreciation on assets leased out and the lease equalisation account, if any. In the case of hire purchase finance, only the component of finance charges is taken to the Profit and Loss Account and therefore, such finance charges will be taken as hire purchase finance income. The composition of assets in the equipment leasing and hire purchase finance activities has to be worked out as a percentage of the total assets net of depreciation and net of lease adjustment account, if any, as disclosed in the audited Balance Sheet of the company. Hire purchase assets should be taken as stock on hire less unmatured finance charges. The sum total of debit balance in Profit and Loss Account, deferred revenue expenditure and intangible assets like Goodwill will also be excluded from the total assets.

Yes. Whenever the due dates fall on Saturday/Sunday/non-business working day/holidays, banks are permitted to pay interest on NRE and FCNR(B) deposits at the originally contracted rate for the intervening period between the due date and date of payment so that no interest loss is suffered by the depositors.

Ans: An enterprise is said to have a centre of economic interest and to be a resident unit of a country (economic territory) when the enterprise is engaged in a significant amount of production of goods and/or services in that centre or when it owns land or buildings located in that centre. The enterprise must maintain at least one production establishment in the country and must plan to operate the establishment indefinitely or over a long period of time.

In such cases where a nomination in respect of a Government security has been made in favour of two and either or any of the nominees is dead, the surviving nominee will be entitled to the Government security and payment thereon.

No. You cannot transfer the money into your Paytm Payments Bank account after March 15, 2024

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

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.

When an NBFC fails to repay any deposit or part thereof in accordance with the terms and conditions of such deposit, the CLB/NCLT either on its own motion or on an application from the depositor, direct by order, the NBFC to make repayment of such deposit or part thereof forthwith or within such time and subject to such conditions as may be specified in the order. After making the payment, the company will need to file the compliance with the local office of the Reserve Bank of India.

As explained above, the depositor can approach CLB/NCLT by mailing an application in prescribed form to the appropriate bench of the CLB/NCLT according to its territorial jurisdiction.

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.

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