Sunday, 8 June 2014

RBI April 2014

Date Subject Amendment
04-Apr-14 Foreign Exchange Management Act, 1999 (FEMA)
Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules) - Compounding of Contraventions under FEMA, 1999
Powers to compound the following offences has now been delegated to the regional offices of RBI: A) Delay in reporting inward remittance received for issue of shares.                                                                B) Delay in filing form FC(GPR) after issue of shares.       
C) Delay in issue of shares/refund of share
application money beyond 180 days,
mode of receipt of funds, etc.                                                                                           
D) Violation of pricing guidelines for issue
of shares.     
E) Issue of ineligible instruments such as
non-convertible debentures, partly paid
shares, shares with optionality clause,
F) Issue of shares without approval of RBI
or FIPB respectively, wherever
required                                                                                                     Kochi and Panaji Offices can compound the contraventions for amount of contravention below Rupees one hundred lakh 
03-Apr-14 Know Your Customer (KYC) Norms /Anti-Money Laundering (AML) Standards/ Combating of Financing of Terrorism (CFT)/ Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002 – Harmonization of KYC norms for Foreign Portfolio Investors (FPIs) RBI has prescribed simplified norms, for the FPI's who are already registered under SEBI guidelines and  undergone the required KYC due diligence/verification prescribed by SEBI through a Custodian/Intermediary regulated by SEBI.Such FPI can approach a bank for opening a bank account for the purpose of investment under Portfolio Investment Scheme (PIS) for which KYC documents mentioned in this circular shall be required.
07-Apr-14 Investment through Alternative Investment Funds – Clarification on Calculation of NOF of an NBFC
While, explaining the meaning  and ambit of NBFC ( Non-Banking Financial Companies), explicitly declared that NBFCs must deduct investments made  in group entities before arriving at NOF (net owned funds).
07-Apr-14 Risk Management & Inter-Bank Dealings:
Booking of Forward Contracts - Liberalisation
RBI has  permitted all resident individuals, firms and companies, who have foreign exchange exposures, both actual and anticipated, to book foreign exchange forward contracts up to $250,000 on the basis of a simple declaration without any requirement of further documentation. However, Small and Medium Enterprises (SMEs) shall remain uneffected by this reformation.
07-Apr-14 Registration of Non-Operative Financial Holding Companies (NOFHCs) RBI has created a separate category of NBFCs, i.e, Non-Operative Financial Holding Company (NOFHC) which will hold bank as well as all other financial services companies regulated by RBI or other financial sector regulators, to the extent permissible under the applicable regulatory prescriptions. Through this category promoters/ promoter groups shall be enabled to set up new banks. NOFHC will be registered with the Department of Non-Banking Supervision (DNBS) of the Reserve Bank, while its regulatory and supervisory framework including prudential norms and submission of returns will be governed by the instructions issued by DBOD from time to time.
16-Apr-14 Foreign Direct Investment (FDI) in Limited Liability Partnership (LLP) Limited Liability Partnership (LLP) registered under the Limited Liability Partnership Act, 2008 shall now be eligible to accept Foreign Direct Investment (FDI), subject to the specified conditions.
21-Apr-14 Foreign Direct Investment in Pharmaceuticals sector – clarification It has been decided by the RBI, that that the existing policy related to FDI in Pharmaceutical sector shall prevail with the condition that ‘non-compete’ clause would not be permitted except in special circumstances with the approval of the FIPB.
 22- Apr-14 Fund/Non-Fund based Credit Facilities to Overseas Joint Ventures / Wholly Owned Subsidiaries /Wholly owned Step-down Subsidiaries of Indian Companies  RBI has ordered overseas branches of domestic banks not to  extend ECBs to manufacturing
and infrastructure companies for repaying rupee loans. Similarly, it has been recommended that, banks, including overseas branches/subsidiaries of Indian banks, must not  issue standby letters of credit/guarantees/letter of comforts etc. on behalf of overseas JV/WOS/WoSDS of Indian companies for the purpose of raising loans/advances of any kind from other entities except in connection with the ordinary course of overseas business. 
 22- Apr-14 Scaling up of the Business Correspondent (BC) Model –Issues in Cash Management Bank boards have been ordered to review the operations of business correspondents (BCs) at least once every six months. This has been done to ensure that requirement of prefunding of corporate BCs and BC agents is taperred down with the passage of time. It was further ordered that banks must review the position of payment of remuneration of BCs and to lay down a system of monitoring by the top management of the bank.

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