Monday, 8 September 2014

RBI July 2014

Notification/Circular no. Date Subject Amendment
UBD.BPD (PCB) Cir. No. 2
July 02, 2014 Know Your Customer (KYC) / Anti-Money Laundering (AML) / Combating of Financing of Terrorism (CFT) Guidelines -Unique Customer Identification Code (UCIC) – Extension of Time – Primary (Urban) Cooperative Banks (UCBs) It has come to the notice of Reserve Bank that some banks are yet to complete the allotment of UCIC (refer Circular UBD.BPD. (PCB).Cir.No.14/14.01.062/2012-13 dated October 9, 2012) and accordingly have sought some more time. In view of the requests received, it has been decided to extend the time for completing the process of allotting UCIC to existing customers up to December 31, 2014.
RBI/2014-15/117                 A.P. (DIR Series) Circular No.1 July 03, 2014 Financial Commitment (FC) by Indian Party under Overseas Direct Investments (ODI) – Restoration of Limit It has been decided to restore the limit of Overseas Direct Investments (ODI)/ Financial Commitment (FC) to be undertaken by an Indian Party under the automatic route to the limit prevailing, as per the extant FEMA provisions, prior to August 14, 2013. It has, however, been decided that any financial commitment exceeding USD 1 (one) billion (or its equivalent) in a financial year would require prior approval of the Reserve Bank even when the total FC of the Indian Party is within the eligible limit under the automatic route (i.e., within 400% of the net worth as per the last audited balance sheet).
DNBS (PD).CC. No 398/03.10.42/2014-15
July 10, 2014 Know Your Customer (KYC) Norms / Anti-Money Laundering (AML) Standards /Combating of Financing of Terrorism (CFT) / Obligation of NBFCs under Prevention of Money Laundering Act (PMLA), 2002- Clarification on proof of Address Customers may submit only one documentary proof of address (either current or permanent) while opening a deposit account or while undergoing periodic updation. In case the address mentioned as per 'proof of address' undergoes a change, fresh proof of address may be submitted to the NBFC within a period of six months.

b) In case the proof of address furnished by the customer is not the local address or address where the customer is currently residing, the NBFC may take a declaration of the local address on which all correspondence will be made by the NBFC with the customer. No proof is required to be submitted for such address for correspondence/local address. This address may be verified by the NBFC through 'positive confirmation' such as acknowledgment of receipt of (i) letter (ii) telephonic conversation; (iii) visits; etc. In the event of change in this address due to relocation or any other reason, customers may intimate the new address for correspondence to the NBFC within two weeks of such a change.
DNBS(PD).CC.No 400/ 03.10 .42/2014-15
July 14, 2014 Know Your Customer (KYC) Norms / Anti-Money Laundering (AML) Standards /Combating of Financing of Terrorism (CFT) / Obligation of NBFCs under Prevention of Money Laundering Act (PMLA), 2002 Recognising E-Aadhaar as an 'Officially Valid Document' under PML Rules NBFCs may accept e-Aadhaar downloaded from Unique Identification Authority of India (UIDAI) website as an officially valid document subject to the following:

a) If the prospective customer knows only his / her Aadhaar number, the NBFC may print the prospective customer's e-Aadhaar letter in the NBFC directly from the UIDAI portal; or adopt e-KYC procedure as mentioned in paragraph 2 above.

b) If the prospective customer carries a copy of the e-Aadhaar downloaded elsewhere, the NBFC may print the prospective customer's e-Aadhaar letter in the NBFC directly from the UIDAI portal; or adopt e-KYC procedure as mentioned in paragraph 2 above; or confirm identity and address of the resident through simple authentication service of UIDAI.

July 14, 2014 Levy of foreclosure charges/pre-payment penalty on Floating Rate Loans As a measure of customer protection and also in order to bring in uniformity with regard to prepayment of various loans by borrowers of banks and NBFCs, it is advised that NBFCs shall not charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect.
A.P.(DIR Series) Circular No.3

July 14, 2014 Issue of Partly Paid Shares and Warrants by Indian Company to Foreign Investors Partly paid equity shares and warrants issued by an Indian company in accordance with the provision of the Companies Act, 2013 and the SEBI guidelines, as applicable, shall be eligible instruments for the purpose of FDI and foreign portfolio investment (FPI) by Foreign Institutional Investors (FIIs)/Registered Foreign Portfolio Investors(RFPIs) subject to compliance with FDI and FPI schemes. Further, the pricing of the partly paid equity shares and warrants, reporting, complainces and other cobed.nditions to be adhered is also prescribed.
A. P. (DIR Series) Circular No.4
July 15, 2014 Foreign Direct Investment (FDI) in India - Issue/Transfer of Shares or Convertible Debentures - Revised pricing guidelines The new pricing guidelines in respect of transfer/issue of shares and for exit from investment in equity shares with or without optionality clauses of listed/unlisted Indian companies have been prescribed so as to provide greater freedom and flexibility to the parties concerned under the FDI framework. The new pricing guidelines are as under:
(i) In case of listed companies
(a) The issue and transfer of shares including compulsorily convertible preference shares and compulsorily convertible debentures shall be as per the SEBI guidelines;
(b) The pricing guidelines for FDI instruments with optionality clauses shall continue to be in accordance with A.P. (DIR Series) Circular No. 86 dated January 9, 2014, i.e., the non-resident investor shall be eligible to exit at the market price prevailing on the recognised stock exchanges subject to lock-in period as stipulated, without any assured return.
(ii) In case of unlisted companies
The issue and transfer of shares including compulsorily convertible preference shares and compulsorily convertible debentures with or without optionality clauses shall be at a price worked out as per any internationally accepted pricing methodology on arm’s length basis. Thus, the guiding principle will be that the non-resident investor is not guaranteed any assured exit price at the time of making such investment/ agreement and shall exit at a fair price computed as above at the time of exit subject to lock-in period requirement as applicable in terms of A.P. (DIR Series) Circular No. 86 dated January 9, 2014.
4. The changes in the existing pricing guidelines for FDI applicable to transfer/issue of shares and for exit from foreign direct investment with optionality clauses for the unlisted Indian companies are given in the Annex 1 and Annex 2 of the notification, respectively.
5. An Indian company taking on record in its books any transfer of its shares or convertible debenture by way of sale from a resident to a non-resident and a non-resident to a resident shall disclose in its balance sheet for the financial year, in which the transaction took place, the details of valuation of share or convertible debentures, the pricing methodology adopted for the same as well as the agency that has given/certified the valuation.
A.P. (DIR Series) Circular No.5
July 17, 2014 Liberalised Remittance Scheme (LRS) for resident individuals-Increase in the limit from USD 75,000 to USD 125,000 The existing limit of USD 75,000 per financial year (April-March) under the LRS has been increased to USD 125,000. Further, it is clarified that the Scheme can now be used for acquisition of immovable property outside India.
July 22, 2014 Anti-Money Laundering (AML)/Combating of Financing of Terrorism (CFT) - Standards  Financial Action Task Force (FATF) has updated its Statement on the subject and document ‘Improving Global AML/CFT Compliance: on-going process’ on June 27, 2014. All banks and financial institutions are accordingly advised to consider the information contained in the enclosed statement.
A.P. (DIR Series) Circular No. 6
July 18, 2014 Foreign Direct Investment – Reporting under FDI Scheme In terms of Para 9 (1) B of Schedule I to the FEMA Notification No. 20 dated May 03, 2000 as amended from time to time, Indian companies are required to report the details of the issue of shares, convertible debentures, partly paid shares and warrants in form FC-GPR, to the Regional Office concerned, within 30 days of issue of shares / convertible debentures. In terms of Para 10 of the Schedule ibid, transfer of shares, convertible debentures, partly paid shares and warrants by way of sale from a person resident in India to a person resident outside India or vice versa, are required to be reported by the transferor/transferee resident in India to the AD Bank in form FCTRS, within 60 days from the date of receipt or payment of the amount of consideration. Indian companies are required to report the NIC Codes in the FCGPR and FCTRS forms as per the NIC 2008 version, henceforth.

It has also been decided to introduce a uniform State and District code list for reporting of details of foreign direct investment by Indian companies in Form FCGPR. The list can be accessed on the RBI website ( → FEMA – State and District Code List).
A. P. (DIR Series) Circular No. 13
July 23, 2014 Foreign investment in India by SEBI registered Long term investors in Government dated Securities It has been decided to enhance the investment limit in government securities available to FIIs/QFIs/FPIs by USD 5 billion by correspondingly reducing the amount available to long term investor from USD 10 billion to USD 5 billion within the overall limit of USD 30 billion. The incremental investment limit of USD 5 billion shall be required to be invested in government bonds with a minimum residual maturity of three years.
A.P. (DIR Series) Circular No.17 
July 28, 2014 External Commercial Borrowing (ECB) Policy — Review of all-in-cost ceiling  It has been decided that the all-in-cost ceiling as specified under paragraph 2 of A.P. (DIR Series) Circular No. 99 dated March 30, 2012 will continue to be applicable till December 31, 2014 and is subject to review thereafter.

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