Weekly Secretarial Updates
March 18, 2012 to March 23, 2012
Updates from the RBI | |||
Sr No | Circular/ Notification number | Particulars | Applicability |
1 (a) | RBI/2011-12/453 A.P. (DIR Series) Circular No. 94 dated March 19, 2012 | Clarification - Prior intimation to the Reserve Bank of India for raising the aggregate Foreign Institutional Investors / Non-Resident Indian limits for investments under the Portfolio Investment Scheme | Registered Foreign Institutional Investors (FII) and Non-Resident Indians (NRI) |
(b) | RBI/2011-12/462 DPSS.CO.CHD.No./1732 / 03.01.03 / 2011-2012 March 20, 2012 | Special Clearing on March 31, 2012 | The Chairman and Managing Director / Chief Executive Officer All Scheduled Commercial Banks including RRBs / UCBs / State Co-operative Banks / District Central Co-operative Banks And information to the Corporates |
(c) | RBI/2011-12/465 A. P. (DIR Series) Circular No.95 dated March 21, 2012. | Foreign Exchange Management (Deposit) Regulations, 2000 - Credit to Non Resident (External) Rupee Accounts | All the Individuals, Category-I Authorised Dealer Banks and Authorised banks |
(d) | RBI/2011-12/466 DNBS(PD).CC. No 264/03.10.42/2011-12 March 21, 2012 dated March 21, 2012 | Know Your Customer (KYC) norms/Anti-Money Laundering (AML) | All the Non Banking Financial Companies |
(e) | RBI / 2011-12/467 DNBS.CC.PD. No.265/03.10.01 /2011-12 dated March 21, 2012 | Lending Against Security of Single Product – Gold Jewellery | Applicable to all the NBFC’s lending towards gold jewellery |
Legal News | |||
2(a) | Alleged irregularity in trading in the shares of Videocon Industries Limited and NRB Bearings Ltd | ||
RBI UPDATES:
1 (a) Clarification - Prior intimation to the Reserve Bank of India for raising the
aggregate Foreign Institutional Investors / Non-Resident Indian limits for
investments under the Portfolio Investment Scheme
aggregate Foreign Institutional Investors / Non-Resident Indian limits for
investments under the Portfolio Investment Scheme
RBI Circular – March 19, 2012:
Applicability:
Registered Foreign Institutional Investors (FII) and Non-Resident Indians (NRI)
Crux of the Circular:
- As per this circular the Indian company raising the aggregate
a. FII investment limit of 24 per cent to the sectoral cap/ statutory limit, as applicable to the respective Indian company
Or
b. The NRI investment limit of 10 per cent to 24 per cent,
should necessarily intimate the same to the Reserve Bank of India, immediately, as hitherto, along with a Certificate from the Company Secretary stating that all the relevant provisions of the extant Foreign Exchange Management Act, 1999 regulations and the Foreign Direct Policy, as amended from time to time, have been complied with.
- As a practice the RBI monitors the ceilings on the FII/NRI/PIO investments in Indian Companies on a daily basis. When the aggregate net purchases of equity shares of the company by FIIs/NRIs/PIOs reaches the cut-off point of 2 per cent below the overall limit, the Reserve Bank cautions all the designated bank branches not to purchase any more equity shares of the respective company on behalf of any FIIs/ NRIs/ PIOs without prior approval of the Reserve Bank.
- In this regard the Reserve Bank also informs the general public about the `caution’ and the `stop purchase’ in these companies through a press release and an updated list regarding the same is placed on the RBI website.
For further details information please follow the below link
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1(b) Special Clearing in March 31, 2012
RBI Circular – March 20, 2012:
We draw your attention to the RBI circular no. RBI/2011-12/462 DPSS.CO.CHD.No. /1732 / 03.01.03 / 2011-2012 dated March 20, 2012.
The Chairman and Managing Director / Chief Executive Officer All Scheduled Commercial Banks including RRBs / UCBs / State Co-operative Banks / District Central Co-operative Banks
Information:
To the corporates.
Crux of the Circular:
In a view to facilitate all the Government transactions of the current financial year 2011-12 the National Clearing cell functioning under the regional office of the RBI have been advised to conduct "Special Clearings" with same day return clearing in the evening / night of March 31, 2012
For further information please follow the below mentioned MCA circular:http://rbi.org.in/scripts/NotificationUser.aspx?Id=7050&Mode=0
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1(c) Foreign Exchange Management (Deposit) Regulations, 2000 -
Credit to Non Resident (External) Rupee Accounts
RBI Circular – March 21, 2012:
We draw your attention to the RBI circular no RBI/2011-12/465 A. P. (DIR Series) Circular No.95 dated March 21, 2012.
Applicability:
All Individuals, Category-I Authorised Dealer Banks and Authorised banks
Introduction:
Borrowing Limit:
An individual resident in India is permitted to borrow a sum not exceeding USD 250,000/- or its equivalent from her / his close relatives outside India, subject to the conditions mentioned therein
RBI has permitted such individual resident in India to repay his loan/ borrowings
- And such loans may be allowed to be credited to the Non Resident (External) Rupee (NRE) Accounts.
- AD Category-I banks may allow repayment of such loans to NRE / Foreign Currency Non-Resident (Bank) [FCNR(B)] account of the lender concerned subject to the condition that the loan to the resident individual was extended by way of inward remittance in foreign exchange through normal banking channels or by debit to the NRE / FCNR(B) account of the lender and the lender is eligible to open NRE / FCNR(B) account
It is further said that such a repayment shall be considered to be treated as an eligible credit to the NRE/ FCNR (B) account.
For further information please follow the link:
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1(d) Know Your Customer (KYC) norms/Anti-Money Laundering (AML)
RBI Circular – March 21, 2012:
We draw your attention to the RBI circular no: RBI/2011-12/466 DNBS(PD).CC. No 264/03.10.42/2011-12 March 21, 2012 dated March 21, 2012
Applicability:
All the Non Banking Financial Companies
Crux of the Circular:
- As per this circular all the NBFCs are now required to prepare a risk profile of each customer and apply enhanced due diligence measures on higher risk customers.
- NBFCs should have policies, controls and procedures, duly approved by their boards, in place to effectively manage and mitigate their risk adopting a risk-based approach.
- NBFCs would also be required to adopt enhanced measures for products, services and customers with a medium or high risk rating
- NBFCs should take steps to identify and assess their ML/FT risk for customers, countries and geographical areas as also for products/ services/ transactions/delivery channels.
For further information please follow the below link:
http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=7029&Mode=0---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1 (e) Lending Against Security of Single Product – Gold Jewellery
RBI Circular – March 21, 2012:
We draw your attention to the RBI circular no: RBI / 2011-12/467 DNBS.CC.PD. No.265/03.10.01 /2011-12 dated March 21, 2012.
Applicability:
Applicable to all the NBFC’s lending towards gold jewellery
Crux of the Circular:
When the NBFCs lend towards gold Jewellery there is an inherent risk involved, there by as a precautionary measure RBI has stated that all the NBFCs shall
- Maintain a Loan-to-Value(LTV) ratio not exceeding 60 percent for loans granted against the collateral of gold jewellery and
- To disclose in their balance sheet the percentage of such loans to their total assets.
- NBFCs who are primarily engaged in lending against gold jewellery (such loans comprising 50 percent or more of their financial assets) shall maintain a minimum Tier l capital of 12 percent by April 01, 2014.
- As per this circular, NBFCs should not grant any advance against bullion / primary gold and gold coins.
For further details information please follow the below link
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2(a) Legal News:
Alleged irregularity in trading in the shares of Videocon Industries Limited and NRB Bearings Ltd
Judgement by the : Adjudicating officer Securities and Exchange Board of India
Crux of the case:
Facts of the Case:
Securities and Exchange Board of India (hereinafter referred to as “SEBI”) conducted an investigation into the alleged irregularity in trading in the shares of Videocon Industries Limited (hereinafter referred to as ‘VIL’) and NRB Bearings Ltd. (hereinafter referred to as ‘NRB’) covering the period from May 01, 2004 to June 15, 2004, into possible violation of the provisions of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI Act’) and various Rules and Regulations framed there under.
Investigation:
The investigation revealed that M/s Monalisha Securities Private Ltd. (hereinafter referred to as the ‘Noticee’) had contributed majority of the trading volume in the shares of VIL and NRB during the investigation period and indulged in structured deals and reversal trades with out taken or given delivery in such a manner that led to creation of artificial volume and impacted the price of the scrip
Judgement:
After taking into consideration all the facts and circumstances of the case, the judge has imposed a penalty of Rs.1,00,000/- (Rupees One Lakh only) under section 15HA and Rs. 1,00,000 ./- (Rupees One Lakh only) under section 15HB of SEBI Act, {i.e. a total penalty of Rs. 2,00,000/- (Rupees Two Lakhs only) } on the Noticee which will be commensurate with the violations committed by it.
Justification of the judgment in the eyes of law:
Prohibition of manipulative, fraudulent and unfair trade practices
(1 ) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities
.
(2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely :—
(a) indulging in an act which creates false or misleading appearance of trading in the securities market;
(b) dealing in a security not intended to effect transfer of beneficial ownership but intended to operate only as a device to inflate, depress or cause fluctuations in the price of such security for wrongful gain or avoidance of loss;
(c) advancing or agreeing to advance any money to any person thereby inducing any other person to offer to buy any security in any issue only with the intention of securing the minimum subscription to such issue;
(e) any act or omission amounting to manipulation of the price of a security;
(g) entering into a transaction in securities without intention of performing it or without intention of change of ownership of such security;
(n) circular transactions in respect of a security entered into between intermediaries in order to increase commission to provide a false appearance of trading in such security or to inflate, depress or cause fluctuations in the price of such security
For further details please follow the link:
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