Secretarial
Updates
For the
Period starting from August 26, 2012 to August 31, 2012
RBI UPDATE
|
Sr No
|
Circular/ Notification number
|
Particulars
|
Applicability
|
1 (a)
|
RBI/2012-13/177
RPCD.CO.RCB.BC.No.26/07. 38.01/2012-13 dated August 28, 2012
|
Interest Rate on Deposits
|
All
Banks
|
(b)
|
RBI/2012-13/178 A. P. (DIR Series)
Circular No. 19 dated
August 28, 2012
|
Issue of Indian Depository Receipts (IDRs) - Limited two
way fungibilty
|
To all the Banks and people dealing with IDRs
|
(c)
|
RBI/2012-13/178 A. P. (DIR Series) Circular No. 20 dated August 29, 2012
|
Non-resident
guarantee for non-fund based facilities entered between two resident entities
|
All
Banks
|
(d)
|
RBI/2012-13/180
UBD. BPD.(PCB)CIR No.6/ 13.01.000/2012-13 dated August 30, 2012
|
Premature Repayment of Term/Fixed Deposits in banks with
“Either
or Survivor” or “Former or Survivor” mandate – Clarification
|
To all the Banks and joint account holders
|
(e)
|
RBI/2012-13/183
DPSS. CO.PD. No.391/ 02.10 .002/2012-13 dated Aug 31, 2012
|
White Label ATMs (WLAs) in India – Guidelines
|
To all the Non Bank entities desirous of setting
up White Label ATMs
|
(f)
|
RBI/2012-13/185
A. P. (DIR Series) Circular No. 21 dated August 31, 2012
|
Foreign investment by Qualified Foreign Investors (QFIs) –
Hedging facilities
|
All Banks
|
MCA UPDATES
|
2. Notices from MCA
|
(a)
|
Stopping of Form 23AC and Form
23AC- XBRL for financial year starting on or after 01.04.2011
|
(b)
|
Webinar on MCA XBRL filings of
financial statements for Financial Year 2011-12
|
(c)
|
Investor Education and Protection
Fund
|
CASE
STUDY
|
3(a)
|
Supreme
Court Judgment on the Sahara conglomerate
|
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RBI UPDATES:
1(a) Interest Rate on Deposits
RBI
Circular:
This is with reference to the RBI Circular No:
RBI/2012-13/177 RPCD.CO.RCB.BC.No.26/07. 38.01/2012-13 dated August 28, 2012
Applicable:
To all the Banks
Crux of the Circular
As per the RBI circular RPCD.No.RF.BC.39/07.38.01/98-99
dated December 4, 1998 :
-
The
State and Central Co-operative Banks were permitted to offer, at their
discretion, differential rates of interest on single term deposits of ` 15 lakh and above, subject to the condition that the
schedule of interest rates payable on deposits, including deposits on which
differential interest is paid, is disclosed in advance and not subject to negotiation
between the depositor and the bank.
-
Based
on this it had been observed that there are wide variations in the interest
rates offered by banks on single term deposits of ` 15
lakh and above and those offered on other deposits (i.e. deposits less than ` 15 lakh) of corresponding maturities. Further, banks are
offering significantly different rates on deposits with very little difference
in maturities.
-
There
by there was inadequate liquidity management system and inadequate pricing
methodologies that prevailed.
Currently what should
Banks do:
-
Banks
are, therefore, advised to put in place a Board approved transparent policy on
pricing of liabilities. The Board/ALCO should ensure that the variation in
interest rates on single term deposits of ` 15 lakh
and above and other term deposits (i.e. deposits less than `
15 lakh) is minimal for corresponding maturities.
For further information:
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1 (b) Issue of Indian Depository
Receipts (IDRs) - Limited two way fungibilty
RBI
Circular:
This is with reference to the RBI Circular No: RBI/2012-13/178 A. P. (DIR Series) Circular No. 19 dated
August 28, 2012
Applicable:
To all the Banks and people dealing with IDRs
Crux of the Circular
Attention of Authorised Dealers
Category – I (AD Category - I) banks is invited to A.P. (DIR Series) Circular No.5 dated July 22, 2009, in
terms of which, the guidelines regarding issue of IDRs by eligible companies
resident outside India have been laid out.
2. It has now been decided to allow
a limited two way fungibility for IDRs (similar to the limited two way
fungibility facility available for ADRs/GDRs) subject to the following terms
and conditions:
i.
The
conversion of IDRs into underlying equity shares would be governed by the
conditions mentioned in paras 6 and 7 of A.P. (DIR Series) Circular No. 5 dated
July 22, 2009.
ii.
Fresh
IDRs would continue to be issued in terms of the provisions of A.P. (DIR
Series) Circular No. 5 dated July 22, 2009.
iii.
The
re-issuance of IDRs would be allowed only to the extent of IDRs that have been
redeemed /converted into underlying shares and sold.
iv.
There
would be an overall cap of USD 5 billion for raising of capital by issuance of
IDRs by eligible foreign companies in Indian markets. This cap would be akin to
the caps imposed for FII investment in debt securities and would be monitored
by SEBI.
Accordingly, Para 5 of A.P. (DIR
Series) Circular No. 5 dated July 22, 2009 stands amended as above.
3. The issuance, redemption and
fungibility of IDRs would also be subject to the SEBI (Issue of Capital and
Disclosure Requirements) Regulations, 2009, as amended from time to time as
well as other relevant guidelines issued in this regard by the Government, the
SEBI and the RBI from time to time.
4.AD Category - I banks may bring
the contents of the circular to the notice of their customers/constituents
concerned.
6. The directions contained in this
circular have been issued under Sections 10(4) and 11(1) of the Foreign
Exchange Management Act, 1999 (42 of 1999) and are without prejudice to
permissions / approvals, if any, required under any other law.
For further
information:
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1 (c) Non-resident guarantee for
non-fund based facilities entered between two resident entities
RBI
Circular:
This is with reference to the RBI Circular No: RBI/2012-13/178 A. P. (DIR Series) Circular No. 20 dated
August 29, 2012
Applicable:
To all the Banks
Crux of the Circular
2. Borrowing and lending of Indian
Rupees between two persons resident in India does not attract the
provisions of the Foreign Exchange Management Act, 1999. In case where a Rupee
loan is granted against the guarantee provided by a person resident outside India, there is
no transaction involving foreign exchange until the guarantee is invoked and
the non-resident guarantor is required to meet the liability under the
guarantee. The Reserve Bank vide Notification No. FEMA 29/2000-RB dated
September 26, 2000 has granted general permission to a person resident in India, being a principal debtor, to make payment
to a person resident outside India,
who has met the liability under a guarantee.
3. On a review, it has been decided
to extend the facility of non-resident guarantee under the general permission
for non-fund based facilities (such as Letters of Credit/guarantees/Letter of
Undertaking (LoU) /Letter of Comfort (LoC) ) entered into between two persons
resident in India. The method of discharge of liability by the non-resident
guarantor under the guarantee and the subsequent repayment of the liability by
the principal debtor would continue, as hitherto, as detailed in A.P. (DIR
Series) Circular No. 28 dated March 30, 2001.
4. It has also been decided to
introduce a reporting format to capture such guarantees issued and invoked.
Authorized Dealer Category-I banks are required to furnish such details by all
its branches, in a consolidated statement, during the quarter, as per the
format in Annex to the Chief General Manager, Foreign Exchange Department, ECB
Division, Reserve Bank of India, Central Office Building, 11th floor, Fort,
Mumbai – 400 001 (and in MS-Excel file through email) so as to reach the Department not later than 10th
day of the following month.
5. The policy would be reviewed at
an appropriate time based on the experience gained in this regard.
6. The modifications to the policy
will come into force from the date of this circular. AD Category - I banks may
bring the contents of this circular to the notice of their constituents and
customers.
7. The directions contained in this
circular have been issued under sections 10(4) and 11(1) of the Foreign
Exchange Management Act, 1999 (42 of 1999) and are without prejudice to
permissions / approvals, if any, required under any other law.
For further
information:
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1 (d) Premature Repayment of Term/Fixed
Deposits in banks with
“Either or Survivor” or “Former or
Survivor” mandate – Clarification
RBI Circular:
This is with reference to the RBI
Circular No: RBI/2012-13/180 UBD.BPD.(PCB)CIR No.6/ 13.01.000/2012-13 dated
August 30, 2012
Applicable:
To all the Banks and joint account holders.
Crux of the Circular
Please refer to paragraph 4 of our circular UBD.BPD.(PCB)CIR No.11/13.01.000/ 2011-12 dated
November 17, 2011 whereby we had advised that in case joint depositors of
term/fixed deposits with “Either or Survivor” or “Former or Survivor” mandate
intend to allow premature withdrawal of their deposits by one of the joint
depositors on the death of the other, it would be open for banks to allow the
same, provided they have taken a specific joint mandate from the depositors for
the said purpose. In this regard you may also refer to Paragraph 3 of our
circular UBD.BPD.Cir.No.4/13.01.00/2005-06 dated July 14,
2005 in terms of which, Urban Co-operative Banks (UCBs) were advised to
incorporate a clause in the account opening form itself to the effect that in
the event of death of the depositor, premature termination of term deposits
would be allowed subject to the conditions which they may specify therein. UCBs
were also advised to give wide publicity to the above and provide guidance to
deposit account holders in this regard.
2. It is reiterated that in case of
term deposits with “Either or Survivor” or “Former or Survivor” mandate, UCBs
are permitted to allow premature withdrawal of the deposit by the surviving
joint depositor on the death of the other, only if, there is a joint mandate
from the joint depositors to this effect.
3. UCBs which have
neither incorporated such a clause in the account opening form nor taken
adequate measures to make the customers aware of the facility of such mandate,
cause unnecessary inconvenience to the “surviving“ deposit account
holders(s). UCBs are, therefore, advised to invariably incorporate the
aforesaid clause in the account opening form and also inform their existing as
well as future term deposit holders about the availability of such an option.
4. The joint deposit holders may be
permitted to give the mandate either at the time of placing fixed deposit or
anytime subsequently during the term/tenure of the deposit. If such a mandate
is obtained, banks can allow premature withdrawal of term/fixed deposits by the
surviving depositor without seeking the concurrence of the legal heirs of the
deceased joint deposit holder. It is also reiterated that such premature
withdrawal would not attract any penal charge.
5. The clarification provided in
this circular would supersede paragraph 3 of circular
UBD.BPD.Cir.No.4/13.01.00/2005-06 dated July 14, 2005.
For further
information:
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1(e) White Label ATMs (WLAs) in India –
Guidelines
RBI
Circular:
This is with reference to the RBI
Circular No: RBI/2012-13/183 DPSS.CO.PD. No.391/ 02.10.002 / 2012-13 dated
August 31, 2012
Applicable:
To all the Non Bank entities desirous of setting up White Label ATMs
Crux of the Circular
2.
We have been receiving queries from non bank entities, whether infusion of
capital to satisfy the criteria of net worth of Rs 100 crore would be
considered if the capital is infused after the entities’ balance sheet have
been audited while seeking authorisation from RBI under the PSS Act, for
setting up White Label ATMs.
3.
It is clarified that such non-bank entities that wish to infuse capital can do
so provided they submit a certificate to this effect from a Chartered
Accountant that additional capital has been infused to satisfy the criterion of
net-worth of Rs. 100 crore. The certificate to this effect may be submitted
from its existing Chartered Accountant who has audited the entity’s last
balance sheet or a Chartered Accountant who has conducted a limited review of
the accounts of the last quarter / half-year along with the application seeking
authorisation as per the stipulated guidelines.
For further
information:
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1(f) Foreign investment by Qualified
Foreign Investors (QFIs) – Hedging facilities
RBI Circular:
This is with reference to the RBI
Circular No: RBI/2012-13/185 A. P. (DIR Series) Circular No. 21 dated August
31, 2012
Applicable:
To all the Banks
Crux of the Circular
Further,
in terms of A.P. (DIR Series) Circular No. 7 dated July 16, 2012,
Qualified Foreign Investors (QFIs) have been permitted to purchase on
repatriation basis debt securities subject to the various terms and conditions.
As per para 2(x) of the circular, QFIs would be permitted to hedge their
currency risk on account of their permissible investments (in equity and debt
instruments) in terms of the guidelines issued by the Reserve Bank from time to
time.
3.
It has now been decided to allow QFIs to hedge their currency risk on account
of their permissible investments (in equity and debt instruments), as per the
details given in the Annex.
5.
AD Category - I banks may bring the contents of this circular to the notice of
their constituents and customers.
6.
The directions contained in this circular have been issued under sections 10(4)
and 11(1) of the Foreign Exchange Management Act 1999 (42 of 1999) and are
without prejudice to permissions/approvals, if any, required under any other
law.
Annexure 1:
Facilities
for Qualified Foreign Investors (QFIs)
Purpose
- To hedge the currency risk on
the market value of entire investment in equity and/or debt in India as
on a particular date.
- To hedge Initial Public Offers
(IPO) related transient capital flows under the Application Supported by
Blocked Amount (ASBA) mechanism.
Products
Forward
foreign exchange contracts with rupee as one of the currencies and foreign
currency-INR options. Foreign Currency – INR swaps for IPO related flows.
Operational
Guidelines, Terms and Conditions
- QFIs are allowed to hedge the
currency risk on account of their permissible investments with the AD
Category-I bank with whom they are maintaining the Rupee Account opened
for the purpose of investment.
- The eligibility for cover may
be determined on the basis of the declaration of the QFI with periodic
review undertaken by the AD Category I bank based on the investment value
as provided / certified by QDP of the QFI at least at quarterly intervals,
on the basis of market price movements, fresh inflows, amounts repatriated
and other relevant parameters to ensure that the forward cover outstanding
is supported by underlying exposures.
- If a hedge becomes naked in
part or in full owing to contraction of the market value of the portfolio,
for reasons other than sale of securities, the hedge may be allowed to
continue till the original maturity, if so desired.
- The contracts, once cancelled
cannot be rebooked. The forward contracts may, however, be rolled over on
or before maturity.
- The cost of hedge should be met
out of repatriable funds and /or inward remittance through normal banking
channel.
- All outward remittances
incidental to the hedge are net of applicable taxes.
- For IPO related transient
capital flows
- QFIs can undertake foreign
currency- rupee swaps only for hedging the flows relating to the IPO
under the ASBA mechanism.
- The amount of the swap should
not exceed the amount proposed to be invested in the IPO.
- The tenor of the swap should
not exceed 30 days.
- The contracts, once cancelled,
cannot be rebooked. Rollovers under this scheme will also not be
permitted.
For further information:
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MCA UPDATES
Notices from MCA
2. a. Stopping of Form 23AC and Form 23AC- XBRL for
financial year starting on or after 01.04.2011
Please note that existing Form 23AC, Form 23ACA, Form 23AC-XBRL and Form
23ACA-XBRL can not be filed by those companies whose financial year is starting
on or after 1.4.2011 as Revised Schedule VI is applicable for such period. New
e-forms are undergoing revision to align with the Revised Schedule VI and new
forms would be updated shortly.
Ministry has observed that some listed companies have shown
abnormal figure of their shareholders in their Annual Return (e-form no. 20B)
filed with the Registrar of Companies.
It appears that the signatories of e-form 20B of above companies including
certifying practicing professionals have not verified the figures of number of
shareholders from the records of the company. It can also be inferred that by
putting figure of only 1 (one shareholder) in a listed company, the practicing
professionals have not discharged their duties prudently and are liable for
professional misconduct.The signatory Directors and company secretaries of
these companies are also liable for furnishing wrong information in the Form.
The Regional Directors have been directed to examine the above lapses on the
part of companies and by practicing professionals and to furnish their report
to the Ministry for initiating further action in the matter.
2. b. Webinar on MCA XBRL filings of financial
statements for Financial Year 2011-12
A Webinar on MCA XBRL filings of financial statements for Financial Year
2011-12 has been scheduled on 16.08.2012 at 12.00 noon. Ministry officials,
representatives of ICSI, ICAI, TCS, etc are expected to participate in this
webinar. Weblink of the Webinar is
2. c Investor Education and Protection Fund
Investor Education and Protection Fund (Uploading of information regarding
unpaid and unclaimed amounts lying with companies) Rules, 2012, has mandated
every company to file eForm 5INV containing the information of unclaimed and
unpaid amounts as referred to in subsection (2) of section 205C of the
Companies Act, 1956.
This information is required to be filed every year within a
period of 90 days after the holding of Annual General Meeting or the date on
which it should have been held as per the provisions of section 166 of the Act,
and every year thereafter till completion of the seven years’ period.
The information is to be filed in Form 5- INV as per the above
mentioned rules; and thereafter an excel sheet containing detailed investor
wise details is to be filed separately. The eForm, the excel template and detailed
steps are provided in the IEPF application link on the portal
For financial year ended on 31st March
2011, the eForm should be filed latest by 31st July 2012.
For more details, refer the website www.iepf.gov.in and the Investor Education
and Protection Fund (Uploading of information regarding unpaid and unclaimed
amounts lying with companies) Rules, 2012.
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CASE STUDY
3 (a) Supreme Court Judgment on the Sahara conglomerate
The Supreme Court on Friday ordered the
Sahara conglomerate to
refund more than $3 billion it had raised from millions of small investors,
reaffirming an order from the SEBI, which had said the process violated rules,
in a blow to the powerful group. The Supreme Court also ordered Sahara to pay 15% interest
to investors on their deposits, a lawyer on the case said.
Two unlisted group companies of Sahara, which has interests
ranging from financial services and housing to media and sports, had between
2008 and 2011 raised a total of 177 billion rupees from 22 million small
investors through an instrument known as an optionally fully convertible
debenture.
The Securities and Exchange Board of India (SEBI)
last year ordered the group companies to refund the money, with 15 percent
annual interest, after it found that the fund-raising process did not comply
with rules.
An appellate tribunal upheld the
regulator's order after hearing Sahara's appeal.
