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RBI updates - June 2016



(1.)      Refinancing of Project Loans

 

RBI Circular: 

 

Circular No: RBI/2015-16/417, DNBR.CC.PD.No.082/03.10.001/2015-16 dated June 2 2016

Applicability:

All Non-Banking Financial Companies

Crux of the Circular:

Through this circular it has now been decided to extent the instructions on refinancing that were applicable earlier to All Scheduled Commercial Banks to be extended to NBFCs also.

As per this circular, NBFCs may refinance any existing infrastructure and other project:

-      by way of take-out financing,
-      without any pre-determined agreement with other lenders
-      fixing a longer repayment period

However, it shall not be considered as restructuring if the following conditions are satisfied:

     i.        Such loans should be 'standard' in the books of the existing lenders, and should have not been restructured in the past;

    ii.        Such loans should be substantially taken over (more than 50% of the outstanding loan by value) from the existing financing lenders; and

   iii.        The repayment period should be fixed by taking into account the life cycle of the project and cash flows from the project.

For existing project loans where the aggregate exposure of all institutional lenders is minimum Rs. 1,000 crore, however, NBFCs may refinance such loans by way of full or partial take-out financing, even without a pre-determined agreement with other lenders, and fix a longer repayment period, and the same would not be considered as restructuring in the books of the existing as well as taking over lenders, if the following conditions are satisfied:

     i.        The project should have started commercial operation after achieving Date of Commencement of Commercial Operation (DCCO);

    ii.        The repayment period should be fixed by taking into account the life cycle of and cash flows from the project, and, Boards of the existing and new lenders should be satisfied with the viability of the project. Further, the total repayment period should not exceed 85% of the initial economic life of the project / concession period in the case of PPP projects;

   iii.        Such loans should be 'standard' in the books of the existing lenders at the time of the refinancing;

  iv.        In case of partial take-out, a significant amount of the loan (a minimum 25% of the outstanding loan by value) should be taken over by a new set of lenders from the existing financing lenders; and

    v.        The promoters should bring in additional equity, if required, so as to reduce the debt to make the current debt-equity ratio and Debt Service Coverage Ratio (DSCR) of the project loan acceptable to the NBFCs.

5. A lender who has extended only working capital finance for a project may be treated as 'new lender' for taking over a part of the project term loan as required under the guidelines.

6. The above facility will be available only once during the life of the existing project loans.

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(2.)     Credit Information Reporting in respect of Self Help Group (SHG) members

 

RBI Circular and Notification: 

 

Circular No. RBI/2015-16/424 DBR.CID.BC.No.104/20.16.56/2015-16 dated June 16, 2016

 

Notification No. RBI/2015-16/424, DBR.CID.BC.No.104/20.16.56/2015-16 dated June 16, 2016

 

Applicability:

All Scheduled Commercial banks (including RRBs)
All Non-Banking Financial Companies (NBFCs)
All Primary (Urban) Co-operative Banks,
State / Central Co-operative Banks
All Credit Information Companies

Crux of the Circular:

 

-      It has been decided to incorporate the SHG member level data into the existing Microfinance data file format

 

-      Further, the Microfinance data file to be submitted to all the four CICs from July 1, 2016

 

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(3.)      Reporting of Information on Investment in Commercial Papers and Unhedged Foreign Currency Exposures of the Borrowers to Credit Information Companies

 

RBI Circular and Notification:

 

Circular no: RBI/2015-16/432, DBR.CID.BC. 107/20.16.056/2015-16 dated June 23, 2016

 

Notification no: RBI/2015-16/432, DBR.CID.BC. 107/20.16.056/2015-16 dated June 23, 2016

 

Applicability:

All Scheduled Commercial Banks
All India Financial Institutions
Credit Information Companies

Crux of the Circular:

 

-      Based on the inputs of the Technical Group on Credit Information set up by RBI and coordinated by CIBIL, it has been decided to capture the information on Commercial Papers (CPs) and Un-hedged Foreign Currency Exposure (UFCE) in addition to the existing information that is required to be captured.

Reporting

-      Further, the following shall be reported in the required format to all the four credit information companies (CICs) with effect from July 1, 2016:

On a monthly basis

o   the information on CPs issued by the companies

o   the information on any default in the redemption of the relevant CP issue shall be reported by IPA

Note: The investing credit institutions need not report the information on CPs to the CICs.

On a quarterly basis

-  The information regarding UFCE of individual borrowers.

 

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(4.)      Format of Statutory Auditors’ Certificate (SAC) to be submitted by NBFCs

 

RBI Circular and Notification:

 

Circular no: RBI/2015-16/433, DNBS (PPD) CC.No./04/66.14.001/2015-16 dated June 23, 2016

 

Notification no. RBI/2015-16/433, DNBS (PPD) CC.No./04/66.14.001/2015-16 dated June 23, 2016

 

Applicability:

All NBFCs (excluding RNBCs) and
Members of ICAI

Crux of the Circular:

 

For the purpose of ensuring consistency in the manner in which the information is received from the Auditors, it has been decided to introduce a uniform format of the Statutory Auditor Certificate (SAC).

 

In this regard the NBFCs are required to fill in the information, as required, in COSMOS and to scan and upload the SAC in COSMOS https://cosmos.rbi.org.in under the menu Upload Returns > Statutory Auditors Certificate. The format of the SAC is attached herewith.

 

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(5.)      Pre-2005 series of Banknotes - Revision of exchange facility

 

RBI Circular:

 

Circular no: RBI/2015-16/443, DCM (Plg) No.G-12/4297/10.27.00/2015-16 dated June 30, 2016

 

Applicability:

All the banks, companies, body corporate and citizens of India

Crux of the Circular:

 

-       With effect from July 1, 2016 the public is directed to approach one of the following offices of RBI to exchange the pre-2005 banknotes (that are available with them currently) for new notes.

RBI Offices: Ahmedabad, Bengaluru, Belapur, Bhopal, Bhubaneswar, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Jammu, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, New Delhi, Patna, Thiruvananthapuram and Kochi.

-        The pre-2005 banknotes will continue to remain legal tender.

 

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(6.)  Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015

 

RBI Notification:

 

Notification No.FEMA 10 (R) /2015-RB dated June 1, 2016

 

Applicability:

Person resident in India

Crux of the Notification:

 

Through this notification, the Reserve Bank of India has:

 

-      Made certain regulations for opening, holding and maintaining Foreign Currency Accounts.

 

-      Specified the limits up to which amounts can be held in such accounts by a person resident in India

 

 

The complete notification is available in the below link

 

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(7.)  Scheme for Sustainable Structuring of Stressed Assets

RBI Notification:

 

Notification No. RBI/2015-16/422, DBR.No.BP.BC.103/21.04.132/2015-16 dated June 13, 2016

 

Applicability:

All Scheduled Commercial Banks (Excluding RRBs),
All-India Term-lending and Refinancing Institutions (Exim Bank, NABARD, NHB and SIDBI)
Non-Banking Financial Companies
Securitisation Companies/ Reconstruction Companies

Crux of the Notification:

 

-      For the purpose of strengthening the lenders’ ability to deal with stressed assets, RBI had been issuing various guidelines and prudential norms on stressed assets resolution from time to time.

-      As banks have represented for permitting them more time to write down the debts and to make the required provisions in case of resolution of large accounts, the RBI after due consultation with the banks has decided to facilitate the resolution of large accounts for the purpose of ensuring the performance of adequate deep financial restructuring, thus enabling the projects a chance of sustained revival.

-      This scheme shall be applicable to those accounts only who meet the following conditions:

o   The project has commenced commercial operations;
o   The aggregate exposure (including accrued interest) of all institutional lenders in the account is more than Rs.500 crore (including Rupee loans, Foreign Currency loans/External Commercial Borrowings,);
o   The debt meets the test of sustainability as outlined in this notification.

 

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(8.) Permitting writing of options against contracted exposures by Indian Residents

 

RBI Notification: 

 

Notification No. RBI/2015-16/431, A.P. (DIR Series) Circular No. 78 dated June 23, 2016

 

Applicability:

All Category - I Authorised Dealer Banks
Indian Residents

Crux of the Notification:

 

-      For the purpose of encouraging participation in the Over the Counter (OTC) currency options market and for the purpose of improving its liquidity, it has been decided by RBI

o   to permit resident exporters and importers of goods and services to write (sell) standalone plain vanilla European call and put option contracts against their contracted exposure,  i.e. covered call and covered put respectively, to any AD Cat-I bank in India subject to operational guidelines and their respective terms and conditions

o   These operational guidelines shall be reviewed after one year based on experience.

 

 

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(9.)  Reserve Bank of India (Financial Statements of All India Financial Institutions - Presentation, Disclosure and Reporting) Directions, 2016

 

RBI Master Direction: 

 

Master Direction No. RBI/DBR/2015-16/26, Master Direction DBR.FID.No.108 / 01.02.000/2015-16 dated June 23, 2016

 

Applicability:

All India Financial Institutions (AIFIs) regulated by Reserve Bank of India viz. EXIM Bank, NABARD, NHB and SIDBI with effect from the quarter ended December 2016.

Crux of the Master Direction:

 

The AIFIs shall, prepare a balance-sheet and profit and loss account as on the last working day of the year or the period, as the case may be, in the form and manner as prescribed under the respective Acts governing their functioning.

 

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