One pager on Opening of Diamond Dollar Accounts (DDAs) – Change in periodicity of the reporting (RBI Circular)

Introduction:

The RBI through its circular no RBI/2008-09/383 A. P. (DIR Series) Circular No. 51 dated February 13, 2009 facilitated all the firms and companies dealing in purchase / sale of rough or cut and polished diamonds / precious metal jewellery plain, minakari and / or studded with / without diamond and / or other stones, with a track record of at least 3 years in import / export of diamonds / coloured gemstones / diamond and coloured gemstones studded jewellery / plain gold jewellery, and having an average annual turnover of Rs 5 crore or above during preceding three licensing years, are allowed to open Diamond Dollar Accounts (DDA).

The request for opening of DDA is considered by the Reserve Bank on a case-to-case basis, subject to the provisions of the prevailing Foreign Trade Policy of the Government of India.

Benefits of opening a Diamond Dollar Accounts:

Permissible Credits  

Ø       Amount of pre-shipment and post-shipment finance availed in US Dollars.

Ø       Realisation of export proceeds from shipments of rough, cut, polished diamonds and diamond studded jewellery.

Ø       Realisation in US Dollars from local sale of rough, cut and polished diamonds.  

Permissible Debits

o        Payment for import / purchase of rough diamonds from overseas / local sources.

o        Payment for purchase of cut and polished diamonds, coloured gemstones and plain gold jewellery from local sources.

o        Payment for import/purchase of gold from overseas / nominated agencies and repayment of USD loans availed from the bank.

o        Transfer to rupee account of the exporter.   The above transactions are subject to the provisions of the Foreign Trade Policy of Government of India, issued from time to time.

RBI circular RBI/2011-12/440 A.P. (DIR Series) Circular No. 92 dated March 13, 2012: - Change in reporting:

Presently the RBI circular RBI/2011-12/440 A.P. (DIR Series) Circular No. 92 dated March 13, 2012 states that instead of monthly reports, quarterly reports giving details of the name and address of the firm / company in whose name the Diamond Dollar Account is opened, along with the date of opening / closing the Diamond Dollar Account are to be filed with effect from the quarter ended March 2012.

Such report is to be submitted within 10 of the month following the quarter to which it relates.

For further information please follow the link:

http://rbidocs.rbi.org.in/rdocs/Notification/PDFs/ODDA130312.pdf

One pager on Disclosures to be made by the Directors

Disclosures to be made by the Directors
Sr No	Applicable Section and Act	Particulars	Periodicity	Points to remember		Applicability
I	Companies Act 1956
1	Sec. 264	Consent of the Director to be filed with the ROC to appoint him as the director of the company	To be obtained at the time of him being appointed as the director of the Company	To take care that,  the consent letter must be dated before the Board meeting date.		Not applicable to the Pvt companies as per the Act but as per the MCA’s latest circular it is applicable to all the companies
2	Sec 274 (1)(g)	Disqualification of Directors	Annual declaration	It should contain the date in the month of April relating to the opening of the FY.		Applicable to all the Companies
3	Sec. 297	Board's sanction to be required for certain contracts in which particular directors are interested	Disclosure to be given before entering into such contracts or within 3 months from the date of entering into such contracts	-		Applicable to all the Companies
4	Sec. 299	Every director of the company who is either directly or indirectly interested in a contract or arrangement, or proposed contract or arrangement, entered into or to be entered into, by or on behalf of the company.	1.       Shall disclose the nature of interest in the Board meeting before entering into the contract or arrangement.	The date of the annual disclosure can only contain a date in the month of March relating to the closure of the FY.		Applicable to all the Companies
			2.       Such notice expires at the end of the FY. There by fresh notice to be given during the last month of the FY in which it would otherwise expire.
5	Sec. 305	Disclosure of directorships and other positions relating to manager and secretary held by the director are to be disclosed by him.	directors are required to inform within 20 days any change in the office. At the time of joining the board	The details provided/ disclosed must match with the register that is maintained.		Applicable to all the Companies
6	Sec. 308	Disclosure of share holdings in the company and in its subsidiary company	General notice at the time of joining the board and as and when there is any change reasonable steps are to be taken for it to be brought up and read at the Next Board meeting of the Company.	It should contain the date in the month of April relating to the opening of the FY.		Applicable to all the Companies
II	Listing Agreement
1	Clause 49	Declaration from the independent directors confirming that all the 6 conditions specified in the clause 49 of the listing agreement is complied	Annual declaration			Only to listed companies
III	SEBI (Prohibition of Insider Trading) Regulations 1992
1	Regulation 13(2)(4)	Details of change in shareholding by Director or Officer of a listed company	Change in disclosure since the last disclosure when the change exceeds, Rs. 5 Lakhs in value or 25000 shares or 1% of total shareholding or voting rights which ever is lower	Such a disclosure is to be made with 2 working days of becoming such promoter or person belonging to promoter group.		Only to listed companies

Weekly Secretarial Updates for the period March 1, 2012 to March 9, 2012

             

Updates from the Ministry of Company Affairs
Sr No	Circular/ Notification number	Particulars	Applicability
1 (a)	MCA General Circular no 2/2012 F. No. 17/165/2011-CL V dated March 1, 2012.	Registration of Companies or LLPs having one of their objects is to carry on the profession of Chartered Accountant, Cost Accountant, Architect, Company Secretary etc.	To All those companies or LLP’s who have their object to carry on the business of Banking, Insurance or to carry on the profession of Chartered Accountant, Cost Accountant, Architect, Company Secretary.
(b)	MCA General Circular no 3/2012 F. No. 17/46/20112CL V dated March 7, 2012.	Policy Document on Corporate Governance	Applicable to all the companies once it is notified.
Updates from IRDA
2(a)	IRDA circular no:  IRDA/F&I/CIR/DATA/066/03/2012 dated March 2, 2012.	Data submitted on Bancassurance channel and as required under Section 31B (2) of Insurance Act, 1938	All the life and general insurance companies
Updates from RBI
3(a)	RBI circular no: RBI/2011-12/430A.P.(DIR Series) Circular No. 90 dated March 6, 2012	Clarification - Liberalised Remittance Scheme for Resident Individuals	Applicable to all the resident individuals.
(b)	RBI circular no: RBI/2011-12/427 IDMD.PCD. 20 /14.01.02/2011-12 dated March 5, 2012	Settlement of OTC transactions in Certificates of Deposit (CDs) and Commercial Papers (CPs)	Applicable to all the entities regulated by RBI
(c)	RBI circular no: RBI/2011-12/425 DBOD.No.BL.BC. 82/22.01.009/2011-1 dated March 2, 2012.	Financial Inclusion by Extension of Banking Services - Use of Business Correspondents (BCs)	All Scheduled Commercial Banks (Including RRBs) & Local Area Banks
(d)	RBI circular no: RBI/2011-12/424 DNBS.PD.CC. No. 256 /03.10.042 / 2011-12 dated March 2, 2012.	Monitoring of Fraud – NBFC	All Non-Deposit taking NBFCs with asset size of Rs.100 crore and above and Deposit taking NBFCs

Registration of Companies or LLPs having one of their objects is to

carry on the profession of Chartered Accountant, Cost Accountant,

Architect, Company Secretary etc.

MCA Circular – March 1, 2012:

We draw your attention to the MCA General Circular no 2/2012 F. No. 17/165/2011-CL V dated March 1, 2012.

Applicability:

To all those companies or LLP’s who have their object to carry on the business of Banking,  Insurance or to carry on the profession of Chartered Accountant, Cost Accountant, Architect, Company Secretary.

Crux of the Circular:

The Registrar of Companies shall incorporate the Companies or the LLP’s carrying on the above mentioned profession or business only on production of an in-principle approval/ NOC from the concerned regulator/professional Institutes.

For further information please follow the below mentioned MCA circular:
http://mca.gov.in/Ministry/pdf/General_Circular_No_02_2012.pdf
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Policy Document on Corporate Governance

MCA Circular – March 7, 2012:

We draw your attention to the MCA General Circular no 3/2012 F. No. 17/46/20112CL V dated March 7, 2012.

Applicability:

Applicable to all the companies once it is notified.

Crux of the Circular:

The increasing business of the economies and complexities of operating in an inter-dependent world has raised the concerns with regard to the quality of the corporate governance system and the need to maintain its integrity.

In this regard more detail guidelines are also being available. The Voluntary Code on Corporate Governance of the CII (1998) and the National Voluntary Guideline on Corporate Governance 2009 are under revision by the Committee under the Chairmanship of Shri Kiran Karnik formulated for the purpose of brining in a more qualitative corporate governance.

Presently the Committee had felt the need to bring in a formal policy document for the purpose of ensuring that the Board, the Management practices and other processes conform to more standardized norms.

The Institute of Company Secretaries of India has prepared a concept paper in this regard on the subject entitled “Concept Paper on National Corporate Governance Policy, 2012”. This concept paper is available on the www.icsi.edu for public information and views and other suggestions are invited on the same.

For further information please follow the below mentioned MCA circular:
http://mca.gov.in/Ministry/pdf/General_Circular_No_03_2012.pdf

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Data submitted on Bancassurance channel and as required under Section 31B (2) of Insurance Act, 1938

IRDACircular  – March 2, 2012:

We draw your attention to the IRDA circular no:  IRDA/F&I/CIR/DATA/066/03/2012 dated March 2, 2012.

Applicability:

All the life and general insurance companies

Crux of the Circular:

To the existing circular the following modifications are being made for compliance in the filing/reporting requirements :

1. The details of various payments made to bancassurance channel shall now be made part of the annual filing made under section 31 B(2) of the Insurance Act, 1938 as against the half-yearly filing stipulations presently in place.

2. Clause 2 of the circular at (ii) above is amended requiring filing of details of remuneration paid whether by way of commission or otherwise to any person, in cases where such remuneration exceeds ` 5 lakh per annum in place of the threshold of ` 1 lakh per annum laid down earlier.

This threshold, however, does not apply to details of payments made to Bancassurance channel. These details shall continue to be provided for the entire business generated/payouts made.

3. Data shall be submitted in the revised formats placed at Annexure 2 (applicable to life insurance Companies) & Annexure3 (applicable to general insurance companies), effective from the financial year ending 31^st March 2012.

For further information please follow the below link:

http://www.irda.gov.in/ADMINCMS/cms/Circulars_Layout.aspx?page=PageNo1656&flag=1&mid=Insurers%20%3E%3E%20Life%20%3E%3E%20Circulars

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  Clarification - Liberalised Remittance Scheme for Resident Individuals

RBI Circular  – March 6, 2012:

We draw your attention to the RBI circular no: RBI/2011-12/430A.P.(DIR Series) Circular No. 90 dated March 6, 2012.

Applicability:

Applicable to all the resident individuals.

Crux of the Circular:

As per this notification the liberalised remittance scheme for resident individuals

         i.            Is available to all resident individuals including minors. In case of remitter being a minor, the LRS declaration form should be countersigned by the minor’s natural guardian.

       ii.            Remittances under the facility can be consolidated in respect of family members subject to individual family members complying with the terms and conditions of the scheme; and

      iii.            Remittances under the scheme can be used for purchasing objects of art subject to the provisions of other applicable laws such as the extant Foreign Trade Policy of the Government of India.

For further details information please follow the below link

http://rbi.org.in/scripts/NotificationUser.aspx?Id=7047&Mode=0

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 Settlement of OTC transactions in Certificates of Deposit (CDs) and Commercial Papers (CPs)

RBI Circular  – March 5, 2012:

We draw your attention to the RBI circular no: RBI/2011-12/427 IDMD.PCD. 20 /14.01.02/2011-12 dated March 5, 2012.

Applicability:

Applicable to all the entities regulated by RBI

Crux of the Circular:

-          It is mandatory for All the entities regulated by RBI to report their OTC transactions in CDs and CPs on FIMMDA reporting platform within 15 minutes of the trade for online dissemination of market information.

-          Now it has been decided to introduce the DvP (delivery vs payment) I based settlement for all the OTC trades in CDs and CPs. This would result in settlement through the pooling of accounts of the National Securities Clearing Corporation Limited and Indian Clearing Corporation Limited. This is in line with the existing method of settlement of OTC trades in corporate bonds.

-          This DvP I based settlement shall come into effect from April 1, 2012.

For more information please follow the below link:

http://rbi.org.in/scripts/NotificationUser.aspx?Id=7040&Mode=0

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Financial Inclusion by Extension of Banking Services - Use of Business Correspondents (BCs)

RBI Circular  – March 2, 2012:

We draw your attention to the RBI circular no: RBI/2011-12/425 DBOD.No.BL.BC. 82/22.01.009/2011-1 dated March 2, 2012.

Applicability:

All Scheduled Commercial Banks (Including RRBs) & Local Area Banks

Crux of the Circular:

The banks have brought in the ‘BC Model’ for providing better services to the customer. These BCs can represent and provide banking services of only one bank. And cannot be a BC for more than one bank. Banks are fully responsible for all the activities performed by the BCs.

Going a step forward the banks have now decided to permit interoperability at the retail outlets or sub-agents of the BCs. The following conditions are to be fulfilled in this regard:

a.       The transactions and authentications at such retail outlets or sub- agents of BCs are carried out on-line;

b.       The transactions are carried out on Core Banking Solution (CBS) platform; and

c.       The banks follow the standard operating procedures to be advised by the Indian Banks' Association (IBA).

For further information please follow the below link:

http://rbi.org.in/scripts/NotificationUser.aspx?Id=7038&Mode=0

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Monitoring of Fraud - NBFC

RBI Circular  – March 2, 2012:

We draw your attention to the RBI circular no: RBI/2011-12/424 DNBS.PD.CC. No. 256 /03.10.042 / 2011-12 dated March 2, 2012.

Applicability:

All Non-Deposit taking NBFCs with asset size of Rs.100 crore and above and Deposit taking NBFCs

Crux of the Circular:

The circular DNBS(PD)CC.No.59/03.10.42/2005-06 dated October 26, 2005 was formulated by RBI to provide guidelines on classification of frauds, approach towards monitoring of and reporting system for frauds for deposit taking NBFCs.

In addition to the above circular RBI has come out with a subsequent circular no RBI/2011-12/424 DNBS.PD.CC. No. 256 /03.10.042 / 2011-12 dated March 2, 2012 extending the same Guidelines to NBFCs-ND-SI also with immediate effect.

The guidelines states as follows:

Sr No	Amount of fraud (individual cases)	Respective authority to report
1	25 Lakhs	Respective Regional Offices (ROs) of DNBS in whose jurisdiction the registered office of the company is situated
2	Rs. 25 Lakhs and above	Frauds Monitoring Cell, Department of Banking Supervision, Reserve Bank of India, Central Office, World Trade Centre, Centre -1, Cuffe Parade, Mumbai- 400 005

Disclosure to the RBI:

All non-deposit taking NBFCs with asset size of Rs.100 crore and above and deposit taking NBFCs shall disclose the amount related to fraud, reported in the company for the year in their balance sheets.

For further details please follow the below link:

http://rbi.org.in/scripts/NotificationUser.aspx?Id=7037&Mode=0