RBI Regulatory Updates & Developments
Notifications

Includes:

  • Notification to SCBs
  • Notification to AD Banks
  • Notification to All Banks
Notification to SCBs

• Interest Rates on Deposits – Deposits of Army Group Insurance Directorate (AGID), Naval Group Insurance Fund (NGIF) and Air Force Group Insurance Society (AFGIS)
It has been decided to withdraw the prescription of offering additional interest of 1.28 per cent per annum on the deposits of AGID, NGIF and AFGIS. Accordingly, interest rates on such deposits should be at par with other deposits of similar maturity and amount.
https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=9977

• Union Budget - 2015-16 Interest Subvention Scheme
Government of India has approved the implementation of the Interest Subvention Scheme for the year 2015-16 for short term crop loans upto INR 3.00 lakhs with the stipulations as detailed in the circular.
https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=9984

• Guidelines for Relief Measures by Banks in Areas affected by Natural Calamities
It has been decided to allow State Level Bankers’ Committees/District Level Consultative Committees/banks to take a view on rescheduling of loans if the crop loss is 33% or more. Banks may allow a maximum period of repayment of up to 2 years (including the moratorium period of 1 year) if the loss is between 33% and 50%. If the crop loss is 50% or more, the restructured period for repayment may be extended to a maximum of 5 years (including the moratorium period of one year).
https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=9992

• Streamlining flow of credit to Micro and Small Enterprises (MSEs) for facilitating timely and adequate credit flow during their ‘Life Cycle’
Banks have been advised to put in place Board approved policy on lending to MSEs, adopting an appropriate system of timely and adequate credit delivery to borrowers in the MSE segment within the broad prudential regulations of RBI.
Banks have also been, advised to ensure that their lending policies for MSEs are streamlined and made flexible keeping in view the guidelines, provided in the circular. They should empower the officials concerned to take quick decisions on credit delivery to MSEs.
https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10000

• Reporting requirement under Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS)
Government of India has notified the amendments to Income Tax Rules (Rules) vide notification dated 7th August 2015 and have added Rule 114F (definitions), 114G (Information to be maintained and reported) and 114H (due diligence requirement) for operationalisation of Inter-Governmental Agreement (IGA) with the USA and CRS. This information regarding US reportable persons and other reportable persons have to be furnished in a form 61B, which has also been notified with the above mentioned notification.
All the concerned ‘financial institutions’ have been advised to refer to the amended rules and take steps for complying with the reporting requirements. Accordingly, all the concerned financial institutions should register on the related e-filling portal of Income Tax Department as Reporting Financial Institution by submitting the requisite details. Thereafter, the reports can be submitted online by using the digital signature of the ‘Designated Director’ by either uploading the Form 61B or ‘NIL’ report. In this regard, Central Board of Direct Taxes (CBDT) is developing a schema, which would be shared with all the regulated entities shortly.
https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10009

Notification to AD Banks

• Foreign Direct Investment – Reporting under FDI Scheme on the e-Biz platform
With a view to promoting the ease of reporting of transactions under foreign direct investment, the Reserve Bank of India (RBI), under the aegis of the e-Biz project of the Government of India has enabled online filing of the Foreign Currency Transfer of Shares (FCTRS) returns for reporting transfer of shares, convertible debentures, partly paid shares and warrants from a person resident in India to a person resident outside India or vice versa.
The FCTRS services of RBI has been made operational on the e-Biz platform from 24th August 2015.
https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=9993

Notification to All Banks

• Detection of Counterfeit Notes
The procedure for detection of counterfeit notes has been reviewed in consultation with the Government and it has been observed that certain modifications are required for bringing improvement in reporting of counterfeit notes and facilitating maintenance of records by banks. RBI has therefore revised certain instructions in this regard as detailed in the circular.
https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10002

Press Releases

Includes:

  • RBI Cancels Certificate of Registration
  • RBI Grants “In-principle” Approval to 11 Applicants for Payments Banks
RBI Cancels Certificate of Registration

During March to June 2015, RBI has cancelled the certificate of registration of nine Non-Banking Financial Companies (NBFCs) viz., Artisans Micro Finance Private Limited, Religare Finance Limited, RCS Parivar Finance Limited (formerly known as Pawansut Merchants Ltd.) from New Delhi, Nott Investments (P) Ltd, Eden Trade & Commerce Pvt. Ltd, Swetasree Finance (P) Ltd, Dewra Stocks & Securities (P) Ltd. from Kolkata and Hanumangarh Finvest Private Limited, Shubham Fiscal Services Private Limited from Rajasthan in exercise of the powers conferred on it under Section 45-IA(6) of the Reserve Bank of India Act, 1934.

RBI Grants “In-principle” Approval to 11 Applicants for Payments Banks

On 19th August 2015, RBI decided to grant “in-principle” approval to 11 applicants to set up payments banks.

SEBI Updates & Developments
Circulars

Includes:

  • Formats Under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
  • Implementation of the Multilateral Competent Authority Agreement (MCAA)and Foreign Account Tax Compliance Act (FATCA)
Formats Under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011

The formats of disclosures specified under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, have been revised, vide SEBI’s circular dated 5th August 2015, with a view to ensure that adequate disclosures are made for investors to take an informed decision.

Implementation of the Multilateral Competent Authority Agreement (MCAA) and Foreign Account Tax Compliance Act (FATCA)

SEBI has drawn the attention of all registered intermediaries to the fact that India has joined the Multilateral Competent Authority Agreement (MCAA) on Automatic Exchange of Financial Account Information. Further to this, Government of India and USA have signed an agreement on 9th July 2015 to improve international tax compliance and to implement the Foreign Account Tax Compliance Act (FATCA) in India. For effective implementation of FATCA and MCAA, the Government of India has made necessary legislative changes to the Income Tax Act, 1961 and has notified Rules in respect of the same. SEBI has advised all registered intermediaries, vide its circular dated 26th August 2015, to take necessary steps to ensure compliance with the requirements specified in the aforesaid rules after carrying out necessary due diligence.

Regulations

Includes:

  • SEBI (Issue of Capital and Disclosure Requirements) (ICDR) (Third Amendment) Regulations, 2015
  • SEBI (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2015
  • SEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2015
  • SEBI (Delisting of Equity Shares) (Second Amendment) Regulations, 2015
  • SEBI (Alternative Investment Funds) (Amendment) Regulations, 2015
SEBI (Issue of Capital and Disclosure Requirements) (ICDR) (Third Amendment) Regulations, 2015

SEBI has, vide notification dated 11th August 2015, introduced amendments to the SEBI (ICDR) Regulations. Key highlights of the amendments which deal with Fast Track issues and utilisation of issue proceeds are as under:

  • The average Market Capitalisation required has now been reduced from INR 3000 crore to INR 1000 crore for Public Issues and INR 250 crores for Rights Issues.
  • Imposition of monetary fines by Stock Exchange would not be a ground for ineligibility for Fast Track Issues.
  • One of the conditions specified is that the issuer or promoters or promoter group or directors of the issuer should not have settled any alleged violation of securities laws through the consent or settlement mechanism with SEBI during 3 years immediately preceding the reference date.
  • In a Rights Issue, promoters and promoter group would be mandatorily required to subscribe to their rights entitlement and should not renounce their rights, subject to certain exceptions that are permitted.
  • No suspension of equity shares should have been done as a disciplinary measure during 3 years immediately preceding the reference date.
  • The annualised delivery based trading turnover of the equity shares during 6 months immediately preceding the month of the reference date should have been at least 10% of the weighted average number of equity shared listed during these 6 months.
  • There should be no conflict of interest between the Lead merchant banker and its Issuer/its associate/ group.
  • Net issue proceeds pending utilisation would be required to be deposited only in scheduled commercial banks included in the Second Schedule of RBI Act.
  • In case of International Depository Receipts (IDR), net issue proceeds pending utilisation would be required to be kept in a bank having a credit rating of ’A’ or above by an international credit rating agency.
SEBI (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2015

On 14th August 2015, SEBI introduced further amendments in the SEBI (ICDR) Regulations. SEBI has replaced the existing guidelines for listing of securities on the Institutional Trading Platform (ITP). The guidelines for listing, which were earlier available only for SME, are now made available to wider class of issuers. Highlights of the amendment are brought out below:

  • Entities, which are intensive in use of technology, information technology, intellectual property, data analytics, bio-technology or nano-technology, and providing products, services or business platforms with substantial value addition with at least 25% of its pre-issue capital held by Qualified Institutional Buyers (QIBs) or any other entity in which at least 50% of pre-issue capital is held by QIBs as on the date of filing of draft information document or draft offer document with SEBI, would be eligible to list on the ITP.
  • The option of listing in the ITP without a Public Issue has also been provided for.
  • The entire pre-issue (pre listing) capital of the shareholders would be locked-in for a period of six months from the date of allotment in case of listing pursuant to public issue or date of listing in case of listing without public issue.
  • An entity complying with the provisions of the ITP would have the option to migrate to the main board of that recognised stock exchange after expiry of three years from the date of listing.
SEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2015

On 14th August 2015, SEBI introduced changes in the Substantial Acquisition of Shares and Takeovers Regulations, 2011, clarifying that the regulations will not apply to direct and indirect acquisition of shares or voting rights in, or control over a company listed without making a public issue, on the ITP of a recognised stock exchange.

SEBI (Delisting of Equity Shares) (Second Amendment) Regulations, 2015

On 14th August 2015, SEBI notified its amendments under its Delisting of Equity Shares Regulations, 2009, clarifying that these regulations would not be applicable to securities listed without making a public issue, on the ITP of a recognised stock exchange.

SEBI (Alternative Investment Funds) (Amendment) Regulations, 2015

On 14th August 2015, SEBI notified amendments to its Alternative Investment Funds (AIF) Regulations, 2012, permitting Category I and II of AIFs to get listed on the separate ITP of the stock exchanges. For the purpose of the SEBI (ICDR) Regulations, the investment made under this regulation would be considered as unlisted securities.

Acts

Includes:

  • Notifications Under Finance Act, 2015 - Merger of FMC with SEBI

 

 

Notifications Under Finance Act, 2015 - Merger of FMC with SEBI

On 28th August 2015, the Government of India notified the merger of commodities regulator, Forward Market Commission (FMC), with SEBI. Effective from 28th September 2015, SEBI would also regulate the commodity derivatives market. As a result of this, with effect from 28th September 2015, the Forward Contracts Regulation Act (FCRA), 1952, gets repealed and regulation of the Commodity Derivatives Market will shift to SEBI under the Securities Contracts Regulation Act (SCRA) 1956.

Press Release

Includes:

  • SEBI Board Meeting
SEBI Board Meeting

On 24th August 2015, SEBI held its board meeting in Mumbai. Key decisions taken at the meeting have been highlighted below.

  • Anchor investors in public issues: In the Board meeting, SEBI has approved revision of the current restriction on the maximum number of anchor investors (currently 25) for anchor allocation of public issue worth over INR 250 crore. However, the requirement of number of anchor investors for allocation of up to INR 250 crore remains the same. In case of allocation beyond INR 250 crore, there can be 10 additional investors for every additional allocation of INR 250 crore, but this would be subject to minimum allotment of INR 5 crore per anchor investor.
  • Amendments to the SEBI (Share Based Employee Benefits) Regulations, 2014: The SEBI Board approved proposals to amend the provisions of Share Based Employee Benefits Regulations. Listed companies having employee benefit trusts would have to re-classify the shareholding of the trusts into 'non-promoter and non-public' category. Such trusts would now be required to comply with minimum public shareholding norms within three years from the date of notification of Share Based Employee Benefits regulations. SEBI has decided to increase the time period for exercise of voting rights by employee benefit trusts from one year to three years. Employees of 'associate company' would not be eligible as beneficiaries of the employee benefit schemes framed under the Share Based Employee Benefits Regulations. In addition, these trusts would be allowed to offer shares under the tender offer route, through the stock exchange platform, without any requirement of minimum holding period.
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