MF Valuation of Money market & Debt securities revised from 1st July 2010 based on 91 days maturity & others

The valuation method of debt and money market instruments specified in the earlier circulars were discussed in the Advisory Committee of Mutual Funds. With a view to ensure that the value of money market and debt securities in the portfolio of mutual fund schemes reflect the current market scenario, the current provisions regarding valuation of these securities need to be modified, as under:
I. Valuation of money market and debt securities with residual maturity of upto 91 days:
All money market and debt securities, including floating rate securities,
with residual maturity of upto 91 days shall be valued at the weighted
average price at which they are traded on the particular valuation day.
When such securities are not traded on a particular valuation day they
shall be valued on amortization basis. It is further clarified that in case of
floating rate securities with floor and caps on coupon rate and residual
maturity of upto 91 days then those shall be valued on amortization basis
taking the coupon rate as floor.
II. Valuation of money market and debt securities with residual maturity of over 91 days:
All money market and debt securities, including floating rate securities, with residual maturity of over 91 days shall be valued at weighted average price at which they are traded on the particular valuation day. When such securities are not traded on a particular valuation day they shall be valued at benchmark yield/ matrix of spread over risk free benchmark yield obtained from agency(ies) entrusted for the said purpose by AMFI.
III. Valuation of securities not covered under the current valuation policy:
In case of securities purchased by mutual funds do not fall within the current framework of the valuation of securities then such mutual fund shall report immediately to AMFI regarding the same. Further, at the time of investment AMCs shall ensure that the total exposure in such securities does not exceed 5% of the total AUM of the scheme.
AMFI has been advised that the valuation agencies should ensure that the valuation of such securities gets covered in the valuation framework within 6 weeks from the date of receipt of such intimation from mutual fund.
In the interim period, till AMFI makes provisions to cover such securities in the valuation of securities framework, the mutual funds shall value such securities using their proprietary model which has been approved by their independent trustees and the statutory auditors.
IV. Dissemination of information:
All mutual funds shall provide transaction details, including inter scheme transfers, of money market and debt securities on daily basis to the agency entrusted for providing the benchmark yield/ matrix of spread over risk free benchmark yield. Submission of data would help in daily matrix generation and would improve uniformity and accuracy of valuation in the mutual funds industry. The format in this regard is provided in SEBI Circular No.MFD/CIR/23 /066 / 2003 dated March 7, 2003.
V. Methodology for matrix of spread for marking up the Benchmark yield
In the methodology for pricing the non traded debt securities detailed in para 3(ii)(b) of SEBI Circular. MFD/CIR/ 8 / 92 / 2000 dated September 18, 2000 and para 3 of SEBI circular MFD/CIR/ no 14 / 442 / 2002 dated February 20, 2002, additional duration bucket(s) viz., 0.25- 0.5 yrs shall be provided.
VI. Consistency
All AMC’s shall ensure that similar securities held under its various schemes shall be valued consistently.
The aforesaid valuation would be applicable with effect from July 1, 2010.

Source: SEBI/IMD/CIR No.16/ 193388/2010 dated 2nd February 2010

Quarterly & Weekly reports by Depositories on Investor Compliants & Arbitration details to SEBI in prescribed formats

Disclosure of investor complaints and arbitration details on Depository (NSDL & CDSL) website
1. SEBI has received feedback from investors and investor associations to improve transparency in the ‘grievance redressal mechanism’. Based on the feedback and inputs received from them transparency in ‘grievance redressal’ is identified as a key area to augment investor protection. It is envisaged that transparency will also improve the general functioning of the market by providing investors the wherewithal to make informed choice.
2. Accordingly, it has been decided that the Depositories shall henceforth disclose the details of complaints lodged by Beneficiary Owners (BO’s)/investors against Depository Participants (DPs) in their website. The aforesaid disclosure shall also include details pertaining to arbitration and penal action against the DPs.
3. The format for the reports for the aforesaid disclosure, prepared following due deliberations and inputs from the Depositories, are given as annexure to this circular (12 pages), consisting of the following reports:
a. Report 1A: Complaints received against DPs during 2009-10
b. Report 1B: Redressal of Complaints received against DPS during 2008-
09
c. Report 1C: Redressal of Complaints received against DPs during 2009-
10
d. Report 2A: Details of Arbitration Proceedings (where Investor is a
party) during 2008-09:
e. Report 2B: Details of Arbitration Proceedings (where Investor is a
party) during 2009-10
f. Report 3A: Penal Actions against DPs during 2008-09
g. Report 3B: Penal Actions against DPs during 2009-10
h. Report 4A: Redressal of Complaints lodged by investors against Listed
Companies during 2008 -09
i. Report 4B: Redressal of Complaints lodged by investors against Listed
Companies during 2009 -10
j. The Depositories are accordingly advised to:
a. bring the provisions of this circular to the notice of the DPs, Companies and their Registrar & Transfer Agents (RTA’s) and also to disseminate the same on the website;
b. arrange to disclose details as per the aforesaid reports in their website within a period of one month from the date of this circular on a continuous basis;
c. arrange to update the aforesaid reports on a quarterly basis, except the reports 1A, which shall be updated on a weekly basis;
d. make amendments to the relevant bye-laws, rules and regulations for the implementation of the aforesaid disclosures, if necessary;
e. communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly Development Report.

Source: SEBI/MRD/ OIAE/ Dep/ Cir- 4/2010 dated 29th January 2010

Rs.7,500 Currency Notes per resident individual travelling abroad can take outside or bring inside India, RBI FEMA limit amendment/extended

Export and Import of Currency
Attention of Authorised Persons is invited to clauses (a) and (c) of sub-regulation (1) of Regulation 3 of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000, notified vide Notification No. FEMA 6 /RB-2000 dated May 3, 2000, in terms of which, any person resident in India may take outside India or having gone out of India on a temporary visit, may bring into India (other than to and from Nepal and Bhutan) currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.5,000 per person.
2. As part of providing greater flexibility to the resident individuals travelling abroad, the existing limits, mentioned above, have been enhanced to Rs. 7,500 per person. The Government of India, has notified vide G.S.R.548 (E) in the Gazette of India dated July 24, 2009 [Notification No.FEMA.195/2009-RB dated July 7, 2009] (copy annexed), an amendment to clauses (a) and (c) of sub-regulation (1) of Regulation 3 of the Notification referred to above.
3. Accordingly, any person resident in India,
i) may take outside India (other than to Nepal and Bhutan) currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.7,500 (Rupees seven thousand five hundred only) per person; and
ii) who had gone out of India on a temporary visit, may bring into India at the time of his return from any place outside India (other than from Nepal and Bhutan), currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.7,500 (Rupees seven thousand five hundred only) per person.

Source: RBI/2009-10/297 A. P. (DIR Series) Circular No. 30 & A.P. (FL/ RL Series) Circular No.06 dated 1st February 2010.

Fee Clearance & NoC NA to certain Intermediaries under SEBI

Requirement of Fee Clearance and NOC – Non applicability in
respect of certain category of members of stock exchanges
1. In terms of clause 4 (e) of SEBI Circular No.SEBI/SMD/SE/Cir-24/2003/18/06 dated June 18, 2003 members of the stock exchanges are required to obtain ‘NOC’ from SEBI through the respective stock exchanges before claiming refund of excess Base Minimum Capital from the stock exchange.
2. Further, in terms of clause 4 of SEBI Circular No.MIRSD/MSS/Cir-30/13289/03 dated July 9, 2003, members of the stock exchanges are required to obtain ‘fee clearance’ from SEBI through the respective stock exchanges for the following purposes:
(a) Change in shareholding pattern without change in control,
(b) Issue and redemption of preference shares, issue of bonus shares, and
(c) Change in directors other than designated / whole time directors
3. On a review, it has been decided that the above referred provisions of the aforesaid circulars shall, henceforth, be not applicable to the following categories of members of the stock exchanges:
(i) trading members and clearing members in the equity derivatives and currency derivatives segments
(ii) stock brokers in the cash segment who are covered under Schedule III A [payment of fees by stock brokers] of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992 and
(iii) stock brokers in the cash segment who may migrate to Schedule III A
[payment of fees by stock brokers] of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992 in future (as and when they migrate).
4. However, the stock brokers who are covered under Schedule III [payment of fees by stock brokers] of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992 will be required to comply with the above referred provisions of the aforesaid circulars.

Source: SEBI/MIRSD/Cir. No.03/2010 dated 21st January, 2010

In person verification,once for account by Depository Participant or Stock Broker, SEBI clarification

Mandatory Requirement of in-person verification of clients

It is clarified that the ‘in person’ verification done for opening beneficial owner’s account by a Depository Participant (DP) will hold good for opening trading account by a stock broker and vice versa, it the Stock broker and DP is the same entity or if one of them is the holding or subsidiary company of the other.

For eg: If Karvy is a Depository Participant as well as a Stock Broker registered under SEBI (Intermediaries) Regulation, 2008, then ‘in person’ verification done for opening beneficial owner’s account by (Karvy as a) Depository Participant (DP) will hold good for opening trading account by (Karvy as a) stock broker.

Source: SEBI/MIRSD/Cir.No. 02/2010 dated 18th January 2o10

Clauses in Mutual Fund Advertisement Code to be printed in BOLD, SEBI Circular [MF Cl.10,13,14]

It is essential for the investors to be aware that the investments made in mutual funds are subjects to risk and that the scheme related documents should be read before investing. Hence it was mandated that statements appearing in Clauses 10, 13 and 14 of Schedule VI of SEBI (Mutual Funds) Regulations, 1996 on Advertisement Code should appear in all advertisements. However, it is noted that the advertisements issued are generally lengthy and hence these disclosures are not bought to the attention of the investors.

In order to make these statements more prominent, it is advised that the disclosures as stated in Clauses 10, 13 and 14 of Schedule VI of SEBI (Mutual Funds) Regulations, 1996 on Advertisement Code shall be printed in BOLD.

The said Clauses are reproduce for your reference.

Clause 10: All advertisements shall also make a clear statement to the effect that all mutual funds and securities investments are subject to market risks, and there can be no assurance that the fund’s objectives will be achieved.

Clause 13: All advertisements issued by a mutual fund or its sponsor or asset management company, shall state ‘all investments in mutual funds and securities are subject to market risks’ and the NAV of the schemes may go up or down depending upon the factors and forces affecting the securities market.

Clause 14: All advertisement launched in connection with the scheme should also disclose prominently the risk factors as stated in the offer document alongwith the following warning statements :—
(a) ............ is only the name of the scheme and does not in any manner indicate either the quality of the scheme, its future prospects or returns; and
(b) please read the offer document before investing.

All mutual funds shall comply with the above requirements in letter and spirit.

Source: SEBI/IMD/CIR No.15/191378 /2010 dated 18th January 2010

Mobile Banking Transaction Guidelines & increase in limits 50,000/- per customer, RBI says

Mobile Banking Transactions in India - Operative Guidelines for Banks

A reference is invited to the guidelines appended to our circular no. RBI/2008-09/ 208, DPSS.CO.No.619 /02.23.02/ 2008-09 dated October 08, 2008, on the captioned subject.

Transaction limit: In amendment of provisions of paragraph 8.1 of the above guidelines, banks are now permitted to offer this service to their customers subject to a daily cap of Rs 50,000/- per customer for both funds transfer and transactions involving purchase of goods/services. Presently, such transactions are subject to separate caps of Rs 5000/- and Rs 10000/ -respectively.
Technology and Security Standard: Transactions up to Rs 1000/- can be facilitated by banks without end-to-end encryption. The risk aspects involved in such transactions may be addressed by the banks through adequate security measures.
Remittance of funds for disbursement in cash:
In order to facilitate the use of mobile phones for remittance of cash, banks are permitted to provide fund transfer services which facilitate transfer of funds from the accounts of their customers for delivery in cash to the recipients. The disbursal of funds to recipients of such services can be facilitated at ATMs or through any agent(s) appointed by the bank as business correspondents. Such fund transfer service shall be provided by banks subject to the following conditions:-
I. The maximum value of such transfers shall be Rs 5000/- per transaction.
II. Banks may place suitable cap on the velocity of such transactions, subject to a maximum value of Rs 25,000/- per month, per customer.
III. The disbursal of funds at the agent/ATM shall be permitted only after identification of the recipient. In this connection, attention of banks is drawn to the provisions of the Notification dated November 12, 2009, issued by Government of India, under Prevention of Money Laundering Act, 2002, as amended from time to time.
IV. Banks may carry out proper due diligence of the persons before appointing them as authorized agents for such services.
V. Banks shall be responsible as principals for all the acts of omission or commission of their agents.

Source: RBI/2009-10/273 DPSS.CO.No.1357/02.23.02/ 2009-10 dated 24th December, 2009

RBI Guidelines on Money Changing Activity & Cross Border Inward Remittance under MTSS

Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating the Financing of Terrorism (CFT)/Obligation of Authorised Persons under Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009- Money changing activities vide RBI/2009-10/235 A.P. (DIR Series) Circular No.17 & A.P. (FL/RL Series) Circular No.04 dated 27th November 2009

Click here to download Norms for Money Changing Activities.

Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating the Financing of Terrorism (CFT)/Obligation of APs(Indian Agents) under Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009-
Cross Border Inward Remittance under Money Transfer Service Scheme vide RBI/2009-01/ 236 A.P. (DIR Series) Circular No.18 & A.P. (FL Series) Circular No.05 dated 27th November 2009.

Click here to download Norms for Cross Border Inward Remittance under MTSS

These guidelines are also applicable mutatis mutandis to all agents / franchisees of Authorised Persons and it will be the sole responsibility of the
franchisers to ensure that their agents / franchisees also adhere to these guidelines.

Advance Remittance & bank guarantee for import of Services NA to Public Sector Company or a Department of Government, RBI says

Advance Remittance for import of Services
Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No. 15 dated September 8, 2008, in terms of which the limit for advance remittance for all admissible current account transactions for import of services without bank guarantee was raised from USD 100,000 to USD 500,000 or its equivalent.

It is clarified that the increase in the limit for advance remittance for all admissible current account transactions for import of services without bank guarantee is not applicable for a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments.

In the case of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments, approval from the Ministry of Finance, Government of India for advance remittance for import of services without bank guarantee for an amount exceeding USD 100,000 (USD One hundred thousand) or its equivalent would continue to be required.

Source: RBI/2009-10/ 175 A.P. (DIR Series) Circular No.10 dated October 5, 2009

Issue of Bank Guarantee on behalf of service importers
Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to Regulation 4 of the Foreign Exchange Management (Guarantees) Regulations, 2000 notified vide Notification No. FEMA 8/2000-RB dated May 3, 2000, as amended from time to time. In terms of Regulation 4(3)(iv) thereof [amended vide Notification No. FEMA 151/2007-RB dated January 4, 2007] and A.P. (DIR Series) Circular No. 13 dated November 17, 2006, banks are allowed to issue guarantees in favour of a non-resident service provider, on behalf of a resident customer who is a service importer, for an amount up to USD 100,000 or its equivalent, subject to the terms and conditions stipulated in the said circular.

With a view to further liberalise the procedure (other than in respect of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments) for import of services, it has been decided to increase the limit for issue of guarantee by AD Category-I banks from USD 100,000 to USD 500,000. Accordingly, AD Category-I banks are now permitted to issue guarantee for amount not exceeding USD 500,000 or its equivalent in favour of a non-resident service provider, on behalf of a resident customer who is a service importer, provided:
(a) the AD Category-I bank is satisfied about the bonafides of the transaction;
(b) the AD Category-I bank ensures submission of documentary evidence for import of services in the normal course; and
(c) the guarantee is to secure a direct contractual liability arising out of a contract between a resident and a non-resident.

In the case of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments, approval from the Ministry of Finance, Government of India for issue of guarantee for an amount exceeding USD 100,000 (USD One hundred thousand) or its equivalent would be required.

Source: RBI/2009-10/ 176 A.P. (DIR Series) Circular No.11 dated 5th October, 2009

Spend Rupees for Spectrum Allocation,get it refinanced with ECB within 12months under Government Route, RBI says in addition to exisitng Automatic route

RBI/2009-10/ 292 dated January 25, 2010 vide A.P. (DIR Series) Circular No. 28

As per the existing ECB policy, eligible borrowers in the telecommunication sector are permitted to avail of ECB for the purpose of payment for spectrum allocation, under the automatic route. Keeping in view the large outlay of funds required to be paid directly to the Government within a limited period of time, it has been decided to make a one-time relaxation in the end-use conditions of the ECB policy.

Accordingly, the payment for spectrum allocation may initially be met out of Rupee resources by the successful bidders, to be refinanced with a long-term ECB, under the Government approval route, subject to the following conditions:
i) The ECB should be raised within 12 months from the date of payment of the final installment to the Government;
ii) The designated AD - Category I bank should monitor the end-use of funds;
iii) Banks in India will not be permitted to provide any form of guarantees; and
iv) All other conditions of ECB, such as eligible borrower, recognized lender, all- in-cost, average maturity, etc, should be complied with.

 

Eligible borrowers in the telecommunications sector proposing to fund the payment for Spectrum allocation directly out of the proceeds of the ECBs may continue to avail of the ECBs under the automatic route as per the existing policy.

Click here to track all the External Commercial Borrrowing related Updates

Calendar Quarterly Report by VCF within 7 days as per Regulations in Revised Format w.e.f 31/03/2010

Sub: Quarterly Reporting by Venture Capital Funds (VCF)

Source: SEBI/IMD/DOF-1/VCF/CIR-1/2010 dated 11th January 2010

1. Please refer to SEBI circular No SEBI/MFD/VCF/CIR no 1/7352/03 dated April 29, 2003 regarding submission of quarterly report on venture capital activity in the prescribed format.
2. Format for the quarterly report on venture capital activity to be submitted by Venture Capital Funds has been revised as per enclosed Annexure. In accordance with Regulation 22 of SEBI (Venture Capital Funds) Regulations, 1996, all venture capital funds are directed to submit the report on venture capital activity to SEBI, complete in all respects in the new format with effect from the quarter ended 31st March, 2010.
3. The report is to be uploaded online on SEBI portal within 7 days from the end of each calendar quarter. Physical copies of the report are not required to be submitted.

Click here to download New Quarterly Report Format for VCF

CS Tax Laws: Excise & CENVAT Credit Rules for Professional Programme exams, concepts in a nutshell, enjoy passin...

Thanks Mr. CS Manoj Bisht for this wonderful presentation on Excise Basics.

The presentation is crystal crisp & clear.

Enjoy reading… Excise Laws in a nutshell with Excise-BasicConcepts-Manoj.pdf

Further, he has specially prepared CENVAT Credit Rules for us!!! Its a mandatory read through.

Enjoy reading CENVAT Credit Rules in a nutshell with CENVATCREDITRULES-Manoj.pdf

You can go for exams with confidence based on this.

Do give your feedback/reviews!!!