Reduction in timelines between issue closure and listing
SEBI, in its continuing endeavour to make the existing public issue process more efficient, proposes to reduce the time between public issue closure and listing to 12 days from existing of up to 22 days. This will be applicable to public issues opening on or after May 1, 2010.
Guide to understand an Offer Document
This sub‐section attempts to inform the structure of presentation of the content in an offer document. The basic objective is to help the reader to navigate through the content of an offer document.
(a) Cover Page
Under this head full contact details of the Issuer Company, lead managers and registrars, the nature, number, price and amount of instruments offered and issue size, and the particulars regarding listing. Other details such as Credit Rating, IPO Grading, risks in relation to the first issue, etc are also disclosed if applicable.
(b) Risk Factors
Under this head the management of the issuer company gives its view on the Internal and external risks envisaged by the company and the proposals, if any, to address such risks. The company also makes a note on the forward looking statements. This information is disclosed in the initial pages of the document and also in the abridged prospectus. It is generally advised that the investors should go through all the risk factors of the company before making an investment decision.
(c) Introduction
Under this head a summary of the industry in which the issuer company operates, the business of the Issuer Company, offering details in brief, summary of consolidated financial statements and other data relating to general information about the company, the merchant bankers and their responsibilities, the details of brokers/syndicate members to the Issue, credit rating (in case of debt issue), debenture trustees (in case of debt issue), monitoring agency, book building process in brief, IPO Grading in case of First Issue of Equity capital and details of underwriting Agreements are given. Important details of capital structure, objects of the offering, funds requirement, funding plan, schedule of implementation, funds deployed, sources of financing of funds already deployed, sources of financing for the balance fund requirement, interim use of funds, basic terms of issue, basis for issue price, tax benefits are also covered.
(d) About us
Under this head a review of the details of business of the company, business strategy, competitive strengths, insurance, industry‐regulation (if applicable), history and corporate structure, main objects, subsidiary details, management and board of directors, compensation, corporate governance, related party transactions, exchange rates, currency of presentation and dividend policy are given.
(e) Financial Statements
Under this head financial statement and restatement as per the requirement of the Guidelines and differences between any other accounting policies and the Indian Accounting Policies (if the Company has presented its Financial Statements also as per either US GAAP/IFRS) are presented.
(f) Legal and other information
Under this head outstanding litigations and material developments, litigations involving the company, the promoters of the company, its subsidiaries, and group companies are disclosed. Also material developments since the last balance sheet date, government approvals/licensing arrangements, investment approvals (FIPB/RBI etc.), technical approvals, and indebtedness, etc. are disclosed.
(g) Other regulatory and statutory disclosures
Under this head, authority for the Issue, prohibition by SEBI, eligibility of the company to enter the capital market, disclaimer statement by the issuer and the lead manager, disclaimer in respect of jurisdiction, distribution of information to investors, disclaimer clause of the stock exchanges, listing, impersonation, minimum subscription, letters of allotment or refund orders, consents, expert opinion, changes in the auditors in the last 3 years, expenses of the issue, fees payable to the intermediaries involved in the issue process, details of all the previous issues, all outstanding instruments, commission and brokerage on, previous issues, capitalization of reserves or profits, option to subscribe in the issue, purchase of property, revaluation of assets, classes of shares, stock market data for equity shares of the company, promise vis‐à‐vis performance in the past issues and mechanism for redressal of investor grievances is disclosed.
(h) Offering information
Under this head Terms of the Issue, ranking of equity shares, mode of payment of dividend, face value and issue price, rights of the equity shareholder, market lot, nomination facility to investor, issue procedure, book building procedure in details along with the process of making an application, signing of underwriting agreement and filing of prospectus with SEBI/ROC, announcement of statutory advertisement, issuance of confirmation of allocation note("can") and allotment in the issue, designated date, general instructions, instructions for completing the bid form, payment instructions, submission of bid form, other instructions, disposal of application and application moneys, , interest on refund of excess bid amount, basis of allotment or allocation, method of proportionate allotment, dispatch of refund orders, communications, undertaking by the company, utilization of issue proceeds, restrictions on foreign ownership of Indian securities, are disclosed.
(i) Other Information
This covers description of equity shares and terms of the Articles of Association, material contracts and documents for inspection, declaration, definitions and abbreviations, etc.
Investment in public Issues/ rights issues
(a) Where can I get application forms for applying/ bidding for the shares?
Application forms for applying/bidding for shares are available with all syndicate members, collection centers, the brokers to the issue and the bankers to the issue. In case you intend to apply through new process introduced by SEBI i.e. APPLICATIONS SUPPORTED BY BLOCKED AMOOUNT (ASBA), you may get the ASBA application forms form the Self Certified Syndicate Banks. For more details on “ASBA process” please refer to the “FAQs on ASBA”
(b) Whom should I approach if the information disclosed in the offer document appears to be factually incorrect?
The document is prepared by Merchant Banker(s), registered with SEBI. They are required to do the due diligence while preparing an offer document. The draft offer document submitted to SEBI is put on website for public comments. In case, you find any instance of misinformation/ lack of information, you may send your complaint to Lead Manager to the issue and/ or to SEBI, at this address: Securities & Exchange Board of India, C4 A, G Block, Bandra KurlaComplex, Bandra (E), Mumbai‐ 400051.
(c) Is it compulsory for me to have a Demat Account?
As per the requirement, all the public issues of size in excess of Rs.10 crore, are to made compulsorily in demat mode. Thus, if you intend to apply for an issue that is being made in a compulsory demat mode, you are required to have a demat account and also have the responsibility to put the correct DP ID and Client ID details in the bid/application forms. You can also refer to FAQs relating to demat available in the URL http://investor.sebi.gov.in/faq/dematfaq.html in the Investor Education section of the SEBI website.
(d) Is it compulsory to have PAN?
Yes, it is compulsory to have PAN. Any investor who wants to invest in an issue should have a PAN which is required to be mentioned in the application form. It is to be distinctly understood that the photocopy of the PAN is not required to be attached along with the application form at the time of making an application.
(e) For how many days an issue is required to be kept open?
The period for which an issue is required to be kept open is:
For Fixed price public issues: 3‐10 working days
For Book built public issues: 3‐7 working days extendable by 3 days in case of a revision in the price band
For Rights issues: 15‐30 days.
(f) When do I get the allotment/ refund of shares?
For Fixed price public issues: 30 days of the closure of the issue
For Book built public issues: 15 days of the closure of the issue
For Rights issues: 15 days of the closure of the issue
(g) How can I know about the demand for an issue at any point of time?
The status of bidding in a book built issue is available on the website of BSE/NSE on a consolidated basis. The data regarding bids is also available investor category wise. After the price has been determined on the basis of bidding, the public advertisement containing, inter alia, the price as well as a table showing the number of securities and the amount payable by an investor, based on the price determined, is issued. However, in case of a fixed price issue, information is available only after the closure of the issue through a public advertisement, issued within 10 days of dispatch of the certificates of allotment/ refund orders.
(h) How will I get my refund in an issue?
You can get refunds in an issue through various modes viz. registered/ordinary post, Direct Credit, RTGS (Real Time Gross Settlement), ECS (Electronic Clearing Service) and NEFT (National Electronic Funds Transfer). As stated above, if you are residing in one of the 68 centers as specified by Reserve Bank of India, then you will get refunds through ECS only except where you are otherwise disclosed eligible under Direct Credit and RTGS. If you are residing at any other center, then you will continue to get refunds through registered/ordinary post. You are therefore advised to read the instructions given in the prospectus/ abridged prospectus/ application form about centers. For more details, you may read subsection on “Electronic Clearing Scheme for Refunds”.
(i) When will the shares allotted to me get listed?
In book built public issue the listing of shares will be done within 3 weeks after the closure of the issue. In case of fixed price public issue, it will be done within 37 days after closure of the issue.
(j) How will I know which issues are coming to the market?
The information about the forthcoming issues may be obtained from the websites of Stock Exchanges. Further the issuer coming with an issue is required to give issue advertisements in an English national Daily with wide circulation, one Hindi national newspaper and a regional language newspaper with wide circulation at the place where the registered office of the issuer is situated.
(k) Where to I get the copies of the offer document?
The soft copies of the offer documents are put up on the website of Merchant banker and on the website of SEBI under Reports/Documents section [http://www.sebi.gov.in/Index.jsp?contentDisp= Section&sec_id=5 ]. Copies of the offer documents in hard form may be obtained from the merchant banker or office of SEBI, SEBI Bhawan, Plot No. C4‐A “G” Block, BKC, Bandra (E), Mumbai ‐ 400051 on a payment of Rs 100 through Demand Draft.
(l) How do I find the status of offer documents filed by issuers with SEBI?
SEBI updates the processing status of offer documents on its website every week under the section http://www.sebi.gov.in/Index.jsp?contentDisp=PrimaryMarket in SEBI website. The draft offer documents are put up on the website under Reports/Documents section. The final offer documents that are filed with SEBI/ROC are also put up for information under the same section.
(m) Whom do I approach if I have grievances in respect of non receipt of shares, delay in refund etc.?
You can approach the compliance officer of the issue, whose name and contact number is mentioned on the cover page of the Offer Document. You can also address your complaints to SEBI at the following address: Office of Investor Assistance & Education, Securities & Exchange Board of India, C4A, G Block,Bandra Kurla Complex, Bandra (E), Mumbai‐ 400051.
Understanding Book Building
(a) What is book Building?
Book building is a process of price discovery. The issuer discloses a price band or floor price before opening of the issue of the securities offered. On the basis of the demands received at various price levels within the price band specified by the issuer, Book Running Lead Manager (BRLM) in close consultation with the issuer arrives at a price at which the security offered by the issuer, can be issued.
(b) What is a price band?
The price band is a band of price within which investors can bid. The spread between the floor and the cap of the price band shall not be more than 20%. The price band can be revised. If revised, the bidding period shall be extended for a further period of three days, subject to the total bidding period not exceeding thirteen days.
(c) How does Book Building work?
Book building is a process of price discovery. A floor price or price band within which the bids can move is disclosed at least two working days before opening of the issue in case of an IPO and atleast one day before opening of the issue in case of an FPO. The applicants bid for the shares quoting the price and the quantity that they would like to bid at. After the bidding process is complete, the ‘cut‐off’ price is arrived at based on the demand of securities. The basis of Allotment is then finalized and allotment/refund is undertaken. The final prospectus with all the details including the final issue price and the issue size is filed with ROC, thus completing the issue process. Only the retail investors have the option of bidding at ‘cut‐off’.
(d) How does “cut‐off” option works for investors?
“Cut‐off” option is available for only retail individual investors i.e investors who are applying for securities worth up to Rs 1,00,000/‐ only. Such investors are required to tick the cut‐off option which indicates their willingness to subscribe to shares at any price discovered within the price band. Unlike price bids (where a specific price is indicated) which can be invalid, if price indicated by applicant is lower than the price discovered, the cut‐off bids always remain valid for the purpose of allotment
(e) Can I change/revise my bid?
Yes, you can change or revise the quantity or price in the bid using the form for changing/revising the bid that is available along with the application form. However, the entire process of changing or revising the bids shall be completed within the date of closure of the issue.
(f) Can I cancel my Bid?
Yes, you can cancel your bid anytime before the finalization of the basis of allotment by approaching/ writing/ making an application to the registrar to the issue.
(g) What proof can I request from a trading member or a syndicate member for entering bids?
The syndicate member returns the counterfoil with the signature, date and stamp of the syndicate member. You can retain this as a sufficient proof that the bids have been accepted by the trading / syndicate member for uploading on the terminal.
Subject: Declaration of Holiday on 14th April, 2010 & Birthday of Dr. B.R. Ambedkar.
It has been decided to declare Wednesday, the 14th April 2010, as a Closed Holiday on account of the birthday of Dr. B.R. Ambedkar, for all Central Government Offices including industrial establishments throughout India.
The above holiday is also being notified in exercise of the powers conferred by Section 25 of the Negotiable Instruments Act, 1881 (26 of 1881).
Source: Notification NO. 12/3/2010-JCA-2 dated 29th March 2010
Interesting Issue: Could you find out what will happen if an Annual General Meeting (AGM) is scheduled on 14th April 2010 by sending 21 clear days advance notice? The issue is, at the time of issue of notice (which will be definitely before 29th March), the Company is unaware that AGM date may be a Public Holiday!!! Enjoy crackin…
External Commercial Borrowings (ECB) Policy – Structured Obligations
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.
As per the extant policy, domestic Rupee denominated structured obligations have been permitted to be credit enhanced by non-resident entities under the approval route. In view of the growing needs of funds in the infrastructure sector, the existing norms have been reviewed and it has been decided to put in place a comprehensive policy framework on credit enhancement to domestic debt as indicated below.
It has since been decided that the facility of credit enhancement by eligible non-resident entities may be extended to domestic debt raised through issue of capital market instruments, such as debentures and bonds, by Indian companies engaged exclusively in the development of infrastructure and by the Infrastructure Finance Companies (IFCs), which have been classified as such by the Reserve Bank in terms of the guidelines contained in the circular DNBS.PD. CC No. 168 / 03.02.089 / 2009-10 dated February 12, 2010, subject to the following conditions:
i) credit enhancement will be permitted to be provided by multilateral / regional financial institutions and Government owned development financial institutions;
ii) the underlying debt instrument should have a minimum average maturity of 7 years;
iii) prepayment and call / put options would not be permissible for such capital market instruments up to an average maturity period of 7 years;
iv) guarantee fee and other costs in connection with credit enhancement will be restricted to a maximum 2% of the principal amount involved;
v) on invocation of the credit enhancement, if the guarantor meets the liability and if the same is permissible to be repaid in foreign currency to the eligible non-resident entity, the all-in-cost ceilings, as applicable to the relevant maturity period of the Trade Credit / ECBs, would apply to the novated loan. Presently, the all-in-cost ceilings, depending on the average maturity period, are applicable as follows:
vi) In case of default and if the loan is serviced in Indian Rupees, the applicable rate of interest would be the coupon of the bonds or 250 bps over the prevailing secondary market yield of 5 years Government of India security, as on the date of novation, whichever is higher;
vii) IFCs proposing to avail of the credit enhancement facility should comply with the eligibility criteria and prudential norms laid down in the circular DNBS.PD.CC No.168 / 03.02.089 / 2009-10 dated February 12, 2010 and in case the novated loan is designated in foreign currency, the IFC should hedge the entire foreign currency exposure; and
viii) The reporting arrangements as applicable to the ECBs would be applicable to the novated loans.
Source: RBI A.P. (DIR Series) Circular No. 40 dated 2nd March 2010
RBI Guidelines on Stripping/Reconstitution of Government Securities
Please refer to paragraph No.101 of the Annual Policy Statement for the year 2009-10. As indicated therein, it has been decided to introduce Separate Trading of Registered Interest and Principal of Securities (STRIPS) in Government Securities as part of the efforts to develop the Government Securities market.
STRIPS in Government Securities will ensure availability of sovereign zero coupon bonds, which will lead to the development of a market determined zero coupon yield curve (ZCYC).
STRIPS will also provide institutional investors with an additional instrument for their assetliability management. Further, as STRIPS have zero reinvestment risk (discounted instruments with no periodic interest payment thereby obviating the need for reinvestment of intermediate cash flows arising out of the investment), they can be attractive to retail/non-institutional investors.
The terms and conditions governing the stripping/reconstitution of Government of India securities are set out in the RBI Notification IDMD.1762/2009-10 dated October 16, 2009.
Detailed guidelines outlining the process of stripping/reconstitution and other operational procedures regarding transactions in STRIPS are enclosed and shall come into effect from April 01, 2010.
Public Provident Fund Scheme, 1968:
1) Clarification regarding reckoning of the date of deposit
2) Reiteration of instructions on opening of an account for a minor
1. Reckoning the date of deposit in case of cheque payment:
As you are aware, Ministry of Finance letter No. F. 3(9)-PD/72 dated September 4, 1972, has issued notification for Public Provident Fund Scheme, 1968 (PPF). In order to bring uniformity in the reckoning of the date of deposit in the PPF vis-à-vis Post Office Savings Schemes (POSS) and Senior Citizens Savings Scheme, 2004 (SCSS), the Government of India (GoI), vide their letter F. No.7/7/2008/NS-II dated February 10, 2010, have decided that hereafter in modification of Ministry of Finance letter No.F.3(9)-PD/72 dated September 4, 1972 "when a deposit is made in the PPF account by means of a local cheque or demand draft by the subscriber, the date of realization of the amount will be the date of deposit."
2. Opening of an account for a minor:
In view of complaints being received about non-opening of accounts for minor by some Agency banks, it is reiterated that as per Rule 3 (1) of PPF Scheme, 1968, an individual may, on his own behalf or on behalf of a minor, of whom he is the guardian, subscribe to the Public Provident Fund. Further it is reiterated that as clarified, vide Ministry of Finance letter F.7/34/88/-NS II dated November 17, 1989, either father or mother can open a PPF account on behalf of his/her minor child but not both.
Source: DGBA.CDD. H- 7530/15.02.001/2009-10 dated 29th March 2010
Buyback / Prepayment of Foreign Currency Convertible Bonds (FCCBs)
Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to the A.P. (DIR Series) Circular No. 39 dated December 08, 2008 and A.P. (DIR Series) Circular No. 65 dated April 28, 2009 on the captioned subject. In terms of A.P. (DIR Series) Circular No. 58 dated March 13, 2009, Indian companies were allowed to buyback their Foreign Currency Convertible Bonds (FCCBs) both under the automatic route and approval route until December 31, 2009. The Scheme was discontinued with effect from January 1, 2010.
In view of the representations made by the issuers of FCCBs, it has been decided to consider applications, under the approval route, for buyback of FCCBs until June 30, 2010, subject to issuers complying with all the terms and conditions of buyback/prepayment of FCCBs, as mentioned in abovementioned circulars.
Accordingly, applications complying with the conditions may be submitted, together with the supporting documents, through the designated AD Category - I bank to the Chief General Manager-in-Charge, Reserve Bank of India, Foreign Exchange Department, External Commercial Borrowings Division, Central Office, 11th Floor, Central Office Building, Shahid Bhagat Singh Road, Mumbai-400 001.
Source: A.P. (DIR Series) Circular No. 44 dated 29th March 2010
Know your Customer (KYC) guidelines - accounts of proprietary concerns
A reference is invited to Para 2.4(a) of the Master Circular on KYC/AML/CFT/Obligation of banks under Prevention of Money laundering Act (PMLA), 2002 issued to banks vide DBOD.AML.BC. No.2/14.01.001/2009-10 dated July 1, 2009. It has been advised to banks that internal guidelines for customer identification procedure of legal entities may be framed by them based on their experience of dealing with such entities, normal bankers’ prudence and the legal requirements as per established practices. If the bank decides to accept such accounts in terms of the Customer Acceptance Policy, the bank should take reasonable measures to identify the beneficial owner(s) and verify his/her/their identity in a manner so that it is satisfied that it knows who the beneficial owner(s) is/are.
For sake of clarity, in case of accounts of proprietorship concerns, it has been decided to lay down criteria for the customer identification procedure for account opening by proprietary concerns. Accordingly, apart from following the extant guidelines on customer identification procedure as applicable to the proprietor, banks / financial institutions should call for and verify the following documents before opening of accounts in the name of a proprietary concern:
These guidelines will apply to all new customers, while in case of accounts of existing customers, the above formalities should be completed in a time bound manner and should be completed before December 31, 2010.
Source: RBI DBOD.AML.BC.No.80 /14.01.001/2009-10 dated 26th March 2010
To All Mutual Funds (MFs)/Asset Management Companies (AMCs)
1. Brokerage and commission paid to associates
i. Regulation 25 (8) of SEBI (Mutual Funds) Regulations, 1996 mandates that the payment of brokerage or commission, if any, to the sponsor or any of its associates, employees or their relatives, has to be disclosed in the half–yearly annual accounts of the mutual fund. Now, in the bridged scheme wise
annual report and the SAI, these disclosures shall henceforth be made in the
format as prescribed in Annexure A.
2. Additional mode of payment through Applications Supported by Blocked Amount (ASBA) in Mutual Funds and Reduction in New Fund offer (NFO) period
3. Non availability of Unit Premium Reserve for dividend distribution
The IX and XI Schedule of SEBI (Mutual Funds) Regulations provide the accounting policies to be followed for determining distributable surplus and accounting the sale and repurchase of units in the books of the Mutual Fund. The Unit Premium Reserve, which is part of the sales price of units that is not attributable to realized gains, cannot be used to pay dividend. It is therefore reiterated that:
4. Role of Mutual Funds in Corporate Governance of Public Listed Companies
It has been decided that henceforth, AMCs shall disclose their general policies
and procedures for exercising the voting rights in respect of shares held by them on the website of the respective AMC as well as in the annual report distributed to the unit holders from the financial year 2010-11.
Further, the AMCs are also required to disclose on the website of the respective AMC as well as in the annual report distributed to the unit holders from the financial year 2010-11, the actual exercise of their proxy votes in the AGMs/EGMs of the investee companies in respect of the following matters
The format for disclosure of voting by mutual funds in general meetings of listed companies is placed in Annexure B.
5. Provision of charging of additional management fees by the AMC’s in case of schemes launched on no load basis
Consequent to SEBI Circular Empowering investors through transparency in payment of commission and load structure” which stipulated that No entry load for all Mutual Fund (MF) scheme,all expenses out of 1% Exit load & disclosure of all commissions to distributors from 1st August 2009, it is clarified that AMC shall not collect any additional management fees referred to in Regulation 52(3) of SEBI Mutual Funds Regulation, 1996. This is applicable to MF schemes which are not launched (including those for which observation letter have been issued).
6. Fund of Funds Scheme
i. It has been observed from the disclosures in the scheme information documents (SID) that Asset Management Companies (AMCs) have been entering into revenue sharing arrangements with offshore funds in respect of investments made on behalf of Fund of Fund schemes. These arrangements create conflict of interest.
ii. It has been decided that henceforth AMCs shall not enter into any revenue sharing arrangement with the underlying funds in any manner and shall not receive any revenue by whatever means/head from the underlying fund. Any commission or brokerage received from the underlying fund shall be credited into concerned scheme’s account.
Source: SEBI/IMD/CIR No 18 / 198647 /2010 dated 15th March 2010
Purchase of Immovable Property in India by Persons of Indian Origin (PIOs) – Amendment of the definition
The term PIO is defined under Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India), Regulations, 2000.
The definition is partially amended by Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) (Second Amendment) Regulations, 2009 to include Mother & Grandmother.
Now, PIO means:
Source: A.P. (DIR Series) Circular No.25 dated 10th January 2o1o
Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Amendment Rules, 2009 - Obligation of banks/Financial institutions
As you are aware, Prevention of Money-laundering Act (PMLA), 2002 read with Rules is amended by Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Amendment Rules, 2009 vide Records to be maintained from transaction, Non profit organisation included, Suspicious transaction defined in amendment of Money Laundering Rules 2009.
Accordingly, in view of amendments to the above Rules, banks / financial institutions are required to :
i) Maintain proper record of all transactions involving receipts by non- profit organizations of value more than Rs.10 lakh or its equivalent in foreign currency and to forward a report to FIU-IND of all such transactions in the prescribed format every month by the 15th of the succeeding month.
ii) In case of transactions carried out by a non-account based customer, that is a walk-in customer, where the amount of transaction is equal to or exceeds Rs.50,000/-, whether conducted as a single transaction or several transactions that appear to be connected, the customer's identity and address should be verified. Further, if a bank has reason to believe that a customer is intentionally structuring a transaction into a series of transactions below the threshold of Rs.50,000/- the bank should verify identity and address of the customer and also consider filing a suspicious transaction report (STR) to FIU-IND.
Source: DBOD. AML.BC. No. 68 /14.01.001/2009-10 dated 12th January 2010
RBI cautions public : Not to deposit money in unincorporated bodies
It has come to the notice of the Reserve Bank of India that some individuals/firms/unincorporated association of individuals (unincorporated bodies) have been collecting deposits from the public by making tall promises of high returns. Some of them are stated to have vanished without repaying deposits. Under Section 45-S(1) of the Reserve Bank of India Act, 1934, unincorporated bodies that are carrying on the business of a financial institution or NBFC or whose principal business is that of receiving deposits are prohibited from accepting deposits from the public. Members of public are hereby cautioned not to deposit money with such unincorporated bodies. Persons depositing money with such unincorporated bodies would be doing so at their own risk.
