Stock Exchange's Inspection, Internal Audit by CS/CA/CWA in practice, Default & Implementation - SEBI Master Circular

SEBI/MIRSD/Master Cir-04/2010 dated 17th March 2010

Master Circular on Oversight of Members (Stock Brokers/Trading Members/Clearing Members of any Segment of Stock Exchanges and Clearing Corporations).  This master circular consolidates and updates the requirements/obligations with regard to oversight of members (Inspection by Stock Exchanges/Clearing Corporations, Internal Audit and Default)

 

I. Inspection of Members by Stock Exchanges / Clearing Corporations
The Stock Exchange or the Clearing Corporation shall

1. formulate a policy for inspection of members and follow up action thereon.
2. shall inspect all active members in various segments every year covering,

a. Compliance with the relevant provisions of the Act, Rules and Regulations made there under, Rules and Regulation of the Stock Exchange / Clearing Corporation and the circulars issued by SEBI and Stock Exchanges / Clearing Corporations from time to time, and
b. Efficacy of the investor grievance redressal mechanism and discharge of various obligations towards clients, for the preceding one year unless a longer period is warranted in the circumstances.

An illustrative list of common violations/deficiencies observed by SEBI in its inspections of members are,

• Relating to KYC
• Relating to Contract notes
• Relating to Investor services
• Relating to funds and securities
• Relating to terminals
• OTHERS

The Stock Exchanges and Clearing Corporations are advised to bring this list to the notice of members with an advice to them to avoid these violations/deficiencies.

The Stock Exchange or the Clearing Corporation, as the case may be, shall initiate all the follow up action – remedial, penal and disciplinary - required on inspection findings, within 6 months from the conclusion of the inspection.

II. Internal Audit
The member shall carry out complete internal audit on a half yearly basis by an independent qualified Chartered Accountant, Company Secretary or Cost and Management Accountant who is in practice and does not have any conflict of interest.

The audit shall cover, inter alia,
a. the existence, scope and efficiency of the internal control system,
b. compliance with the provisions of the SEBI Act, 1992, Securities Contracts
(Regulation) Act 1956, SEBI (Intermediaries) Regulations, 2008, SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992, circulars issued by SEBI from time to time, Bye Laws and Regulations and circulars issued by the Stock Exchange / Clearing Corporation,
c. data security and insurance in respect of operations, and
d. efficacy of the investor grievance redressal mechanism and discharge of various obligations towards clients.

The internal auditor shall submit the audit report to the member, who shall place it before its Board of Directors/Proprietor/Partners and shall forward the same along with para-wise comments to the respective stock exchange/clearing corporation within 3 months from the end of the half year period.

The Stock Exchange/Clearing Corporation shall initiate appropriate actions – remedial, penal or disciplinary - against the members where deficiencies are noticed in audit reports or where audit report has not been received, and inform the details of action taken to SEBI, within 6 months from the end of the half year period.

III. Default in case of Multiple Membership
Whenever a member of any segment is declared defaulter, the concerned Stock Exchange/Clearing Corporation shall immediately declare it a defaulter in all its segments. It shall also immediately inform all other Stock Exchanges/Clearing Corporations the details of the defaulter member such as name of the member, the names of the proprietors/partners/promoters/dominant shareholders, as applicable.  Immediately on receipt of the information about default of a member, the Stock Exchange / Clearing Corporation shall declare the said member defaulter on all its segments.

The Stock Exchanges / Clearing Corporations shall take appropriate action against the associates of defaulter member. For this purpose, the term ‘associate’ shall include a person:
a. who, directly or indirectly, by itself, or in combination with other persons,
exercises control over the member, whether individual, body corporate or firm or holds substantial share of not less than 15% in the capital of such entities; or
b. in respect of whom the member, individual or body corporate or firm, directly or indirectly, by itself or in combination with other persons, exercises control; or
c. whose director or partner is also a director or partner of the member, body
corporate or the firm, as the case may be.
Explanation: The expression “control" shall have the same meaning as defined under clause (c) of Regulation 2 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

IV. Implementation
For the above purpose, the Stock Exchanges / Clearing Corporations shall take all necessary action, including the following:
a. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately, if the same has not been already made.
b. bring the provisions of this circular to the notice of the members and also to disseminate the same on the website, and
c. communicate to SEBI, the status of the implementation of the provisions of
this circular in the Monthly Development Report (MDR).

The circulars mentioned hereunder stand rescinded:

A. Circular no. SMD(B)/104/22775/93 dated October 29, 1993
B. Circular no. SMD/MDP/CIR/043/96 dated August 5, 1996
C. Circular no. SMD/Policy/Cir-24/97 dated September 26, 1997
D. Circular no. SMDRP/POLICY/Cir-45/2001 dated September 17, 2001
E. Circular no. SEBI/SMD/DBA-1/CIR-27/2003 dated June 25, 2003
F. Circular no. MIRSD/DPSIII/Cir-26/08 dated August 22, 2008, and
G. Circular no. MRD/DMS/Cir-29/2008 dated October 21, 2008

Notwithstanding such rescission, anything done or any action taken under those circulars before the date of this Master circular, shall be deemed to have been done or taken or commenced under the corresponding provisions of this circular. After the rescission of the earlier circulars, any reference thereto in any regulation, guidelines and circulars shall be deemed to be a reference to this Master Circular.

Understand SEBI ICDR with Checklist & download good material to read through the same, its applicable for CS exams now

ICSI has published a good material on ICDR, its an interesting read-through for CS, Non-CS, students, professionals, etc… The content is standardised and really good as a referencer.  Enjoy readin… DOWNLOAD ICDR – An Understanding.

ATTENTION!
STUDENTS OF Company Secretary (CS) PROFESSIONAL/EXECUTIVE PROGRAMME

Supplement on

• ‘Due Diligence and Corporate Compliances Management’ (Module –IV Paper -7)
• ‘Securities Laws and Compliances’ (Module – II Paper -6)

Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 [called SEBI (ICDR) Regulations, 2009] are applicable for June 2010 Examination.  Please click here for download Softcopy of supplement.

Accordingly, a hard copy of the supplement will be available free of cost to the students after 25th March 2010. Students may receive the hard copy of the supplement by sending a self addressed envelope of 25cms x 18 cms size by affixing stamps for Rs. 6/- to Shri Harish Joshi, Administrative Officer (Store), The Institute of Company Secretaries of India, C-37,Sector 62 , Institutional Area , NOIDA -2 01301. Students may also collect the copy of supplement from headquarters at Lodi Road and Regional/Chapter offices i.e. EIRC, NIRC, SIRC, WIRC, Ahmedabad, Poona, Hyderabad, Bangalore, Jaipur & Noida.

1 year Securities law course from SEBI by NISM is power packed and has good career prospects, may be even good placements, go for it

National Institute of Securities Market (NISM) – An Educational Institution by Securities & Exchange Board of India (SEBI).

NISM is established by SEBI which is entrusted with duties also under Securities and Exchange Board of India (Certification of Associated Persons in the Securities Markets), Regulations, 2007 and it is in the process of mandating few programmes for Market Intermediaries like SEBI NISM Currency Derivatives Exam through BSE/NSE/MCX for brokers made mandatory to operate in securities market.

NISM Schools on Securities Market in India:

1. School for Investor Education and Financial Literacy (SIEFL)
2. School for Certification of Intermediaries (SCI)
3. School for Securities Information and Research (SSIR)
4. School for Regulatory Studies and Supervision (SRSS)
5. School for Corporate Governance (SCG)
6. School for Securities Education (SSE)

The CSMP Programme:

1. CSMP stands for Certified Securities Markets Professional.
2. The CSMP programme is a 1-year full-time certificate programme offered by NISM.
3. It covers Security analysis and Equity Research, Investment Banking, Fund Management, Corporate Re-structuring and Consulting, Investment Advisory Services, Equity and Debt Market Broking and related fields.
4. Aimed at graduates, post graduates and Executives aspiring for careers in securities markets.

Programme Architecture:

The programme is a balanced blend of theory and practice, divided into four terms. The themes of the four terms are:

• Conceptual Phase
• Application Phase
• Industry- Interaction Phase
• Advanced Application Phase

1. 600 hours of teaching.
2. During the first two terms/phases and in the fourth term/phase students are expected to study a total of 24 courses.
3. In the third term/phase is the internship project with an organization in the securities industry.

Admission Process:

1. Nationwide online Test and
2. Personal Interview.

Eligibility Criteria:

• A Post- Graduation (PG) course for 2 years or in the final year of PG course OR
• A Graduate (UG), with 2 years post qualification experience.
• NISM reserves the right to relax any of the above criteria in deserving cases and also accept or reject any application without assigning any reason.
• Should have a personal laptop.

Selection Criteria/Weightage:

1. Profile – 20% ( consists of Academic Qualification / Performance – 10% and Work Experience – 10%)
2. Online Test – 40%
3. Personal Interview – 40%

Course Fees:

1. Tuition fee: Rs.1,50,000/-
2. Examination fee: Rs.10,000/-
3. Library deposit fee: Rs.6,000/-
4. Library fee: Rs.10,000/-
5. Total = Rs.1,76,000/-
6. Plus Hostel/Stay fees.

For further details, contact:

National Institute of Securities Markets, Navi Mumbai.

E: csmp@nism.ac.in

W: www.nism.ac.in

Prospectus: Click Here to download

Registration: Click Here to Register Online [Rs.525/-]

Important Cut off or Due Dates: <><><></></></> Event Date Last date for Online Registration April 15 Online test April 25 Announcement online test results April 28 Personal interviews May 7 - 10 Announcement of first list of selected candidates for admission May 12 Payment of commitment fees for first list May 12 - 24 Announcement of second list of selected candidates for admission May 25 Receipt of First Installment Fee for all admitted candidates May 26 – June 14 Last date of completing all formalities and payment of first installment fee June 14 Inauguration of the programme June 22 Commencement of the programme June 23

Feel free to catch me up for clarifications… Trust me, if you are passionate about or wish to make a career in Securities Market, this is the right time to take a decision, go for it!!!

Understand when lesser penalty of 100%,50% & 30% may be levied under Competition Act Regulations

Understand CCI (Lesser Penalty)

Regulations, 2009

Regulation 2(1)(b): “applicant” means an enterprise, who is or was a member of a cartel and submits an application as per Schedule for lesser penalty to Competition Commission of India (CCI);

Regulation 2(1)(h): “priority status” means the position of the applicant marked for giving the benefit of lesser penalty in the queue of the applicants;

Regulation 2(1)(i): “vital disclosure” means full and true disclosure of information or evidence by the applicant to CCI, which is sufficient to enable CCI to form a prima-facie opinion about the existence of a cartel or which helps to establish the contravention of the provisions of section 3 of the Act.

Regulation 3. Conditions for lesser penalty. – Applicant shall,

(a) cease to have further participation in the cartel from the time of its DISCLOSURE;

(b) provide VITAL DISCLOSURE in respect of violation u/s.3 of the Act;

(c) provide all RELEVANT INFORMATION, documents and evidence as may be required by CCI;

(d) CO-OPERATE genuinely, fully, continuously and expeditiously throughout the investigation and other proceedings before the CCI; and

(e) NOT conceal, destroy, manipulate or remove the relevant documents in any manner, that may contribute to the establishment of a cartel.

The discretion of CCI, in regard to reduction in monetary penalty under these regulations, shall be exercised having due regard to –

(a) the STAGE at which the applicant comes forward with the disclosure;

(b) the EVIDENCE already in possession of the Commission;

(c) the QUALITY of the information provided by the applicant; and

(d) the entire FACTS and circumstances of the case.

Regulation 4. Grant of lesser penalty. – CCI may decide in the following manner,

(a) The applicant may be granted benefit of reduction in penalty [ONLY IF no other applicant has been granted such benefit by CCI] UPTO 100%, if the applicant is the first to make a vital disclosure,

• enabling CCI to form a prima-facie opinion regarding the existence of a cartel and CCI did not, at the time of application, have sufficient evidence to form such an opinion:
• in a matter under investigation and CCI, or the Director General did not, at the time of application, have sufficient evidence to establish such a contravention:
• no other applicant has been granted such benefit by CCI.

(b) Any subsequent applicant may also be granted benefit of reduction in penalty, if CCI opines that it may provide significant ADDED VALUE to the evidence. “Added value” means the extent to which the evidence provided enhances the ability of CCI

or the Director General, to establish CARTEL as alleged. It shall be in the

following order of PRIORITY STATUS:

(i) if the applicant is marked as second, reduction may be UPTO 50% of full penalty;

(ii) the applicant is marked as third, reduction may be UPTO 30% of full penalty;

Regulation 5. Procedure for grant of lesser penalty. –

(1) an application with material information as per the Schedule, or may contact, orally or through e-mail or fax, the designated authority for furnishing the information (which may be followed by written application subsequently within 15 days).

(2) WITHIN 3 working days, the designated authority shall put the matter before CCI.

(3) CCI shall mark priority status of applicant.

(4) Designated authority shall convey the same to the applicant either on telephone, or through e-mail or fax and shall provide the written acknowledgement.

(5) The evidence will be evaluated and only then the next applicant shall be considered by CCI.

(6) CCI may accept the application on satisfaction or reject the same for want of information after giving an opportunity of being heard.

Source: No. L-3(4)/Reg-L.P./2009-10/CCI dated 13^th August 2009

Online Verification of CS Exam Marks after re-totalling, ICSI's New Initiative based on Roll or Registration No. of Student

Are you not satisfied with your CS results? then apply for Verification of marks (casually called revaluation or re-counting) within 30 days from today (ie) within 30 days from declaration of CS results.  For more details, visithttp://yehseeyes.blogspot.com/2009/02/revaluation-retotalling-cs-marks.html

Online Verification of marks based on Roll No. or Registration Number is permissible now…

Yes, its a good news to CS students as they can see the New Mark Sheet after re-totalling or revaluation, what ever you call, of Company Secretary Exams online itself, following the link: http://www.icsi.edu:8888/StudentVerification/verificationQuery.aspx

Now, CS students need not wait till 25th March 2010 to decide – whether to apply for exams or not!!!

Enjoy passin…

IFC, the new NBFC under ECB approval route upto 50% NOF subject to RBI compliances & hedging full currency risk

Why all this?

In view of the thrust given to the development of the infrastructure sector, a separate category of NBFCs viz. Infrastructure Finance Companies (IFCs) has been introduced in terms of the guidelines contained in DNBS Notification.  In view of the new category of NBFCs being in place, the dispensation provided in “Old Position” below is not considered necessary.

New Position

Accordingly, proposals for External Commercial Borrowings (ECBs) by the IFCs, which have been classified as such by the Reserve Bank, for on-lending to the infrastructure sector, as defined in the extant ECB policy may be considered under the approval route, subject to their complying with the following conditions:

i) compliance with the norms prescribed in the aforesaid DNBS Circular dated February 12, 2010;
ii) hedging of the currency risk in full; and
iii) the total outstanding ECBs including the proposed ECB not exceeding 50 % of the Owned Funds.

Old Position

As per the extant ECB policy, Non-Banking Finance Companies (NBFCs), which are exclusively engaged in financing of infrastructure sector, are permitted to avail of ECB from the recognized lender category including international banks, under the approval route, for on- lending to the infrastructure sector, as defined in the extant ECB policy.

Source: A.P. (DIR Series) Circular No.39 dated 2nd March 2010

To know all about ECB notifications, visit http://yehseeyes.blogspot.com/search?q=ECB

New Infrastructure sector definition for ECB to include Cold storage at agricultural & allied levels

Why all this?

As announced in para 54 of the Union Budget for the Year 2010-11, it has been decided to expand the definition of infrastructure sector for the purposes of External Commercial Borrowings (ECB).

New Definition of “Infrastructure Sector”

The infrastructure sector would henceforth be defined to include (i) power, (ii) telecommunication, (iii) railways, (iv) road including bridges, (v) sea port and airport, (vi) industrial parks, (vii) urban infrastructure (water supply, sanitation and sewage projects), (viii) mining, exploration and refining and (ix) cold storage or cold room facility, including for farm level pre-cooling, for preservation or storage of agricultural and allied produce, marine products and meat.

Old Definition of “Infrastructure Sector”

As per the extant ECB policy, infrastructure sector is defined as (i) power, (ii) telecommunication, (iii) railways, (iv) road including bridges, (v) sea port and airport, (vi) industrial parks, (vii) urban infrastructure (water supply, sanitation and sewage projects) and (viii) mining, exploration and refining.

Source: A.P. (DIR Series) Circular No.38 dated 2nd March 2010

To know all about ECB, visit http://yehseeyes.blogspot.com/search?q=ECB

Download or SMS CS December exam results 2010 now for Company Secretary Foundation, Executive & Professional Programme by ICSI

Direct Link for Institute of Company Secretaries of India (ICSI) Exam Results for CS Foundation, Executive and Professional programme: http://icsi.examresults.net/ in addition to www.icsi.in or www.icsi.edu

• Further, to get CS Results in SMS: send “Result” as SMS to 56263.
• Download CS Exam Results here and search (Ctrl + F) for first three digits of your Roll Number and then look for the last 2 digits in the Row.  If your number is available in the PDF, it means you have passed the Exam.

What to do after passing CS Exams? What are the programmes to be completed after every level of CS exams? What are TOP, ADP, EDP, SIP, MSOP, SMTP, etc…? To understand, visit the CHECKLIST after CS Exams in http://yehseeyes.blogspot.com/2010/02/december-cs-exam-results-june-2010.html

December CS Exam Results February 2010 & Checklist of programmes after passing Company Secretary Foundation or Executive or Professional

The results of the CS Foundation Course, Intermediate and Final (Old Syllabus) and Foundation Programme, Intermediate/Executive Programme, and Professional Programme (New Syllabus) examinations of the Company Secretaries held in December, 2009 are scheduled to be declared at 12.00 Noon on 25^th February, 2010 at www.icsi.edu and also try www.icsi.in & http://icsi.examresults.net or details in http://yehseeyes.blogspot.com/2010/02/download-or-sms-cs-december-exam.html

HEARTIEST WISHES FOR EVERY ONE WHO HAS WON & IN THE PROCESS OF WINNING COMPANY SECRETARY EXAMS

Candidates registered upto and including the month of February in a year are eligible for appearing in both the groups of the Executive Programme or all 4 modules of Professional Programme examination held in June of next year. So, its mandatory for you to submit prescribed forms before 2nd March 2010 (also note even 27 & 28th February viz Saturday and Sunday is a full working day for ICSI) to appear for all modules in December 2010.  There is one another new requirement in lieu of TOP, SMTP, etc…which is called Student Induction Programme (SIP), Executive Development Programme (EDP)  and Professional Development Programme (PDP) from 1st September 2009 0nwards.  Details in http://yehseeyes.blogspot.com/2010/02/newcstrainingsipedpmsoppdpparttimeicsic.html

Before visiting the nearest ICSI office, make sure you are ready with following things:

For Foundation passed:

1. Click here to register online for CS Executive Program Application -http://www.icsi.in and arrange for fees as per http://www.icsi.edu/LinkClick.aspx?link=http%3a%2f%2fwww.icsi.edu%2fwebmodules%2flinksofweeks%2fREVISION+OF+FEES.doc&tabid=528&mid=3166

2. Get to know your subjects and classes schedules at http://csclasses.learnlabz.com
3. Register for Computer Training with Aptech or produce your Certificates to write Exemption exam on or before February 2010: www.icsi.aptechtrainingsolutions.com
4. Enroll for Student Induction Programme (SIP), a 7 full day program with ICSI which shall be completed within 6 months.  Details in http://yehseeyes.blogspot.com/2010/02/newcstrainingsipedpmsoppdpparttimeicsic.html
5. Get your Bcom degree too BCom CS Executive & MCom CS Professional programme is possible -IGNOU & ICSI offers this mutli-degrees for Company Secretaries

6. Get your scholarship based on your school marks from 10&12th Standard Marks for 100% Company Secretary Course fees, says ICSI by Students Education Fund Trust scheme-60/75/90%

7. Start writing CC papers for eligibility Just write 1 CC paper for CS Executive/Professional/Foundation programme, instead of 3 CC papers per subject but to secure 40% marks and submit on or before August 2010.

8. Enjoy reading CS Executive Programme books from http://csbooks.learnlabz.com

For Executive passed:

1. Click here to download & fill CS Professional Program Application -http://www.icsi.edu/webmodules/student/final.doc and arrange for fees as per Apply for Executive Development Program (EDP) and find details from nearest ICSI -http://www.icsi.edu/webmodules/student/TopForm.doc (its a mandatory pre-requisite to commence CS Training). EDP is a 8 full day program offered at ICSI and your training will commence only on completion of this program.  Details in http://yehseeyes.blogspot.com/2010/02/newcstrainingsipedpmsoppdpparttimeicsic.html

2. Then, start sending emails & applications of RESUME for CS Training to

   1. List of Company Secretaries in Practice Registered for Imparting Training

   2. Registered Companies for Training

3. For 15-month CS Training related information, you can visit http://yehseeyes.blogspot.com/2008/05/icsi-15-months-managementapprentice.html

4. Start looking out for Professional Development Programs (PDP) as its mandatory to attend for 25 hours or you have the option to register for National Convention of ICSI.

5. Get your Mcom degree too BCom CS Executive & MCom CS Professional programme is possible -IGNOU & ICSI offers this mutli-degrees for Company Secretaries

6. Get your scholarship based on your school marks from 10&12th Standard Marks for 100% Company Secretary Course fees, says ICSI by Students Education Fund Trust scheme-60/75/90%

7. Get to know your subjects and classes schedules at http://csclasses.learnlabz.com
8. Start writing CC papers for eligibility Just write 1 CC paper for CS Executive/Professional/Foundation programme, instead of 3 CC papers per subject but to secure 40% marks and submit on or before February 2010.

9. Enjoy reading CS Professional books @ http://csbooks.learnlabz.com

For Professional passed:

1. Pending Training you are eligible for Licentiate Membership of ICSI -http://www.icsi.edu/webmodules/student/Licentiate.doc and you will get Chartered Secretary (Members magazine) free of cost.

2. Complete your CS Training or Claim exemption from it following http://yehseeyes.blogspot.com/2008/05/icsi-15-months-managementapprentice.html

3. Complete RoC Training or Stock Exchange training, if applicable. Send e-mail to training2@icsi.edu to get the sponsorship letter.

4. Complete 25 hours PDP's, 15 full days MSOP’s, etc… in http://yehseeyes.blogspot.com/2010/02/newcstrainingsipedpmsoppdpparttimeicsic.html
5. Then, apply for the esteemed membership of ICSI following, http://yehseeyes.blogspot.com/2009/01/checklistformsfeesguide-to-apply-for.html

Are you not satisfied with your CS results? then apply for Verification of marks (casually called revaluation or re-counting) within 30 days from today (ie) within 30 days from declaration of CS results.  For more details, visit http://yehseeyes.blogspot.com/2009/02/revaluation-retotalling-cs-marks.html

Enjoy passin... Of course, you can keep track of all updates, happenings and all about Company Secretaries by following http://yehseeyes.blogspot.com/and Get See Yes -> Yes, ACS delivered by email

New Format Cheque under Cheque Truncation System (CTS) Standard issued by RBI, in addition to MICR, yet to be notified

"CTS-2010 Standard" for Cheque Forms – Specifications

RBI has proposed a New Cheque Truncation System (CTS) and a Model of proposed cheque, the effective date of which will be intimated soon.

It has since been decided to prescribe certain benchmarks towards achieving
standardisation of cheques issued by banks across the country. These include provision of mandatory minimum security features on cheque forms like quality of paper, watermark, bank’s logo in invisible ink, void pantograph, etc., and standardisation of field placements on cheques. In addition, certain desirable features are also being suggested which could be implemented by banks based on their need and risk perception. The set
of minimum security features would not only ensure uniformity across all cheque forms issued by banks in the country but also help presenting banks while scrutinising /recognising cheques of drawee banks in an image-based processing scenario. The homogeneity in security features is expected to act as a deterrent against cheque frauds, while the standardisation of field placements on cheque forms would enable straightthrough-processing (STP) by use of optical / image character recognition technology (MICR).

Source: RBI Circular DPSS.CO.CHD.No.1832/04.07.05/2009-2010 dated February 22, 2010

New NBFC Classification: AFC, IFC, Investment & Loan company as per RBI

Consequent upon re-classification of NBFCs, in the proposed structure the following categories of NBFCs will emerge:

1. Asset Finance Company
2. Investment Company
3. Loan Company
4. Infrastructure Finance Company (IFC) – a new category as notified by RBI vide DNBS.PD. CC No.168 /03.02.089 /2009-10 dated 12th February 2010.

Conversion into New Pricing Norms for FCCB on or before 15th August 2010 (ie) average 2 week high & low prices only like QIP under ICDR

A Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary Receipt Mechanism) Scheme was notified in 1993 to allow the Indian Corporate sector to access global capital markets through issue of Foreign Currency Convertible Bonds (FCCB)/Equity Shares under the Global Depository Receipt Mechanism (GDR) and American Depository Receipt Mechanism (ADR). The Scheme has been amended several times since then.

What is FCEB?

Amendment: On or before 15th August 2010 (6 month period from 15th February 2010), the corporates have the option to revise from OLD CONVERSION PRICE norms to NEW CONVERSION PRICE norm (as below) for FCCB’s.  The said revision of conversion price is subject to the following conditions:

• Prior approval from RBI (PRBI) is mandatory.
• The issuing Company shall ensure that the revision of price and consequent issue of shares may not breach Foreign Direct Investment (FDI) limit (Sectoral caps) under Automatic or Approval route.
• The issuing Company shall take approval from its Board as well as from its shareholders (Board Resolution + Ordinary Resolution).
• The issuing Company shall enter into a fresh agreement with the FCCB holders in terms of re-negotiation of the conversion price.

Source: Ministry of finance Press Note F.No.9/3/2009-ECB dated 15th February 2010.

[Old Conversion Price]FCCB Pricing Norm prior to 27th November 2008:

Listed Companies – The pricing should not be less than the higher of the following two averages:

(i) The average of the weekly high and low of the closing prices of the related shares quoted on the stock
      exchange during the six months preceding the relevant date;

(ii) The average of the weekly high and low of the closing prices of the related shares quoted on a stock
       exchange during the two week preceding the relevant date.

The “relevant date” means the date thirty days prior to the date on which the meeting of the general body of shareholders is held, in terms of section 81 (IA) of the Companies Act, 1956, to consider the proposed issue.”

[New Conversion Price]FCCB Pricing Norm from 27th November 2008: similar to QIP pricing under ICDR

Listed Companies – The pricing should not be less than the average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the two weeks preceding the relevant date; [avg 2 weeks high & low]
The “relevant date” means date of the meeting in which the Board of the company or the Committee of Directors duly authorized by the Board of the company decides to open the proposed issue.”

Source: FINMIN

Revised CS Training programme: 7,8,15days training programmes after Foundation, Executive & Professional Programme exams…Understand it!!!

Updated New Company Secretary Training Provisions

1. Applicability: Students enrolled for Company Secretary (CS) course on or after 1^st September 2009.
2. Student Induction Program (SIP): Students shall complete SIP Within 6 months of Registration for CS Executive Programme. SIP is a 7 full days training programme (introduced for the very first time). SIP will be conducted by ICSI's Regional Councils like NIRC, SIRC, EIRC & WIRC and 'A' & 'B' grade Chapters as provided in www.icsi.edu. To register for SIP, only physical application shall be made to the nearest ICSI chapter along with a fees of Rs.1,000/- To Get exemption from SIP, follow https://docs.google.com/open?id=1XBh5rCmnC1ZP_Fjq-lU2dXop9VnyJh1aggwku6CX_WG3TfihHBw-VdU6dUS3
3. Executive Development Program (EDP): EDP is the new name of erstwhile Training Orientation Programme (TOP). EDP is a 8 full days (instead of 5 days as earlier) training programme. EDP as a pre-requisite for Training which shall be done after passing CS Executive Programme Exams remains as such. To register for EDP, only physical application shall be made to the nearest ICSI chapter along with a fees of Rs.1,000/
4. Professional Development Program (PDP): PDP is the new name of erstwhile Academic Development Programme (ADP) which remains for the period of 25 hours. PDP's are the lectures, seminars, etc...conducted by ICSI on daily basis or weekend basis or half-day basis and will have PDP hours mentioned in it. PDP's will be counted after completion of Executive Development Programme (EDP) and during the course of CS Training. It shall be completed before applying for ACS Membership.
5. Wholly or Partly with PCS & Company & Firms/Institutions: The existing 15 month Training Programme remains as such. ICSI has specifically mentioned that Students are free to undergo training wholly or partly with Practising Company Secretary or Registered Companies. Further,
   6 (SIX) MONTHS OF 15 MONTHS TRAINING CAN BE DONE WITH FINANCIAL INSTITUTIONS/ MANAGEMENT CONSULTANTS / LAW FIRMS REGISTERED WITH ICSI.
   
6. RoC/Stock Exchange Training: The 15 day RoC or Specialised Institutions training on completion of 12 months of CS Training remains as such.
7. Management Skills Orientation Programme (MSOP): MSOP, the erstwhile Secretarial Modular Training Programme (SMTP) or Residential Secretarial Modular Training Programme (RSMTP) @ ICSI-CCGRT remains for 15 full days at the ICSI's Regional Councils. MSOP shall be completed after passing CS Professional Programme exams.
8. Membership Application: Details in http://yehseeyes.blogspot.com/2009/01/checklistformsfeesguide-to-apply-for.html
9. Full details about new CS Training, courses to be undergone and details can be found in http://yehseeyes.blogspot.com/2008/05/icsi-15-months-managementapprentice.html

Source: ICSI Notification & Website

The Council of the Institute has approved the following decisions
pertaining to training of the students of the Company Secretaryship
Course.:
A) 15 months training with Law Firms, Consultancy Firms,
Financial Institutions
The Council of the Institute has allowed imparting 15 months
training by Law Firms, Consultancy Firms and Financial
Institutions. Earlier they were allowed to impart training for 6
months only. Further the Council has removed the criteria of
standing, minimum number of partners and fixed assets for
registration of Law Firms and Consultancy Firms and approved the
revised guidelines for registration of Law Firms, Consultancy
Firms, Financial Institutions for imparting 15 months training
which is available at training link on the website of the Institute
www.icsi.edu.
B) Removal of requirement of remitting fee of ₹ 50/-with
Apprenticeship Agreement by the Practising Company
Secretaries
The Council has removed the requirement of remitting a fee of
₹ 50/- by the PCS towards registration of apprenticeship training
of the students.
C) 15 days with any one specialised agency:
The Council has also allowed undergoing training of 15 days with
any one specialised agency as prescribed under Regulation 50 (b)
of the Company Secretaries Regulations, 1982, with the broking
firms/ companies, Law firms, Universities (recognized by UGC),
Merchant Bankers, Mutual Funds, Insurance Companies, SMEs,
Industry Associations/ Chambers of Commerce, all Ministries,
SEBI, IRDA, TRAI, CCI, Courts, Tribunals and other quasi-judicial
bodies

Websites/Blogs/astrology predictions or advice/Newspaper Advertisements/SMS’s/Emails/rumours NO Papa...Only SEBI Registered Intermediaries for Investments

SEBI PR No.36/2010 dated 10th February 2010

Caution to investors

Securities and Exchange Board of India (SEBI) is a regulatory body established by an Act of Parliament to protect the interests of investors in the securities market, to promote the development of, to regulate the securities market and for matters connected therewith or incidental thereto.

The following caution is issued by SEBI in the interest of investors.

SEBI has observed a proliferation of websites that offer investment advice to investors. Many of these websites offer investment advice not backed by any reasonable basis and prima facie appear to be misguiding. Investors should realize that when they follow such advice they are exposing themselves to undue risk in using unconfirmed information available on such Websites/Blogs/astrology predictions or advice/Newspaper Advertisements/SMS’s/Emails/rumours/ advice rendered through television or print media and trading tips on an intra-day basis, short term basis or long term basis. The public in general is advised not to fall prey to or be lured by such sources of information promising quick gains and unrealistic high returns. It is advised that investors should take well informed investment decisions.

The following may be borne in mind:

· Deal only with/ through SEBI registered intermediaries.

· Do not get carried away by advertisements promising unrealistic gains and windfall profits.

· Do not invest based on market rumours or unconfirmed or unauthentic news.

· Be aware that advice through television or print media does not mean that it is the opinion of the channel or publisher.

· Be extra cautious while using information available from media sources such as Websites/ Blogs/ Newspaper Advertisements/ SMS’s Emails/rumours/ advice through television or print media for information and tips for intra-day, short term or long term investing.

· Do not be guided by astrological predictions on share prices and market movements.

· Do not make investment decisions on the basis of implicit/explicit promises made by anyone.

· Do not be unduly influenced by indicative returns.

· Do not be unduly influenced by Bull Runs/Bear Runs while making investment decisions.

No prior RBI approval for ECB changes: Name of Borrower or Currency or Repayment or Bank after allotment of LRN, if other Terms are same

External Commercial Borrowings (ECB) Policy – Liberalisation vide RBI/2009-10/311 A. P. (DIR Series) Circular No.33 dated 9th February 2010
As per the extant ECB procedures, any changes or amendment in the terms and conditions of the ECB after obtaining the Loan Registration Number (LRN) from the Department of Statistics and Information Management (DSIM), Reserve Bank, require the prior approval of the Reserve Bank. Accordingly, the requests of the borrowers for changes in the terms and conditions, such as, drawdown / repayment schedules, currency of borrowing and changes in designated AD bank, name of the borrowing company, etc. are referred to the Reserve Bank for necessary approval.

As a measure of simplification of the existing procedures, it has been decided to delegate powers to the designated AD category-I banks to approve the following requests from the ECB borrowers, subject to specified conditions:
a) Changes / modifications in the drawdown / repayment schedule (maintaining Average Maturity Period)
Designated AD Category – I banks may approve changes / modifications in the drawdown / repayment schedule of the ECBs already availed, both under the approval and the automatic routes, subject to the condition that the average maturity period, as declared while obtaining the LRN, is maintained. The changes in the drawdown / repayment schedule should be promptly reported to the DSIM, Reserve Bank in Form 83. However, any elongation / rollover in the repayment on expiry of the original maturity of the ECB would require the prior approval of the Reserve Bank.
b) Changes in the currency of borrowing (with same terms)
Designated AD Category I banks may allow changes in the currency of borrowing, if so desired, by the borrower company, in respect of ECBs availed of both under the automatic and the approval routes, subject to all other terms and conditions of the ECB remaining unchanged. Designated AD banks should, however, ensure that the proposed currency of borrowing is freely convertible.
c) Change of the AD bank (with NoC & Due Diligence)
Designated AD Category - I banks may allow change of the existing designated AD bank by the borrower company for effecting its transactions pertaining to the ECBs subject to No-Objection Certificate (NOC) from the existing designated AD bank and after due diligence.
d) Changes in the name of the Borrower Company  (with Evidence)
Designated AD Category - I banks may allow changes in the name of the borrower company subject to production of supporting documents evidencing the change in the name from the Registrar of Companies (Name Approval Letter [pursuant to e-form 1A] with Fresh Certificate of Incorporation [pursuant to e-form 1B]).

The modifications to the ECB guidelines will come into force with immediate effect.

To know, all about ECB http://yehseeyes.blogspot.com/search/label/RBI%20FEMA%20ECB

FDI in NBFC-Statutory Auditors Certification-half yearly within 1 month to RBI R.O.

Compliance with FDI norms-Half yearly certificate from Statutory Auditors of NBFCs

NBFCs having Foreign Direct Investment (FDI) whether under automatic route or under approval route have to comply with the stipulated minimum capitalisation norms and other relevant terms and conditions, as amended from time to time under which FDI is permitted.

As such these NBFCs are required to submit a certificate from their Statutory Auditors on half yearly basis (half year ending September and March) certifying compliance with the existing terms and conditions of FDI. Such certificate may be submitted not later than one month from the close of the half year to which the certificate pertains, to the Regional Office in whose jurisdiction the head office of the company is registered.

Source:RBI/2009-10/304 DNBS (PD).CC. No 167 /03.10.01 /2009-10 dated 4th February 2010

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