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NBFC – Factors

Q 3. What are the entry point norms for NBFC-Factor ? +

Ans, Every company registered under Section 3 of the Companies Act 1956 seeking registration as NBFC-Factor shall have a minimum Net Owned Fund (NOF) of Rs. 5 crore. Existing companies seeking registration as NBFC-Factor but do not fulfil the NOF criterion of Rs. 5 crore may approach the Bank for time to comply with the requirement.

3. How can the ATS be accessed ? +

A link to ATS has been provided in the RBI website http://www.rbi.org.in.

3. Are there any risks in investing in SGBs? +

There may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.

3. Whether capital protection will be provided? +

Yes, capital protection will be provided by paying higher of the adjusted principal and face value (FV) at redemption.
If adjusted principal goes below FV due to deflation, the FV would be paid at redemption and thus, capital will get protected.

3. How does the NEFT system operate? +

Ans: Following is the step-wise flow of NEFT transaction.

Step-1: An individual / firm / corporate willing to transfer funds through NEFT can use the internet / mobile banking facility offered by his / her bank for initiating online funds transfer request. The remitter has to provide details of beneficiary such as, name of the beneficiary, name of the bank branch where the beneficiary has an account, IFSC of the beneficiary bank branch, account type and account number, etc. for addition of the beneficiary to his / her internet / mobile banking module. Upon successful beneficiary addition, the remitter can initiate online NEFT funds transfer by authorising debit to his / her account. Alternatively, the remitter can also visit his / her bank branch for initiating NEFT funds transfer through branch / off-line mode. The customer has to fill-in the beneficiary details in NEFT application form available at the bank branch and authorise the branch to debit to his / her account to the extent of the amount requested in NEFT application form.

Step-2: The originating bank prepares a message and sends the message to its pooling centre, also called the NEFT Service Centre.

Step-3: The pooling centre forwards the message to the NEFT Clearing Centre, operated by the RBI, to be included for the next available batch.

Step-4: The Clearing Centre sorts the funds transfer transactions beneficiary bank-wise and prepares accounting entries to receive funds from the originating banks (debit) and give the funds to the beneficiary banks (credit). Thereafter, bank-wise remittance messages are forwarded to the beneficiary banks through their pooling centre (NEFT Service Centre).

Step-5: The beneficiary banks receive the inward remittance messages from the Clearing Centre and pass on the credit to the beneficiary customers’ accounts.

3. Whether a licence is mandatory for carrying out money changing business? +

Yes. Money changing business can be undertaken by entities authorised by the Reserve Bank under Section 10 of the Foreign Exchange Management Act, 1999. No person shall carry on money changing business without the possession of a valid licence issued by the Reserve Bank. Any person found undertaking money changing business without a valid licence is liable to be penalised under the Act ibid.

Q 3. How much foreign currency can be carried in cash for travel abroad? +

Ans. Travellers going to all countries other than (a) and (b) below are allowed to purchase foreign currency notes / coins only up to USD 3000 per visit. Balance amount can be carried in the form of store value cards, travellers cheque or banker’s draft. Exceptions to this are (a) travellers proceeding to Iraq and Libya who can draw foreign exchange in the form of foreign currency notes and coins not exceeding USD 5000 or its equivalent per visit; (b) travellers proceeding to the Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States who can draw entire foreign exchange (up-to USD 250,000) in the form of foreign currency notes or coins.

For travellers proceeding for Haj/ Umrah pilgrimage, full amount of entitlement (USD 250,000) in cash or up to the cash limit as specified by the Haj Committee of India, may be released by the ADs and FFMCs.

3 Who is a Resident? +

Ans. Resident as defined in Sec 2(v) ² of FEMA, 1999. Further, the onus is on the individual to prove his/ her residential status, if questioned by any authority.

3. How payment into government account is made? +

All monies for credit to government account like taxes or other remittances can be made by filling the prescribed challans of the Government/Department concerned. The tax payers are encouraged to pay dues to Government electronically by login in to respective government portals. However, if they prefer to pay dues by way of cash, cheque, demand draft, these are required to be tendered with the authorized agency bank branches along with requisite challan

Q.3. What is the funds availability schedule for the beneficiary? +

Ans The remitting bank transmits the funds transfer message to RBI so as to reach NCC, before the cut off time for the settlement, the receiving bank’s account is credited by RBI at the destination centre and beneficiary gets credit on the same day.

3. What is the maximum deposit amount insured by the DICGC ? +

Each depositor in a bank is insured upto a maximum of ₹ 5,00,000 (Rupees Five Lakhs) for both principal and interest amount held by him in the same right and same capacity as on the date of liquidation/cancellation of bank's licence or the date on which the scheme of amalgamation/merger/reconstruction comes into force.

3.Who is an authorized dealer? +

An authorized dealer is normally a bank specifically authorized by the Reserve Bank under Section 10(1) of FEMA,1999, to deal in foreign exchange or foreign securities.

Q.3. Are LO/BO/PO required to register/report with Police authorities? +

Ans. Only applicants from Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong, Kong, Macau and Pakistan shall have to register with the State Police authorities. Copy of approval letter for persons from these countries shall be marked by the AD Category I bank to the Ministry of Home Affairs, Internal Security Division – I, Government of India, New Delhi for necessary action and record. All other countries are exempted from registering with the State Police authorities.

3. It is now clear that USD cheques are payable in USA and are required to be sent there for realisation. But are there different modes of collecting such cheques? +

Yes. There are various ways of collecting (realising) USD denominated cheques. The collection process followed by banks (presenting banks) varies depending on the institutional arrangements put in place by them. There are basically three types of arrangements adopted by banks–

i. Cash Letter Arrangement (CLA): Cheques are sent by the presenting banks in India to their correspondent banks (CBs) in USA for domestic clearing. Funds are collected (realised) by the CBs and credited to the account of the presenting bank maintained in US. Such accounts are known as NOSTRO accounts. For cheques sent under CLA the CB gives provisional credit to the bank on a pre-determined date (which varies from 7 to 9 days after tendering of cheque to the CB). However, the provisional credit will be subjected to a cooling period. After the cooling period, the customer’s account with the presenting bank in India is credited. In case of secured collection facility, the CB provides a guaranteed credit but at an additional cost.

(Cooling period is the time up to which banks wait after receiving provisional credit for the amount of cheque in their Nostro account for possible return of the cheque under provisions of the laws of USA by the drawee bank, before giving credit to the customers. More details are available under Question 9.)

(Secured Collection is a facility extended by the CBs. Under this facility, the CBs provide guaranteed final credit without recourse within a confirmed time period unlike normal collection service. Hence the collection time period is better under this facility. CBs offering this facility normally fix a cap for the amount of individual cheques collected under the arrangement. The CBs absorb any subsequent recall of payment by the drawee bank as per US laws. The bank offering such service charge an additional amount for giving credit without recourse.)

ii. Direct Collection Arrangement (DCA) : Cheques are sent by the banks in India directly to the drawee banks in USA for collection. Usually collection services ensure receipts of clear funds i.e., risk of return is almost eliminated. Therefore, high value cheques are generally sent under collection though the time taken may be more.

iii. Final Credit Services (FCS) : These services are offered by some CBs. The CB offering the service guarantees confirmed credit against the instrument. Under this arrangement banks receive final credit in their Nostro accounts without any recourse. This service normally does not have any cooling period as the cooling period is factored by the CBs before releasing the clear funds.

iv. Check-21 Facility : The System has been facilitated under Check-21 Legislation. It works more or less like CTS. When using check 21 facility, dealings are cleared utilizing the exchange of check images from bank to bank. It saves time in transit.

3. Which are the non-bank entities enjoying access to CPS presently? +

Ans. Non-bank entities with access to CPS are standalone primary dealers, clearing corporations of stock exchanges, central counterparty (CCIL), retail payment system organisation (NPCI), select financial institutions (NABARD, EXIM Bank) and DICGC.

3. Can the maturing FCNR (B) deposits be renewed and construed as fresh deposits for the purpose of swap ? +

Yes. However, only such deposits which are renewed on maturity for a minimum tenor of three years and having a lock in period of one year would qualify as eligible deposits for undertaking swap with RBI.

Sr.No. 3 How is leverage defined in case of NBFC-P2P lending platform ? +

Ans: Leverage ratio refers to outside liabilities on the balance sheet of an NBFC-P2P Platform that it can raise divided by its owned funds. Customers’ funds lent/borrowed by using the platform is not reckoned as outside liability of the platform.

3. Is there any limit on number of such transactions? How many such remittances can be sent in a year? +

Ans: There is no limit on remittances if the sender is maintaining account with any NEFT enabled bank-branch in India. Walk-in / Non-customers are allowed to remit 12 remittances in a year with ceiling of ₹50,000 per remittance.

3. What are the credit concentration norms for IFCs? +

Ans : IFCs may exceed the concentration of credit norms as provided in paragraph 18 of the aforesaid Directions as under:

i. In lending to

a. any single borrower by ten per cent of its owned fund, (i.e at 25% of Owned Funds) and

b. any single group of borrowers by fifteen per cent of its owned fund, (i.e. at 40% of Owned Funds)

ii. In lending and investing (loans/investments taken together) by

a. five percent of its owned fund to a single party, (i.e.at 30% of Owned Funds); and

b. ten percent of its owned fund to a single group of parties, (i.e. at 50% of Owned funds).

iii. The extant norms for investment for both single party and single group of parties will remain same as in Para 18 of the Directions, i.e.

a. Investment in shares of another company cannot exceed 15% of its Owned Funds

b. Investment in shares of a single group of companies cannot exceed 25% of its Owned Funds.

3. Query Can an Individual have any number of 'Basic Savings Bank Deposit Account' in one bank? +

Response

No. An individual is eligible to have only one 'Basic Savings Bank Deposit Account' in one bank.

Q.3 When should one apply for compounding? +

Ans. When a person is made aware of the contravention of the provisions of FEMA, 1999 by the Reserve Bank or any other statutory authority or the auditors or by any other means, she/he may apply for compounding. One can also make an application for compounding, suo mo-to, on becoming aware of the contravention.

3. What is the interest rate on these securities? +

There will be two parts in the interest rate. One, fixed rate of 1.5% per annum and second, inflation rate.
For example, if inflation rate during the six months is 5%, then interest rate for this six months would be 5.75% (i.e. fixed rate -0.75% and inflation rate -5%).

3. Query: What is the procedure for a customer to make a deposit under the scheme? Does interest on deposit start accruing from Day 1 of depositing the gold with CPTC/GMCTA/designated branch? +

Response: An eligible depositor can open a Gold Deposit Account with any of the designated banks after meeting the KYC norms. Generally, deposits under the scheme shall be made at the CPTC/GMS Mobilisation, Collection & Testing Agent (GMCTA) which would then test the purity of the customers’ gold in their presence and issue deposit receipts of the standard gold of 995 fineness to the depositor and also inform the customers’ respective bank about acceptance of deposit. The designated bank will credit Short-Term Bank Deposit (STBD) or Medium/Long-Term Government Deposit (MLTGD) account of the customer, as is applicable, either on the same day of receipt of deposit receipt by the depositor or within 30 days of deposit of gold at CPTC/GMCTA (regardless of whether the depositor submits the receipt or not), whichever is earlier.

Thereafter, the interest on deposits will start accruing from date of conversion of gold deposited into tradable gold bars or 30 days after receipt of gold at the CPTC/GMCTA, whichever is earlier.

Q 3. Whether loans for consumption (i.e., for buying gadgets, meeting expenses on ceremonies, etc.) without collateral would be treated as microfinance loans? +

Ans. All collateral-free loans to individual/s belonging to low-income households, i.e., households having annual income up to ₹3,00,000 are treated as microfinance loans.

Q 3: Whether RBI approval is required for opening such Special Rupee Vostro Accounts?

Answer: Yes, for opening of Special Rupee Vostro Account, prior approval of RBI would be required. The bank willing to open Special Rupee Vostro Account for bank of the partner country should have a good level of business resilience and financial health. Second, they need to have experience in facilitating trade/investment transactions and capability to provide other financial services. Third, AD banks should have good correspondent relationships with banks in partner countries.

3. Whether, the originating NBFCs/HFCs can offer credit enhancement for the pooled assets made available under the scheme ? +

Yes, the originating NBFCs/HFCs can offer credit enhancement. However, for such credit enhancement, they need to maintain capital as per the capital requirements prescribed for NBFCs/HFCs by the Bank.

Q3. Where are the instructions, relating to the ACU, available? +

Ans. The detailed procedural instructions issued by RBI are contained in the A.P.(DIR Series) Circular No. 22 dated March 17, 2020 and in Master Direction No.16/2015-16 dated January 1, 2016 on Export of Goods and Services, as amended from time to time.

3. Who can participate as a seller in TReDS ? +

Ans. Only MSMEs can participate as sellers in TReDS.

3. WHY IS ADF THOUGHT OF NOW? +

With CBS in banks, it is felt that time has come to utilize CBS system capabilities to meet requirements like MIS, ADF, etc, in addition to regular transactional activities.

3. Which are the Entities covered under the Scheme ? +

The Scheme has been made applicable to System Participants as defined in Clause 3 (11) of the Scheme.

3. Does the legal tender status of ₹2000 banknotes remain? +

Yes. The ₹2000 banknote will continue to maintain its legal tender status.

4. Are non-CTS cheques invalid? +

Banks have been advised to issue only CTS 2010 standard compliant cheques from September 30, 2012. Earlier, there were septate clearing sessions for non-CTS cheques. However, they were discontinued with effect from December 31, 2018. As of now, non-CTS cheques cannot be presented in CTS. Bank have been advised to withdraw the non-CTS cheques from the customers. However, non-CTS cheques remain to be valid as a negotiable instrument.

.4. Who can initiate an ECS Credit transaction? +

ECS Credit payments can be initiated by any institution (called ECS Credit User) which needs to make bulk or repetitive payments to a number of beneficiaries. The institutional User has to first register with an ECS Centre. The User has to also obtain the consent of beneficiaries (i.e., the recipients of salary, pension, dividend, interest etc.) and get their bank account particulars prior to participation in the ECS Credit scheme. ECS Credit payments can be put through by the ECS User only through his / her bank (known as the Sponsor bank). ECS Credits are afforded to the beneficiary account holders (known as destination account holders) through the beneficiary account holders’ bank (known as the destination bank). The beneficiary account holders are required to give mandates to the user institutions to enable them to afford credit to their bank accounts through the ECS Credit mechanism.

4. Which are the banks covered under the Banking Ombudsman Scheme, 2006 ? +

All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.

4. Whether banks can pay differential rates of interest on deposits aggregating Rs.15 lakhs and above ? +

Differential rates of interest can be paid onsingle depositof Rs.15 lakhs and above and not on the aggregate of individual deposits where such total exceeds Rs.15 lakhs.

4. What would be the amount offered for non-competitive bidding ? +

Non-competitive bids will be allowed upto 5 percent of the notified amount in the specified auctions of dated securities.

4. Can ADs (banks) remit proceeds of such accounts on closure ? +

Yes. But ADs (banks) should ensure that the funds to be repatriated outside India were either received from abroad or are of repatriable in nature or are permissible in terms of RBI notification No.FEMA.13/2000 dated 3rd May 2000.

Has any documentation been prescribed by the RBI to ADs for remittance? +

Authorised dealers are free to decide the documentation, as also any other information (including declaration), required by them, to satisfy themselves, before effecting the remittance. They should, however, call for the following documents viz. A certificate from a Chartered Accountant certifying that the applicant exporter satisfies the criteria of having export earning of at least Rs.10 lakhs, during each of the preceding two years, The C.A. certificate as at (a) above is not necessary, in case the export earnings prescribed (i.e. minimum Rs.10 lakhs in each of the previous two years), have been realised through the same authorised dealer, through whom the remittance is sought to be made. A Chartered Accountant’s certificate should also be obtained, certifying that the remittance represents advertisement charges incurred by the advertiser towards telecast in foreign countries and not in India alone. The certificate will have to be obtained for each remittance. Authorised dealers should, before allowing the remittances, obtain from the remitter an undertaking and a C.A. certificate in the format as prescribed in the CBDT circular No.10/2002 dated October 9, 2002. [c.f. A.P. (DIR Series) Circular No.56 dated November 26, 2002).

4. Can foreign tourists repatriate the balance held in their NRO account at the time of departure from India ? +

Banks have been allowed to convert the balance in the account at the time of departure of the tourists into foreign currency provided the account has been maintained for a period not exceeding six months and the account has not been credited with any local funds, other than interest accrued thereon.

Q.4 Where can one get the guidelines pertaining to overseas investment ? +

These guidelines have been notified by Reserve Bank of India in its Notification FEMA No.19 dated 3^rd May 2000 as amended from time to time which can be accessed at the Reserve Bank’s website fema.rbi.org.in.

4. How much foreign exchange can one buy when going for tourism to a country outside India?
+

In connection with private visits abroad, viz., for tourism purposes, etc., foreign exchange up to US$10,000, in any one calendar year may be obtained from an authorised dealer. The ceiling of US$10,000 is applicable in aggregate and foreign exchange may be obtained for one or more than one visits provided the aggregate foreign exchange availed of in one calendar year does not exceed the prescribed ceiling of US$10,000 {The facility was earlier called B.T.Q or F.T.S.}. This US$10,000 (BTQ) can be availed of by a person alongwith foreign exchange for travel abroad for any purpose, including for employment or immigration or studies. However, no foreign exchange is available for visit to Nepal and/or Bhutan for any purpose.

4. In what form can a foreign currency account in India be opened? +

Answer: Unless otherwise specifically stated in the features of the account, a foreign currency account maintained by a person resident in India with an authorized dealer in India can be opened, held and maintained in the form of current or savings or term deposit account in cases where the account holder is an individual, and in the form of current account or term deposit account in all other cases. The account can be held singly or jointly in the name of person eligible to open, hold and maintain such account.

4. My bank refuses to accept outstation cheques for collection. Is there any remedy? +

No bank can refuse to accept outstation cheques deposited for collection or refuse to offer its products to customers.

4. When did the G S Act and the G S Regulations come into force and to which Government securities do they apply? +

The G S Act and the G S Regulations came into force with effect from December 1, 2007. The G S Act applies to Government securities created and issued by the Central Government or a State Government, whether before or after the commencement of this Act. The G S Act will apply to all Government securities created and issued even prior to December 1, 2007.

4. Which are the entities permitted to access the NDS-OM Web Module? +

The potential users of the NDS-OM Web Module are GAHs permitted by RBI to access the NDS OM Web Based Module. So far, GAHs have only the indirect access through CSGL route for placing their order/bid feed into NDS-OM. Now in addition to the indirect access, permitted GAHs can directly deal on the NDS-OM Web system, subject to controls set by PM. The access to the GAH to the NDS-OM Web Based Module is granted on a request made on his behalf by its Primary Member.

4. What is a Nostro Account? +

A Nostro account is a bank account established in a foreign country usually in the currency of that country for the purpose of carrying out transactions there. For example most commercial banks maintain US dollar accounts with their correspondent banks in USA in order to facilitate settlement of interbank and customer transactions in US dollar.

Q.4. What is the procedure for applying for compounding? +

Ans. The documents/formats listed in the FED Master Direction No. 18/2015-16 titled ‘Master Direction – Reporting under Foreign Exchange Management Act, 1999’ dated January 01, 2016 (Updated as on September 18, 2019) can be used for applying for compounding. The above Master Direction can be downloaded from the Reserve Bank’s website by clicking on the link /en/web/rbi/-/notifications/master-direction-reporting-under-foreign-exchange-management-act-1999-updated-as-on-may-12-2023-lt-span-gt-10202 and the documents as applicable therein should be submitted along with the application.

4. How much of one’s foreign exchange earnings can be credited into an EEFC account? +

100% foreign exchange earnings can be credited to the EEFC account subject to the condition that the sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments.

4. The Resolution Framework states that the accounts that do not fulfill the eligibility conditions may continue to be considered under the prudential framework applicable to the specific category of institutions. Does it mean that alternative resolution frameworks available to a specific category of financial institutions such as Paragraph 2(1)(zc)(ii) of the Master Circular – The Housing Finance companies (NHB) Directions, 2010 for housing finance companies, and Paragraph 2.2.7.21 of the Master Circular- Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs dated July 1, 2015 for Urban Co-operative Banks would continue to be applicable for non-Covid impacted borrowers?

For the borrowers eligible for resolution under the circular dated August 6, 2020 on Resolution Framework for COVID-19-related Stress, the circular dated August 6, 2020 will be applicable if a resolution process under the circular is invoked. For all other borrowers, the extant instructions as otherwise applicable shall still be in force. However, if any entity is otherwise eligible to be resolved under the Resolution Framework, only Resolution Framework can be used for resolving the stress arising out of the pandemic.

4. কোন যুক্তিৰ আধাৰত নন-বেংক সংস্থাক ডাব্লিউএলএ স্থাপন কৰিবলৈ দিয়া হৈছে?

উত্তৰ. নন-বেংক সংস্থাক হোৱাইট লেভেল এটিএম স্থাপন কৰিবলৈ দিয়াৰ যুক্তিটো হ’ল এয়াই যে, গাঁও অঞ্চলত বিশেষকৈ গ্ৰাহক সেৱা বৃদ্ধি/উন্নত কৰাৰ বাবে এটিএম-ৰ ভৌগোলিক প্ৰসাৰ বৃদ্ধি কৰা।

4. নেশ্বনেল ইলেকট্ৰনিক ফাণ্ড ট্ৰান্সফাৰ (এনইএফটি)-ৰ তুলনাত আৰটিজিএচ প্ৰচেছিং ক’ত বেলেগ হয়?

উত্তৰ. এনইএফটি এটা ইলেকট্ৰনিক ফাণ্ড ট্ৰান্সফাৰ ছিষ্টেম হয়। ইয়াত নিৰ্দিষ্ট সময়লৈকে বেচ হিচাপে প্ৰচেছ হৈ থকালৈকে ট্ৰানজাকশ্বন গ্ৰহণ কৰা হয়। ইয়াৰ বিপৰীতে, আৰটিজিএচ-ত এটাৰ পাছত এটা ট্ৰানজাকশ্বন চলি থাকে আৰটিজিএচ-ৰ কামৰ সময়সীমাৰ ভিতৰত।

4. পিপিআই ধাৰক কোন হয়? +

উত্তৰ. পিপিআই ধাৰক এনেকুৱা এজন ব্যক্তি/প্ৰতিষ্ঠান হয় যিজনে পিপিআই জাৰী-কৰ্তাৰপৰা পিপিআই সংগ্ৰহ/ক্ৰয় কৰে আৰু সেইটোকে ব্যৱহাৰ কৰে পণ্য আৰু সেৱা, লগতে বিত্তীয় সেৱা, ৰেমিটেনস সুবিধা ইত্যাদি ক্ৰয় কৰিবলৈ।

4. ‘প্ৰাথমিক সঞ্চয় বেংক জমা একাউণ্ট’ থকা গ্ৰাহক এজনে সেই একেটা বেংকতে আন জমা একাউণ্ট খোলিব পাৰেনে? +

‘প্ৰাথমিক সঞ্চয় বেংক জমা একাউণ্ট’ থকা গ্ৰাহক এজনে সেই একেটা বেংকতে আন জমা একাউণ্ট খোলিব পাৰেনে?

4. Who is eligible to invest in the SGBs? +

Persons resident in India as defined under Foreign Exchange Management Act, 1999 are eligible to invest in SGB. Eligible investors include individuals, HUFs, trusts, universities and charitable institutions. Individual investors with subsequent change in residential status from resident to non-resident may continue to hold SGB till early redemption/maturity.

4. What would be the selection process/reporting line (in terms of para 2.5 and 2.7) in case of Foreign Bank Operating under the Branch Model (FBOBM)? +

The provisions relating to process of selection / removal / qualification, etc. would be fully applicable to foreign banks operating under the branch model (FBOBM). However, in respect of FBOBM, any reference to the Board in terms of para 2.5 of the aforesaid circular detailing the selection process would be treated as equivalent to the Regional or Head Office Compliance. Further, in terms of para 2.7 on detailing the reporting line, any reference to the Board/ACB would be treated as equivalent to Regional or Head Office Compliance in case of FBOBM.

4. What are the grounds of complaints ? +

As per Clause 8 of the Scheme, the Ombudsman for Digital Transactions shall receive and consider complaints on deficiency in services against System Participants defined in the Scheme on any of the following grounds:

4.(1) Prepaid Payment Instruments: Non-adherence to the instructions of Reserve Bank by System Participants about Prepaid Payment Instruments¹ on any of the following:

Failure in crediting merchant's account within reasonable time;
Failure to load funds within reasonable time in wallets / cards;
Unauthorized electronic fund transfer;
Non-Transfer / Refusal to transfer/ failure to transfer within reasonable time, the balance in the Prepaid Payment Instruments to the holder’s ‘own’ bank account or back to source at the time of closure, expiry of validity period etc., of the Prepaid Payment Instrument;
Failure to refund within reasonable time / refusal to refund in case of unsuccessful / returned / rejected / cancelled / transactions;
Non-credit / delay in crediting the account of the Prepaid Payment Instrument holder as per the terms and conditions of the promotions offer(s) from time to time, if any;
Non-adherence to any other instruction of the Reserve Bank on Prepaid Payment Instruments.

4. Can the existing SCAs/SAs continue if they do not fulfill the eligibility criteria but are yet to complete their original tenure of appointment? Are the Entities required to appoint SCAs/SAs (including as Joint Auditors) immediately or they can be appointed in the ensuing Annual General Meeting (AGM)? +

The existing SCAs/SAs of the Entity can continue (including as Joint Auditors) only if they fulfill the eligibility criteria and have not completed the stipulated tenure of three years as SCAs/SAs of the Entity. Till the appointment of SCAs/SAs for FY 2021-22, as per the requirements of the Circular and applicable statutory provisions, the SCAs/SAs for FY 2020-21 can continue for the Limited Review for Q1, Q2, etc.

4. Whether purpose code is to be used and who is responsible for FETERS reporting? +

The regulatory reporting under FETERS (R Return) will be undertaken by the Bank maintaining SNRR A/c.
Any credit / debit to / from an SNRR account from / to an offshore account of the non-resident entity holding the SNRR account will be reported under AD bank transfer.
Any credit / debit to / from an SNRR account from / to a domestic (Indian) party will be reported basis underlying transaction (import, export, Trade Credit, services, ECB, etc).

Please note that bank holding SNRR account shall follow the reporting procedure as applicable to other INR Vostro accounts held by it. Please also refer to A.P. (DIR Series) Circular No. 25 March 20, 2019 on Compilation of R-Returns: Reporting under FETERS.

Q.4. Since this guideline mentions that capital structure of NOFHC shall consist of item (a) and item (b), would it be mandatory that a part of NOFHC equity (not exceeding 10%) must be held by any individual belonging to the Promoter Group, along with his relatives / entities in which he and / or his relatives hold not less than 50 per cent of the voting equity shares? +

It is not necessary that individual alongwith his related parties have shareholding in the NOFHC. However, if any individual belonging to the Promoter Group chooses to become a promoter of the NOFHC, he along with his relatives (as defined in Section 6 of the Companies Act 1956) and along with entities in which he and / or his relatives hold not less than 50 per cent of the voting equity shares can hold voting equity shares not exceeding 10 per cent of the total voting equity shares of the NOFHC. [para 2 ( C ) (ii) (a) of the guidelines]

4. Which are the authorized agencies where the application and amount of deposit will be accepted? +

Application and amount for the deposit (in the form of Bond Ledger Account) shall be received by any banking company, other than Co-operative Banks, to which the Banking Regulation Act, 1949 (10 of 1949) applies (Authorised Banks).

4. Query: What is the minimum and maximum amount of gold that can be deposited under the scheme? +

Response: The minimum deposit at any one time is 10 grams of raw gold (bars, coins, jewellery excluding stones and other metals) and there is no maximum limit for deposit under the scheme. The quantity of gold deposited will be expressed up to three decimals of a gram.

Sr.No. 4 What is the meaning of Investible Funds ? +

Ans: Investible funds refer to capital infused in the business and surplus generated out of business of NBFC-P2P. It does not include funds of lenders and borrowers that flow through the escrow accounts. Customers’ funds lent/borrowed by using the platform cannot be utilised by the platform.

4. What are the grounds of complaints ? +

As per Clause 8 of the Scheme, the NBFC Ombudsman can receive and consider any complaint on the following grounds:non-payment or inordinate delay in the payment of interest on deposits;non-adherence to the Reserve Bank directives, if any, applicable to rate of interest on deposits;non-repayment or inordinate delay in the repayment of deposits;non-presentation or inordinate delay in the presentation of post-dated cheques provided by the customer;failure to convey in writing, the amount of loan sanctioned along with terms and conditions including annualised rate of interest and method of application thereof;failure or refusal to provide sanction letter/ terms and conditions of sanction in vernacular language or a language as understood by the borrower;failure or refusal to provide adequate notice on proposed changes being made in sanctioned terms and conditions in vernacular language as understood by the borrower;failure or inordinate delay in releasing the securities/ documents to the borrower on repayment of all dues;levying of charges without adequate prior notice to the borrower/customer;failure to provide legally enforceable built-in repossession clause in the contract/ loan agreement;failure to ensure transparency in the contract/ loan agreement regarding (i) notice period before taking possession of security; (ii) circumstances under which the notice period can be waived; (iii) the procedure for taking possession of the security; (iv) provision of final chance to be given to the borrower for repayment of loan before the sale/ auction of the security; (v) the procedure for giving repossession to the borrower and (vi) the procedure for sale/ auction of the security;non-observance of directions issued by Reserve Bank to the NBFCs;non-adherence to any of the other provisions of Reserve Bank Guidelines on Fair Practices Code for NBFCs.The Ombudsman may also deal with such other matter as may be specified by the Reserve Bank from time to time.

4. Why will WPI be used for inflation protection? Why CPI has not considered for the same? +

The consumer price index (CPI) reflects the inflation people at large face and therefore, globally CPI or Retail Price Index (RPI) is used for inflation target by the Central Banks as well as for providing inflation protection in IIBs.
In India, all India CPI is being released since January 2011 and it will take some time in stabilizing. Monetary policy has also been continuing to target WPI for its price stability objective. In view of above, it has been decided to consider WPI for inflation protection in IIBs.

4. Who receives the application ? +

The Department / Office selected by the applicant, while submitting his/her application through ATS, will receive the application.

Q 4. What would happen with the existing companies registered with RBI as NBFCs and conducting factoring business that constitute less than 75 percent of total assets / income ? +

Ans. Such a company shall have to submit to RBI, a letter of its intention either to become a Factor or to unwind the business totally, and a road map to this effect. The company would be granted CoR as NBFC-Factor only after it complies with the twin criteria of financial assets and income. If the company does not comply within the period as specified by the Bank, it would have to unwind the factoring business.

4. WHETHER ANY SPECIFIC APPROACH HAS BEEN RECOMMENDED? +

No specific approach has been recommended for achieving ADF due to the reason that various banks are at different levels of IT and Process maturity. However, the Approach Paper on ADF clearly articulates the common end state for achieving the objectives of ADF.

4 What is meant by ‘not permanently resident’? +

Ans. Not permanently resident means a person resident in India for employment of a specified duration (irrespective of length) or for a specific job duration which does not exceed three years.

4. What is Indian Financial System Code ? +

Ans: Indian Financial System Code (IFSC) is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system. It is a 11-digit code with the first 4 alpha characters representing the bank, and the last 6 characters representing the branch. The 5th character is 0 (zero). IFSC is used by the NEFT system to identify the originating / destination banks / branches and also to route the messages appropriately to the concerned banks / branches.

4. Who can apply for an FFMC licence? +

The applicant has to be a company registered under the Companies Act, 1956/ Companies Act 2013/ Registration of Companies (Sikkim) Act, 1961, having a minimum Net Owned Funds (NOF) of INR 25 lakh to apply for a single-branch FFMC licence and INR 50 lakh to apply for a multiple-branch FFMC licence.

Q 4. How much Indian currency can be brought in while coming into India? +

Ans. A resident of India, who has 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 Nepal and Bhutan), currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.25,000. A person may bring into India from Nepal or Bhutan, currency notes of Government of India and Reserve Bank of India notes, in denomination not exceeding Rs.100. Any person resident outside India, not being a citizen of Pakistan and Bangladesh and also not a traveller coming from and going to Pakistan and Bangladesh, and visiting India may bring into India currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.25,000 while entering only through an airport.

Q.4. How does the RBI EFT system operate? +

Ans Step-1: The remitter fills in the EFT Application form giving the particulars of the beneficiary (city, bank, branch, beneficiary’s name, account type and account number) and authorises the branch to remit a specified amount to the beneficiary by raising a debit to the remitter’s account. Step-2: The remitting branch prepares a schedule and sends the duplicate of the EFT application form to its Service branch for EFT data preparation. If the branch is equipped with a computer system, data preparation can be done at the branch level in the specified format. Step-3: The Service branch prepares the EFT data file by using a software package supplied by RBI and transmits the same to the local RBI (National Clearing Cell) to be included for the settlement. Step-4: The RBI at the remitting centre consolidates the files received from all banks, sorts the transactions city-wise and prepares vouchers for debiting the remitting banks on Day-1 itself. City-wise files are transmitted to the RBI offices at the respective destination centres. Step-5: RBI at the destination centre receives the files from the originating centres, consolidates them and sorts them bank-wise. Thereafter, bank-wise remittance data files are transmitted to banks on Day 1 itself. Bank-wise vouchers are prepared for crediting the receiving banks’ accounts the same day or next day. Step-6: On Day 1/2 morning the receiving banks at the destination centres process the remittance files transmitted by RBI and forward credit reports to the destination branches for crediting the beneficiaries’ accounts.

Q4. How the ACU transactions are to be handled by Authorised Dealers in India? +

Ans. All transactions to be settled through the ACU will be handled by AD Category-I banks in the same manner as other normal foreign exchange transactions, through correspondent arrangements.

4. How will you know whether your bank is insured by the DICGC or not ? +

The DICGC while registering the banks as insured banks furnishes them with printed leaflets for display giving information relating to the protection afforded by the Corporation to the depositors of the insured banks. In case of doubt, depositor should make specific enquiry from the branch official in this regard.

4.How much exchange is available for a business trip? +

Authorized dealers can release foreign exchange up to USD 25,000 for a business trip to any country other than Nepal and Bhutan. Release of foreign exchange exceeding USD 25,000 for a travel abroad (other than Nepal and Bhutan) for business purposes, irrespective of period of stay, requires prior permission from Reserve Bank. Visits in connection with attending of an international conference, seminar, specialised training, study tour, apprentice training, etc., are treated as business visits. Visit abroad for medical treatment and/or check up also falls within this category.

4. How can the eligible investors participate in the auctions? +

Eligible investors cannot participate directly. They have to necessarily come through an aggregator or facilitator.

4. What is the risk weight IFCs have to maintain on assets covering PPP and which have completed one year of commercial production? +

Infrastructure Finance Companies can maintain risk weight at 50% for assets covering PPP and post commercial operations date (COD) projects which have completed at least one year of satisfactory commercial operations and which are backed by a buyback guarantee by a designated Project / Statutory authority under a Tripartite Agreement.

Q.4. What is meant by Priority Sector Lending ? +

Priority sector lending includes only those sectors as part of the priority sector, that impact large sections of the population, the weaker sections and the sectors which are employment-intensive such as agriculture, and Micro and Small enterprises. Detailed guidelines on Priority Sector Lending are available in our Master Direction on Priority Sector Lending FIDD.CO.Plan.BC.5/04.09.01/2020-21 dated September 04, 2020 and updated from time to time.

Q4. What does “sponsorship” mean? +

Ans : “Sponsorship” means an equity participation by the NBFC between 30 to 49% of the IDF.

4. How will the swap cost of 3.5 per cent be computed ? +

The swap cost of 3.5 per cent will be compounded semi-annually for the tenor of the swap.

4. Whether the NBFCs/HFCs failing to meet the requirements as per the existing RBI guidelines shall have to maintain capital for the assets sold as if these were still on the books of the originating NBFC/HFC ? +

No, the transactions covered under the PCG scheme adhering to the prescriptions as per Government of India notification dated August 10, 2019 and the clarifications provided herein will be deemed to have met true sale criteria and the originating NBFC/HFC would not be required to maintain any capital after the transfer of the pooled assets to the purchasing PSBs except in the cases where the originating NBFC/HFC provides credit enhancement.

4. How have non-bank Payment System Providers (PSPs) accessed payment systems previously? +

Ans. Banks have been providing the services to non-banks for their payment and settlement needs.

4. Query Whether a 'Basic Savings Bank Deposit Account' holder can have any other saving account in that bank ? +

Response

Holders of 'Basic Savings Bank Deposit Account' will not be eligible for opening any other savings account in that bank. If a customer has any other existing savings account in that bank, he / she will be required to close it within 30 days from the date of opening a 'Basic Savings Bank Deposit Account'.

4. Who can participate as a buyer in TReDS ? +

Ans. Corporates, Government Departments, PSUs and any other entity can participate as buyers in TReDS.

4. Storage of data pertaining to cross-border transactions +

For cross border transaction data, consisting of a foreign component and a domestic component, a copy of the domestic component may also be stored abroad, if required.

4. Is this facility available at all merchant establishments? How will I know if the facility is available at a particular merchant PoS? +

Ans. No. The facility is made available at merchant establishments designated by the acquirer banks (i.e. the banks that deploy the PoS terminals) after a process of due diligence. The designated merchant establishments have to clearly indicate / display the availability of this facility along with the charges, if any, payable by the customer.

4. When is the receipted challan for payment made into government account made available? +

The receipted challans in case of cash tender are generally handed over to the remitter immediately across the counter. In case of payments made by cheque/DD, the receipted challan is issued only on realization of the instruments based on the clearing cycle of the local Clearing House. In all such cases, a paper token is issued to the depositor indicating the date on which the receipted challan will be ready for delivery. The receipted challan will have to be collected within a specified number of days from the date of delivery, as indicated on the paper token, by surrendering the paper token.

4. Does the beneficiary need to maintain an account with a bank branch in Nepal? +

Ans: No, this is not mandatory. It would, however, be ideal if the beneficiary maintains an account with a bank branch in Nepal to which the credit could be afforded. In Nepal, the INRF Scheme is handled by Nepal SBI Ltd. (NSBL). If the beneficiary does not have a bank account with NSBL or resides in a locality / area in Nepal not serviced by a NSBL bank branch, an arrangement has been entered into by NSBL with a money transfer company in Nepal (called Prabhu Money Transfer) who would make arrangements for delivery of cash (in Nepalese Rupees) to the beneficiary.

4. Clarify the definition of short term borrowings. +

A short term borrowing means borrowing of tenor up to but less than one year.

Q.4. Can an LO/BO/PO acquire property for its operation? +

Ans. The BO /PO of a foreign entity, excluding an LO, are permitted to acquire property for their own use and to carry out permitted/incidental activities but not for leasing or renting out the property. However, entities from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, Nepal, Bhutan, China, Hong Kong and Macau require prior approval of the Reserve Bank to acquire immovable property in India for a BO/PO. BOs/LOs/POs have general permission to carry out permitted/ incidental activities from leased property subject to lease period not exceeding five years.

4. Is there any floor as inflation may turn into deflation at times? +

Yes, fixed rate of 1.5% would act as a floor, which means that 1.5% per annum interest rate is guaranteed if there is deflation.
For example, if inflation rate is (-) 5%, then interest rate should be (-) 3.5% by simple calculation. But in such case, negative inflation will not be recognised and investors would get fixed rate of 1.5% (please see example 2 at 23).

(iv) Whether ECB and Trade Credit raised from overseas branches of Indian banks be counted towards ASCL? +

Yes, ECB and Trade Credit raised from overseas branches of Indian banks will count towards ASCL.

Q 4. If a loan is backed by hypothecation of any security (gold, equipment, white goods, underlying assets etc.), will this loan be considered collateral-free and classified as a microfinance loan? +

Ans. Loans backed by hypothecation of any security shall not be treated as microfinance loans.

Q 4: What is Correspondent banking?

Answer: The term correspondent banking relationship acts as an intermediary or agent, facilitating wire transfers, conducting business transactions, accepting deposits and gathering documents on behalf of another bank. Correspondent banks are most likely to be used by domestic banks to service transactions that either originate or are completed in foreign countries. Domestic banks also use correspondent banks to gain access to foreign financial markets and to serve international clients without having to open branches abroad.

Q4. Can a Bangladeshi/ Pakistani national or an entity owned/ controlled from Bangladesh/ Pakistan have an account in India ? +

Answer: Opening of accounts by individuals/ entities of Pakistan nationality/ ownership and entities of Bangladesh ownership requires prior approval of the Reserve Bank.

However, individuals of Bangladesh nationality can open an NRO account subject to the individual(s) holding a valid visa and valid residential permit issued by Foreigner Registration Office (FRO)/ Foreigner Regional Registration Office (FRRO) concerned.

Further, citizens of Bangladesh/Pakistan belonging to minority communities in those countries, namely, Hindus, Sikhs, Buddhists, Jains, Parsis and Christians residing in India and who have been granted Long Term Visa (LTV) or whose application for LTV is under consideration, are permitted to open only one NRO account with an AD bank in India subject to the conditions mentioned in Notification No. FEMA 5(R)/2016-RB dated April 01, 2016, as updated from time to time. The opening of such NRO accounts will be subject to reporting of the details of the accounts opened by the concerned Authorised bank, to the Ministry of Home Affairs (MHA) on a quarterly basis as instructed vide AP (DIR Series) Circular No. 28 dated March 28, 2019.

4. Can ₹2000 banknotes be used for normal transactions? +

Yes. Members of the public can continue to use ₹2000 banknotes for their transactions and also receive them in payment. However, they are encouraged to deposit and/or exchange these banknotes on or before September 30, 2023.

4. How Indian citizens who were abroad exchange the SBNs ? +

In terms of the Specified Banknotes (Cessation of liabilities) Act 2017, a facility for exchange of SBNs is made available for the resident and non-resident Indian citizens (Indian passport required) who could not avail the facility from November 10 to December 30, 2016 on account of their absence from India during the aforementioned period. The facility was open for residents from January 2, 2017 to March 31, 2017 and for NRIs it will be till June 30, 2017 at five Reserve Bank offices at Mumbai, New Delhi, Chennai, Kolkata, and Nagpur.

The facility can be availed only in individual capacity and only on one occasion during the period. No third party tender is permissible under the facility.

This facility will not be available for Indian citizens resident in Nepal, Bhutan, Pakistan and Bangladesh.

The details of the facility including terms/ conditions and modalities thereof are available in our circular DCM (Plg) No 2170/10.27.00/2016-17 dated December 31, 2016.

Link to tender form for Resident Indians and NRIs (holding Indian passport) available here.

5. What if the paper token is misplaced / lost? +

In case of loss of original token, on a specific request and on payment of prescribed fees, the receipted challan is issued.

5. Who is an aggregator or facilitator? +

An aggregator or facilitator means a Scheduled Bank or Primary Dealer or Specified Stock Exchange permitted to aggregate the bids received from the investors and submit a single bid in the non-competitive segment of the primary auction.