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Sovereign Gold Bond Scheme

23. What are the procedures involved during redemption? +

The investor will be advised one month before maturity regarding the ensuing maturity of the bond.
On the date of maturity, the maturity proceeds will be credited to the bank account as per the details on record.
In case there are changes in any details, such as, account number, email ids, then the investor must intimate the bank/SHCIL/PO promptly.

23. Can the payment of a Government security be made to minor or insane person? +

No. If a Government security is held on behalf of a minor, the payment for the same may be made to the father or mother of such minor and in case neither parent is alive then the payment is made to a person entitled, as per law, to take care of the property of the minor. However, if a Government security, whose principal value does not exceed Rupees One lakh, belongs to a minor or person who is insane and incapable of managing his affairs, RBI may make a vesting order in terms of Regulation 17 of the GS Regulations in favour of a person to represent the minor or insane person.

23. Query In certain accounts like NREGA where disbursements are made weekly and if a month has five weeks, it may result in more than four withdrawals. In such cases can banks permit five withdrawals? +

Response

In BSBDA, banks are required to provide free of charge minimum four withdrawals, including through ATM and other mode. Beyond four withdrawals, it is left to discretion of the banks to either offer free or charge for additional withdrawal/s. However pricing structure may be put in place by banks on a reasonable, non-discretionary, non-discriminatory and transparent manner by banks.

23. How much jewellery one can carry while going abroad?

Taking personal jewellery out of India is governed by Baggage Rules framed under Export-Import Policy by the Government of India.

23. What is minimum order Size? What are the markets available on NDS-OM Web Module? +

Since the orders placed on present application merges with main NDS-OM, the trade segment are as same as normal NDS-OM i.e. Standard market and Odd Lot Market. The Lot size for the Standard Market is minimum Rs.5 crore and in multiples of Rs. 5 crore. In the Odd Lot segment the minimum lot size is Rs.10,000 for Central and State Government Securities and Rs.25,000 for Treasury Bills. Presently GAH are not permitted to participate in the When Issued Market. GAH are also not permitted to short sale in government securities market.

23. Can the mandate once given by a customer be withdrawn or stopped? +

Yes. In case of any need to withdraw or stop a mandate the customer can do so by approaching the user institution to withdraw the mandate. The account holder / customer can also withdraw the mandate / debit instruction directly from his / her banker without involvement of the User institution. The withdrawal instructions of a customer in such cases would be treated equivalent to a ‘stop payment’ instruction in cheque clearing system. However, as a matter of best practice, the customer may also provide prior notice or intimation of mandate withdrawal to the ECS user institution well in time, so as to ensure that the input files submitted by the user institution does not include the ECS Debit details in respect of the withdrawn / stopped mandates, leading to avoidable returns/rejections etc.

23. Whether IIBs will be underwritten by primary dealers (PDs)? +

Like fixed rate G-Secs, IIBs would be underwritten by the primary dealers.

Q.23. What is Trade Receivables Discounting System (TReDS)? +

The objective of TReDS is to create Electronic Bill Factoring Exchanges which could electronically accept and settle bills so that MSMEs could encash their receivables without delay. This will not only give them greater access to finance but will also put greater discipline on corporates to pay their dues on time. For more details you may refer to RBI guidelines for setting up and operating TReDS on /en/web/rbi/-/guidelines-for-the-trade-receivables-discounting-system-treds-3504.

23. While going abroad how much foreign exchange can a person carry? +

Residents are free to carry the foreign exchange purchased from an authorised dealer or money changer in accordance with the Rules. In addition, they can also carry up to USD 2,000, or higher amounts representing the unutilized balance of a previous trip, if already held by them (see item13 above) in accordance with the Regulations.

23. How can I file complaint under the RB-IOS, 2021? +

Ans: Complaints can be filed online on https://cms.rbi.org.in, or through the dedicated e-mail or sent in physical mode to the ‘Centralised Receipt and Processing Centre’ set up at RBI, 4th Floor, Sector 17, Chandigarh – 160 017 in the format given at the following path - /documents/87730/39016390/RBIOS2021_121121_A.pdf. A toll-free number – 14448 (9:30 am to 5:15 pm) – is also available for customers to seek assistance in filing complaints and information on grievance redressal, with multi-lingual support.

23. Who will do the KYC? +

As customers will be owned by the banks, KYC will also be done by the banks.

23. Can an existing investor in Inflation indexed bond(IIB) or Sovereign Gold Bond(SGB) use the same Investor ID for depositing in this scheme? +

Yes, an investor in IIB or SGB scheme may retain the same Investor ID to deposit in PMGKDS provided the Personal Identification Document (PID) linked to the Investor ID is the Permanent Account Number.

Q.23. In the application, the promoter / promoter group would provide a clear roadmap for formation of NOFHC and letters of approval of key stakeholders. Do we understand that the NOFHC could then be formed after the grant of in-principle approval, as a condition precedent to getting a certificate of commencement of business –unless specifically instructed otherwise? +

At the time of making applications, the Promoters/Promoter Group will have to furnish a road map and methodologies they would adopt to comply with all the requirements of the corporate structure indicated in para 2 (C)(ii) and (iii) of the guidelines and realign the business between the entities to be held under the NOFHC [para 2(C)(iv) of the guidelines] within a period of 18 months. After the ‘in-principle approval’ is accorded by RBI for setting up of the bank, the actual setting up of NOFHC and the bank, re-organization of the Promoter Group entities to bring the regulated financial services entities under the NOFHC as well as realignment of business among the entities under the NOFHC have to be completed within a period of 18 months from the date of in-principle approval or before commencement of banking business, whichever is earlier.

Q.24. Can a customer stipulate any ceiling on the amount of debit, purpose or validity period of the mandate under the ECS Debit Scheme?

Ans : Yes. It is left to the choice of the individual customer and the ECS user to decide these aspects. The mandate can contain a ceiling on the maximum amount of debit, specify the purpose of debit and validity period of the mandate.

24. Can a resident open a foreign currency denominated account in India?

Persons resident in India are permitted to maintain foreign currency accounts in India under following two Schemes:

EEFC Accounts –

To avoid exchange loss on conversion of foreign exchange into Indian Rupee & Rupee into foreign exchange, residents can retain upto 50% of foreign currency remittances received from abroad in a foreign currency account, viz., EEFC account, with an authorised dealer in India . Funds held in EEFC account can be utilised for current account transactions and also for approved capital account transactions as specified by the extant Rules/Regulations/Notifications/Directives issued by the Government/RBI from time to time.

RFC Accounts :-

Returning Indians, i.e., those Indians, who were non-residents earlier, and are returning now for permanent stay, are permitted to open, hold and maintain with an authorised dealer in India a Resident Foreign Currency (RFC) Account to keep their foreign currency assets. Assets held outside India at the time of return can be credited to such accounts. The funds in RFC account are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment outside India. The facility is also available to residents provided foreign exchange to be credited to such account is received out of certain specified type of funds/accounts.

24. In how many days will the investor receive the security ? +

The transfer of securities to the clients should be completed within five working days from the date of the auction.Delivery and Form of Holding

24. In the case of deceased depositor’s NRE / FCNR(B) deposit, in the event of legal heirs effecting premature withdrawal before completion of minimum prescribed period, whether any interest is payable ? +

No. A deposit has to run for a minimum stipulated period, which is at present one year for FCNR(B) and six months for NRE deposits, to be eligible to earn interest.

Q.24 Whether any prior registration with the Reserve Bank is necessary for investments under the automatic route ? +

No, once the report of remittance in form ODR is received by the Reserve Bank through the designated Authorised Dealer, an identification number for that particular investment is issued for the purpose of future reference. Subsequent investment in the same project will be permitted to be made only after allotment of the identification number.

24. What are the practices which should be adopted by a customer for safe and secure digital payments? +

Ans: The webpage of RBI “RBI Kehta Hai” at /en/web/rbi/rbi-kehta-hai for information regarding ways to ensure safe and secure digital payments can be referred to. Further, RBI has also launched a magazine named BE(A)WARE for users of digital transactions which can be accessed at /documents/87730/39016390/BEAWARE07032022.pdf.

24. What is the prescribed rate of interest payable on balances in such ‘Basic Savings Bank Deposit Account’ ? +

Our instructions contained in circular UBD.BPD(PCB).Cir.No.18/13.01.000/2011-12 dated February 7, 2012 on Deregulation of Savings Bank Deposit Interest Rate, are applicable to deposits held in ‘Basic Savings Bank Deposit Account’.

24. How should the customer keep his / her ATM / WLA transaction secure ?

Ans. Customers should observe the following Do’s and Don’ts to keep their transactions at ATMs / WLAs safe and secure :

Customer should conduct the ATM / WLA transaction in complete privacy.
Only one card holder should enter and access the ATM / WLA kiosk at a time.
The card holder should not lend his / her card to anyone.
The card holder should not write the PIN on the card.
The card holder should not share the PIN with anyone.
The card holder should not let anyone see the PIN while it is being entered at the ATM.
The card holder should never use a PIN that could be easily guessed.
The card holder should never leave the card in the ATM / WLA.
The card holder should register his / her mobile number with the card issuing bank for getting alerts for transactions at ATMs / WLAs. Any unauthorized card transaction in the account, if observed, should be immediately reported to the card issuing bank.
The card holder should be vigilant and check if any extra device/s is / are attached to the ATMs / WLAs. The device/s may be put in place to capture customer data fraudulently; if found, the security guard / bank / WLA entity should be informed immediately.
The card holder should keep an eye on suspicious movement/s of people around the ATMs / WLAs. He / She should be careful of strangers trying to engaging him / her in conversation or offering assistance / help in operating the ATM.
The card holder should remember that bank officials never ask for card details or PIN over telephone / email. So, he / she should not respond to any such communication from anyone indicating that they represent his / her bank.

24. What is Legal Entity Identifier and how is it relevant in case of RTGS transactions? +

Ans. The FAQs on “Legal Entity Identifier (LEI) for Large Value Transactions in Centralised Payment Systems” on the RBI website at https://www.rbi.org.in/Scripts/FAQView.aspx?Id=140 can be referred to.

24. What are the other types of PPIs apart from the Small PPIs and Full-KYC PPIs mentioned above ? +

Ans. Apart from above PPIs, there are the following two categories of PPIs:

Gift PPIs; and
PPIs for Mass Transit Systems (PPI-MTS).

24. Can I encash the bond anytime I want? Is premature redemption allowed? +

Though the tenor of the bond is 8 years, early encashment/redemption of the bond is allowed after fifth year from the date of issue on coupon payment dates. The bond will be tradable on Exchanges, if held in demat form. It can also be transferred to any other eligible investor.

24. Can payments towards tax, penalty, surcharge and deposit under PMGKY be made in SBNs? +

The Central Government has decided that upto 30.12.2016, the payment towards tax, surcharge, penalty and deposit under the Pradhan Mantri Garib Kalyan Yojana (PMGKY), can be made in Old Bank Notes of ₹ 500 and ₹ 1000 denomination issued by the RBI. The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016 has commenced on 17th December, 2016 and is open for declarations upto 31st March, 2017. The payment of tax, surcharge and penalty under the Scheme is to be made through challan ITNS-287 and the deposits are to be made in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. The notifications relating to PMGKY are available on the website www.incometaxindia.gov.in

24. Query What is the prescribed rate of interest payable on balances in such ‘Basic Savings Bank Deposit Account’? +

Our instructions contained in circular RPCD.CO.RRB.BC.No.57/03.05.33/2011-12 dated January 30, 2012 on Deregulation of Savings Bank Deposit Interest Rate, are applicable to deposits held in ‘Basic Savings Bank Deposit Account’.

24. What the order management functionalities available to the GAH? +

On the NDS OM Web Module, the GAH has the functionality to directly place bids and offers. The GAH can modify or cancel his/her outstanding orders. Outstanding orders can also be put on Hold and Released, if required by the GAH. The complete control over his outstanding orders is available to the GAH. The GAH gets real time update about the status of his orders through notifications and pop-ups.

24. What is going to be the issuance size of IIBs for each tranche? +

As indicated in our press release dated May 15, 2013, size of the each tranche would be Rs. 1,000-2,000 crore.

24. Is one required to follow complete export procedure when a gift parcel is sent outside India? +

A person resident in India is free to send (export) any gift article of value not exceeding Rs. 5,00,000 provided export of that item is not prohibited under the extant EXIM Policy.

24. Can a customer stipulate any ceiling on the amount of debit, purpose or validity period of the mandate under the ECS Debit Scheme? +

Yes. It is left to the choice of the individual customer and the ECS user to decide these aspects. The mandate can contain a ceiling on the maximum amount of debit, specify the purpose of debit and validity period of the mandate.

Q.24. What is the Certified Credit Counsellors (CCC) Scheme ? +

In terms of announcement in para 48 of First Bi-monthly Monetary Policy Statement, 2016-17, Reserve Bank laid down a framework for accreditation of credit counsellors which was shared with SIDBI for laying down operational guidelines. Accordingly, the scheme was launched by SIDBI in July 2017. As per the scheme, Certified Credit Counsellors are institutions or individuals registered with SIDBI who shall assist MSMEs in preparing project reports in a professional manner which would, in turn, help banks make more informed credit decisions.

24. When will customers be issued securities? +

The customers should be issued the securities after receiving clear money. After receiving clear money, banks should register the customer on CBS and generate Certificate of Holding.

24. Whether duplicate Government security can be issued in lieu of a Government security that has been lost, stolen or destroyed, or has been defaced or mutilated? +

Yes. A duplicate Government security may be issued if the holding was in the form of SC and GPN. However, no duplicate Government security will be issued for Bearer Bonds/Prize Bonds. Further, no duplicate Government security will be issued in case of matured loans and the redemption proceeds will be paid to the investor after following the procedure for issuing duplicate Government security.

Q.25. Is there any limit on the value of Individual transactions in ECS Debit?

Ans : No. There is no value limit on the amount of individual transactions that can be collected by ECS Debit.

25. Can a person resident in India hold assets outside India?

In terms of sub-section 4, of Section (6) of the Foreign Exchange Management Act, 1999, a person resident in India is free to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.

25. How will the securities be issued ? +

RBI will issue securities only in demat (SGL) form. It will credit the securities to the CSGL account of the bank/PD .

25. Whether banks can pay interest on NRE and FCNR(B) deposits for the intervening Saturday, Sunday and holidays between the date of maturity and payment ? +

Yes. Whenever the due dates fall on Saturday/Sunday/non-business working day/holidays banks are permitted, to pay interest on NRE and FCNR(B) deposits at the originally contracted rate for the intervening period between the due date and date of payment so that no interest loss is suffered by the depositors.III. Advances

Q.25 Is there any prohibition under the automatic route ? +

Yes. Companies, which are under the investigation by the Enforcement Directorate or are in the Reserve Bank’s caution/defaulters list, are not eligible to make investment under the automatic route.

25. In terms of RBI circular DPSS. CO.CHD. No. 274/03.01.02/2012-13 dated August 10, 2012, if “payable at par” / “multi-city” cheques are issued to BSBDA customers based on their request, can banks prescribe minimum balance requirements?

BSBDA does not envisage cheque book facility in the minimum facilities that should be provided to BSBDA customers. They are free to extend any additional facility including cheque book facility free of charge (in which case the account remains BSBDA) or charge for the additional facilities (in which case the account is not BSBDA).

25. What should be done if card is lost / stolen ? +

Ans. The customer should contact the card issuing bank immediately on noticing the loss / theft of the card and should request the bank to block the card.

These FAQs are issued by the Reserve Bank of India for information and general guidance purposes only. The Bank will not be held responsible for actions taken and/or decisions made on the basis of the same. For clarifications or interpretations, if any, one may be guided by the relevant circulars and notifications issued from time to time by the Bank.

25. What are salient features of a Gift PPI ? +

Ans. The salient features of Gift PPIs are as follows:

Maximum value of each such prepaid gift instrument shall not exceed ₹10,000/-;
Are not reloadable;
Cash-out or fund transfer is not permitted. However, the funds may be transferred ‘back to source account’ (account from where Gift PPI was loaded) after receiving consent of the PPI holder;
Shall be revalidated (including through issuance of new instrument) as and when requested by the PPI holder; and
The Additional Factor of Authentication (AFA) / Two Factor Authentication (2FA) for transactions using Gift PPIs is not mandatory.

25. Query

In terms of RBI circular DPSS.CO.CHD.No.274/03.01.02/2012-13 dated August 10, 2012, if 'payable at par' / 'multi-city' cheques are issued to BSBDA customers based on their request, can banks prescribe minimum balance requirements?

Response

BSBDA does not envisage cheque book facility in the minimum facilities that it should provide to BSBDA customers. They are free to extend any additional facility including cheque book facility free of charge (in which case the account remains BSBDA) or charge for the additional facilities (in which case the account is not BSBDA).

25. What are the various quantity and time conditions available to the GAH? +

The various quantity conditions available are as under:

Normal: By default the amount type will be Normal. A Normal order can get partly traded.
Disclosed: Disclosed Amount is the part of order amount (In Rs. Crore) which the User is willing to disclose to the market. This is an optional field.
All or None (AON): By selecting this option, a User specifies that all of the order should be traded in full i.e. no partial trades, should be allowed. This is an optional field.

The various time conditions available are as under:

Day: Under this time condition, order would remain valid throughout the validity of the trading session. It will be available for trade till session close. By default Time Condition - Day is selected.
IOC (Immediate or Cancel): If a User wishes his order to be traded immediately, then he could select IOC. Under this condition, when an IOC order is placed, the order would seek for an immediate match, if found it results into a trade; else the IOC order would get cancelled.
GTT (Good Till Time): Here while placing an order, the User could mention the time up to which the order would be valid and available for trade. Once the User specified order expiry time has been reached the order would get cancelled.

25. Will there be exclusive series of IIBs for retail investors? +

Exclusive series for retail investors would be launched in the second half of the current fiscal year (around October 2013).

25. How much jewellery one can carry while going abroad? +

Taking personal jewellery out of India is governed by Baggage Rules framed under Export-Import Policy by the Government of India. No approval of Reserve Bank is required in this case.

.25. Is there any limit on the value of Individual transactions in ECS Debit? +

No. There is no value limit on the amount of individual transactions that can be collected by ECS Debit.

25. What is the procedure to be followed for issue of duplicate Government security? +

When a Government security is lost, stolen, destroyed, mutilated or defaced, then the investor(s) may apply to RBI for issue of a duplicate GPN or SC in terms of Regulations 11 and 13, respectively, of GS Regulations.

25. What is Legal Entity Identifier and how is it relevant in case of large value NEFT transactions? +

Ans: The FAQs on “Legal Entity Identifier (LEI) for Large Value Transactions in Centralised Payment Systems” on the RBI website at /en/web/rbi/faq-page-2?ddm__keyword__26256231__FaqDetailPage2Title_en_US=Legal Entity Identifier (LEI) for Large Value Transactions in Centralised Payment Systems can be referred to.

Q.25. When submitting the application for the banking license, is it required that the company envisaged to hold voting equity shares in the NOFHC satisfy conditions under clause 2C (ii) (b) above. Eg. If the promoter holding in the above company is currently greater than 49% would this holding have to be reduced when applying for the license or would a plan detailing out the process that will be used to reduce this holding suffice at application stage? +

25. Where can investors get the application form? +

The application form can be downloaded from the RBI’s website. However, banks shall also get forms printed and made available to the investors.

25. What do I have to do if I want to exit my investment? +

In case of premature redemption, investors can approach the concerned bank/SHCIL offices/Post Office/agent thirty days before the coupon payment date. Request for premature redemption can only be entertained if the investor approaches the concerned bank/post office at least one day before the coupon payment date. The proceeds will be credited to the customer’s bank account provided at the time of applying for the bond.

26. What is SGL account and what is CSGL account ? +

SGL or CSGL are a demat form of holding government securities with the RBI. Just as an investor can hold shares in demat form with a depository participant, he can also hold government securities in an account with a bank or a PD. Securities kept on behalf of customers by banks or PDs are kept in a segregated CSGL A/c with the RBI. Thus, if the bank or the PD buys security for his client, it gets credited to the CSGL account of bank or PD with the RBI.

Q 26 What is the Normal route ? +

Proposals not covered by the conditions under the automatic route require the prior clearance of the regulatory authority for which a specific application in form ODI is required to be made to the Reserve Bank of India.

26. What is the time frame available to banks for converting “No-Frills” Account as Basic Savings Bank Deposit Account? What is the time frame available to banks for issuing ATM Cards to all the existing Basic Savings Bank Deposit Account holders? +

All the existing “No-Frill” accounts may be treated as BSBDA accounts from the date of the circular i.e., August 17, 2012 and banks may offer the prescribed facilities as per the circular such as issuing ATM card etc., to the existing ‘No-Frill’ account holders as and when the customer approaches the bank. However, customers opening new accounts after the issue of our circular should be provided prescribed facilities immediately on opening of the account.

26. What are Magnetic Stripe cards and EMV Chip & PIN cards ? +

Ans. The Magnetic Stripe card stores card data on the magnetic stripe present on the card while the data in an EMV Chip & PIN card is stored in a chip.

26. What are the salient features of PPIs for Mass Transit Systems (PPI-MTS) ?

Ans. The salient features of PPI-MTS are as follows:

These PPIs are issued by MTS operators;
Apart from the MTS, these PPIs can be used only at merchants whose activities are allied / related to / are carried on within the premises of the transit system;
Reloadable in nature;
Maximum outstanding cannot exceed ₹3,000/- at any point of time;
Cash-out or refund or fund transfer is not permitted;
Shall be revalidated (including through issuance of new instrument) as and when requested by the PPI holder; and
The AFA / 2FA for transactions using such PPIs is not mandatory.

Q.26. What are the processing / service charges levied under ECS Debit?

Ans : The Reserve Bank of India has deregulated the charges to be levied by sponsor banks from user institutions. The sponsor banks are, however, required to disclose the charges in a transparent manner. With effect from 1st July 2011, originating banks are required to pay a nominal charge of 25 paise and 50 paise per transaction to the Clearing house and destination bank respectively. Bank branches do not generally levy processing / service charges for debiting the accounts of customers maintained with them.

26. Can I gift the bonds to a relative or friend on some occasion? +

The bond can be gifted/transferable to a relative/friend/anybody who fulfills the eligibility criteria (as mentioned at Q.no. 4). The Bonds shall be transferable in accordance with the provisions of the Government Securities Act 2006 and the Government Securities Regulations 2007 before maturity by execution of an instrument of transfer which is available with the issuing agents.

26. Whether Government securities are eligible for conversion, consolidation, sub-division, renewal? +

Yes. Government securities are eligible for conversion from one form of holding to another as well as consolidation, sub-division and renewal as per the terms and conditions prescribed in the G S Regulations.

26. Query What is the time frame available to banks for converting 'No-Frills' Account as Basic Savings Bank Deposit Account? What is the time frame available to banks for issuing ATM Cards to all the existing Basic Savings Bank Deposit Account holders? +

Response

All the existing 'No-Frill' accounts may be treated as BSBDA accounts from the date of the circular i.e., August 22, 2012 and banks may offer the prescribed facilities as per the circular such as issuing ATM card etc., to the existing ‘No-Frill’ account holders as and when the customer approaches the bank. However, for customers opening new accounts after the issue of our circular should be provided with the prescribed facilities immediately on opening of the account.

26. Whether product structure of the retail series of IIBs would be same as series of IIBs of all investors? +

Product structure of the series of IIBs for retail investors is yet to be finalised. It will be finalised in the due course and accordingly, the same would put in the public domain.

26. Can a resident extend local hospitality to a non-resident? +

A person resident in India is free to make any payment in Indian Rupees towards meeting expenses on account of boarding, lodging and services related thereto or travel to and from and within India of a person resident outside India who is on a visit to India.

26. What are the processing / service charges levied under ECS Debit? +

The Reserve Bank of India has deregulated the charges to be levied by sponsor banks from user institutions. The sponsor banks are, however, required to disclose the charges in a transparent manner. With effect from 1st July 2011, originating banks are required to pay a nominal charge of 25 paise and 50 paise per transaction to the Clearing house and destination bank respectively. Bank branches do not generally levy processing / service charges for debiting the accounts of customers maintained with them.

26. What are the Order Matching rules of the NDS-OM system? +

CG and SG match on a price- time priority basis and T Bills Match on a yield-time priority basis. For a bid in CG/SG to match with an offer, the bid price has to be equal to or greater than the offer price. For an offer in CG/SG to match with a bid, the offer price has to be equal to or less than the offer price. In case of T Bills, the bid yield has to be equal to or less than the offer yield and vice versa for offers. At the same price/yield, the order which has come first to the system will get priority.

Q.26. Where the current group structure of a bank applicant group is not in compliance with the Guidelines, can they submit a proposed structure and plan of action for compliance with the Guidelines after in-principle approval but before commencement of the banking operations ? +

26. What is the meaning of the word ‘Free’ in the lending rate prescription ? +

Banks are free to fix Prime Lending Rate (PLR) for credit limits over Rs.2 lakhs with the approval of their respective Boards, which should be the minimum rate charged by them for such credit limits. PLR is to be declared and has to be uniformly applicable at all branches. The banks may authorise their Asset-Liability Management Committee (ALCO) to fix interest rates on Deposits and Advances, subject to their reporting to the Board immediately thereafter. The banks should also fix maximum spread over the PLR with the approval of the ALCO/Board for all advances other than consumer credit.

27.(i) What are the ‘intermediary agencies’? (ii) What are ‘housing finance intermediary agencies’? +

An illustrative list of Intermediary Agencies is as under: 1. State sponsored organizations for on-lending to Weaker Sections.@ 2. Distributors of agricultural inputs/implements. 3. State Financial Corporations (SFCs)/State Industrial Development Corporations (SIDCs) to the extent they provide credit to weaker sections. 4. National Small Industries Corporation (NSIC). 5. Khadi and Village Industires Commission (KVIC). 6. Agencies involved in assisting the decentralized sector. 7. Housing and Urban Development Corporation Ltd. (HUDCO). 8. Housing Finance Companies approved by National Housing Bank (NHB) for refinance. 9. State sponsored organization for SCs/STs (for purchase and supply of inputs to and/or marketing of output of the beneficiaries of these organizations). 10. Micro Finance Institutions/Non-Government Organisations (NGOs) on-lending to SHGs. @ ‘Weaker Sections’ in Priority Sector includes following: Small and marginal farmers with land holdings of 5 acres and less, landless labourers, tenant farmers and share-croppers; Artisans, village and cottage industries where individual credit requirements do not exceed Rs.25,000/-. Small and marginal farmers, sharecroppers, agricultural and non-agricultural labourers, rural artisans and families living below the poverty lines are the beneficiaries. The family income should not exceed Rs. 11,000/- per annum. Scheduled Castes and Scheduled Tribes. Beneficiaries are persons whose family income from all sources does not exceed Rs.7200/- per annum in urban or semi urban areas or Rs.6,400/- per annum in rural areas. They should not own any land or the size of their holding does not exceed one acre in the case of irrigated land and 2.5 acres in the case of unirrigated land ( land holding criteria do not apply to SC/ST). Beneficiaries under Scheme of Liberation and Rehabilitation of Scavengers (SLRS). Advances granted to Self-Helf Groups (SHGs) for reaching the rural poor.

Q.27 What is the procedure to be followed for investment proposed to be made under Normal Route ? +

An application for direct investment in a JV/WOS may be made in form ODI to:The Chief General Manager,Overseas Investment Division,Exchange Control Department,Reserve Bank of India, Central Office,Amar Building, Sir P.M.Road,Mumbai 400 001.

27. Whether the normal saving bank account can be converted into BSBDA at the request of customer ? +

Yes. Such customers should give their consent in writing and they should be informed of the features and extent of services available in BSBDAs.

27. What is the mandate for banks for issuing Magnetic Stripe cards or EMV Chip & PIN cards ?

Ans. Banks have been instructed to convert all existing Magnetic Stripe cards to EMV Chip & PIN cards before December 31, 2018. If the card holder has not got his / her magnetic stripe card replaced by an EMV Chip & PIN card, he / she should immediately approach his / her bank branch to get the replacement.

27. What is meant by the word KYC mentioned in the MD-PPIs at different places like paragraph numbers 7.12, 9.1 (i) (k), 9.1 (ii) (g), etc. ? +

Ans. The meaning of KYC is as defined in paragraph 6 of the MD-PPIs. The KYC / Anti-Money Laundering (AML) / Combating Financing of Terrorism (CFT) guidelines issued by the Department of Regulation (DoR), RBI, in “Master Direction – Know Your Customer Direction, 2016”, shall apply mutatis mutandis to all the entities issuing PPIs.

27. Can I use these securities as collateral for loans? +

Yes, these securities are eligible to be used as collateral for loans from banks, financial Institutions and Non-Banking Financial Companies (NBFC). The Loan to Value ratio will be the same as applicable to ordinary gold loan prescribed by RBI from time to time. Granting loan against SGBs would be subject to decision of the bank/financing agency, and cannot be inferred as a matter of right.

27. Are Government securities eligible for stripping or reconstitution? +

Yes. Government securities, as per eligibility, can be stripped separately for interest and principal and reconstituted as well.

27. Will the orders placed by a GAH match with orders placed by its Primary Member? +

The NDS-OM system ensures that orders place by a GAH will not match with its Primary Member. Similarly orders placed by two GAH of the same Primary Member will not match.

27. What will be methodology for valuation of these bonds? +

Fixed Income Money Market and Derivatives Association of India (FIMMDA) will come out with valuation guidelines shortly.

27. Can residents purchase air tickets in India for their travel not touching India? +

Residents may book their tickets in India for their visit to any third country. That is residents can book their tickets for travel for instance to London/New York through domestic/foreign airlines in India itself.

Q.27. We understand that at the time of making applications for banking licence, the applicants will need to submit the proposed structure which meets with RBI guidelines and requirements. The setting up of the NOFHC, bank and realignment of businesses assets / portfolio into financial services, non-financial services etc. will be done after receiving in-principle approval from RBI and before the final approval of the RBI. The above understanding may be clarified. +

27. Will the retail investor have to maintain a subsidiary general ledger (SGL) account or a constituents' subsidiary general ledger (CSGL) account ? +

No. It will not be mandatory for the retail investor to maintain a constituent subsidiary general ledger (CSGL) account with a bank or a primary dealer (PD) through whom it proposes to participate in the auction. It will, however, be convenient for the investor to have such an account.

27. Query Whether the normal saving bank account can be converted into BSBDA at the request of customer? +

Response

Yes. Such customers should give their consent in writing and they should be informed of the features and extent of services available in BSBDAs.

28. Can the retail investor get the securities credited to his existing demat account with a DP ? +

Yes, the PD/ bank through whom the application is made must clearly indicate such mode of crediting the securities.

28. Whether banks can charge interest rate without reference to their own PLR ? +

Yes. In respect the following categories the banks have freedom to charge interest rate without reference to PLR:Loans covered by refinance schemes of term lending institutions.Interest rates on bank lending to intermediary agencies.Bill discounting by banks.Advances/overdrafts against domestic/NRE/FCNR(B) deposits.Banks are also free to determine the rates of interest without reference to PLR for the following categories:a. Loans for purchase of consumer durables.b. Loans to individuals against shares and debentures /bonds.c. Other non-priority sector personal loans.However, it is not the intention to allow any concessionality in case of such loans and therefore banks should not charge rates below PLR,regardless of the size of the loan amount.

Q.28 What are the parameters for considering proposals under the normal route ? +

Requests under the normal route are considered by taking into account the prima facie viability of the proposal, business track record of the promoters, experience and expertise of the promoters, benefits to the country, etc.

These FAQs are issued by the Reserve Bank of India (hereinafter referred to as “Bank”) for information and general guidance purposes only. The Bank will not be held responsible for actions taken and / or decisions made on the basis of the same. For clarifications or interpretations, if any, one may be guided by the relevant circulars, guidelines and notifications issued from time to time by the Bank.

28. Does a holder earn any interest on PPI balances ? +

Ans. No interest is payable on PPI balances.

28. What are the tax implications on i) interest and ii) capital gain? +

Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond.

28. What is STRIPS? What is the benefit of stripping Government securities? +

STRIPS is the acronym for 'Separate Trading of Registered Interest and Principal of Securities'. These are basically "zero-coupon" securities where the investor receives a payment at maturity only. STRIPS allow investors to hold and trade the individual interest and principal components of eligible Government securities as separate securities of varying tenure. They are popular with investors who want to receive a known payment on a specific future date and want to hold securities of desired maturity.

28. What are the various Order Management rights available to the Primary Member? +

The Primary Member has the right to cancel/hold or release any outstanding order of the GAH. For instance, in case of any connectivity issues at the GAH end, the GAH can request the Primary Member to either cancel or hold his orders. Orders held by the Primary Member can only be released by the Primary Member. Orders placed by the GAH cannot be modified by the Primary Member. Trades once concluded on the NDS OM Web Module cannot be cancelled.

28. Can a resident open a foreign currency denominated account in India? +

Persons resident in India are permitted to maintain foreign currency accounts in India under following two Schemes: EEFC Accounts:- To avoid exchange loss on conversion of foreign exchange into Indian Rupee & Rupee into foreign exchange, residents can retain upto 50% of foreign currency remittances received from abroad in a foreign currency account, viz., EEFC account, with an authorised dealer in India. Funds held in EEFC account can be utilised for current account transactions and also for approved capital account transactions as specified by the extant Rules/Regulations/Notifications/Directives issued by the Government/RBI from time to time. RFC Accounts :- Returning Indians, i.e., those Indians, who were non-residents earlier, and are returning now for permanent stay, are permitted to open, hold and maintain with an authorised dealer in India a Resident Foreign Currency (RFC) Account to keep their foreign currency assets. Assets held outside India at the time of return can be credited to such accounts. The foreign exchange (i) received or acquired as gift or inheritance from a person referred to sub-section (4) of section 6 of FEMA,1999 or (ii) referred to in clause (c) of section 9 of the Act or acquired as gift or inheritance therefrom may also be credited to this account. The funds in RFC account are free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment outside India. The facility is also available to residents provided foreign exchange to be credited to such account is received out of certain specified type of funds/accounts. c. RFC (Domestic)Account:- A person resident in India can open, hold and maintain with an authorized dealer in India, a Resident Foreign Currency (Domestic) Account, out of foreign exchange acquired in the form of currency notes, Bank notes and travellers cheques from any of the sources like, payment for services rendered abroad, as honorarium, gift, services rendered or in settlement of any lawful obligation from any person not resident in India. The account may also be credited with/opened out of foreign exchange earned like proceeds of export of goods and/or services, royalty, honorarium, etc., and/or gifts received from close relatives (as defined in the Companies Act) and repatriated to India through normal banking channels by resident individuals.

Q.28. As per 2C (i) Promoter / Promoter Group will be permitted to set up a bank only through a wholly-owned Non-Operative Financial Holding Company (NOFHC). Query: Whether the formation of NOFHC is required prior to submission of bank license application form, because it requires RBI approval and thus it may not be possible to set up NOFHC prior to deadline i.e 1.7.2013? +

29. Can the investor ask for physical security ? +

Yes. At the instance of the investor, subsequent conversion to the physical form is allowed.

29. Whether it is in order for banks to have multiple PLRs ? +

Yes. The banks may announce different PLRs for credit limits over Rs. 2 lakhs for different maturities provided the transparency and uniformity of treatment originally envisaged continues to be maintained. The banks, which have moved over to declaration of tenor-linked PLRs should always indicate the specific tenor for which the declared PLR is applicable. Banks may announce a separate Prime Term Lending Rate (PTLR) for term loans of three years and above. Banks may also prescribe separate PLRs and spreads over PLRs for loan component and cash credit component.

Q.29 Who is the approving authority under the normal route ? +

Proposals under the normal route are approved by the Special Committee on Indian Direct Investment Abroad, which consists of the representatives of the Ministry of Finance, Ministry of External Affairs and Ministry of Commerce of the Government of India and the Reserve Bank of India.

29. In what form can a PPI be issued ? +

Ans. PPIs can be issued as cards, wallets, and any such form / instrument which can be used to access the PPI and to use the amount therein. PPIs in the form of paper vouchers cannot be issued.

29. Is tax deducted at source (TDS) applicable on the bond? +

TDS is not applicable on the bond. However, it is the responsibility of the bond holder to comply with the tax laws.

29. Will the orders placed by clients be visible to PM? +

The Primary Member being responsible for the settlement of the trades done by the GAH on the NDS OM Web Based Module, will have a view of the Orders placed by the GAH as well as the trades done by the GAH.

29. Can a person resident in India hold assets outside India? +

29. Are there any fees to be paid for conversion, consolidation, sub-division, renewal and issue of duplicate Government securities? +

Yes. A fee of Rupees twenty is payable for renewal, conversion or sub-division of Government security and a fee of Rupees One hundred is payable for issue of a duplicate Government security. However, no fee is payable for conversion of GPN into SC and SGL/CSGL or SC into SGL/CSGL, consolidation of Government securities and renewals due to filling up of interest cages at the back of the GPN or filling up of transfer endorsement cages at the back of the SC.