Ans:

Foreign Subsidiary: An Indian entity is called as a Foreign Subsidiary if a non-resident investor owns more than 50% of the voting power/equity capital OR where a non-resident investor and its subsidiary(s) combined own more than 50% of the voting power/equity capital of an Indian enterprise.

Foreign Associate: An Indian entity is called as Foreign Associate if non-resident investor owns at least 10% and no more than 50% of the voting power/equity capital OR where non-resident investor and its subsidiary(s) combined own at least 10% but no more than 50% of the voting power/equity capital of an Indian enterprise.

Special Purpose Vehicle: A special purpose Vehicle (SPV) is a legal entity (usually a limited company of some type or, sometimes, a limited partnership) created to fulfil narrow, specific or temporary objectives. SPV have little or no employment, or operations, or physical presence in the jurisdiction in which they are created by their parent enterprises, which are typically located in other jurisdictions (economies). They are often used as devices to raise capital or to hold assets and liabilities and usually do not undertake significant production.

Answer: In case of transfer of shares between a resident buyer and a non-resident seller or vice-versa, not more than twenty five per cent of the total consideration can be paid by the buyer on a deferred basis, within a period not exceeding eighteen months from the date of the transfer agreement. The amount deferred can also be either in the form of an indemnity or an Escrow. In all cases, the pricing guidelines should be complied with.

In addition to the security features listed above, banknotes issued after introduction of MG series-2005 have the year of printing on the reverse of the banknotes which is not present in the pre-2005 series.

Ans: A holding company not meeting the criteria for a CIC laid down in para 2 of Notification No DNBS. (PD) 219/CGM(US)-2011 dated January 5, 2011 would require to register as an NBFC. However, if such company wishes to register as CIC-ND-SI/ be exempted as CIC, it would have to apply to RBI with an action plan achievable within the specific period to reorganize its business as CIC. If it is not able to do so, it would need to comply with NBFC requirements and prudential norms.

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 Industries 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 Organizations (NGOs) on lending to SHGs.

@ ‘Weaker Sections’ in Priority Sector includes following:

1. Small and marginal farmers with land holdings of 5 acres and less, landless labourers, tenant farmers and share-croppers;

2. Artisans, village and cottage industries where individual credit requirements do not exceed Rs.25,000/-.

3. 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.

4. Scheduled Castes and Scheduled Tribes.

5. Beneficiaries are persons whose family income from all sources does not exceed Rs.7200/- per annum in urban or semi urban areas or Rs.6400/- 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).

6. Beneficiaries under Scheme of Liberation and Rehabilitation of Scavengers (SLRs).

7. Advances granted to Self-Help Groups (SHGs) for reaching the rural poor.

The NBFCs have been permitted to regularise their excess public deposits by 1/3rd every year so as to pay off/regularise by obtaining/improving their Credit Rating or by augmenting NOF or by substituting public deposits by other form of debt the entire excess by 31st December, 2000. While the companies having the prescribed minimum level of Rating can accept fresh public deposit and renew such maturing deposit, the NBFCs which are unrated or rated below the minimum grade can only renew the maturing deposits. Within this period, the NBFCs are expected to augment their NOF, obtain or improve their Credit Rating, substitute public deposits by borrowings from other avenues. RBI does not intend to order the NBFCs to prematurely repay their deposits. The NBFCs may repay their deposits only on maturity. If the deposits accepted before January 2, 1998 are maturing after December 31, 2000 and the concerned NBFC holds these deposits in excess of its entitlements, this would not tantamount to violation of the RBI directions. It should, however, report the matter to the concerned Regional Office of Reserve Bank of India.

Ans: Participating preference shares are those shares which have one or more of the following rights:

(a) To receive dividend, out of surplus profit after paying the dividend to equity shareholders.

(b) To have share in surplus assets remaining after the entire capital is paid in case of winding up of the company.

On the other hand, non-participating preference shares are those shares which do not have any of the above said rights.