All regulated financial services entities of the Promoters/Promoter Group in which the Promoters/Promoter Group has ‘significant influence’ or ‘control’ (as defined in Accounting Standard 23) have to be held by a NOFHC. Regarding financial groups setting up banks, the existing NBFC must transfer all regulated financial services business to a new company and shares in that new company must be held by the NOFHC. Conversion of the NBFC into a non operating holding company would enable meeting the requirement of para 2(C)(iii) of the guidelines provided the listed non operating holding company meets the requirement of para(C)(ii)(b) of the guidelines i.e. the public hold not less than 51 percent voting equity shares in the company.

Yes. Individuals are free to open, hold and maintain foreign currency accounts with a bank outside India for making remittances under the Scheme without the prior approval of RBI. The account can be used for putting through any transaction connected with or arising from remittances under the Scheme.

PDs and banks will furnish information relating to the Scheme to the Reserve Bank of India as and when called for. RBI can also review the guidelines. If and when the guidelines are revised, RBI will notify the modified guidelines.December 15, 2001

Partnership firms engaged in providing professional services, such as chartered accountancy, legal practice and related services, information technology and entertainment software related services and medical and healthcare services are eligible for investment abroad on an automatic basis by filing form ODA with the AD without prior approval of the Reserve Bank up to an amount of US$ 1 million. Partnership firms, which do not conform to the above parameters, are required to obtain specific approval of the Reserve Bank by filing an application in form ODI (to the extent applicable).

उत्तर.

अधिकृत ओव्हरसीज प्रिन्सिपल (ओपी) यांचे भारतीय एजंट असलेल्या बँका आणि बँकाव्यतिरिक्त पीपीआय उपयोगकर्ता यांना आरबीआयच्या मनी ट्रान्सफर सर्व्हिस योजना (एमटीएसएस) अंतर्गत इनवर्ड रेमिटन्सच्या लाभधारकांना केवायसीची पूर्तता करणारे पीपीआयज जारी करण्याची परवानगी आहे. याचा अर्थ असा की हे काम हाती घेणारी संस्था ही अधिकृत पीपीआय जारीकर्ता व त्याचबरोबर एमटीएसएस अंतर्गत भारतीय एजंट असली पाहिजे (परदेशी चलन विभाग, आरबीआय द्वारा अधिकृत).

व्यक्तिगत इनवर्ड एमटीएसएस रेमिटन्सेस मधून रु. ५०,०००/- पर्यंतची रक्कम लाभधारकाला जारी केलेल्या पीपीआय मध्ये लोड किंवा रिलोड करण्याची परवानगी आहे. कोणताही रु. ५०,०००/- पेक्षा जास्त रकमेचे एक व्यवहार केल्यास बँकेच्या खात्याला क्रेडिट करून त्याचे पैसे देण्यात येतील.

Yes, part holdings can be redeemed in multiples of one gm.

An investor in Government securities, held in the form of SC, BLA and SGL/CSGL, can avail of the facility of automatic redemption, i.e., the maturity proceeds along with the interest accruing thereon will be credited to the investor's bank account on due date and the investor need not submit physical discharge in respect of such securities provided the investor has furnished his/her bank account details to the RBI or its agent (A model format is given at the end of these FAQs). However, in case, the investor does not submit his/her bank details to the RBI or the Agency Bank, he/she would be required to submit physical discharge towards the Government securities to receive the redemption proceeds.

All regulated financial services entities of the Promoters/Promoter Group in which the Promoters/Promoter Group has ‘significant influence’ or ‘control’ (as defined in Accounting Standard 23) have to be held by a NOFHC. Regarding financial groups setting up banks, the existing NBFC must transfer all regulated financial services business to a new company and shares in that new company must be held by the NOFHC. Conversion of the NBFC into a non operating holding company would enable meeting the requirement of para 2(C)(iii) of the guidelines provided the listed non operating holding company meets the requirement of para(C)(ii)(b) of the guidelines i.e. the public hold not less than 51 percent voting equity shares in the company.

The facility under the Scheme is in addition to those already available under Foreign Exchange Management (Current Account Transactions) Rules, 2000.

Direct housing loans to individuals upto Rs.5 lakhs in rural/semi-urban area and Rs.10 lakhs in urban/metropolitan area and loans upto Rs.50,000/- for repairs to damaged houses by individuals are treated as priority sector advances. The rate of interest will be determined according to size of the credit limit. As such the loans upto Rs.2 lakhs should be charged interest as per size of limit i.e. ‘not exceeding PLR’. Loans above Rs. 2 lakhs and upto Rs. 5 lakhs in rural/semi-urban area or Rs.10 lakhs in urban/metropolitan area should be charged interest subject to PLR and the spread announced by the bank concerned. Loan above Rs.5 lakhs in rural/semi-urban area and above Rs.10 lakhs in urban/metropolitan area will fall under category ‘Other non-priority sector personal loans’ in which case banks are free to determine the rates of interest without reference to PLR.37. Consequent on the deregulation of interest rate on advances over Rs. 2 lakhs with effect from October 18, 1994, how banks will bear DICGC Guarantee fee in respect of priority sector advance?As regards DICGC Guarantee fee, the banks have discretion to absorb or to pass on the guarantee fee to the borrower in case of advances over Rs.25,000/- excluding advances to weaker sections. Banks should bear DICGC guarantee fees in respect of advances upto Rs.25,000/- and all advances to weaker sections.38.Whether banks can charge rate of interest beyond the spread announced by them on advances granted to Non-Banking Finance Companies (NBFCs)?Banks have freedom to charge interest rate beyond the declared 'spread' on advances granted to NBFCs for onlending for consumer credit.39. Whether interest on loans and advances could be charged at varying periods ranging from monthly rests to yearly rests?With effect from April 1, 2002 the interest rates on loans and advances should be charged with monthly rests except in the case of agricultural advances( including short term loans and other allied activities) where the existing practice would continue. However the banks should compound the interest at monthly intervals only from April 1, 2003.40. What rate of interest is chargeable on loans/ advances granted to Staff Member/Staff Co-operative Credit Societies?The interest rate directives on bank advances will not be applicable to loans or advances or other financial accommodation made or provided or renewed by a scheduled bank, inter alia, to its own employees. Where the advances are provided by the bank to co-operative credit societies formed by the bank’s staff members for lending to constituents ( i.e. Staff of the bank ) the interest rate directives of the RBI will not apply to such advances.IV. Advances against shares and debentures41. Whether banks can sanction loans to Trust and Endowments against the security of shares and debentures?No.42. Whether banks can sanction loans against the equity shares of the banking company to its directors?No.43. Whether any ceiling has been stipulated regarding the banks exposure to the capital markets?Thetotalexposure including both fund based and non-fund based, to capital market by a bank in all forms covering direct investment by a bank in equity shares, convertible bonds and debentures and units of equity oriented mutual funds; Advances against shares to individuals for investment in equity shares (including IPOs ), bonds and debentures, units of equity-oriented mutual funds etc and secured and unsecured advances to stockbrokers and guarantees issued on behalf of stockbrokers and market makers should be restricted to 5 % of the outstanding advances as on March 31 of the previous year. (including Commercial Paper). Further, for computing the ceiling on exposure to capital market, direct investment in shares by banks will be calculated at cost price of the shares.44. Whether banks can indulge in short sales of shares?No. Banks are prohibited from making any short sales of share45. Whether banks can invest in their subsidiaries?Banks can invest in their subsidiaries. However, such investments will be outside the purview of 5%of the outstanding advances of the previous year and subject to compliance of Section 19 of the Banking Regulation Act, 1949.46. Which of the bills should not be discounted by the banks?The bills covering payment of electricity charges, customs duty, hire purchase/lease rental instalments, sale of securities and other types of financial accommodation should not be discounted by banks.47. Whether banks can invest in Fixed Deposits of non-banking non-financial companies?There is no prohibition on banks' placing of funds with non-banking non-financial companies under their Public Deposit Scheme. However, such investment in the Public Deposit Scheme should be classified by banks as loans/advances in their balance sheet and returns under the Banking Regulation Act, 1949 and fortnightly returns by scheduled commercial banks under Reserve Bank of India Act , 1934.48. Whether banks can purchase letter of allotment in respect of PSU Bonds?Banks can purchase letter of allotment in respect of PSU bonds subject to following conditions.1. The transaction (other than inter bank transaction) should be undertaken only through recognised Stock Exchanges and registered brokers.2. While purchasing the security, the bank should ensure that it gets a clear title to the security and the security is traded in the secondary market.The bank should formulate their own internal guidelines with the approval of the Board for undertaking such transaction.49. What should be the method of valuation for advances against shares/debentures /bonds?Shares/debentures/bonds should be valued at prevailing market prices when they are lodged as security for advances.50. Whether the banks can sanction bridge loans to companies?Yes. For a period not exceeding one year against the expected equity flows/issues as also against the expected proceeds of Non-convertible Debentures, External Commercial Borrowings, Global Depository Receipts and/or funds in the nature of Foreign Direct Investments, provided the bank is satisfied that the borrowing company has made firm arrangements for raising the aforesaid resources/funds. Such loans are required to be accommodated within the ceiling of 5% of outstanding advances of the previous year.51. What is the quantum of loans to individuals against security of shares, debentures and PSU bonds if held in physical form and in dematerialized form?The loans to individuals against the security of shares, debentures and PSU bonds if held in physical form should not exceed the limit of Rs.10 lakhs per borrower and Rs.20 lakhs if the securities are held in dematerialized form. The maximum amount of finance that can be granted to an individual for IPOs is Rs.10 lakh. The corporates should not be extended finance for investment in other companies’ IPOs and NBFCs should not be provided finance for further lending to individuals for IPOs. Finance extended by a bank for IPOs should be reckoned as an exposure to capital market.52. What is the margin stipulated for advances against shares held in physical form and dematerialized form?A uniform margin of 40% has been stipulated for all advances against shares.V. Donations53. Whether banks can make donations?Yes, the profit making banks can make donations during a financial year, aggregating upto one per cent of the published profit of the bank for previous year inclusive of donations made earlier under exempted category and donations to National funds and other funds. Banks should not make donations in excess of prescribed ceiling of one per cent as stated above. Unutilised amount of the permissible limit in a year should not be carried forward to the next year for the purpose of making donations.54. Whether loss-making banks can make donations?Yes, loss making banks can make donations totaling Rs.5 lakhs only in a financial year.55. Whether overseas branches of the banks can make donations abroad?Yes, the overseas branches of the banks can make donations abroad, provided the banks do not exceed the prescribed ceiling of one per cent of their published profit of the previous year.VI. Premises Loan56. What are the norms and procedure laid down by RBI for acquisition of accommodation on lease/rental basis by commercial banks for their use i.e. for office and residence of staff?i) Boards of Directors of the banks should lay down policy and formulate detailed operational guidelines separately in respect of metropolitan, urban, semi-urban and rural areas covering all areas in respect of acquiring premises on lease/rental basis for the bank's use including delegation of powers at various levels. The decision of surrender or shifting of premises other than at rural centres is taken at central office level by a committee of senior executives.ii) Banks' Boards should lay down a separate policy in respect of loans granted to landlords who provide to them premises on lease/rental basis. The rate of interest to be charged on such loans should be fixed as per the lending rate directives issued by RBI with minimum PLR for the loans above Rs. 2 lakhs. The rate of interest may be simple rate or compound rate as per the usual practice of the bank as applicable to other term loans.iii) Banks should evolve a suitable machinery for dealing with genuine grievances of the landlord for expeditious disposal.iv) In case of negotiated contracts in respect of advances to landlords and rental (including taxes etc. and deposits of Rs.25 lakhs and above) in respect of premises taken on lease/rental basis by public sector banks, the cases will be reported to Central Bureau of Investigation as per the extant Government instructions. This requirement is not applicable to banks in the private sector.VII Service charges57. Are there any limit prescribed by the RBI on service charges to be levied by the banks?The banks have been given the freedom to determine the service charges to be levied from their customers and the RBI has not prescribed any ceilings in this regard.