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Regulatory Framework for Microfinance Loans

Q 11. Is there any specific reason for including a dedicated mechanism for redressal of recovery related grievances when there is already a customer grievance redress mechanism? +

Ans. The purpose of having a dedicated redress mechanism for recovery related grievances is that these grievances should be promptly addressed. Treating (clubbing) them as (with) other complaints (e.g., operational issues) may result in delayed action. However, this does not imply that a separate redress mechanism for recovery related grievances is being mandated. REs can restructure/ re-organise the existing customer grievance redress mechanism to identify and promptly address recovery related grievances.

Q 11: How will the exchange rate be determined?

Answer: Exchange rate between the currencies of the two trading partner countries will be market determined.

11. How will the FCNR (B) deposits mobilised in currencies other than US Dollars be taken into account for the purpose of entering into swap with RBI ? +

For FCNR (B) deposits mobilized in permissible foreign currencies other than US Dollar, banks may arrive at the equivalent dollar amount eligible to be swapped by converting the same at the prevailing market rates on the day of the swap deal. Banks may follow a consistent policy as far as conversion is concerned and should maintain a proper documentation (audit trails) of the procedure followed for such conversions.

11. What if someone needs more than ₹20,000/- cash for business or other purposes? +

Deposit into accounts can be made without restrictions. The ₹2000 banknotes can be deposited into bank accounts and cash requirements can be drawn thereafter, against these deposits.

Q.12. What will happen if credit is not afforded to the account of the beneficiary?

Ans: If a Destination Bank is not in a position to credit the beneficiary account due to any reason, the same would be returned to the ECS Centre to enable the ECS Centre to pass on the uncredited items to the User Institution through the Sponsor Bank. The User Institution can then initiate payment through alternate modes to the beneficiary.

In case of delayed credit by the destination bank, the destination bank would be liable to pay penal interest (at the prevailing RBI LAF Repo rate plus two percent) from the due date of credit till the date of actual credit. Such penal interest should be credited to the Destination Account Holder’s account even if no claim is lodged to the effect by the Destination Account Holder.

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.

12. Is there any limit on the amount of compensation as specified in an Award ? +

The amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the complainant is limited to the amount arising directly out of the act or omission of the bank or ₹ 20 lakhs (₹ Two Million), whichever is lower.

12. How will the bank or the PD bid on behalf of his non-competitive bidders ? +

Each bank or PD will, on the basis of firm orders, submit a single bid for the aggregate amount of non-competitive bids on the day of the auction. The bank or PD will furnish details of individual customers, viz., name, amount, etc. along with the application.

Q.12 Which are the schemes under which an Indian Company can set up a Joint Venture or Wholly Owned Subsidiary abroad ? +

Broadly there are two schemes under which one can set up a JV/WOS abroad, namely automatic route and normal route.

12. Can one pay by cash full rupee equivalent of foreign exchange being purchased for travel abroad ?

Foreign exchange for travel abroad can be purchased from banks against rupee payment in cash up to Rs.50,000/-. However, if the rupee equivalent exceeds Rs.50,000/-, the entire payment should be made by way of a crossed cheque/banker’s cheque/pay order/demand draft only.

Q.12 Which projects can IDF-NBFC invest in? +

Ans : IDF-NBFCs shall invest only in PPP and post COD infrastructure projects which have completed at least one year of satisfactory commercial operation and are a party to a Tripartite Agreement with the Concessionaire and the Project Authority for ensuring a compulsory buyout with termination payment.

12. What does one mean by BLA? +

A BLA or Bond Ledger Account means an account with RBI or an agency bank in which the Government securities are held in a dematerialized form to the credit of the holder. The investor in this case receives a Certificate of Holding or Certificate of Investment from RBI/Agency Banks.

12. What is the infrastructure requirement at the GAH end? +

All NDS OM-Web GAH users would need to use Digital Certificates issued by the designated Certifying Authority obtained by the respective PM, embedded into e-tokens (of the prescribed configuration) supplied to them by their PM. A safe, reliable, stable internet connection with suitable bandwidth is necessary for efficient operations. A modern PC with contemporary configuration, minimum 1 GB RAM, Operating System - Windows XP and above will be required. Only IE Browser - 7 and above can be used for accessing OM-Web.

12. Whether EEFC Account is permitted to be held jointly with a resident relative? +

Resident individuals are permitted to include resident relative(s) [as defined in section 2(77) of the Companies Act, 2013] as joint holder(s) in their EEFC account on ‘former or survivor’ basis.

12. குறைந்தபட்ச விவர பிபிஐ––களுக்காக பெறப்படும் குறைந்தபட்ச விவரங்களில் எவை எல்லாம் அடங்கும்? +

பதில். குறைந்தபட்ச விவரங்களில் ஒன் டைம் பாஸ்வேர்ட் (ஓடிபி) மூலம் பரிசீலிக்கப்பட்ட மொபைல் எண், பெயருக்கான சுய அத்தாட்சி, பிஎம்எல் விதிகள் 2005 ன் விதி 2(d) யின் கீழ் அதிகார பூர்வமாக வழங்கப்பட்ட அடையாள ஆவணத்தின் (ஓவிடி) தனிப்பட்ட அடையாள எண் அல்லது பிஎம்எல் விதிகள் 2005 ன் கீழ் உரித்தாகும் கட்டாய ஆவணங்கள் ஆகியவை அடங்கும்.

12. பேசிக் சேவிங்க்ஸ் பேங்க் டெபாசிட் கணக்கில் எந்த சேவைகள் இலவசமாக கிடைக்கின்றன? +

பேசிக் சேவிங்க்ஸ் பேங்க் டெபாசிட் கணக்கில் இலவசமாக கிடைக்கும் சேவைகள்: ரொக்கமாக பணம் போடுதல் மற்றும் எடுத்தல், பெறுதல்/ எலெக்ட்ரானிக் வழிகளில் பணம் செலுத்துதல் அல்லது டெபாசிட்/ காசோலைக்கு பணம் பெறுதல் போன்ற சேவைகள் கிளைகள் மற்றும் ஏடிஎம்களில்.

12. ஒரு வங்கி ஏடிஎம்களில் இன்னும் அதிக இலவச பரிவர்த்தனைகளை வழங்க முடியுமா? +

பதில். ஏடிஎம்களில் குறைந்தபட்ச இலவச பரிவர்த்தனைகளின் எண்ணிக்கையை ஆர்பிஐ கட்டாயமாக்கியுள்ளது. வங்கிகள் இன்னும் அதிகமான எண்ணிக்கையில் இலவச பரிவர்த்தனைகளை தமது வாடிக்கையாளர்களுக்கு வழங்கலாம்.

12. In RTGS, why is credit to the beneficiary given solely based on account number? +

Ans. Transactions in RTGS happen in real time and it is not possible to match name and account number before affording credit to the beneficiary. Since name in the Indian context is spelt differently and would not really match with that available with the beneficiary bank, the process of affording credit solely based on the account number of the beneficiary has been enabled.

Our Circular Ref. No. DPSS (CO) EPPD No. / 863 / 04.03.01 / 2010-11 dated October 14, 2010 on ‘Electronic payment products – Processing inward transactions based solely on account number information’ (available at https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6043&Mode=0) may be referred to for further details.

12. Is there any minimum cut off with respect to aggregate outstanding exposure with banking system for mandatorily signing ICA under the Resolution Framework? Also, whether the ICA norms are applicable to loans availed by individuals for business purpose from two or more banks? +

If there are multiple lending institutions with exposure to a borrower whose resolution is undertaken in terms of Part B of the Annex to the Resolution Framework, all lending institutions having exposure to such borrower are required to enter into ICA.

12. Can compensation be claimed for mental agony and harassment ? +

The NBFC Ombudsman may award compensation not exceeding rupees 0.1 million to the complainant for causing mental agony and harassment. The NBFC Ombudsman, while passing such award, will take into account the loss of the complainant's time, expenses incurred by the complainant, harassment and mental anguish suffered by the complainant.

12. Can an investor/trust buy 4 Kg/20 Kg worth of SGB every year? +

Yes. An investor/trust can buy 4 Kg/20 Kg worth of gold every year as the ceiling has been fixed on a fiscal year (April-March) basis.

12. What is the eligibility criteria for setting up and operating TReDS? +

Ans. Eligibility criteria for the purpose of setting up and operating a TReDS platform is provided in the guidelines (as amended from time to time) for TReDS issued by RBI. These guidelines are available at the following path: www.rbi.org.in → “Payment and Settlement Systems” dropdown →“Guidelines”. RBI’s Press Release dated October 15, 2019 may also be read in this regard. The same can be accessed at the following web links: /en/web/rbi/-/guidelines-for-the-trade-receivables-discounting-system-treds-3504 and /en/web/rbi/-/press-releases/on-tap-authorisation-of-payment-systems-48405

12. Can compensation be claimed for mental agony and harassment ? +

The Ombudsman may award compensation not exceeding rupees 0.1 million to the complainant for mental agony and harassment. The Ombudsman, while giving the compensation, shall take into account the loss of time, expenses incurred by the complainant, harassment and mental anguish suffered by the complainant.

12. WHAT LEVEL OF ‘GRANULARITY’ IS DESIRABLE IN ADF +

The granularity to be built in the system should be able to meet the current requirements of regulatory reporting as prescribed by various departments of Reserve Bank. However, over and above this, banks are free to determine and have a finer granularity not only to meet ad- hoc requirements of RBI from time to time but also for internal MIS..

12. Query: Can a customer get back his jewellery if the purity determined by the CPTC/GMCTAs is not acceptable to him/her and he/she does not want to invest in the GMS? +

Response: The jewellery will be melted by the CPTC/GMCTAs to conduct the fire assay and the customer can then get back gold only in post-melted form. Thus, the decision regarding taking back jewellery in the original form must be taken by the customer after XRF test and before giving consent for fire-assaying.

12. Query What kinds of services are available free in the 'Basic Savings Bank Deposit Account’? +

Response

The services available free in the 'Basic Savings Bank Deposit Account’ will include deposit and withdrawal of cash; receipt / credit of money through electronic payment channels or by means of deposit / collection of cheques at bank branches as well as ATMs.

Q.12. Is credit rating mandatory for the MSE borrowers ? +

The credit rating by external rating agencies is not compulsory from regulatory capital perspective, if the maximum aggregate exposure to one counterparty does not exceed the threshold limit of ₹7.5 crore, subject to meeting certain other conditions.

12. Do same Rules apply to persons going for studies abroad? +

For the purpose of studies abroad, exchange for maintenance expenses is released in the form of (i) currency notes up to US$ 2,000, (ii) the balance foreign exchange may be taken in form of traveller’s cheques or bank draft payable overseas.

Q12. Who can open an Escrow Account in India and for what purpose ? +

Answer: Resident and Non-resident acquirers can open Escrow Account in INR with an AD bank in India as the Escrow Agent, for acquisition/transfer of capital instruments/convertible notes in accordance with Foreign Exchange Management (Non-Debt Instrument) Rules, 2019 as amended from time to time and subject to the terms and conditions specified under Schedule 5 of Foreign Exchange Management (Deposit) Regulations, 2016, as amended from time to time.

12. What are the customer charges levied by bank for NEFT transactions? +

Ans: There are no charges to be levied for inward transactions at destination bank branches for giving credit to beneficiary accounts.

For outward transactions undertaken using the NEFT system, RBI stopped levying processing charges on member banks from July 01, 2019.

Also, in order to give further impetus to digital retail payments, banks have been advised to not levy any charges from their savings bank account holders for NEFT funds transfers initiated online with effect from January 01, 2020.

The maximum charges which originating bank can be levy from its customers for other outward transactions, if they so desire, are given below: –

- For transactions up to ₹10,000 : not exceeding ₹2.50 (+ Applicable GST)

- For transactions above ₹10,000 up to ₹1 lakh: not exceeding ₹5 (+ Applicable GST)

- For transactions above ₹1 lakh and up to ₹2 lakhs: not exceeding ₹15 (+ Applicable GST)

- For transactions above ₹2 lakhs: not exceeding ₹25 (+ Applicable GST)

The details about charges applicable for transferring funds from India to Nepal using the NEFT system under the INRF Scheme is available on the RBI website at /en/web/rbi/faq-page-2?ddm__keyword__26256231__FaqDetailPage2Title_en_US=Indo-Nepal Remittance Facility scheme.

12. What is the objective of the Scheme for appointing Franchisees by AD Category Banks, ADs Category-II and FFMCs for undertaking restricted money changing activities? +

The objective of the Scheme is to provide easier foreign exchange conversion facilities for travellers and tourists, including Non Resident Indians (NRIs), by enlarging the network of money changing facilities in the country. It is expected that the facility of Franchisee arrangement will enable AD Category-I banks, ADs Category-II and FFMCs to provide such facilities at all tourist centres and major cities during extended hours and on holidays.

Q 12. How much jewellery can be carried while going abroad? +

Ans. Taking personal jewellery out of India is as per the Baggage Rules, governed and administered by Customs Department, Government of India. While no approval of the Reserve Bank is required in this case, approvals, if any, required from Customs Authorities may be obtained.

12. What will happen if credit is not afforded to the account of the beneficiary? +

If a Destination Bank is not in a position to credit the beneficiary account due to any reason, the same would be returned to the ECS Centre to enable the ECS Centre to pass on the uncredited items to the User Institution through the Sponsor Bank. The User Institution can then initiate payment through alternate modes to the beneficiary. In case of delayed credit by the destination bank, the destination bank would be liable to pay penal interest (at the prevailing RBI LAF Repo rate plus two percent) from the due date of credit till the date of actual credit. Such penal interest should be credited to the Destination Account Holder’s account even if no claim is lodged to the effect by the Destination Account Holder.

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 based on 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.

12. Who pays the cost of deposits insurance ? +

Deposit insurance premium is borne entirely by the insured bank.

12. Will the customer be compensated for delay in collection beyond the collection period indicated in the Cheque Collection Policy of the bank? +

Yes. Compensation by way of additional interest will be paid on to the customer for delay in collection beyond the declared collection period as per the bank’s USD Cheque Collection policy and such interest shall be on “step-up basis” for the period of delay. The compensation shall be paid automatically without the customer requesting for the same

Q.12. How is the compounding process brought to conclusion? +

Ans. The Compounding Authority passes an order indicating details of the contravention and the provisions of FEMA, 1999 that have been contravened. The sum payable for compounding the contravention is indicated in the compounding order. The process of compounding is brought to a conclusion by payment of the amount imposed.

Q.12. W.r.t. 2(C)(ii)(b), is it mandatory to have a public company which has more than 51% shareholding in the NOFHC as part of the promoter group? +

The requirement is that the companies in the Promoter Group in which the public hold not less than 51 per cent of the voting equity shares shall hold not less than 51 per cent of the total voting equity shares of the NOFHC.[ para 2 (C) (ii) (b) of the guidelines] A company in which public holds 51 per cent need not necessarily be listed. For the purpose of these guidelines, ‘public shareholding’ implies that no person along with his relatives (as defined in Section 6 of the Companies Act, 1956) and entities in which he and / or his relatives hold not less than 50 per cent of the voting equity shares, by virtue of his shareholding or otherwise, exercises ‘significant influence’ or ‘control’ (as defined in Accounting Standard 23) over the company.

12. On premature withdrawal, banks will have a US Dollar outflow. Can banks meet these dollar demands using any other available source of foreign currency funding ? +

As stated earlier, banks have to necessarily approach RBI for unwinding of the swap in case of premature withdrawal of deposits. However, banks may arrange funds from other permitted sources pending unwinding of the swap with RBI.

Q 12: How would the exchange rate between INR and the currency of the trading partner country be market-determined in the absence of direct quote for the pair of currencies?

Answer: The exchange rate for most currencies are determined in the Forex markets, typically against global currencies like the USD, EUR, JPY etc. In the transition phase, when there is no market with direct exchange rates between two currencies (say INR and Sri Lankan Rupee), the exchange rate between the currencies of two trading partner countries, each of which has markets against global currencies, would be derived as a cross currency rate.

12. Whether banks are permitted to offer differential rate of interest on other deposits ? +

Banks can formulate special fixed deposit schemes specifically for senior citizens offering higher and fixed rates of interest as compared to normal deposits of any size.

Q.12. Do AD banks need to obtain UIN from RBI for PO? +

Ans. No

12. Should the customer apply through the bank in which he/she has an account? +

Customers can approach any of the authorised banks, including SHCIL for such investment irrespective of whether they hold an account or not with that bank.

12. At what rate will the non-competitive bidders get the allotment? +

The allotment to the non-competitive segment will be at the weighted average price of all allotments to competitive bidders. In case of a yield based auction, the weighted average yield in the auction will be used to arrive at the allotment price for non-competitive bids.

12. Whether IIBs will be traded in the secondary market? +

As IIBs are G-Sec, they can be tradable in the secondary market like other G-Secs. Investors will be able to trade them in NDS-OM, NDS-OM (web-based), OTC market, and stock exchanges.

12. Can I cancel my deposit in this scheme at any time? +

There is no option for cancellation of deposit in this scheme after creation of the Bond Ledger Account.

12. What kind of supervisory assessment will be applicable for authorised non-bank PSPs directly participating in CPS? +

Ans. In addition to extant regulatory requirements for authorised non-bank PSPs, supervisory assessments will include compliance with regulatory requirements as laid out in:

Master Directions on Access to Payment Systems;

RTGS System Regulations; and

NEFT Procedural Guidelines.

Q 12. What is the purpose of assessment of household expenses as provided under Annex-I on ‘Indicative Methodology for Household Income Assessment’? Does it mean that household income for computing the limit on loan repayment obligations of a household is the household income net of expenses? +

Ans. Annex I provides only an indicative methodology for assessment of household income, and REs are required to put in place a board-approved policy for household income assessment. References to household expenses and assessment of household profile are only for the purpose of validation of the household income reported by the borrowers.

12. Is there any fee to be paid for the exchange facility? +

No. The exchange facility shall be provided free of cost.

Q.13. What are the advantages of the ECS Credit Scheme to the beneficiary

Ans : ECS Credit offers many advantages to the beneficiary –

The beneficiary need not visit his / her bank for depositing the paper instruments which he would have otherwise received had he not opted for ECS Credit.
The beneficiary need not be apprehensive of loss / theft of physical instruments or the likelihood of fraudulent encashment thereof.
Cost effective.
The beneficiary receives the funds right on the due date.