RBI April 2014

By June 9, 2014 December 20th, 2019 No Comments
Date Subject Amendment
04-Apr-14 Foreign
Exchange Management Act, 1999 (FEMA)
Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules) –
Compounding of Contraventions under FEMA, 1999
to compound the following offences has now been delegated to the regional
offices of RBI: A) Delay in reporting inward remittance received for issue of
B) Delay in filing form FC(GPR) after issue of shares.       
C) Delay in issue of shares/refund of share
application money beyond 180 days,
mode of receipt of funds, etc.                                                                                           

D) Violation of pricing guidelines for issue
of shares.     
E) Issue of ineligible instruments such as
non-convertible debentures, partly paid
shares, shares with optionality clause,
F) Issue of shares without approval of RBI
or FIPB respectively, wherever
Kochi and Panaji Offices can compound the contraventions for amount of
contravention below Rupees one hundred lakh 
03-Apr-14 Know
Your Customer (KYC) Norms /Anti-Money Laundering (AML) Standards/ Combating
of Financing of Terrorism (CFT)/ Obligation of banks under Prevention of
Money Laundering Act (PMLA), 2002 – Harmonization of KYC norms for Foreign
Portfolio Investors (FPIs)
has prescribed simplified norms, for the FPI’s who are already registered
under SEBI guidelines and  undergone
the required KYC due diligence/verification prescribed by SEBI through a
Custodian/Intermediary regulated by SEBI.Such FPI can approach a bank for
opening a bank account for the purpose of investment under Portfolio
Investment Scheme (PIS) for which KYC documents mentioned in this circular
shall be required.
07-Apr-14 Investment
through Alternative Investment Funds – Clarification on Calculation of NOF of
explaining the meaning  and ambit of
NBFC ( Non-Banking Financial Companies), explicitly declared that NBFCs must
deduct investments made  in group
entities before arriving at NOF (net owned funds).
07-Apr-14 Risk
Management & Inter-Bank Dealings:
Booking of Forward Contracts – Liberalisation
has  permitted all resident
individuals, firms and companies, who have foreign exchange exposures, both
actual and anticipated, to book foreign exchange forward contracts up to
$250,000 on the basis of a simple declaration without any requirement of
further documentation. However, Small and Medium Enterprises (SMEs) shall
remain uneffected by this reformation.
07-Apr-14 Registration
of Non-Operative Financial Holding Companies (NOFHCs)
has created a separate category of NBFCs, i.e, Non-Operative Financial
Holding Company (NOFHC) which will hold bank as well as all other financial
services companies regulated by RBI or other financial sector regulators, to
the extent permissible under the applicable regulatory prescriptions. Through
this category promoters/ promoter groups shall be enabled to set up new
banks. NOFHC will be registered with the Department of Non-Banking
Supervision (DNBS) of the Reserve Bank, while its regulatory and supervisory
framework including prudential norms and submission of returns will be
governed by the instructions issued by DBOD from time to time.
16-Apr-14 Foreign
Direct Investment (FDI) in Limited Liability Partnership (LLP)
Liability Partnership (LLP) registered under the Limited Liability
Partnership Act, 2008 shall now be eligible to accept Foreign Direct
Investment (FDI), subject to the specified conditions.
21-Apr-14 Foreign
Direct Investment in Pharmaceuticals sector – clarification
has been decided by the RBI, that that the existing policy related to FDI in
Pharmaceutical sector shall prevail with the condition that ‘non-compete’
clause would not be permitted except in special circumstances with the
approval of the FIPB.
 22- Apr-14 Fund/Non-Fund
based Credit Facilities to Overseas Joint Ventures / Wholly Owned
Subsidiaries /Wholly owned Step-down Subsidiaries of Indian Companies
 RBI has ordered overseas branches of
domestic banks not to  extend ECBs to
and infrastructure companies for repaying rupee loans. Similarly, it has
been recommended that, banks, including overseas branches/subsidiaries of
Indian banks, must not  issue standby
letters of credit/guarantees/letter of comforts etc. on behalf of overseas
JV/WOS/WoSDS of Indian companies for the purpose of raising loans/advances of
any kind from other entities except in connection with the ordinary course of
overseas business. 
 22- Apr-14 Scaling
up of the Business Correspondent (BC) Model –Issues in Cash Management
boards have been ordered to review the operations of business correspondents
(BCs) at least once every six months. This has been done to ensure that
requirement of prefunding of corporate BCs and BC agents is taperred down
with the passage of time. It was further ordered that banks must review the
position of payment of remuneration of BCs and to lay down a system of
monitoring by the top management of the bank.

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