FEMA

CA. Manoj Shah, CA Atal Bhanja

A.P. (DIR Series) Circular No. 07 dated November 10, 2023

Guidelines on Import of Silver by Qualified Jewellers as notified by – The International Financial Services Centres Authority (IFSCA)

Vide A.P. (DIR Series) Circular No. 04 dated May 25,2022 the AD Category I Banks were permitted to remit advance payments on behalf of Qualified Jewellers (QJs) as notified by IFSCA for 11 days for import of gold through India International Bullion Exchange IFSC Ltd. (IIBX).

DGFT vide its notification No. 35/2023 dated October 11, 2023 has not allowed the QJs to import silver under specific ITC codes through IIBX. Accordingly, it has been decided that AD Category I banks may allow QJs to remit advance payment for 11 days for import of silver through IIBX subject to conditions as prescribed in A.P Dir Circular No. 04 of May 25, 2022.

1. RBI NOTIFICATION NO. RBI/DoR/2023-24/106 DoR.FIN.REC.No.45/03.10.119/2023-24 Dated October 19, 2023 (Updated as on November 10, 2023)

Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023

The Reserve Bank of India, having considered it necessary in the public interest, and being satisfied that, for the purpose of enabling the Reserve Bank to regulate the financial system to the advantage of the country and to prevent the affairs of any Non-Banking Financial Company from being conducted in a manner detrimental to the interest of investors and depositors or in any manner prejudicial to the interest of such NBFCs, and in exercise of the powers conferred under sections 45JA, 45K, 45L and 45M of the Reserve Bank of India Act, 1934 (Act 2 of 1934) and section 3 read with section 31A and section 6 of the Factoring Regulation Act, 2011 (Act 12 of 2012), hereby issues to every NBFC, in supersession of the Non-Banking Financial Company–Non-Systemically Important Non-Deposit taking (Reserve Bank) Directions, 2016 and Non-Banking Financial Company–Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 (the Directions), hereinafter specified.

The URL links are given below; “https://rbidocs.rbi.org.in/rdocs/content/pdfs/106MDNBFCs19102023_ANN.pdf”

2. RBI NOTIFICATION NO. RBI/2023-24/71 DOR.ACC.47/21.04.018/2023-24 Dated October 25, 2023

Reserve Bank of India (Financial Statements - Presentation and Disclosures) Directions, 2021: Presentation of unclaimed liabilities transferred to Depositor Education and Awareness (DEA) Fund

  • The ‘Notes and Instructions for compilation’ given in Annex II to the Reserve Bank of India (Financial Statements - Presentation and Disclosures) Directions, 2021 (Master Direction) require commercial banks to present all unclaimed liabilities, where the amount due has been transferred to the Depositor Education and Awareness (DEA) Fund established under the DEA Fund Scheme, 2014, under ‘Schedule 12- Contingent Liabilities - Other items for which the bank is contingently liable’.

  • To ensure consistency in presentation of financial statements, it is advised that all co-operative banks shall present all unclaimed liabilities (where the amount due has been transferred to DEA Fund) under “Contingent Liabilities – Others”.

  • Further, all banks shall specify in the disclosures1 in the notes to accounts to the financial statements that balances of the amount transferred to DEA Fund are included under ‘Schedule 12 - Contingent Liabilities - Other items for which the bank is contingently liable’ or ‘Contingent Liabilities - Others,’ as the case may be.

  • These instructions are applicable to all commercial and cooperative banks for preparation of financial statements for the financial year ending March 31, 2024 and onwards.

  • The Reserve Bank of India (Financial Statements - Presentation and Disclosures) Directions, 2021 stands updated to reflect these changes.

1 Clause C.10 of Annex III to the Maser Direction ibid on “Transfers to DEA Fund”.

3. RBI NOTIFICATION NO. RBI/2023-24/72 DoR.FIN.REC.48/20.16.003/2023-24 Dated October 26, 2023

Framework for compensation to customers for delayed updation/ rectification of credit information

  1. Please refer to para 4 of the Statement on Developmental and Regulatory Policies released with the Bi-monthly Monetary Policy Statement 2023-24 on April 6, 2023, wherein it was announced, inter alia, that a compensation mechanism will be put in place for delayed updation/rectification of credit information by the credit institutions (CIs) and credit information companies (CICs).
  2. Accordingly, in exercise of the powers conferred by sub-section (1) of section 11 of the Credit Information Companies (Regulation) Act, 2005 (CICRA, 2005), the Reserve Bank of India directs CICs and CIs to implement the compensation framework for delayed updation/rectification of credit information by CIs and CICs as detailed below:

    1. Complainants shall be entitled to a compensation of ₹100 per calendar day in case their complaint is not resolved within a period of thirty (30) calendar days from the date of the initial filing of the complaint by the complainant with a CI/ CIC.

      2. Explanation:

      1. Section 21 (3) of CICRA, 2005 provides that a complainant may request a CIC or CI to update the credit information by making an appropriate correction, addition or otherwise, and on such request the CI or CIC shall take steps to update the credit information within thirty (30) days after being requested to do so.

      2. Rule 20 (3) (c) of CIC Rules, 2006 provides that the CI shall forward the corrected particulars of the credit information to the CIC or complainant within a period of twenty-one (21) days from the date when the CI was informed of the inaccuracy in the credit information.

      3. The combined reading of Section 21(3) of CICRA, 2005 and Rule 20 (3) (c) of Credit Information Companies Rules, 2006 provide the CI and the CIC, collectively, an overall limit of thirty (30) days to resolve/ dispose of the complaint. In effect, this would mean that a CI would get twenty-one (21) days and CICs would effectively get the remainder of nine (9) days for complete resolution of the complaint.

    2. A CI shall pay compensation to the complainant if the CI has failed to send updated credit information to the CICs by making an appropriate correction or addition or otherwise within twenty-one (21) calendar days of being informed by the complainant or a CIC.

    3. A CIC shall pay compensation to the complainant if the CIC has failed to resolve the complaint within thirty (30) calendar days of being informed by the complainant or a CI, despite the CI having furnished the updated credit information to the CIC within twenty-one (21) calendar days of being informed by the complainant or the CIC.

    4. The complainant shall be advised by the CI/ CIC of the action taken on the complaint in all cases, including the cases where the complaint has been rejected. In cases of rejection, the reasons for rejection shall also be provided by CI and CIC.

    5. Compensation to be provided by the CICs/ CIs to the complainant (for delayed resolution beyond thirty (30) calendar days of filing the complaint) shall be apportioned among the CIs/ CICs concerned proportionately. Illustrative examples of the same are given in Annex.

    6. Where the grievance/ complaint involves inaccurate credit information provided by more than one CI, the complaint shall be registered by the complainant with the concerned CIC. The CIC shall coordinate with all the CIs concerned and furnish the complainant with a comprehensive resolution of the grievance.

    7. Where the complaint has been received and registered by a CIC and there has been a delay in the resolution of the complaint, the CIC shall inform the concerned CI(s) and the complainant after the final resolution, regarding total delay (in calendar days) and the amount of compensation to be paid by the CI(s) and/ or CIC.

    8. Where the complaint has been received and registered by a CI and there has been a delay in the resolution of the complaint, the CI shall inform the concerned CIC(s) and the complainant after the final resolution, regarding total delay (in calendar days) and the amount of compensation to be paid by the CI and/ or CIC(s).

    9. The date of the resolution of the grievance shall be the date when the rectified Credit Information Report (CIR) has been sent by the CIC or CI to the postal address or email ID provided by the complainant.

    10. The CICs/ CIs shall make appropriate provision in their complaint submission format (both online and offline) for enabling the complainant to submit the contact details, email ID, and bank account details/ Unified Payment Interface (UPI) ID for crediting the compensation amount. The onus of providing accurate details will lie with the complainant and the CIs/ CICs will not be held responsible for any incorrect information provided by the complainant.

    11. The compensation amount shall be credited to the bank account of the complainant within five (5) working days of the resolution of the complaint.

    12. The complainant can approach RBI Ombudsman, under the Reserve Bank - Integrated Ombudsman Scheme, 2021, in case of wrongful denial of compensation by CIs or CICs.

    13. In case of wrongful denial of compensation by CIs which are yet to be covered under the Reserve Bank - Integrated Ombudsman Scheme, 2021, the complainant can approach Consumer Education and Protection Cell (CEPC) functioning from Regional Offices (ROs) of Reserve Bank of India.

    14. Non-Maintainability: The compensation framework shall not be applicable in the following cases:

      1. disputes for which remedy has been provided under Section 18 of CICRA, 2005. The Section 18 of CICRA, 2005 provides that for disputes arising amongst, CICs, CIs, borrowers, and clients on matters relating to the business of credit information and for which no remedy has been provided under CICRA, 2005, such disputes shall be settled by conciliation or arbitration as provided in the Arbitration and Conciliation Act, 1996.

      2. complaints/ references relating to (a) internal administration, (b) human resources, (c) pay and emoluments of staff, and (d) references in the nature of suggestions and commercial decisions of the CIC/CI.

      3. complaints pertaining to disputes/ grievances regarding the computation of the credit score/ credit score model.

      4. complaints that have been decided by or are already pending in other fora such as Consumer Disputes Redressal Commission, Courts, Tribunals, etc.

    3. The compensation framework shall come into effect six (6) months from the date of this circular. CICs and CIs are directed to put in place necessary systems and processes to implement the compensation framework within this period.

    4. CICs and CIs which contravene or default in adherence to the above directions shall be liable for penal action as per the provisions of CICRA, 2005.

    4. RBI NOTIFICATION NO. RBI/2023-24/74 DOR.SPE. REC. No 51/13.03.000/2023-24 Dated October 26, 2023

    Non-Callable Deposits - Master Direction on Interest Rate on Deposits

    • Please refer to the instructions contained in Section 7 of the Master Direction (MD) on Interest Rate on Deposits dated March 03, 2016 and Master Direction - Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016 dated May 12, 2016. In terms of these instructions, banks have been permitted to offer domestic term deposits (TDs) without premature withdrawal option, provided that all TDs accepted from individuals for an amount of Rupees fifteen lakh and below shall have premature-withdrawal-facility. Further, the banks have also been permitted to offer differential rate on interest on TDs based on non-callability of deposits (i.e., non-availability of premature withdrawal option) in addition to tenor and size of deposits.

    • On a review, it has been decided that (i) the minimum amount for offering non-callable TDs may be increased from Rupees fifteen lakh to Rupees one crore i.e., all domestic term deposits accepted from individuals for amount of Rupees one crore and below shall have premature-withdrawal-facility and (ii) these instructions shall also be applicable for Non-Resident (External) Rupee (NRE) Deposit / Ordinary Non-Resident (NRO) Deposits.

    • Accordingly, the relevant sections of the Master Direction have been amended as indicated in the Annex. (https://www.rbi.org.in/Scripts/NotificationUser.aspx/NotificationUser.aspx?Id=12555&Mode=0#ANN1)

    • All other instructions shall remain unchanged.

    • This circular is applicable to all Commercial Banks and Co-operative Banks.

    • These instructions shall come into force with immediate effect.

    5. RBI NOTIFICATION NO. RBI/2023-24/76 DoR.FIN.REC.52/03.10.123/2023-24 Dated October 26, 2023

    Review of Financial Information Provider (FIP) under Account Aggregator Framework

    • Please refer to the paragraph 3(1)(xi) of Master Direction – Non-Banking Financial Company - Account Aggregator (Reserve Bank) Directions, 2016 defining the term ‘Financial Information Provider’.

    • As per National Pension System (NPS) architecture, Central Recordkeeping Agency (CRA), registered under section 27 of the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013, acts as an interface between the different intermediaries in the NPS system. CRAs hold information pertaining to the subscribers including the balances under NPS. Accordingly, and as suggested by the PFRDA, it has been decided to replace ‘Pension Fund’ with ‘Central Recordkeeping Agency’ as the financial information provider in the AA ecosystem.

    • The Master Direction – Non-Banking Financial Company - Account Aggregator (Reserve Bank) Directions, 2016, is being modified accordingly.

    6. RBI NOTIFICATION NO. RBI/2023-24/77 DoR.FIN.REC.53/03.10.123/2023-24 Dated October 26, 2023

    Joining the Account Aggregator Ecosystem as Financial Information User

    • Please refer to the Master Direction – Non-Banking Financial Company - Account Aggregator (Reserve Bank) Directions, 2016.

    • It has been observed that certain entities, which are eligible to join Account Aggregator (AA) ecosystem as Financial Information Provider (FIP), have on boarded as Financial Information User (FI-U) only. Consequently, such entities are accessing financial information from other FIPs but are not providing the financial information held by them. As such, with a view to ensure efficient and optimum utilisation of the AA ecosystem, it has been decided that regulated entities of the Bank joining the AA ecosystem as FI-U shall necessarily join as FIP also, if they hold the specified financial information and fall under the definition of FIP.

    • The Master Direction – Non-Banking Financial Company - Account Aggregator (Reserve Bank) Directions, 2016, is being modified accordingly.

    7. RBI NOTIFICATION NO. RBI/2023-24/80 CO.DPSS.POLC.No.S-786/02-14-008/2023-24 Dated October 31, 2023

    Regulation of Payment Aggregator – Cross Border (PA - Cross Border)

    • A reference is invited to the Reserve Bank of India (RBI) circulars on –

      1. ‘Guidelines on Regulation of Payment Aggregators and Payment Gateways’ – (a) DPSS.CO.PD.No.1810/02.14.008/2019-20 dated March 17, 2020 and (b) CO.DPSS. POLC.No.S33/02-14-008/2020-2021 dated March 31, 2021,

      2. ‘Processing and Settlement of Export related receipts facilitated by Online Payment Gateways’ - A.P. (DIR Series) Circular No. 17 dated November 16, 2010,

      3. ‘Processing and Settlement of Export related receipts facilitated by Online Payment Gateways – Enhancement of the value of transaction’ - A.P. (DIR Series) Circular No. 109 dated June 11, 2013,

      4. ‘Processing and settlement of import and export related payments facilitated by Online Payment Gateway Service Providers’ – A.P. (DIR Series) Circular No.16 dated September 24, 2015, and

      5. ‘Processing and settlement of small value Export and Import related payments facilitated by Online Export-Import Facilitators (OEIF) (erstwhile OPGSP)’ – draft circular issued on April 7, 2022 for seeking feedback from banks and other stakeholders.

    • All Payment Aggregators (PAs) which facilitate processing of domestic transactions in online mode are covered within the scope of the circulars referred to above at paragraph 1(a). Further, instructions for cross-border payment transactions are provided for in the circulars mentioned above at paragraphs 1(c) to 1(e) as well as through specific approval given by the RBI to banks for their collection agent arrangements.

    • Keeping in view the developments that have taken place in the area of cross-border payments, it has been decided to bring all entities facilitating cross-border payment transactions for import and export of goods and services under direct regulation of the RBI. Such entities shall be treated as Payment Aggregator-Cross Border (PA-CB); details thereof are provided in Annex.

      • (https://www.rbi.org.in/Scripts/NotificationUser.aspx/NotificationUser.aspx?Id=12561&Mode=0#ANN1)

    • Entities, including Authorised Dealer (AD) banks, PAs and PAs-CB, involved in processing / settlement of cross-border payment transactions for import and export of goods and services, shall comply with these instructions (as updated from time to time).

    • This directive is issued under Section 10 (2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), and, Section 10 (4) and Section 11 (1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999), and is without prejudice to permissions / approvals, if any, required under any other law.

    8. RBI NOTIFICATION NO. RBI/2023-24/107 DoS.CO.CSITEG/SEC.7/31.01.015/2023-24 Dated November 7, 2023

    Master Direction on Information Technology Governance, Risk, Controls and Assurance Practices

    • Please refer to paragraph IV (8) of the Statement on Developmental and Regulatory Policies released with the Bi-monthly Monetary Policy Statement 2021-22 on February 10, 2022, wherein it was announced that draft guidelines, updating and consolidating the instructions relating to Information Technology (IT) Governance and Controls, Business Continuity Management and Information Systems Audit, will be issued by the Reserve Bank of India.

    • Accordingly, a draft Master Direction on the subject was published in October 2022 seeking public comments. Based on feedback received, the final Reserve Bank of India (Information Technology Governance, Risk, Controls and Assurance Practices) Directions, 2023 are enclosed herewith.

    (Refer: https://www.rbi.org.in/Scripts/NotificationUser.aspx/NotificationUser.aspx?Id=12562&Mode=0)

    9. RBI NOTIFICATION NO. RBI/2023-24/81FMRD.FMID.No. 04/14.01.006/2023-24 Dated November 08, 2023

    Fully Accessible Route’ for Investment by Non-residents in Government Securities – Inclusion of Sovereign Green Bonds

    • A reference is invited to the Press Release on ‘Issuance Calendar for Marketable Dated Securities for October 2023 - March 2024’ dated September 26, 2023, issued by the Reserve Bank, notifying, inter alia, the issuance calendar for Sovereign Green Bonds for the fiscal year 2023-24. Attention is also invited to the Fully Accessible Route (FAR) introduced by the Reserve Bank, vide A.P. (DIR Series) Circular No. 25 dated March 30, 2020, wherein certain specified categories of Central Government securities were opened fully for non-resident investors without any restrictions, apart from being available to domestic investors as well.

    • The Government Securities that are eligible for investment under the FAR (‘specified securities’) were notified by the Bank, vide circular no. FMRD.FMSD.No.25/14.01.006/2019-20 dated March 30, 2020, circular no. FMRD.FMID.No.04/14.01.006/2022-23 dated July 07, 2022 and circular no. FMRD.FMID.No. 07/14.01.006/2022-23 dated January 23, 2023.

    • It has now been decided to also designate all Sovereign Green Bonds issued by the Government in the fiscal year 2023-24 as ‘specified securities’ under the FAR.

    • The Directions contained in this circular have been issued under Section 45W of Chapter IIID of the Reserve Bank of India Act, 1934 and are without prejudice to permissions/ approvals, if any, required under any other law.

    • These Directions shall be applicable with immediate effect.

    10. RBI NOTIFICATION NO. RBI/2023-2024/83 A.P. (DIR Series) Circular No. 07 Dated November 10, 2023

    Guidelines on import of silver by Qualified Jewellers as notified by – The International Financial Services Centres Authority (IFSCA)

    • Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to A.P. (DIR Series) Circular No.04 dated May 25, 2022, in terms of which AD Category-I banks have been permitted to remit advance payments on behalf of Qualified Jewellers as notified by International Financial Services Centres Authority (IFSCA) for eleven days for import of gold through India International Bullion Exchange IFSC Ltd (IIBX).

    • Further, attention of AD Category-I banks is invited to Notification No.35/2023 dated October 11, 2023 issued by DGFT, in terms of which, in addition to nominated agencies as notified by RBI (in case of banks) and DGFT (for other agencies), Qualified Jewellers as notified by International Financial Services Centres Authority (IFSCA) have been permitted to import silver under specific ITC(HS) Codes through IIBX.

    • Accordingly, it has been decided that AD Category-I banks may allow Qualified Jewellers to remit advance payment for eleven days for import of silver through IIBX subject to the conditions as mentioned in A.P. (DIR Series) Circular No.04 dated May 25, 2022.

    • AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

    • The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

    11. RBI NOTIFICATION NO. RBI/2023-24/85 DOR.STR.REC.57/21.06.001/2023-24 Dated November 16, 2023

    Regulatory measures towards consumer credit and bank credit to NBFCs

    • Please refer to Governor’s Statement dated October 6, 2023 flagging the high growth in certain components of consumer credit and advising banks and non-banking financial companies (NBFCs) to strengthen their internal surveillance mechanisms, address the build-up of risks, if any, and institute suitable safeguards, in their own interest. The high growth seen in consumer credit and increasing dependency of NBFCs on bank borrowings were also highlighted by Governor in the interactions with MD/CEOs of major banks and large NBFCs in July and August 2023, respectively.

    • In this context, it has been decided to effect the following measures as under:

    A. Consumer credit exposure

    1. Consumer credit exposure of commercial banks

      2. As per extant instructions applicable to commercial banks1, consumer credit attracts a risk weight of 100%. On a review, it has been decided to increase the risk weights in respect of consumer credit exposure of commercial banks (outstanding as well as new), including personal loans, but excluding housing loans, education loans, vehicle loans and loans secured by gold and gold jewellery, by 25 percentage points to 125%.

    2. Consumer credit exposure of NBFCs

      3. In terms of extant norms, NBFCs’ loan exposures generally attract a risk weight of 100%2. On a review, it has been decided that the consumer credit exposure of NBFCs (outstanding as well as new) categorised as retail loans, excluding housing loans, educational loans, vehicle loans, loans against gold jewellery and microfinance/SHG loans, shall attract a risk weight of 125%.

    3. Credit card receivables

      4. As per extant instructions, credit card receivables of scheduled commercial banks (SCBs) attract a risk weight of 125%3 while that of NBFCs attract a risk weight of 100%4. On a review, it has been decided to increase the risk weights on such exposures by 25 percentage points to 150% and 125% for SCBs and NBFCs respectively.

    B. Bank credit to NBFCs

    In terms of extant norms, exposures of SCBs to NBFCs, excluding core investment companies, are risk weighted as per the ratings assigned by accredited external credit assessment institutions (ECAI)5. On a review, it has been decided to increase the risk weights on such exposures of SCBs by 25 percentage points (over and above the risk weight associated with the given external rating) in all cases where the extant risk weight as per external rating of NBFCs is below 100%. For this purpose, loans to HFCs, and loans to NBFCs which are eligible for classification as priority sector in terms of the extant instructions shall be excluded.

    C. Strengthening credit standards

    1. The REs shall review their extant sectoral exposure limits for consumer credit and put in place, if not already there, Board approved limits in respect of various sub-segments under consumer credit as may be considered necessary by the Boards as part of prudent risk management. In particular, limits shall be prescribed for all unsecured consumer credit exposures. The limits so fixed shall be strictly adhered to and monitored on an ongoing basis by the Risk Management Committee.

    2. All top-up loans extended by REs against movable assets which are inherently depreciating in nature, such as vehicles, shall be treated as unsecured loans for credit appraisal, prudential limits and exposure purposes.

    • The above instructions have been issued in exercise of the powers conferred by the Sections 21 and 35A of the Banking Regulation Act, 1949; Chapter IIIB of the Reserve Bank of India Act, 1934 and Sections 30A, 32 and 33 of the National Housing Bank Act, 1987.

    • The above instructions, other than paragraph 2C(a), shall come into force with immediate effect. All REs shall endeavour to comply with the provisions at paragraph 2C(a) at the earliest, but in any case shall implement them by no later than February 29, 2024.

    12. RBI NOTIFICATION NO. RBI/2023-2024/86 FED Circular No.08 Dated November 17, 2023

    International Trade Settlement in Indian Rupees (INR) – Opening of additional Current Account for exports proceeds

    • Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to A.P. (DIR Series) Circular No.10 dated July 11, 2022, in terms of which an additional arrangement has been put in place for invoicing, payment, and settlement of exports/imports in INR through Special Rupee Vostro Accounts of the correspondent bank/s of the partner trading country maintained with AD Category-I banks in India.

    • Further, attention of AD Category-I banks is invited to Para 4.1 of circular DOR.CRE.REC.23/21.08.008/2022-23 dated April 19, 2022 on Opening of Current Accounts and CC/OD Accounts by Banks. In terms of this provision and in order to provide greater operational flexibility to the exporters, AD Category-I banks maintaining Special Rupee Vostro Account as per the provisions of the Reserve Bank circular dated July 11, 2022 referred above are permitted to open an additional special current account for its exporter constituent exclusively for settlement of their export transactions.