FEMA

CA. Manoj Shah, CA Atal Bhanja

Summary Information on few Compounding Orders:

Sr. No.

Party Name

Nature of Contravention

Date of Order

Compounding Fees (Rs.)

1.

Little Internet Private Limited

Contraventions under Regulation 13.1(2) and 13.1(4) of FEMA Notification No. 20® relating to delay in reporting of allotment of shares in Form FCGPR and delay in filing of Form FCTRS for transfer of shares.

15-09-2023

1,49,79,067

2.

Precision Camshafts Limited

Contraventions under Regulation 16(1)(iii) of FEMA Notification No. 120 relating to disinvestment without obtaining valuation based on audited financial statements of overseas entity.

04-08-2023

7,51,991

3.

HRK Enterprises LLP

Para 6(1) of Schedule 9 of FEMA Notification No. 20 read with Regulation 13.1(7) of FEMA Notification No. 20(R) relating to delay in filing of Form LLP1 for reporting of foreign investment in LLP

18-09-2023

5,72,931

1. RBI NOTIFICATION NO. RBI/2023-24/63 DoR.FIN.REC.41/20.16.003/2023-24 Dated September 25, 2023

Display of information - Secured assets possessed under the SARFAESI Act, 2002

  • As a part of the move towards greater transparency, it has been decided that the Regulated Entities (REs) of the Reserve Bank which are secured creditors as per the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, shall display information in respect of the borrowers whose secured assets have been taken into possession by the REs under the Act.
  • REs shall upload this information on their website in the format as prescribed in the Annex. The first such list shall be displayed on the website of REs within six (6) months from the date of this circular, and the list shall be updated on monthly basis.

Annex

Information on secured assets possessed under the SARFAESI Act, 2002

Sl. No

Branch Name

State

Borrower Name

Guarantor Name (wherever applicable)

Registered address of the Borrower

Registered address of the Guarantor (wherever applicable)

Outstanding amount (in ₹)

Asset Classification

Date of Asset classification

Details of security possessed

Name of the Title holder of the security possessed
                       

2. RBI NOTIFICATION NO. RBI/2023-24/66 DOR.CRE.REC.42/07.10.002/2023-24 Dated October 6, 2023

Gold Loan – Bullet Repayment – Primary (Urban) Co-operative Banks (UCBs)

  • Please refer to the circular UBD.BPD.(PCB).Cir.No.25/13.05.001/2014-15 dated October 30, 2014, in terms of which UCBs were permitted to extend gold loans up to ₹2.00 lakh with bullet repayment option, subject to certain conditions.
  • Reference is also invited to para 5 of our circular DOR.CRE.REC.18/07.10.002/2023-24 dated June 8, 2023 wherein it is stated that incentives to UCBs meeting the Priority Sector Lending (PSL) targets shall be announced separately. Accordingly, as announced vide para 3 of Statement on Developmental and Regulatory Policies dated October 6, 2023, it has been decided to increase the monetary ceiling of gold loans that can be granted under the bullet repayment scheme, from ₹2.00 lakh to ₹4.00 lakh for those UCBs who have met the overall PSL target and sub targets as on March 31, 2023 and continue to meet the targets and sub-targets as prescribed at para 2 of our circular dated June 8, 2023, ibid.
  • The limits prescribed above are effective from the date of this circular. All other provisions of the aforesaid circulars remain unchanged.

3. RBI NOTIFICATION NO. RBI/2023-24/67 Ref. No.DoS.CO.PPG/SEC.05/11.01.005/2023-24 Dated October 10, 2023

  • Prompt Corrective Action (PCA) Framework for Non-Banking Financial Companies (NBFCs) – Extension to Government NBFCs
  • Reserve Bank of India introduced PCA Framework for NBFCs on December 14, 2021. The Framework has since been reviewed and it has been decided to extend the same to Government NBFCs (except those in Base Layer) with effect from October 1, 2024, based on the audited financials of the NBFC as on March 31, 2024, or thereafter.

4. RBI NOTIFICATION NO. RBI/2023-24/68 DoR.RET.REC.43/12.01.001/2023-24 Dated October 16, 2023

Reverse Repo transactions - Reporting in Form ‘A’ Return

Please refer to Form A Return in the Master Direction - Reserve Bank of India [Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)] Directions - 2021 (updated as on September 25, 2023) regarding the reporting of Reverse Repo transactions by Commercial Banks.

2. In order to bring uniformity in reporting of Reverse Repo transactions in the Form A Return by various banks, it is clarified that the banks should adhere to the following practice for presentation of Reverse Repo transactions in the above return:

  1. Reverse Repo transactions with the banks should be reported as under:
    1. For original tenors up to and inclusive of 14 days
      1. Item III(b) of Form A (i.e. Money at call and short notice) and;
      2. Memo item 2.1 of Annex A to Form A (i.e. under Inter Bank Assets)
    2. For original tenors more than 14 days
      1. Item III(c) of Form A (i.e. Advances to banks) and;
      2. Memo item 2.1 and 2.2 of Annex A to Form A (i.e. under Inter Bank Assets)
  2. Reverse Repo transactions with non-banks (other institutions) for all tenors should be reported under Item VI(a) of Form A [i.e. Loans, cash credits and overdrafts under Bank Credit in India (excluding inter-bank advances)].

5. RBI NOTIFICATION NO. RBI/2023-24/69 DOR.AML.REC.44/14.01.001/2023-24 Dated October 17, 2023

Amendment to the Master Direction (MD) on KYC

  • Please refer to the Master Direction (MD) on KYC dated February 25, 2016, as amended from time to time, in terms of which Regulated Entities (REs) have to undertake Customer Due Diligence (CDD), as per the process laid out therein, for their customers.
  • In this regard, on a review, it has been decided to amend the MD on KYC to:
    1. Update certain instructions considering amendments to the PML Rules vide Government notifications dated September 4, 2023 and October 17, 2023;
    2. Update Annex II of the MD considering the changes to Government of India Order related to Unlawful Activities (Prevention) Act (UAPA), 1967, vide corrigendum dated August 29, 2023;
    3. Update Annex III of the MD by replacing the Government of India Order dated January 30, 2023, related to Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 (WMD Act, 2005) with the Government of India Order dated September 1, 2023 (which has been issued by the Government in suppression of the earlier WMD Act Order dated January 30, 2023), on the matter;
    4. Update certain instructions in accordance with the FATF Recommendations;
    5. Add a new Section 55A, on FCRA, in the MD on KYC; and
    6. Update certain other instructions post review.

    The changes carried out in the MD in this regard are provided in Annexure. (Refer link https://rbidocs.rbi.org.in/rdocs/content/pdfs/MDKYC17102023_Annexure.pdf )

  • Accordingly, the relevant Sections of the MD on KYC (are hereby amended to reflect the changes furnished in Annexure. The amended provisions in the MD shall come into force with immediate effect.

6. RBI NOTIFICATION NO. RBI/DoR/2023-24/105 DoR.FIN.REC.No.45/03.10.119/2023-24 Dated October 19, 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.

(Refer link https://rbidocs.rbi.org.in/rdocs/content/pdfs/106MDNBFCs19102023_ANN.pdf to access the new Directions)