New rules for railway bookings

Railway Ministry introduces new checks on booking of e-ticket/i-ticket through IRCTC website with a view to further prevent possible misuse

Under the new provisions a maximum of 6 tickets can be booked online by an individual user in a month on IRCTC website

This new provision will come into effect w.e.f. 15^th February, 2016

The move aims to deter touts and to facilitate genuine users

In order to facilitate genuine users and prevent touting activities, various checks have already been put in place for the booking of e-ticket/i-ticket on IRCTC website including the following existing provision: -

1.      Individuals are allowed only 2 tickets per user-ID in a day (for ARP booking) from 08:00 hours to 10.00 hours.

2.      Individuals are allowed only 2 tickets per user-ID in a day (for Tatkal booking) from 10:00 hours to 12:00 hours.

3.      Quick Book Option is disabled from 08:00 to 12:00 hours

4.      All types of ticketing agents (YTSK, RTSA, IRCTC agents etc.) have been debarred from booking tickets during the first thirty minutes of opening of booking i.e. from 08:00 to 08:30 hours for general bookings, and from 10:00 to 10:30 hours and 11:00 to 11:30 hours for Tatkal booking in AC and non-AC classes respectively.

5.      Booking is not allowed through e-wallet and cash cards from 08:00 to 12:00 hours.

6.      There is only one booking in one user login session except for return/onward journey between 08:00 to 12:00 hours.

To further prevent any possible misuse, Ministry of Railways has now decided that effective from 15^th February, 2016, a maximum of 6 tickets can be booked online by an individual user in a month on IRCTC website. This will replace the existing system under which a maximum of 10 tickets can be booked online through IRCTC website in a month by an individual. However, the existing condition will continue wherein these booking will be subject to a limit of booking 2 opening Tatkal tickets in 10:00- 12:00 hours period in a day and 2 opening Advance Reservation Period (ARP) tickets in 08:00-10:00 hours period in a day. 

This has been done keeping in view the analysis of usage of quota of 10 tickets which indicated that 90% of users are booking upto 6 tickets in a given month and only 10% are making more than 6 tickets. It is suspected that the 10% users might be involved in touting activities. Therefore to deter such touts and to facilitate genuine users, it has been decided that a maximum of 6 tickets can be booked by an individual user in a month.

Fraud reporting

The Ministry of Corporate Affairs has vide its gazette notification dated 14th December, 2015 amended the Rule 13 of the Companies (Audits and Auditors), Rules, 2014 as under.

“13. Reporting of frauds by auditor and other matters:

(1) If an auditor of a company, in the course of the performance of his duties as statutory auditor, has reason to believe that an offence of fraud, which involves or is expected to involve individually an amount of rupees one crore or above, is being or has been committed against the company by its officers or employees, the auditor shall report the matter to the Central Government.

(2) The auditor shall report the matter to the Central Government as under:-
(a) the auditor shall report the matter to the Board or the Audit Committee, as the case may be, immediately but not later than two days of his knowledge of the fraud, seeking their reply or observations within forty-five days;
(b) on receipt of such reply or observations, the auditor shall forward his report and the reply or observations of the Board or the Audit Committee along with his comments (on such reply or observations of the Board or the Audit Committee) to the Central Government within fifteen days from the date of receipt of such reply or observations;
(c) in case the auditor fails to get any reply or observations from the Board or the Audit Committee within the stipulated period of forty-five days, he shall forward his report to the Central Government along with a note containing the details of his report that was earlier forwarded to the Board or the Audit Committee for which he has not received any reply or observations;
(d) the report shall be sent to the Secretary, Ministry of Corporate Affairs in a sealed cover by Registered Post with Acknowledgement Due or by Speed Post followed by an e-mail in confirmation of the same;
(e) the report shall be on the letter-head of the auditor containing postal address, e-mail address and contact telephone number or mobile number and be signed by the auditor with his seal and shall indicate his Membership Number; and
(f) the report shall be in the form of a statement as specified in Form ADT-4.

(3) In case of a fraud involving lesser than the amount specified in sub-rule (1), the auditor shall report the matter to Audit Committee constituted under section 177 or to the Board immediately but not later than two days of his knowledge of the fraud and he shall report the matter specifying the following:-
(a) Nature of Fraud with description;
(b) Approximate amount involved; and
(c) Parties involved.

(4) The following details of each of the fraud reported to the Audit Committee or the Board under sub-rule (3) during the year shall be disclosed in the Board’s Report:-
(a) Nature of Fraud with description;
(b) Approximate Amount involved;
(c) Parties involved, if remedial action not taken; and
(d) Remedial actions taken.

(5) The provision of this rule shall also apply, mutatis mutandis, to a Cost Auditor and a Secretarial Auditor during the performance of his duties under section 148 and section 204 respectively.”; 

Now onerous duties has been cast on the auditors, cost auditors and secretarial auditors to report frauds and the process for reporting auditors has been laid down in the above notification. 

Non compliance with listing regulations - penalties thereof

SEBI has vide its circular no. CIR/CFD/CMD/12/2015 dated 30th November, 2015 laid down certain uniform fine structure for non compliance with listing regulations regarding non submission of certain periodic disclosures and standard operating procedures for suspension and revocation of suspension of trading of specified securities for such non compliances thereof.

Accordingly for non submission of corporate governance compliance report within the period specified in regulation 27(2) of the listing agreements will entail fine of Rs.1000/- per day of non-compliance till the date of compliance. This is in case of first non compliance. For each subsequent non compliances, it is Rs.2000/- per day of non compliance till the date of compliance.

Similarly it is the same for non submission of shareholding pattern u/r 31 with a further condition specified that if the non compliance continues for more than 15 days, additional fine of 0.1% of the paid up capital of the company or Rs.1 crore, whichever is less.

In case of non submission of the financial results u/r 33 thereof, the fines are Rs.5000/- per day for 1st non compliance and Rs.10000 per day for subsequent non compliances and if the non compliance continues for 15 or more days, then fine structure is as described above.

In case of non submission of annual report u/r 34, if the non compliance continues for five more days, then fine of Rs.1000 per day until the date of compliance for 1st non compliance and Rs.2000/- per day for subsequent non compliances.

Paid up capital is taken as at the beginning of the financial year in which the non compliance occurs.

Further standard operating procedures have been laid down for suspension of trading in case the non compliances under the above mentioned regulations continues for two consecutive quarters and in case of annual report for two consecutive financial years.

The SEBI circular can be found at its website. 

Aadhar based e-KYC process

SEBI vide circular dated October 8, 2013, enabled Aadhaar based e-KYC service offered by UIDAI for KYC verification. Intermediaries have sought clarifications from SEBI on certain operational aspects of the same. It is clarified that for accessing the details enabling client identification and authentication from UIDAI based on client authorisation, on voluntary basis, intermediaries who utilize the services of KYC Service Agencies (KSAs) would be registered as KYC User Agencies (KUA) with UIDAI.

1. For entering into account based relationship, the client may provide the following information to the intermediary: i. Name ii. Aadhaar number iii. Permanent Account Number (PAN)

2. The above information can be provided by the client electronically including through any web enabled device.

3. The intermediary shall perform verification of the client with UIDAI through biometric authentication (fingerprint or iris scanning). Mutual Funds can also perform verification of the client with UIDAI through One Time password (OTP) received on client’s mobile number or on e-mail address registered with UIDAI provided, the amount invested by the client does not exceed Rs. 50,000 per financial year per Mutual Fund and payment for the same is made through electronic transfer from the client’s bank account registered with that Mutual Fund.

4. PAN of such client is to be verified from the income tax website.

5. After due validation of Aadhaar number provided by the client, the intermediary (acting as KUA) shall receive the KYC information about the client from UIDAI through KSA.

6. The information downloaded from UIDAI shall be considered as sufficient information for the purpose of KYC verification. The intermediary shall upload this KYC information on the KRA system in terms of KRA Regulations.

7. In case material difference is observed either in the name (as observed in the PAN vis-a-vis Aadhaar) or photograph in Aadhaar is not clear, the intermediary shall carryout additional due diligence and maintain a record of the additional documents sought pursuant to such due diligence.

8. The records of KYC information so received shall be maintained by the intermediary as per the SEBI Act, Regulations and various circulars issued thereunder.  

HUF/ Karta cannot become partner in LLP

MCA has vide its circular no. 2/2016 clarified that Hindu Undivided Family or its Karta cannot become a partner or a designated partner of a Limited Liability Partnership. As per section 5 of the LLP Act, 2008 only an individual or a body corporate can become a partner in LLPs. Since HUFs are not treated as a body corporate it cannot become a partner in a LLP.

MCA circular is available here

Compliance Function in Banks

RBI has issued a circular dated 4th March, 2015 emphasising greater importance to compliance function in banks. RBI notification

Areas that require greater oversight in banks from the perspective of compliance is given below:

1. Risk Based Supervision:

a. Certain very specific templates oriented towards compliance assessment have been introduced under the RBS framework. RBI expects Chief Compliance Officers to ensure total compliance with all specified guidelines enlisted in the said template. It may also be noted that regulatory guidelines forming part of such template are neither exhaustive nor static and are expected to be updated on an annual basis. Banks may, therefore, strive to put in an exhaustive compliance framework encompassing all guidelines emanating from RBI, identify potential breaches and remedy them up-front.

b. Examination of compliance rigor prevalent in banks will be suitably factored in the risk assessment process and would go further in evaluating risk scores of banks. As banks may be aware, a similar regime prevails under the CAMELS/CALCS approach as well.

2. Conflict of interest and independence of compliance functions:

Supervisory reviews have, at several times, pointed out significant and unwarranted forays of compliance functionaries on audit committees/Boards and vice versa. In order to ensure that there is no room for conflict of interest and the activities of the compliance function are subject to independent review, the compliance function and the audit function of the bank should necessarily be kept separate.

3. Reviews on compliance functions: Board/ACB/Board level committees/ Internal Audits should regularly review compliance functions in strict accordance with extant guidelines on the subject. Compliance failures may be reviewed by Boards/Management Committees and appropriate remedial measures may be taken.

4. Staffing of compliance Departments:

1. Staffing of compliance departments may be accorded adequate priority in order to ensure that the compliance wings discharge their functions without human resource constraints.
2. Appropriate succession planning may be resorted to, for ensuring that the post of compliance officers does not remain vacant.
3. In certain cases, appointment of compliance officers was not notified to RBI. Such instances may be avoided.
4. Compliance structure, set-up of compliance Department, appointment of compliance officers etc may strictly be done in accordance with Para 5 of the extant guidelines.

5. Compliance with Monitorable Action Plan/ Risk Mitigation Plan: RBI has been placing a lot of emphasis on banks’ adherence and compliance with MAP/RMP prescribed pursuant to the Annual Financial Inspection/Risk Based Supervision process. Compliance units may specifically devise a time-bound strategy to ensure that compliance on all specified points is achieved within the time frame. RBI will continue to expect an adept compliance scenario, where all MAP/RMP points are complied with well before the commencement of the subsequent supervisory cycle and/or within the periods prescribed for fulfilling the requirements of MAP/RMP. As banks may be aware, penal provisions can also be invoked for unsatisfactory compliance with MAP/RMP.

6. Compliance testing: Compliance units in banks may evaluate the compliance risk in each business line at periodical intervals and put up the results to the Board/Management Committee.

7. Submission of Compliance: It has been observed that few banks are submitting compliance to AFI/RBS inspection reports through their Inspection & Audit Department without bringing the same to the notice of the Chief Compliance Officer. Hence, in case compliance to RBI inspection reports is communicated through the Inspection & Audit department of banks to RBI, a copy of the same needs to be endorsed to the Chief Compliance Officer, for information.

8. Promoting a compliance culture: It is important that the need to comply with instructions meticulously is re-emphasized among all the staff in the bank through continuous and mandatory training to all staff on compliance aspects, appropriate disciplinary measures through staff accountability framework/ policies for non compliance etc. Compliance should not be seen as an activity of the compliance department alone but as a culture that should pervade across the banks.

Share Application Moneys

MCA has issued notification on 31st March, 2015 amending the Companies (Acceptance of Deposits) Rules, 2014 to provide that share application moneys which were disclosed as such in the accounts for year ended 31st March, 2014 and pending allotment as on 31st March, 2015 should be either allotted before 1st  June, 2015 or returned therewith to the allottees before the said date.

Further every eligible company i.e. every company which is eligible to receive deposits should obtain credit rating for deposits accepted by it in the manner specified from the specified rating agencies and a copy of the rating report should be furnished to the MCA in form DPT-3. So additional compliance requirement for companies which accept deposits.

Further the requirement of having a deposit insurance has been postponed to 31st March, 2016 or till such deposit insurance product is available on the market whichever is earlier.

Copy of the MCA notification is given below.

http://www.mca.gov.in/Ministry/pdf/Acceptance_Deposits_AmendmentRules_01042015.pdf