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

MCA filings - Penalties for late filings.

Section 403 of the Companies Act, 2013 is a wake up call for companies in India. Not any more they can afford to relax and file documents months and years after they are supposed to do so.

Section 403(1) provides that documents should be submitted, filed, registered or recorded within the time specified in the relevant section for the same. For eg. most of the forms require to be filed within 30 days of the event, save for a few provisions such as Auditors appointment within 15 days, annual return within 60 days and charge registration/ modification within 300 days of the event.

The first proviso to section 403(1) provides for additional time within which the documents can be filed by paying additional filing fees. This additional period is 270 days beyond the original period of filing. Therefore in most cases a 300 days period is given for filing the document by paying the normal fees and additional filing fees.

The second proviso to section 403(1) provides that such documents can be filed beyond the said 300 days but it says "without prejudice to any other legal action or liability under the Act"

Section 403(2) provides that where the company fails to submit/ deliver the documents within the time specified including the additional time given, the company and every officers of the company shall be liable for penalty or punishment provided under the Act. This is apart from the fees and additional filing fees payable by the company for filing the document.

The various sections give different penalties for delayed filing beyond the normal period and additional period given thereunder, for eg.

1) delayed filing of annual return under section 92 is liable for a penalty of minimum Rs.50,000 but which may extend to Rs.5 lakhs and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than Rs.50,000/- but which may extend to Rs.5 lakhs or with both;
2) for failure to file documents required under section - minimum penalty is Rs.5 lakhs but which may extend to Rs.25 lakhs for the company and every officer of the company who is in default shall be punishable with fine which shall be minimum Rs.1 lakh but which may extend to Rs.5 lakhs;
3) Audited financial statements under section 137 - Fine of Rs.1000/- per day during which the failure continues but which shall not be more than Rs.10 lakhs and MD and CFO (or in the absence of MD/ CFO, any director who is charged by the Board of complying with this section, or in the absence of any such director, all directors of the company) shall be punishable with imprisonment for a term which may extend to six months or with fine, which shall not be less than Rs.1 lakh but which may extend to Rs.5 lakhs or both;

Apparently the system will not allow filings to take place after the period stipulated in section 403 unless the company applies for a an application for condonation of delay with the prescribed authorities which in this case is the REgistar of Companies of the respective jurisdiction.

Therefore Compliance is the Need of the Hour for every company in India. Gone are the days when the companies can sleep for years on end without doing any filings whatever.

Documents reqd for import/ export

The Director General of Foreign Trade in the Ministry of Commerce & Industry has specified the followed documents as mandatory requirement for export and import of goods into India. From a huge list of documents they have specified only three documents for import and export.

The Govt. has issued notification dated 12th March, 2015 in this regard. Gist of the notification reads as under:

2. Para2.53: The following mandatory documents are prescribed for exports and imports of goods
from/into India:

(a) Mandatory documents required for export of goods from India:
1. Bill of Lading/Airway Bill
2. Commercial Invoice cum Packing List*
3. Shipping Bill/Bill of Export

(b) Mandatory documents required for import of goods into India
1. Bill of Lading/Airway Bill
2. Commercial Invoice cum Packing List*
3. Bill of Entry

[Note: *(i) As per CBEC Circular No. 01/15-Customs dated 12/01/2015.
(ii) Separate Commercial Invoice and Packing List would also be accepted.]

(c) For export or import of specific goods or category of goods, which are subject to any
restrictions/policy conditions or require NOC or product specific compliances under any
statute, the regulatory authority concerned may notify additional documents for purposes of
export or import.

(d) In specific cases of export or import, the regulatory authority concerned may
electronically or in writing seek additional documents or information, as deemed necessary to ensure legal compliance.

This notification will come into effect from 1st April, 2015. 

Badlapur -

Sriram Raghavan made two excellent movies in Ek Haseena Thi and Johnny Gaddar, both of them taut with good scripts, fast paced, never a dull moment. But he slips in Badlapur which has a weak script, confused ending, weak acting, all in all a big let down from the man.

Raghu's wife and kid are unfortunately got caught in a bank robbery escape attempt and both of them get killed but the distraught man plots revenge. The real killer is caught but he keeps playing the cops around like one of Robert de Niro characters. Jump forward 15 years, revenge still simmers on his mind but here the plot then starts getting wayward without any real meaning. There are more killings, threats galore but it ends up on a totally confused note. The Dhawan guy goes through the entire movie with a single expression and overall acting is tepid to say the least. The plot does'nt rise above a certain level but people like Sriram Raghavan should not accept such hackneyed scripts for direction. 

allowance of balance 50% additional depreciation

Salient features of Union Budget 2015 

To encourage investment in plant or machinery by the manufacturing and power sector, additional depreciation of 20% of the cost of new plant or machinery acquired and installed is allowed under the existing provisions of section 32(1)(iia) of the Act over and above the general depreciation allowance. On the lines of allowability of general depreciation allowance, the second proviso to section 32(1) inter alia provides that the additional depreciation would be restricted to 50% when the new plant or machinery acquired and installed by the assessee, is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in the previous year.

Non-availability of full 100% of additional depreciation for acquisition and installation of new plant or machinery in the second half of the year may motivate the assessee to defer such investment to the
next year for availing full 100% of additional depreciation in the next year. To remove the discrimination in the matter of allowing additional depreciation on plant or machinery used for less than 180 days and used for 180 days or more, it is proposed to provide that the balance 50% of the additional depreciation on new plant or machinery acquired and used for less than 180 days which
has not been allowed in the year of acquisition and installation of such plant or machinery, shall be allowed in the immediately succeeding previous year.

This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year
2016-17 and subsequent assessment years.

Deduction for employment of new workmen in factory

The existing provisions contained in section 80JJAA of the Income-Tax Act 1961, inter alia, provide for deduction to an Indian company, deriving profits from manufacture of goods in a factory. The quantum of deduction allowed is equal to thirty per cent of additional wages paid to the new regular workmen employed by the assessee in such factory, in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided.

Clause (a) of sub-section (2), inter alia, provides that no deduction under sub-section (1) shall be available if the factory is hived off or transferred from another existing entity or acquired by the assessee company as a result of amalgamation with another company. Explanation to the section defines “Additional wages” to mean the wages paid to the new regular workmen in excess of hundred workmen employed during the previous year.

With a view to encourage generation of employment, it is proposed to amend the section so as to extend the benefit to all assessees having manufacturing units rather than restricting it to corporate assessees only. Further, in order to enable the smaller units to claim this incentive, it is proposed to extend the benefit under the section to units employing even 50 instead of 100 regular workmen.
Accordingly, it is proposed to amend sub-section (1) of the aforesaid section. It is also proposed to amend clause (i) of the Explanation so as to provide “additional wages” to mean the wages paid to the new regular workmen in excess of fifty workmen employed during the previous year.

These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years.

Section 269SS of Income Tax Act - no cash transactions above Rs.20,000/-

1) section 269SS of the Income-Tax Act is being amended to provide that no cash transactions in the purchase of immoveable property is allowed. In case anybody violates this provision then penalties as provided in sections 271D and 271E will be attracted.

The amendment to section 269SS provides that no person shall accept any advance or repayment of an advance in cash exceeding Rs.20,000/-. So the onus on complying with this provision is on the person accepting the cash which is usually the builder or developer or seller of the flat in the case of immovable property.

This is a welcome move to curb black money in the real estate sector and one hopes that persons duly comply with the new rules.

SEBI (Investment Advisers) Regulations

SEBI has published its FAQs on the SEBI (Investment Advisers) Regulations. Any person who is providing investment advisory services will need to get himself registered with SEBI under these regulations.

“Investment advice” is an advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products, and advice on investment portfolio containing securities or investment products, whether written, oral or through any other means of communication for the benefit of the client and shall include financial planning.

Provided that the investment advice given through newspaper, magazines, any electronic or broadcasting or telecommunications medium, which is widely available to the public shall not be considered as investment advice for the purpose of IA regulations. However, investment advisers who make public appearance or make recommendations or offer an opinion concerning securities
or public offers through public media while making recommendations through public media, are required to comply with the relevant provisions of these regulations.

Members of the Institute of Company Secretaries of India, Institute of Chartered Accountants of India, Institute of Cost and Works Accountants of India who provide investment advice to their clients incidental to their professional services are exempted from obtaining registration under IA Regulations.

For example :- An advice by a professional CA as a tax consultant to his tax client for investing in ELSS in the course of tax planning will be treated as incidental to his profession as a tax consultant.

However, if they are engaged in providing investment advisory services in securities as an activity or business to clients or investors which is not incidental to their main activity then they are required to get registration as an investment adviser.

The FAQs can be found at this link, here

Form GNL-4 introduced by MCA

Ministry of Corporate Affairs has introduced form GNL-4 to replace form erstwhile form 67. The form GNL-4 is to be used as an addendum for filing documents to complete the defect/ rectification in the original forms filed by the stakeholders.

MCA notification for introducing the form can be seen here

Full Mobile Number Portability - TRAI

TRAI has allowed full mobile number portability with effect from 3rd May, 2015. Hitherto only intra circle mobile number portability was allowed from 2009. Now both inter and intra licensed area mobile number portability is to be introduced from 3rd May, 2015. TRAI has issued notification dated 25th February, 2015 in this regard.

The explanatory memorandum to the notification states as follows:

The Telecom Regulatory Authority of India issued the Telecommunication Mobile Number Portability Regulations, 2009 (8 of 2009) dated 23rd September, 2009 laying down the basic business process framework for implementation of intra-circle mobile number portability in the country. The regulation 6,7,8,9,10,11,12 and 13 of the Regulations came into effect in all telecom service areas in the country from 20th January 2011 through the Authority’s direction dated 18th January, 2011.

2. Now the Government has decided to implement inter-service area mobile number portability (Full Mobile Number Portability). Accordingly, necessary amendments to the MNP service license were issued by the Department of Telecommunications (DoT) through letter No. 800-22/2013-AS-II dated 3rd November, 2014 wherein it is stated that Full MNP would be implemented in the country within six months from the said amendment. In this context the Authority issued a draft The Telecommunication Mobile Number Portability (Sixth Amendment), 2015 on 23rd January, 2015 seeking comments of stakeholders for facilitating Full MNP. In addition, the draft amendments also proposed some changes to the existing porting process viz. reduction in timelines for number return process, refining non-payment disconnection issues etc.

3. In response to the draft Amendment, fifteen stakeholders submitted their comments. These comments have been examined by the Authority and, after deliberations, this Sixth Amendment to the MNP Regulations is being issued. The explanation for the amendments made in the Regulations is provided in the following paragraphs.

Time period for implementation
4. As per the DoT’s amendment to the MNP service licence, full MNP (inter and intra Licensed Service Area MNP) is to be implemented within six months from the date of the said amendment to the Licenses. Accordingly, the Authority has made the Sixth Amendment to the MNP Regulations effective from 3rd May 2015.

Forwarding of porting request by the Recipient Operator
5. On a request by a subscriber for porting of his number, the Recipient Operator (RO) will forward the porting requests to the MNP Service provider (MNPSP) to which the number range holder (service provider who originally allocated the mobile number) belongs. Even if a subscriber ports his mobile number from one MNP Zone to another, the same MNPSP will continue to handle his porting requests for all subsequent portings. This is required as the porting history of the subscriber is maintained by the MNPSP of the MNP zone to which his number range holder belongs.
Time period for Donor Operator to raise non-payment disconnections:

6. The MNP Regulations provide that in case a post paid subscriber defaults in the payment which was due to the Donor Operator (DO), the DO may request the RO for disconnection of the ported mobile number. It is noticed that in many cases, the DO raises disconnection requests (due to non-payment of outstanding bill) long after the subscriber has ported his number. Therefore, there is a need to bring order in this matter so that non-payment disconnection cases are settled in a timely manner by the Donor as well as the RO to avoid any inconvenience to the subscriber at a later date. Accordingly, in the Amendment, time period of ‘thirty days’ from the due date of the outstanding bill has been specified for a DO to raise the non-payment notice to the subscriber who has defaulted in the payment. It is also stipulated that after completion of ‘sixty days’ from the due date of payment of the outstanding bill, the DO will not be entitled to raise non-payment disconnection requests to the RO through the MNP service provider.

Increase in Notice period for disconnection by the RO

7. In response to the draft Amendment, most stakeholders have requested for increase in the notice period given by the RO to the subscriber who has defaulted in the payment to the DO from the existing fifteen days period to thirty days. After examination, the Authority has agreed to increase the time period. However, provision has been made for barring outgoing services of such defaulting subscriber for fifteen days, so as to prompt the subscriber to pay the outstanding amount due to the DO. Further, the extended period will also help inter-service area porting subscribers who may have to settle outstanding payments of a different service area from where the subscriber ported his mobile number. In case the subscriber fails to make payment within fifteen days, his mobile number will be disconnected permanently by the RO and number will be returned to the number range holder after sixty days.

Reduction in timelines for Number return process

8. In the existing MNP Regulations, in case of disconnection of a mobile number in the network of RO, it is mandated that such mobile number will be returned to the number range holder after the expiry of ninety days. This implies that once a mobile number is disconnected, it remains unutilized for as long as ninety days. For effective utilization of such a mobile number, the Authority has reduced this time period to sixty days.

Online filing of petitions - CERC

The Central Electricity Regulatory Commission has vide its circular dated 22nd January, 2015 provided for online filing of the petitions and pleadings by the parties before the Commission. The gist of their circular is given below:

The Central Electricity Regulatory Commission determines the tariff of the generating
companies and transmission licensees covered under the jurisdiction of the Commission and
regulate inter-State transmission of electricity and adjudicates the disputes relating thereto apart
from other functions based on the petitions filed before the Commission. Presently, all petitions
and pleadings are filed by the parties before the Commission in accordance with Regulation 27
of Central Electricity Regulatory Commission (Conduct of Business) Regulations, 1999. The
Regulation provides for filing of petitions and pleadings through CD/electronic media on such
terms and conditions as may be decided by the Commission.
2. In order to improve and expedite the process of disposal of petitions, the Commission has
decided to introduce electronic filing of all petitions, applications, replies, rejoinders, etc with
effect from 1st February, 2015. As a first step in this direction, all the petitions, replies and
rejoinders, etc filed by the parties are being digitized for creating data base to facilitate e-filing.
3. The generating companies, licensees, system operators, and any other person who has
filed or is intending to file a petition before the Commission are requested to henceforth file soft
copy of all the pleadings like petitions, replies, rejoinders, written submissions, documents,
affidavits, etc in pdf and word format in a CD along with the usual hard copies. All
pleadings/filings/submissions made after 1st March, 2015 shall be accepted only if accompanied
by soft copy, as stated above. The parties are also requested to mail the petition, replies,
rejoinder, written submissions, etc. to registry@cercind.gov.in

Domestic Carriage Charges - TRAI regulation

The Telecom Regulatory Authority of India (TRAI) today issued the “Telecommunication Interconnection Usage Charges (Twelfth Amendment) Regulations” which prescribe a revised domestic carriage charge of 35 paisa per minute. 

         

An Access Service provider in India offers access services within the Licensed Service Area (LSA) only.  Inter-LSA calls have to be routed through a National Long Distance Operator (NLDO).  The charges to be paid by an access provider to the NLDO to cover the cost for carrying inter-LSA calls are called carriage charges. TRAI had prescribed the carriage charges through the Interconnection Usage Charges (IUC) Regulations of 23^rd February, 2006 which stipulated a ceiling of 65 paisa per minute.  These charges were reviewed again in 2008/2009 but the same ceiling of 65 paisa per minute was retained. 

To review the IUC, the Authority issued a Consultation Paper on 19.11.2014 to seek the views of stakeholders on various component of IUC including domestic carriage charges. Stakeholders were asked to submit written comments by 11.12.2014 and counter-comments by 18.12.2014. On the request of some stakeholders, the dates for submission of comments and counter-comments were extended up-to 22.12.2014 and 29.12.2014 respectively. Written comments were received from two industry associations, 15 TSPs and 47 other stakeholders, including companies, organizations, firms and individuals. Counter-comments were received from six TSPs and one individual. An Open House Discussion was held on 09.01.2015 in Delhi with stakeholders. 

On the basis of comments received from stakeholders either in writing or during the Open House Discussion and internal analysis, the Authority has reduced the ceiling of the domestic carriage charge to 35 paisa per minute from the existing 65 paisa per minute through these Regulations which will be effective from 1^st March, 2015. 

TRAI has already issued regulations prescribing Mobile Termination Charge and Fixed Termination Charge and International Termination Charge on 23^rd February, 2015. 

Full text of the “Telecommunication Interconnection Usage Charges (Twelfth Amendment) Regulations” is available on TRAI’s website: www.trai.gov.in.

Coastal Zone Regulations - exemptions for memorials/ monuments etc.

The Ministry of Environment & Forests has vide its notification dated 17th February, 2015 given exemption to construction of memorials/ monuments in Coastal Zone IV areas subject to clearance from the State Coastal Zone Management ARea.

The exemption is for reclamation from the seas as well as dressing or altering the sand dunes, hills, natural landscapes.

CRZ-IV is water area from low tide line to 12 nautical miles on seaward side and shall include the water area of the tidal influenced water body from the mouth of the water body at the sea upto the influence of the tide which is measured as 5 parts per thousand during the driest part of the year.

http://envfor.nic.in/sites/default/files/SO%20NO.556%20E-12302012072610.pdf

Indian Accounting Standards notified

Ministry of Corporate Affairs has notified the Indian Accounting Standards Rules on 16th February, 2015.

Listed and unlisted companies and having net worth of Rs.500 crores or more are required to follow the IndAs from the financial year 2016-17 onwards with comparatives for the year ending 31st March, 2016.  Holding, subsidiary, associate or joint venture of these category companies will also follow this schedule

Listed Companies having net worth of less than Rs.500 crores will start adhering to the IndAs from the financial year 2017-18 with comparatives for financial year ending 31st March, 2017. Unlisted companies with networth of Rs.250 crores to Rs.500 crores will also follow this schedule. As again, the holding, subsidiary, associate or joint venture companies of such category companies will follow this schedule.

Companies listed on the SME platform or Institutional Trading Platform are not required to follow the schedule for other listed companies.

Networth shall be determined as at 31st March, 2014.

Of course any company wanting to voluntarily follow the IndAS can do so from the financial year 2015-16 onwards with comparatives for the financial year ending 31st March, 2015. But once a company starts following the IndAS then for all subsequent financial years, it has to the follow the IndAS standards.

The standards are available at the MCA website.

Private Placement of NCDs by NBFCs

RBI revised its guidelines on private placement of Non-Convertible Debentures (NCDs) by Non-Banking Financial Companies (NBFCs) vide its circular dated 20th February, 2015.

Salient features of the guidelines are given below:

A. Guidelines on Private Placement of NCDs (maturity more than 1 year) by NBFCs:

1. NBFCs shall put in place a Board approved policy for resource planning which, inter-alia, should cover the planning horizon and the periodicity of private placement.

2. The issues shall be governed by the following instructions:

1. The minimum subscription per investor shall be Rs. 20,000 (Rupees Twenty thousand);
2. The issuance of private placement of NCDs shall be in two separate categories, those with a maximum subscription of less than Rs. 1 crore and those with a minimum subscription of Rs. 1 crore and above per investor;
3. There shall be a limit of 200 subscribers for every financial year, for issuance of NCDs with a maximum subscription of less than Rs. 1 crore, and such subscription shall be fully secured;
4. There shall be no limit on the number of subscribers in respect of issuances with a minimum subscription of Rs. 1 crore and above; the option to create security in favour of subscribers will be with the issuers. Such unsecured debentures shall not be treated as public deposits as defined in NBFCs Acceptance of Public Deposits (Reserve Bank) Directions, 1998.
5. An NBFC (excluding Core Investment Companies) shall issue debentures only for deployment of funds on its own balance sheet and not to facilitate resource requests of group entities / parent company / associates.
6. An NBFC shall not extend loans against the security of its own debentures (issued either by way of private placement or public issue).

3. Tax exempt bonds offered by NBFCs are exempted from the applicability of the circular.

4. For NCDs of maturity upto one year, guidelines on Issuance of Non-Convertible Debentures (Reserve Bank) Directions, 2010, dated June 23, 2010, by Internal Debt Management Department, RBI shall be applicable.

---

 

FDI insurance notified

Ministry of Finance Press Release dated 20th february, 2015

The Indian Insurance Companies (Foreign Investment) Rules, 2015 have been notified by the Government of India under the powers conferred by Section 114 of the Insurance Act, 1938 read with clause (b) of sub-section (7A) of Section 2 of the Insurance Act, 1938 and Section 24 of the Insurance Regulatory and Development Authority Act, 1999. These Rules have been prepared based on extensive consultations with all the relevant Departments/Organisations. These Rules incorporate the recent amendments in the law into the standing/prevalent practices being followed hitherto with respect to the treatment of foreign investment in Indian Insurance Companies under extant applicable regulations and the FDI policy of Government of India. According to these rules, foreign equity investment cap of 49 per cent is applicable to all Indian insurance companies and they shall not allow the aggregate holdings by way of total foreign investment in their equity shares by Foreign Investors, including portfolio investors, to exceed forty-nine per cent of their paid-up equity capital and also shall ensure that ownership and control shall remain at all times in the hands of resident Indian entities as referred to in these rules. The foreign equity investment cap of 49 per cent shall also apply to Insurance Brokers, Third Party Administrators, Surveyors and Loss Assessors and other insurance intermediaries appointed under the provisions of the IRDA Act, 1999. As per these rules, Foreign Direct Investment (FDI) proposals up to 26 per cent of the total paid-up equity of the Indian Insurance Company shall be allowed on the automatic route, and FDI proposals which take the total Foreign Investment above 26 per cent and up to the cap of 49 per cent shall require FIPB approval. Further, Foreign Portfolio Investment in an Indian Insurance Company shall be governed by the provisions contained in the relevant sub-regulations/regulations under FEMA Regulations, 2000 and provisions of the Securities Exchange Board of India (Foreign Portfolio Investors) Regulations. Any increase of foreign investment of an Indian insurance company shall be in accordance with the pricing guidelines specified by Reserve Bank of India under the FEMA. These rules shall come into force from the date of their publication in the Official Gazette. A copy of these rules are also placed on the website of Department of Financial Services at www.financialservices.gov.in

Govt. e-Biz portal launched

Ministry of Commerce & Industry Press Release dated 19th Feb 2015

 

The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry today announced the launch of 11 Central Government Services on eBiz portal. These services are required for starting a business in the country - four services from Ministry of Corporate Affairs, two services of Central Board of Direct Taxes, two services of Reserve Bank of India and one service each from Directorate General of Foreign Trade, Employees’ Provident Fund Organisation and Petroleum & Explosives Safety Organisation.  A business-user today avails these services either from the portal of respective Ministry/Department or by physical submission of forms. With the integration of these services on eBiz portal, he/she can avail all these services 24*7 online end-to-end i.e., online submission of forms, attachments, payments, tracking of status and also obtain the license/permit from eBiz portal. 

Through eBiz portal, a business user can fill the eForms online/offline, upload the attachments, make payment online and submit the forms for processing of the department. He will be provided with copy of challan, which he can save or print, acknowledgement of submission and tracking of status of the form besides receiving sms alerts on important notifications. The certificate/clearance can be downloaded from eBiz. The eBiz platform, thus, enables a transformational shift in the Governments’ service delivery approach from being department-centric to customer-centric as a single window portal.

eBiz – India’s Government-to-Business (G2B) portal  was conceptualized with support from National Institute of Smart Government (NISG) as the consulting partner and developed by M/s. Infosys Ltd., Bangalore in a Public Private Partnership (PPP) Model for a period of 10 years. The first three years of the term would be the pilot phase, while the remaining seven years will be the expansion phase. During the pilot phase, 50 (26 central + 24 state) services are being implemented across ten pilot states viz., Andhra Pradesh, Delhi, Haryana, Maharashtra, Tamilnadu, Odisha, Punjab, Rajasthan, Uttar Pradesh and West Bengal. It is envisaged that during the next few years, more than 200 services related to investors and businesses will be rolled-out across the country.

One of the salient features of eBiz is its payment gateway solution. With integration of PSU banks, government fees are transferred on ‘T+1’ basis. For eBiz transactions, an electronic PAO system (ePAO) has been set up in DIPP which will make booking and reconciliation of all Central Government fees received through eBiz portal. The Comptroller General of Accounts has given approval to establish the electronic system of collection, apportionment and remittance of fees collected under the eBiz portal. It is for the first time in the country that collection of fees through credit and debit cards for different services have been permitted making it very convenient for business to deposit fees.

Speaking on the occasion the Minister of Finance, Corporate Affairs and Information & Broadcasting Shri Arun Jaitley, said, “We are firmly committed to wide-ranging initiatives aimed at fostering the business environment in the country in a holistic manner. Our approach includes leveraging technology to bring transparency, improve efficiency and promote convenience. eBiz is an important step in this direction. With the integration of 11 services, an important milestone in the electronic service delivery mechanism between the citizens’ and Governments Departments has been achieved”. The Minister of State (Independent Charge), Commerce & Industry Smt. Nirmala Sitharaman said “Now, irrespective of the level of computerization at the Department’s end, whether online or not, eBiz platform will provide end-to-end online submission and processing of forms including online payment. This marks the highest level of maturity in web-based eGovernance applications as it strives to achieve horizontal integration across various verticals of Central government, State governments and Para-statal agencies. The integrated payment gateway, which is also the first of its kind in the country, provides for debiting from and crediting to multiple sources in a completely automated manner. Such a gateway can serve as the universal gateway for all eGovernance applications. All that would be required is integration of the department or the particular service with the eBiz portal.” Also present in the function, the Minister of State (Independent Charge), Labour & Employment Shri Bandaru Dattatreya said “we had earlier launched the ‘Employer Registration’ service of Employees’ State Insurance Corporation on eBiz portal in December, 2014 and with today’s launch of Employees’ Provident Fund Organisation’s service, another milestone has been achieved by the Ministry in creating conducive atmosphere for doing business with ease in the country.”

 

 

 

List of 11 services

 

0S. No.	Ministry/ Dept. Name	Service  Name
1	Ministry of Corporate Affairs	Name Availability
2	Ministry of Corporate Affairs	Director Identification Number
3	Ministry of Corporate Affairs	Certificate of Incorporation
4	Ministry of Corporate Affairs	Commencement of Business
5	Central Board of Direct Taxes	Issue of Permanent Account Number (PAN)
6	Central Board of Direct Taxes	Issue of Tax Deduction Account Number (TAN)
7	Reserve Bank of India	Advanced Foreign Remittance (AFR)
8	Reserve Bank of India	Foreign Collaboration-General Permission Route (FC-GPR)
9	Employees’ Provident Fund Organization	Employer Registration
10	Petroleum and Explosives Safety Organization	Issue of Explosive License
11	Directorate General of Foreign Trade	Importer Exporter Code License

 

Online IEC application

From 1st January, 2015 all IEC (Importer Exporter Code) applications have to be made online. The Ministry of Commerce has laid down some procedural guidelines vide their circular dated 31st December, 2014. Some salient features of the guidelines are given in the Dept circular no. 15 dated 31st December, 2014 followed by another circular no. 17 dated 30th January, 2015

Part A: General Information:

1.      From 1.1.2015, all applications for IEC would be made in online mode only. All applicants will have to fill IEC application and also upload all required documents online.

2.      All IEC Certificates would also be issued by the concerned RA (with his digital signature) in digital format only. The applicant can take a print out of the digitally signed IEC, as and when required.

3.      Applicants with digital signatures would sign the application with their digital signature and submit the same online.

4.      In case the applicant does not possess digital signature, then he would be required to take a print out of the filled up application (without attachments), sign the same and submit it to the concerned RA, either by Post or at the counter.

5.      All applications must be processed and disposed within two working days of their receipt.

6.      RAs would record their observations with reference to the application, based on which either an e-IEC or a rejection letter, along with the reasons for rejection, would be issued. RA would also print the office note generated by the system on the application received for their office record.

7.      There is no provision for issue of deficiency letter in the new system. If the IEC application is rejected, the applicant would be required to file a fresh application.

8.      The authorised officer (not below the rank of FTDO) in the Regional Authorities (RAs) as in Appendix 1 of Handbook of Procedure (vol.1) (2009-2014) will be the competent authority to issue/reject applications for IEC.

Part B: What to Examine/Verify:

1.      Applicant entity’s details:

a)         In case of Proprietorship firms: To verify Name, Date of Birth and PAN, as filled in the application form and as mentioned in the uploaded PAN, from the website of Income Tax Department.

b)         In case of  Partnership firms : 

                                                        i.            To verify Name, Date of Incorporation and PAN of the entity, as filled in the application form and as mentioned in the uploaded PAN, from the website of Income Tax Department.

                                                      ii.            To verify Name, Date of Birth and PAN of the Partners as filled in the application form, from the website of Income Tax Department.

c)         In case the entity is Limited Liability Partnership/ Private/ Public/Govt. Undertaking / Section 25 Company:

                                                     i.               To verify Name, Date of incorporation and PAN of the entity, as filled in the application form and as mentioned in the uploaded PAN, from the website of Income Tax Department.

                                                   ii.               To verify and cross-check the number, names and other details of Partners/Directors from the LLPIN/CIN information available on the Ministry of Corporate Affair’s website.

d)            In case the entity is  a Registered Society/Trust or a HUF:

To verify Name, Date of incorporation and PAN of the Society/Trust as filled in the application form and as mentioned in the uploaded PAN, from the website of Income Tax Department.

2.     Applicant entity’s address verification: To verify the applicant entity’s address  cross-check the address as indicated in Part A (ii)  with that of the address as mentioned in the Sale deed (in case business premises is self-owned); or Rental / Lease Agreement (in case office space is rented/ leased); or  latest electricity /telephone bill.

3.    Verification of the bank details of the applicant entity: Name of the Account Holder, Account number, Bank’s name and Branch and IFS code as filled in by the applicant in Part A (viii) needs to be cross-checked from the cancelled cheque/ bank certificate as uploaded.

Part C: Procedure for verification of details from websites by RAs:

·         RAs can cross-check and verify Applicant entity's Name, Date of Birth/Date of Incorporation, PAN of the entity from the link as below:

https://incometaxindiaefiling.gov.in/e-Filing/Services/KnowYourPanLink.html

 

·         The LLPIN/CIN details of the Firm/Company may similarly be cross verified from the Ministry of Corporate Affair’s website: http://www.mca.gov.in/MCA21/Master_data.html , by taking the steps listed therein.

 

 

 

Online FDI application

Department of Economic Affairs, Ministry of Finance launched here today a new upgraded and secure user friendly web site for filing and processing of applications for Foreign Direct Investment (FD) requiring Government approval. Presently the applications are filed online at http://www.fipbindia.com which had limited features and processing capabilities.
The new website http://fipb.gov.in, which becomes operational from today, shall henceforth receive applications regarding FDI in approval route sectors. 
With the introduction of the new website, applicant will have to submit only SINGLE copy of the application for records with the FIPB Secretariat instead of 15-18 copies being  filed earlier.
The initiative is part of the Government’s ongoing efforts for Good Governance by enhancing transparency and accountability in its procedures and is a step towards Minimum Government and Maximum Governance. The innovative features of the website are:

(1) Global Reach -Apply from anywhere in the world! Access your status from anywhere in the world!
(2) E-communication – communication between the applicant, FIPB and other ministries/ departments is online.
(3) Quicker communication- All the correspondence including updates/ decisions are communicated through SMS/emails and thus eliminating physical delivery and loss of time due to postal delays.
(4) Less Paperwork – Single signed copy only needed (for record) instead of present multiple sets of the application.
(5) SMS/email alert- Regular alerts are sent to the applicants related to the queries raised by the administrative ministries, inclusion of the proposal in the scheduled FIPB meeting and decisions.
(6) Transparency and security- all transactions and correspondences are recorded online and are secure.
(7) Query module- Any doubts? A user can raise a query online which shall be replied by the relevant ministry

Import of Goods - liberalisation

RBI has vide its notification dated 12th February, 2015 done away with the requirement of filling and submitting form 1 to the RBI for payment for imports into India exceeding US$5000. The onus is now on the Authorised Dealers to satisfy themselves about the bonafides of the transaction before effecting the remittance.

Hitherto, form 1 was required to be submitted to the authorised dealers for all import payments above US$5,000/-. This is a major step towards liberalisation of the documentary procedures.

The salient features of the said RBI circular is given below:

Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to the A.P.(DIR Series) Circular No. 82 dated February 21, 2012 in terms of which applications by persons, firms and companies for making payments, exceeding USD 5,000 or its equivalent towards imports into India must be made in Form A-1.

 

To further liberalise and simplify the procedure, it has been decided to dispense with the requirement of submitting request in Form A-1 to the AD Category –I Banks for making payments towards imports into India. AD Category –I may however, need to obtain all the requisite details from the importers and satisfy itself about the bonafides of the transactions before effecting the remittance.

Copy of the RBI circular can be found here i.e..http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=9567&Mode=0