KYC norms for bank account opening for mentally challenged persons

RBI had vide its notification no. RBI/2013-14/444 DBOD.No.Leg.BC.84/09.07.005/2013-14 dated 13th January, 2014 laid down guidelines for opening/ operating bank accounts for mentally challenged persons i.e. persons suffering from autism, cerebral palsy, mental retardation and any other form of mental disability. According to the said guidelines, 

1. The Mental Health Act, 1987 provides for a law relating to the treatment and care of mentally ill persons and to make better provision with respect to their property and affairs. According to the said Act, “mentally ill person” means a person who is in need of treatment by reason of any mental disorder other than mental retardation. Sections 53 and 54 of this Act provide for the appointment of guardians for mentally ill persons and in certain cases, managers in respect of their property. The prescribed appointing authorities are the district courts and collectors of districts under the Mental Health Act, 1987.
2. The National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 provides for a law relating to certain specified disabilities. Clause (j) of Section 2 of that Act defines a “person with disability” to mean a person suffering from any of the conditions relating to autism, cerebral palsy, mental retardation or a combination of any two or more of such conditions and includes a person suffering from severe multiple disabilities. This Act empowers a Local Level Committee to appoint a guardian, to a person with disabilities, who shall have the care of the person and property of the disabled person.
3. Banks are advised to take note of the legal position stated above and may rely on and be guided by the orders/certificates issued by the competent authority, under the respective Acts, appointing guardians/managers for the purposes of opening/operating bank accounts. In case of doubt, care may be taken to obtain proper legal advice.

Subsequently it has been brought to the notice of the RBI that the banks have been insisting upon the guardianship certificate from all mentally ill persons, Therefore RBI has clarified vide its notification no. RBI/2015-16/321 DBR.No.Leg.BC.78/09.07.005/2015-16 dated 11th February, 2016 that "paragraph 2(iii) of the aforesaid circular is not intended to mandate banks to insist on  appointment of a guardian as a matter of routine from every person “who is in need of treatment by reason of any mental disorder”. It would be necessary for banks to seek appointment of a guardian only in such cases where they are convinced on their own or based on documentary evidence available, that the concerned person is mentally ill and is not able to enter into a valid and legally binding contract."

Banks therefore have to exercise their judgment and call for documents only if they feel or have documentary evidence that the person is incapable of operating the bank account and needs guardian to take care of him. 

Startup Regulatory Relaxations - Issue of shares

RBI has vide its notification dated 11/2/2016 made a couple of clarifications w.r.t. issue of shares in case of start ups. One of the points is issue of shares without cash payment through sweat equity or issue of shares in lieu of payments due which are permissible transactions under FEMA. 

Accordingly, the following is clarified:

a. Issue of shares without cash payment through sweat equity: Reserve Bank of India vide Notification No. FEMA.344/2015 RB dated June 11, 2015 has permitted Indian companies to issue sweat equity, subject to conditions, inter-alia, that the scheme has been drawn either in terms of regulations issued under the Securities Exchange Board of India Act, 1992 in respect of listed companies or the Companies (Share Capital and Debentures) Rules, 2014 notified by the Central Government under the Companies Act 2013 in respect of other companies.

b. Issue of shares against legitimate payment owed: Reserve Bank of India vide Notification No. FEMA.315/2014-RB dated July 10, 2014, has permitted Indian companies to issue equity shares against any other funds payable by the investee company (e.g. payments for use or acquisition of intellectual property rights, for import of goods, payment of dividends, interest payments, consultancy fees, etc.), remittance of which does not require prior permission of the Government of India or Reserve Bank of India under FEMA, 1999 subject to conditions relating to adherence to FDI policy including sectoral caps, pricing guidelines, etc. and applicable tax laws (cf. paragraph 3 of Schedule 1 to Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2015).

Relaxations for start ups - acceptance of payments

RBI has vide its notification dated 11th February, 2016 made some clarifications regarding start ups, especially w.r.t to acceptance of payments by them from their overseas subsidiares.

In this connection, it is clarified as under:

1. A start-up in India with an overseas subsidiary is permitted to open foreign currency account abroad to pool the foreign exchange earnings out of the exports/sales made by the concerned start-up;
2. The overseas subsidiary of the start-up is also permitted to pool its receivables arising from the transactions with the residents in India as well as the transactions with the non-residents abroad into the said foreign currency account opened abroad in the name of the start-up;
3. The balances in the said foreign currency account as due to the Indian start-up should be repatriated to India within a period as applicable to realisation of export proceeds (currently nine months);
4. A start-up is also permitted to avail of the facility for realising the receivables of its overseas subsidiary or making the above repatriation through Online Payment Gateway Service Providers (OPGSPs) for value not exceeding USD 10,000 (US Dollar ten thousand) or up to such limit as may be permitted by the Reserve Bank of India from time to time under this facility; and
5. To facilitate the above arrangement, an appropriate contractual arrangement between the start-up, its overseas subsidiary and the customers concerned should be in place.

Realisation, Repatriation & Surrender of FEX regulations

RBI has recently updated its Foreign Exchange Management (Realisation, Repatriation & Surrender of Foreign Exchange) Regulations, 2015 vide its notification dated 4th February, 2016, 

The salient features of the regulations are:

A. Duty of persons to realise foreign exchange due:-

A person resident in India to whom any amount of foreign exchange is due or has accrued shall, save as otherwise provided under the provisions of the Act, or the rules and regulations made thereunder, or with the general or special permission of the Reserve Bank, take all reasonable steps to realise and repatriate to India such foreign exchange, and shall in no case do or refrain from doing anything, or take or refrain from taking any action, which has the effect of securing -

1. that the receipt by him of the whole or part of that foreign exchange is delayed; or
2. that the foreign exchange ceases in whole or in part to be receivable by him.

B. Manner of Repatriation :-

(1) On realisation of foreign exchange due, a person shall repatriate the same to India, namely bring into, or receive in, India and -

1. sell it to an authorised person in India in exchange for rupees; or
2. retain or hold it in account with an authorised dealer in India to the extent specified by the Reserve Bank; or
3. use it for discharge of a debt or liability denominated in foreign exchange to the extent and in the manner specified by the Reserve Bank.

(2) A person shall be deemed to have repatriated the realised foreign exchange to India when he receives in India payment in rupees from the account of a bank or an exchange house situated in any country outside India, maintained with an authorised dealer.

C. Period for surrender of realised foreign exchange:-

A person not being an individual resident in India shall sell the realised foreign exchange to an authorised person, within the period specified below :-

1. foreign exchange due or accrued as remuneration for services rendered, whether in or outside India, or in settlement of any lawful obligation, or an income on assets held outside India, or as inheritance, settlement or gift, within seven days from the date of its receipt;
2. in all other cases within a period of ninety days from the date of its receipt.

D. Period for surrender in certain cases:-

(1) Any person not being an individual resident in India who has acquired or purchased foreign exchange for any purpose mentioned in the declaration made by him to an authorised person under sub-section (5) of Section 10 of the Act does not use it for such purpose or for any other purpose for which purchase or acquisition of foreign exchange is permissible under the provisions of the Act or the rules or regulations or direction or order made thereunder, shall surrender such foreign exchange or the unused portion thereof to an authorised person within a period of sixty days from the date of its acquisition or purchase by him.

(2) Notwithstanding anything contained in sub-regulation (1), where the foreign exchange acquired or purchased by any person not being an individual resident in India from an authorised person is for the purpose of foreign travel, then, the unspent balance of such foreign exchange shall, save as otherwise provided in the regulations made under the Act, be surrendered to an authorised person -

1. within ninety days from the date of return of the traveller to India, when the unspent foreign exchange is in the form of currency notes and coins; and
2. within one hundred eighty days from the date of return of the traveller to India, when the unspent foreign exchange is in the form of travellers cheques.

E. Period for surrender of received/realised/unspent/unused foreign exchange by Resident individuals.-

A person being an individual resident in India shall surrender the received/ realised/ unspent/ unused foreign exchange whether in the form of currency notes, coins and travellers cheques, etc. to an authorised person within a period of 180 days from the date of such receipt/ realisation/ purchase/ acquisition or date of his return to India, as the case may be.

F. Exemption:-

Nothing in these regulations shall apply to foreign exchange in the form of currency of Nepal or Bhutan.

Export and Import of Currency Regulations

RBI has vide its notification dated 4th February, 2016 updated the Foreign Exchange Management (Export and Import of Currency) Regulations, 2015. Accordingly, the gist of the regulations provides that

A. Export and import of Indian currency and currency notes

a) Any person resident in India,

1. may take outside India (other than to Nepal and Bhutan) currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.25,000 (Rupees Twenty Five Thousand only) per person.
2. may take or send outside India (other than to Nepal and Bhutan) commemorative coins not exceeding two coins each.

Explanation:

'Commemorative Coin' includes coin issued by Government of India Mint to commemorate any specific occasion or event and expressed in Indian currency.

3. who had gone out of India on a temporary visit, may bring into India at the time of his return from any place outside India (other than from Nepal and Bhutan), currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.25,000 (Rupees Twenty Five Thousand only) per person.

b) Any person resident outside India, not being a citizen of Pakistan or Bangladesh, and visiting India,

1. may take outside India currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.25,000 (Rupees Twenty Five Thousand only) per person
2. may bring into India currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.25,000 (Rupees Twenty Five Thousand only) per person

B. Import of Foreign Exchange into India

A person,

1. may send into India without limit foreign exchange in any form other than currency notes, bank notes and travelers cheques;
2. may bring into India from any place outside India without limit foreign exchange (other than unissued notes) subject to the condition that such person makes, on arrival in India, a declaration to the Customs authorities in Currency Declaration Form (CDF). It shall not be necessary to make such declaration where the aggregate value of the foreign exchange in the form of currency notes, bank notes or travelers cheques brought in by such person at any one time does not exceed US$10,000 (US Dollars ten thousand) or its equivalent and/ or the aggregate value of foreign currency notes brought in by such person at any one time does not exceed US$ 5,000 (US Dollars five thousand) or its equivalent.

C. Export of Foreign Exchange and Currency Notes

1. An authorised person may send out of India foreign currency acquired in normal course of business,
2. any person may take or send out of India, -
1. Cheques drawn on foreign currency account maintained in accordance with Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2000;
2. foreign exchange obtained by him by drawal from an authorised person in accordance with the provisions of the Act or the rules or regulations or directions made or issued thereunder;
3. currency in the safes of vessels or aircrafts which has been brought into India or which has been taken on board a vessel or aircraft with the permission of the Reserve Bank;
3. any person may take out of India, -
1. foreign exchange possessed by him in accordance with the Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2000 ;
2. unspent foreign exchange brought back by him to India while returning from travel abroad and retained in accordance with the Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2000 ;
4. any person resident outside India may take out of India unspent foreign exchange not exceeding the amount brought in by him and declared in Currency Declaration Form (CDF).

D. Export and Import of currency to or from Nepal and Bhutan

A person may-

1. take or send out of India to Nepal or Bhutan, currency notes of Government of India and Reserve Bank of India notes (other than notes of denominations of above Rs.100 in either case) provided that an individual travelling from India to Nepal or Bhutan can carry Reserve Bank of India currency notes of denomination Rs.500/- and/or Rs.1000/- up to a limit of Rs.25,000/- ;
2. bring into India from Nepal or Bhutan, currency notes of Government of India and Reserve Bank of India notes (other than notes of denominations of above Rs.100 in either case) ;
3. take out of India to Nepal or Bhutan, or bring into India from Nepal or Bhutan, currency notes being the currency of Nepal or Bhutan.

E. Prohibition on Export of Indian Coins

No person shall take or send out of India the Indian coins which are covered by the Antique and Art Treasure Act, 1972.

RTGS charges for customers - revision

RBI has vide its notification dated 4th february, 2016 revised the RTGS charges for bank members and customers alike. The variation in charges for customers which will come into effect from 1st
april, 2016 is as follows:

1) Processing charges per transaction: - There will be a flat processing charge of Rs.0.50 per outward transaction and a time varying charge as follows:

Between 8 to 11 hours - NIL
From 11 hours to 13 hours - Rs.2 per transaction
From 13 hours to 1630 hours - Rs.5 per transaction
After 1630 hours - Rs. 10 per transaction

The time is reckoned as settlement at RBI. All charges are out outward transactions, NONE for inward transaction. All rates mentioned above are exclusive of service tax.

2) The maximum anount that the member can recover from its customer (if it so desires) will remain unchanged as under:

For inward transactions NIL
For outward transactions
Amount between Rs.2 lakhs to Rs.5 lakhs - Rs.25 plus applicable time varying charge, subject to maximum of Rs.30/-
Amount above Rs.5 lakhs - Rs.50 plus applicable time varying charge, subject to maximum of Rs.55/-

The RBI notification is available here i.e. https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10260&Mode=0

Safe deposit locker facility from NBFCs

RBI has vide its notification dated 28th January, 2016 clarified that safe deposit locker facilities being offered by certain NBFCs is a fee based service and shall not be reckoned as part of the financial business provided by NBFCs and further that this facility is not being regulated by RBI. NBFCs have to disclose to their customers that this activity is not regulated by RBI.