Kisan Credit Card

As per RBI notification dated 4th February, 2019 Kisan Credit Card will now be extended to meeting working capital requirements in the animal husbandry and fisheries sector. There are guidelines to be followed, which are as under

1. Introduction

In the Budget 2018-19 the Union Government had announced their decision to extend the facilities of Kisan Credit Card (KCC) to Animal Husbandry farmers and Fisheries (AH & F) to help them meet their working capital requirements. In pursuance of the said budget announcement the matter has been examined, and in consultation with all stakeholders, it has been decided to extend the KCC facility for working capital requirement for activities related to Animal Husbandry and Fisheries.

2. Purpose:

The KCC facility will meet the short term credit requirements of rearing of animals, birds, fish, shrimp, other aquatic organisms, capture of fish.

3. Eligibility:

The criteria for eligible beneficiaries under KCC for Animal Husbandry and Fisheries will be as under:

3.1 Fishery

3.1.1 Inland Fisheries and Aquaculture

3.1.1.1 Fishers, Fish Farmers (individual & groups/ partners/ share croppers/ tenant farmers), Self Help Groups, Joint Liability Groups and women groups.

3.1.1.2 The beneficiaries must own or lease any of the fisheries related activities such as pond, tank, open water bodies, raceway, hatchery, rearing unit, possess necessary license for fish farming and fishing related activities, and any other State specific fisheries and allied activities.

3.1.2 Marine Fisheries

3.1.2.1 Beneficiaries listed at 2.1.1.1 above, who own or lease registered fishing vessel/boat, possess necessary fishing license/permission for fishing in estuary and sea, fish farming/mariculture activities in estuaries and open sea and any other State specific fisheries and allied activities.

3.2 Poultry and small ruminant

3.2.1 Farmers, poultry farmers either individual or joint borrower, Joint Liability Groups or Self Help Groups including tenant farmer of sheep/goats/pigs/poultry/birds/rabbit and having owned/rented/leased sheds.

3.3 Dairy

3.3.1 Farmers and Dairy farmers either individual or joint borrower, Joint Liability Groups or Self Help Groups including tenant farmers having owned /rented/leased sheds.

4. Scale of Finance

4.1 The scale of finance will be fixed by the District Level Technical Committee (DLTC) based on local cost worked out on the basis of per acre/per unit/per animal/per bird etc.

4.2 The working capital components in fisheries, under the scale of finance, may include recurring cost towards seed, feed, organic and inorganic fertilisers, lime/other soil conditioners, harvesting and marketing charges, fuel/electricity charges, labour, lease rent (if leased water area) etc. For capture fisheries, working capital may include the cost of fuel, ice, labouring charges, mooring/landing charges etc. may form part of the scale of finance.

4.3 The working capital components in Animal Husbandry, under the scale of finance, may include recurring cost towards feeding, veterinary aid, labour, water and electricity supply.

4.4 The maximum period for assessment of working capital requirement may be based on the cash flow statement or completion of one production cycle.

4.5 Fisheries and Animal Husbandry experts of the Govt. may be made members of the DLTC for giving technical inputs for assessing the cash credit requirement.

4.6 Progressive entrepreneurs of livestock/fisheries sector may also be included in the DLTC for providing field level inputs while assessing the working capital requirements.

5. General Guidelines

5.1 Drawing power: The drawing power will be worked on the basis of the latest valuation of stocks, receivables and/or cash flows as per terms of sanction.

5.2 Repayment: The loan will be in the nature of a revolving cash credit limit. Repayment will be fixed as per the cash flow/income generation pattern of the activity undertaken by the borrower.

5.3 Monitoring of end use: The account/smart card for the loan issued under the scheme is to be maintained/issued separately from the existing KCC loan to monitor the utilization limit. The monitoring of end use of funds will be in line with other loans (KCC on crop loans included) viz., field visits to the site of unit/project to be carried out by the branch officials for checking the progress of the unit. Banks will periodically review the facility and continue/withdraw/scale down the facility based on the performance of the borrower.

5.4 Prudential norms: The extant prudential norms on income recognition, asset classification and provisioning¹ on allied activities will apply.

5.5 Rate of Interest: The rate of interest will be as stipulated in DBR’s Master Direction – Reserve Bank of India (Interest Rate on Advances) Directions 2016.

5.6 All other guidelines laid down in Kisan Credit Card Scheme for short term crop loans will be applicable mutatis mutandis.

Copy of the RBI notification can be found here

Maternity Benefit

The Ministry of Labour and Employment in the Govt. of India has vide its notification dated 29th January, 2019 amended Rule 16  of the Maternity Benefit (Mines & Circus) Rules, 1963.

The new Rule 16 reads as follows:

16.- (1) The employer of every mine & circus shall, on or before the 1st day of February in each year, upload unified annual return in Form X on the web portal of the Central Government in the Ministry of Labour and Employment giving information as to the particulars specified in respect of the preceding year: 

Provided that during inspection, the inspector may require the production of accounts, books, registers and other documents maintained in electronic form or otherwise.

(2) If the employer of a mine or circus to which the Act applies sells, abandons or discontinues the working of the mine or circus, then, he shall, within one month of the date of such sale or abandonment or four months of the date of such discontinuance, as the case may be, upload online, on the web portal of the Central Government in the Ministry of Labour and Employment, a further unified return in Form X referred to in sub-rule (1) in respect of the period between the end of the preceding year and the date of the sale, abandonment or discontinuance.’.

What is unified annual return is not specified or defined anywhere, but the Labour Ministry has carried out similar amendments to 7 legislations.

It is not also clear from when it is effective, because the notification is dated 29th January, 2019 and it requires the establishment to file a return on or before 1st February every year. So it would be practically impossible to collate all the information and file the return in just one day!!!

The circus industry is more or less moribund across India, there are hardly any circuses left in town. So don't know what purpose this will serve to that sector. Mines hardly employ any women on their rolls so again the purpose of having a maternity benefit act for mine sector seems hardly to be a great idea. Better idea would have been to scrap this legislation altogether. 

Minimum Wages

The Ministry of Labour and Employment in the Govt. of India has vide its notification dated 29th January, 2019 amended Rule 21(4A)  of the Minimum Wages (Central) Rules, 1950.

The new Rule 21(4A) reads as follows:

4A.- Every employer shall, on or before the 1st day of February in each year, upload unified annual return in Form III on the web portal of the Central Government in the Ministry of Labour and Employment giving information as to the particulars specified in respect of the preceding year: 

Provided that during inspection, the inspector may require the production of accounts, books, registers and other documents maintained in electronic form or otherwise."

What is unified annual return is not specified or defined anywhere, but the Labour Ministry has carried out similar amendments to 7 legislations.

It is not also clear from when it is effective, because the notification is dated 29th January, 2019 and it requires the establishment to file a return on or before 1st February every year. So it would be practically impossible to collate all the information and file the return in just one day!!!

Payment of Bonus

The Ministry of Labour and Employment in the Govt. of India has vide its notification dated 29th January, 2019 amended Rule 5 of the Payment of Bonus Rules, 1975.

The new Rule 5 reads as follows:

5. Annual return.- Every employer shall, on or before the 1st day of February in each year, upload unified annual return in Form D on the web portal of the Central Government in the Ministry of Labour and Employment giving information as to the particulars specified in respect of the preceding year: 

Provided that during inspection, the inspector may require the production of accounts, books, registers and other documents maintained in electronic form or otherwise."

What is unified annual return is not specified or defined anywhere, but the Labour Ministry has carried out similar amendments to 7 legislations.

It is not also clear from when it is effective, because the notification is dated 29th January, 2019 and it requires the establishment to file a return on or before 1st February every year. So it would be practically impossible to collate all the information and file the return in just one day!!!

Digital Transactions

RBI has vide its notification dated 31st January, 2019 provided for an Ombudsman scheme for redressal of complaints against deficiency of services related to digital transactions. All system participants defined under Ombudsman Scheme shall come within the ambit of the Scheme and shall comply with the provisions of Ombudsman Scheme for Digital Transactions 

The RBI notification can be found here

Commencement of Business

MCA has vide the Companies Ordinance 2019 which has been promulgated on 14th January, 2019 introduced a new section 10A in the Companies Act, 2013 which requires that every company incorporated after the above date and having share capital shall not commence business nor exercise its borrowing powers unless it has filed a declaration within 180 days from the date of incorporation and also filed document pertaining to its registered office.

There is the penalty of Rs.50,000 on the company and Rs.1000 per day on each officer in default subject to a maximum of Rs.100,000/-

Where the aforesaid declaration has not been filed within 180 days of the date of incorporation, then the Registrar may, where he is of the opinion, that the company is not carrying on any business or operations, start proceedings to remove the name of the company from its records. Of course the penalty clause will still be applicable.

Form INC-20A is the form which has been introduced by the MCA and the only mandatory documentation required is the proof that the subscriber has paid in his subscription money for the value of shares which he has agreed to subscribe via the memorandum of association. A copy of the cheque issued by the subscriber and a copy of the bank statement showing the credit in the company's bank account should suffice for the purpose. Which also means that the bank account can be opened by the company but actual business like invoicing etc. cannot commence until this declaration has been filed.

Originally this provision was introduced vide Companies Amendment Ordinance 2018 w.e.f  2nd November, 2018 but this 2019 Ordinance replaces the old one.

So one more compliance for a company after its incorporation in India. 

Insider Trading

SEBI has vide an amendment dated 21st January, 2019 amended the clause 7(1) of the SEBI (Prohibition of Insider Trading) REgulations 2015.

Clause 7(1) of the PIT Regulations refers to initial disclosure by every promoter, KMP and Director of every company whose securities are listed on a stock exchange, they are required to disclose his holding of securities in the company as on the date of the regulations coming into force. The initial disclosure was required to be done within 30 days of the regulations coming into force.

Now vide this amendment, which was with effect from 21st January, 2019, "member of the promoter group" is also included in the list of persons who are required to give their initial disclosures.

Now the meaning of "promoter group" is defined in the SEBI (Issue of Capital and Disclosure Requirements) REgulations, 2018. (ICDR Regulations).

As per the said ICDR regulations, "promoter group" includes

i) the promoter;

ii) an immediate relative of the promoter (i.e. any spouse of that person, or any parent, brother, sister or child of the person or of the spouse); and

iii) in case promoter is a body corporate:
A) a subsidiary or holding company of such body corporate;
B) any body corporate in which the promoter holds twenty per cent. or more of the equity share capital; and/or any body corporate which holds twenty per cent. or more of the equity share capital of the promoter;
C) any body corporate in which a group of individuals or companies or combinations thereof acting in concert, which hold twenty per cent. or more of the equity share capital in that body corporate and such group of individuals or companies or combinations thereof also holds twenty per cent. or more of the equity share capital of the issuer and are also acting in concert;

and iv) in case the promoter is an individual:
A) any body corporate in which twenty per cent. or more of the equity share capital is held by the promoter or an immediate relative of the promoter or a firm or Hindu Undivided Family in which the promoter or any one or more of their relative is a member;
B) any body corporate in which a body corporate as provided in (A) above holds twenty per cent. or more, of the equity share capital; and
(C) any Hindu Undivided Family or firm in which the aggregate share of the promoter and their relatives is equal to or more than twenty per cent. of the total capital;

v) all persons whose shareholding is aggregated under the heading "shareholding of the promoter group":

Provided that a financial institution, scheduled bank, foreign portfolio investor other than Category III foreign portfolio investor, mutual fund, venture capital fund, alternative investment fund, foreign venture capital investor, insurance company registered with the Insurance Regulatory and Development Authority of India or any other category as specified by the Board from time to time, shall not be deemed to be promoter group merely by virtue of the fact that twenty per cent. or more of the equity share capital of the promoter is held by such person or entity:

Provided further that such financial institution, scheduled bank, foreign portfolio investor other than Category III foreign portfolio investor, mutual fund, venture capital fund, alternative investment fund and foreign venture capital investor insurance company registered with the Insurance Regulatory and Development Authority of India or any other category as specified by the Board from time to time shall be treated as promoter group for the subsidiaries or companies promoted by them or for the mutual fund sponsored by them;

So members of the promoter group have to give their initial disclosures in the form prescribed within 30 days of the amendment coming into force i.e. within 30 days of 21st January, 2019 or on or before 19th February, 2019.