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Popularity: 15% [?]
RBI Notifications 2010
On January - 27 - 2010 ADD COMMENTS
Auction for Sale (Re-issue) of Government of India Floating Rate Bonds, 2020
On January - 14 - 2010 ADD COMMENTS
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Economic Affairs)
(Budget Division)
New Delhi, the January 15, 2010
NOTIFICATION
Auction for Sale (Re-issue) of Government of India Floating Rate Bonds, 2020
F.No.4(1)-W&M/2009(i): Government of India hereby notifies sale (re-issue) of Floating Rate Bonds, 2020 ( hereinafter called ‘the Bonds’) for an aggregate amount of Rs 3,000 crore. The sale shall be subject to the terms and conditions spelt out in this notification (called ‘Specific Notification’) as also the terms and conditions specified in the General Notification F. No. 4 (13)–W&M/2008, dated October 8, 2008 issued by Government of India.
Method of Issue
2. The Bonds shall be sold through the Reserve Bank of India, Public Debt Office, Mumbai Office, Fort, Mumbai – 400 001 in the manner as prescribed in paragraph 5.1 of the General Notification F.No. 4(13)- W&M /2008, dated October 8, 2008 by a price based auction using the Uniform Price Auction Method.
Allotment to Non-competitive Bidders
3. The Bonds up to 5 % of the notified amount of the sale shall be allotted to eligible individuals and institutions as per the enclosed Scheme for Non-competitive Bidding Facility in the Auctions of Government Securities (Annex).
Place and Date of Auction
4. The auction shall be conducted by the Reserve Bank of India, (Public Debt Office), Mumbai Office, Fort, Mumbai on January 22, 2010. Bids for the auction should be submitted in electronic format on the Negotiated Dealing System (NDS) on January 22, 2010. The non-competitive bids should be submitted between 10.30 a.m. and 11.30 a.m. and the competitive bids should be submitted between 10.30 a.m. and 12.30 p.m.
When Issued Trading
5. The Bonds shall be eligible for “When Issued” trading in accordance with the guidelines issued by the Reserve Bank of India.
Tenure
6. The Bonds shall be of eleven-year tenure commencing from December 21, 2009. The Bonds shall be repaid at par on December 21, 2020.
Date of Issue and Payment for the Bonds
7. The result of the auction shall be displayed by the Reserve Bank of India at its Fort, Mumbai Office on January 22, 2010. The payment by successful bidders shall be made on January 25, 2010 (Monday), i.e., the date of re-issue. The payment for the Stock shall include accrued interest on the nominal value of the Stock allotted in the auction from the date of original issue i.e., December 21, 2009 to January 24, 2010.
Interest
8. (i) Interest at a rate of 3.79 per cent per annum shall accrue on the nominal value of the Bonds from December 21, 2009 (date of original issue) and shall be paid on June 21, 2010. For the subsequent periods, the interest at a variable rate shall be paid every half-year on December 21 and June 21.
(ii) The variable coupon rate for payment of interest on subsequent semi-annual periods shall be the average rate (rounded off up to two decimal places) of the implicit yields at the cut-off prices of the last three auctions of Government of India 182 day Treasury Bills held up to the commencement of the respective semi-annual coupon periods. The implicit yields shall be computed by reckoning 365 days in a year.
(iii) In the event of Government of India 182-day Treasury Bill auctions being discontinued during the currency of the Bonds, the coupon rate shall be the average of Yield to Maturity (YTM) rates prevailing for six month Government of India Security/ies as on the last three non-reporting Fridays prior to the commencement of the semi-annual coupon period. In case particular Friday/s is/are holiday/s, the yield to maturity rates as on the previous working day shall be taken.
(iv) The rate of interest payable half yearly on the Bonds during the subsequent periods shall be announced by the Reserve Bank of India before the commencement of the relative semi-annual coupon period.
By Order of the President of India
(Shaktikanta Das)
Joint Secretary to the Government of India
Popularity: 10% [?]
Auction for Sale (Re-issue ) of ‘7.32 per cent Government Stock, 2014′
On January - 14 - 2010 ADD COMMENTS
Government of India
Ministry of Finance
Department of Economic Affairs
Budget Division
New Delhi, dated January 15, 2010
NOTIFICATION
Auction for Sale (Re-issue ) of ‘7.32 per cent Government Stock, 2014′
F. No.4 (1)-W&M/2009: Government of India hereby notifies sale (reissue) of ‘7.32 per cent Government Stock, 2014’ (hereinafter called ‘the Stock’) for an aggregate amount of Rs. 2,000 crore (nominal). The sale will be subject to the terms and conditions spelt out in this notification (called ‘Specific Notification’) as also the terms and conditions specified in the General Notification F. No. 4 (13)–W&M/2008, dated October 8, 2008 issued by Government of India.
Method of Issue
2 The Stock will be sold through Reserve Bank of India, Mumbai Office, Fort, Mumbai- 400 001 in the manner as prescribed in paragraph 5.1 of the General Notification F. No. 4 (13)–W&M/2008, dated October 8, 2008 by a price based auction using uniform price auction method.
Allotment to Non-competitive Bidders
3. The Government Stock up to 5 % of the notified amount of the sale will be allotted to eligible individuals and institutions as per the enclosed Scheme for Non-competitive Bidding Facility in the Auctions of Government Securities (Annex).
Place and date of auction
4. The auction will be conducted by Reserve Bank of India, Mumbai Office, Fort, Mumbai-400 001 on January 22, 2010. Bids for the auction should be submitted in electronic format on the Negotiated Dealing System (NDS) on January 22, 2010. The non-competitive bids should be submitted between 10.30 a.m. and 11.30 a.m. and the competitive bids should be submitted between 10.30 a.m. and 12.30 p.m.
When Issued Trading
5. The Stock will be eligible for “When Issued” trading in accordance with the guidelines issued by the Reserve Bank of India.
Tenure
6 The Stock will be of five-year tenure commencing from October 20, 2009. The Stock will be repaid at par on October 20, 2014.
Date of issue and payment for the stock
7. The result of the auction shall be displayed by the Reserve Bank of India at its Fort, Mumbai Office on January 22, 2010. The payment by successful bidders will be on January 25, 2010, i.e., the date of re-issue. The payment for the Stock will include accrued interest on the nominal value of the Stock allotted in the auction from the date of original issue i.e., October 20, 2009 to January 24, 2010.
Interest
8.Interest at the rate of 7.32 per cent per annum will accrue on the nominal value of the Stock from the date of original issue and will be paid half yearly on April 20 and October 20.
By Order of the President of India
(Shaktikanta Das)
Joint Secretary to the Government of India
Popularity: 10% [?]
Auction of Government of India Dated Securities
On January - 14 - 2010 ADD COMMENTS
Ref.No. IDMD.3103/08.02.33/2009-10
January 15, 2010
All Scheduled Commercial Banks /
All State Co-operative Banks/
All Scheduled Primary (Urban) Co-operative Banks/
All Financial Institutions/ All Primary Dealers
Dear Sirs,
Auction of Government of India Dated Securities
Government of India have offered to sell (re-issue) of (a) “7.32 percent Government Stock 2014 ” for a notified amount of Rs.2,000 crore (nominal) through a price based auction using uniform price method vide Notification No.4(1)-W&M/2009 dated January 15, 2010, (b) ”Floating Rate Bonds 2020″ for a notified amount of Rs.3,000 crore (nominal) through a price based auction using uniform price method vide Notification No.4(1)-W&M/2009(i) dated January 15, 2010 and (c) “8.28 percent Government Stock 2032” for a notified amount of Rs. 2,000 crore (nominal) through a price based auction using uniform price method vide Notification No.4(1)-W&M/2009(ii) dated January 15, 2010. The Reserve Bank of India at Mumbai will conduct the auctions on January 22, 2010. The salient features of the auctions and the terms and conditions governing the issue of the Stocks are given in the Notifications (copies enclosed), which should be read along with the General Notification F. No. 4 (13)–W&M/2008, dated October 8, 2008 issued by Government of India.
2. We wish to draw your attention, in particular, to the following:
A. With regard to Floating Rate Bonds (FRBs)
- The coupon rate for payment of interest for the first half year ending June 20, 2010 will be 3.79 per cent . For the subsequent periods, the interest will be paid at a variable rate on a semi-annual basis.
- The variable interest rate for payment of interest will be the average of the implicit yields at cut-off prices of last three auctions of Government of India 182 day Treasury Bills.
- The reset of variable interest rates will be made semi-annually and will be announced by the Reserve Bank of India on or before the commencement of the respective coupon periods
- The Stocks will be issued for a minimum amount of Rs.10,000/- (nominal) and in multiples of Rs.10,000/- thereafter
- ‘Floating Rate Bonds 2020′ will be repaid at par on December 21, 2020.
B. With regard to ’7.32% Government Stock 2014′ and ’8.28% Government Stock 2032′
- The Stocks will be issued for a minimum amount of Rs.10,000/- (nominal) and in multiples of Rs.10,000/- thereafter.
- ’7.32% Government Stock 2014′ and ’8.28% Government Stock 2032′ will be repaid at par on October 20, 2014, and February 15, 2032 respectively.
C. In all the cases
- Government Stock up to 5% of the notified amount of sale will be allotted to the eligible individuals and institutions under the Scheme for Non-competitive Bidding Facility in the Auctions of Government Securities (enclosed with the notifications F. No.4 (1)-W&M/2009, F. No.4 (1)-W&M/2009(i) and F. No.4 (1)-W&M/2009(ii) all dated January 15, 2010). Each bank or PD on the basis of firm orders received from their constituents will submit a single consolidated non-competitive bid on behalf of all its constituents in electronic format on the Negotiated Dealing System (NDS). Allotment under the non-competitive segment to the bank or PD will be at the cut-off price that will emerge in the auction on the basis of the competitive bidding.
- Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Negotiated Dealing System (NDS) on January 22, 2010. Bids in physical form will not be accepted except in extraordinary circumstances such as general failure of the NDS system. The non-competitive bids should be submitted between 10.30 a.m. and 11.30 a.m. and the competitive bids should be submitted between 10.30 a.m. and 12.30 p.m.
- An investor can submit more than one competitive bids at different prices in electronic format on the Negotiated Dealing System (NDS). However, the aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.
- On the basis of bids received, the Reserve Bank will determine the minimum price up to which tenders for purchase of Government Stock will be accepted at the auctions. Bids quoted at rates lower than the minimum price determined by the Reserve Bank of India will be rejected. Reserve Bank of India will have the full discretion to accept or reject any or all bids either wholly or partially without assigning any reason.
- The result of the auctions will be announced on January 22, 2010 and payment by successful bidders will be on January 25, 2010 (Monday).
- The Government Stocks will be issued by credit to Subsidiary General Ledger Account (SGL) of parties maintaining such account with Reserve Bank of India or in the form of Stock Certificate. Interest on the Government Stock will be paid half-yearly.
- The Floating Rate Bonds/ Government stocks will qualify for the ready forward facility.
- The Stock will be eligible for “When Issued” trading during the period January 18-22, 2010 in accordance with the guidelines on ‘When Issued’ transactions in Central Government Securities’ issued by the Reserve Bank of India vide circular No. RBI /2006-07/178 dated November 16, 2006 as amended from time to time.
Yours faithfully,
(Rajendra Kumar)
Deputy General Manager
Popularity: 10% [?]
Auction for Sale (Re-issue ) of ‘6.90 per cent Government Stock, 2019’
On January - 14 - 2010 ADD COMMENTS
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Popularity: 10% [?]
RRBs – Computation of NDTL for the purpose of Maintenance of CRR/SLR
On January - 14 - 2010 ADD COMMENTS
RBI/2009-10/289
RPCD.CO.RRB.BC.No.48 /03.05.50 /2009-10
January 18, 2010
All Regional Rural Banks
Dear Sir,
Computation of Net Demand and Time Liabilities (NDTL)
for the purpose of Maintenance of CRR/SLR
It has been observed that the Regional Rural Banks (RRBs) are not following a uniform practice in reckoning their liability in respect of arrangements with correspondent banks (mainly sponsor banks) for remittance facilities. Under the arrangements, there is a transfer of funds by accepting bank to its correspondent bank and it is an obligation of the correspondent bank to honour the instruments. However, such transfer of funds and obligation of correspondent bank to honour the instruments in no way absolve the primary liability of the accepting bank issuing drafts and interest/dividend warrants to its customers. It is, therefore, advised that all RRBs should reckon the liability in the following manner:
i) When an RRB accepts funds from a client under its remittance facility scheme, it becomes a liability (Liabilities to Others) in its books. The liability of the RRB accepting funds will extinguish only when the correspondent bank honours the drafts issued by the accepting bank to its customers. As such, the balance amount in respect of the drafts issued by the RRB on its correspondent bank under the remittance facility scheme and remaining unpaid should be reflected in the RRB’s books as an outside liability and the same should also be taken into account for computation of NDTL for CRR/SLR purpose.
ii) The amount received by correspondent banks has to be shown as ‘ Liabilities to the Banking System ‘ by them and not as ‘ Liabilities to Others ‘ and this liability could be netted off by the correspondent banks against their inter-bank assets. Likewise sums placed by banks issuing drafts/interest/duplicate warrants are to be treated as Assets within banking system in their books and can be netted off from their inter-bank liabilities.
2. Please acknowledge receipt to our Regional Office concerned.
Yours faithfully,
(A.K.Pandey)
General Manager
Popularity: 11% [?]
Guidelines on trading of Currency Futures in Recognized Stock Exchanges
On January - 14 - 2010 ADD COMMENTS
RBI/2009-10/290
A.P. (DIR Series) Circular No. 27
January 19, 2010
To
All Authorised Dealer Category – I Banks
Madam / Sir,
Guidelines on trading of Currency Futures
in Recognized Stock Exchanges
Attention of Authorized Dealers Category – I (AD Category – I) banks is invited to A.P.(DIR Series) Circular No. 05 dated August 06, 2008, permitting persons resident in India to participate in the currency futures market in India, subject to the directions contained in Currency Futures (Reserve Bank) Directions, 2008 [Notification No. FED.1/ DG (SG)-2008 dated August 6, 2008].
2. Currently, persons resident in India are permitted only to trade in US Dollar (USD) – Indian Rupee (INR) currency futures contracts in recognized stock exchanges. In order to facilitate direct hedging of currency risk in other currency pairs as well, it has been decided, as announced in the Second Quarter Review of Monetary Policy 2009-10 (Para 117), to permit the recognized stock exchanges to offer currency futures contracts in the currency pairs of Euro-INR, Japanese Yen (JPY)-INR and Pound Sterling (GBP)-INR, in addition to the USD-INR contracts, with immediate effect.
3. Accordingly, the Notification No.FED. 2 / ED (HRK)-2009 dated January 19, 2010 viz. Currency Futures (Reserve Bank) (Amendment) Directions, 2010, amending the Directions notified vide Notification No.FED.1/DG(SG)-2008 dated August 6, 2008 has been issued. A copy of the Notification is annexed.
4. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers, concerned.
5. This circular has been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
Salim Gangadharan
Chief General Manager-in-charge
Annex
[A.P.(DIR Series) Circular No.27
dated January 19, 2010]
Currency Futures (Reserve Bank) (Amendment) Directions, 2010
Notification No. FED. 2/ ED (HRK)-2010 dated January 19, 2010
The Reserve Bank of India having considered necessary in the public interest and having regard to the need for regulating the financial system of the country to its advantage, in exercise of its powers conferred by section 45W of the Reserve Bank of India Act, 1934 and of all the powers enabling it in this behalf, hereby makes the following amendments to the Currency Futures (Reserve Bank) Directions, 2008 which werenotified vide Notification No. FED.1/ DG (SG)-2008 dated August 6, 2008 and published in Part III, Section 4 of the Gazette of India (Weekly) dated October 11, 2008.
1. Short title and commencement of the directions
These Directions may be called the Currency Futures (Reserve Bank) (Amendment) Directions, 2010 and they shall come into force with effect from January 19, 2010.
2. Amendment of the directions
In paragraph 4 of the Currency Futures (Reserve Bank) Directions, 2008,
(i) in clause (a), after the words “Only USD-INR”, the comma and words, “, Euro-INR, Pound Sterling (GBP)-INR and Japanese Yen (JPY)-INR ” shall be inserted.
(ii) in clause (b), after the words “USD 1000”, the words, “ for USD-INR contracts, Euro 1000 for Euro-INR contracts, GBP 1000 for GBP-INR contracts and JPY 100,000 for JPY-INR contracts.” shall be inserted.
(iii) for clause (e) , the following clause shall be substituted, namely :-
“e. The settlement price for USD-INR and Euro-INR contracts shall be the Reserve Bank’s Reference Rates and for GBP-INR and JPY-INR contracts shall be the exchange rates published by the Reserve Bank in its press release on the last trading day.”
(H. R. Khan)
Executive Director
Popularity: 7% [?]
Auction for Sale (Re-issue ) of ‘8.28 per cent Government Stock, 2032’
On January - 14 - 2010 ADD COMMENTS
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Popularity: 9% [?]
Retail Issue of Subordinated Debt for Raising Tier II Capital
On January - 13 - 2010 ADD COMMENTS
RBI/2009-10/287
DBOD.BP.BC.No. 69 / 21.01.002/ 2009-10
January 13, 2010
All Commercial Banks
(excluding RRBs )
Dear Sir,
Retail Issue of Subordinated Debt for Raising Tier II Capital
Please refer to our circular DBOD.No.BP.BC. 38 /21.01.002/2009-10 September 7, 2009 on ‘Issue of Subordinated Debt for Raising Tier II Capital’.
2. Some banks have indicated that they would like to issue subordinated debt to retail investors. With a view to enhancing investor education relating to risk characteristics of regulatory capital instruments, banks issuing subordinated debt to retail investors are advised to adhere to the following conditions:
a) The requirement for specific sign-off as quoted below, from the investors for having understood the features and risks of the instrument may be incorporated in the common application form of the proposed debt issue.
” By making this application, I/We acknowledge that I/We have understood the terms and conditions of the Issue of [ insert the name of the instruments being issued ] of [ Name of The Bank ] as disclosed in the Draft Shelf Prospectus, Shelf Prospectus and Tranche Document “.
b) For floating rate instruments, banks should not use its Fixed Deposit rate as benchmark.
c) All the publicity material, application form and other communication with the investor should clearly state in bold letters (with font size 14) how a subordinated bond is different from fixed deposit particularly that it is not covered by deposit insurance.
3. The guidelines contained in this circular would be applicable with immediate effect.
Yours faithfully
(B. Mahapatra)
Chief General Manager
RBI/2009-10/287DBOD.BP.BC.No. 69 / 21.01.002/ 2009-10
January 13, 2010
All Commercial Banks(excluding RRBs )
Dear Sir,
Retail Issue of Subordinated Debt for Raising Tier II Capital
Please refer to our circular DBOD.No.BP.BC. 38 /21.01.002/2009-10 September 7, 2009 on ‘Issue of Subordinated Debt for Raising Tier II Capital’.
2. Some banks have indicated that they would like to issue subordinated debt to retail investors. With a view to enhancing investor education relating to risk characteristics of regulatory capital instruments, banks issuing subordinated debt to retail investors are advised to adhere to the following conditions:
a) The requirement for specific sign-off as quoted below, from the investors for having understood the features and risks of the instrument may be incorporated in the common application form of the proposed debt issue.
” By making this application, I/We acknowledge that I/We have understood the terms and conditions of the Issue of [ insert the name of the instruments being issued ] of [ Name of The Bank ] as disclosed in the Draft Shelf Prospectus, Shelf Prospectus and Tranche Document “.
b) For floating rate instruments, banks should not use its Fixed Deposit rate as benchmark.
c) All the publicity material, application form and other communication with the investor should clearly state in bold letters (with font size 14) how a subordinated bond is different from fixed deposit particularly that it is not covered by deposit insurance.
3.The guidelines contained in this circular would be applicable with immediate effect.
Yours faithfully
(B. Mahapatra)
Chief General Manager
Popularity: 9% [?]
Purchase of Immovable Property in India by Persons of Indian Origin (PIOs) – Amendment of the definition
On January - 13 - 2010 ADD COMMENTS
RBI/2009-10/ 286
A.P. (DIR Series) Circular No.25
January 13, 2010
To
All Authorised Dealers in Foreign Exchange
Madam / Sir,
Purchase of Immovable Property in India by
Persons of Indian Origin (PIOs) – Amendment of the definition
Attention of Authorised Dealer Category-I banks is invited to clause (c) of Regulation 2 of Notification No. FEMA 21/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India), Regulations, 2000, as amended from time to time, in terms of which ‘a Person of Indian Origin’ means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who (i) at any time, held an Indian Passport or (ii) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).
2. Government of India, has notified vide G.S.R.813 (E) in the Gazette of India dated November 12, 2009 [Notification No.FEMA.200/2009-RB dated October 5, 2009] an amendment to clause (c) of Regulation 2 of the Notification referred to above. Accordingly, ‘a Person of Indian Origin’ means an individual (not being a citizen of Pakistan or Bangladesh or Sir Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who (i) at any time, held an Indian Passport or (ii) who or either of whose father or mother or whose grandfather or grandmother was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955). A copy of the Notification is annexed.
3. Authorised Dealer Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
4. The Directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Salim Gangadharan )
Chief General Manager in Charge
RBI/2009-10/ 286A.P. (DIR Series) Circular No.25
January 13, 2010
To
All Authorised Dealers in Foreign Exchange
Madam / Sir,
Purchase of Immovable Property in India byPersons of Indian Origin (PIOs) – Amendment of the definition
Attention of Authorised Dealer Category-I banks is invited to clause (c) of Regulation 2 of Notification No. FEMA 21/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India), Regulations, 2000, as amended from time to time, in terms of which ‘a Person of Indian Origin’ means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who (i) at any time, held an Indian Passport or (ii) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).
2. Government of India, has notified vide G.S.R.813 (E) in the Gazette of India dated November 12, 2009 [Notification No.FEMA.200/2009-RB dated October 5, 2009] an amendment to clause (c) of Regulation 2 of the Notification referred to above. Accordingly, ‘a Person of Indian Origin’ means an individual (not being a citizen of Pakistan or Bangladesh or Sir Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who (i) at any time, held an Indian Passport or (ii) who or either of whose father or mother or whose grandfather or grandmother was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955). A copy of the Notification is annexed.
3. Authorised Dealer Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
4. The Directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Salim Gangadharan ) Chief General Manager in Charge
Popularity: 9% [?]
Prevention of Money-laundering Rules – Amendment – Obligation of Banks/FIs
On January - 12 - 2010 ADD COMMENTS
RBI/2009-10/285
DBOD. AML.BC. No. 68 /14.01.001/2009-10
January 12, 2010
The Chairmen and Chief Executive Officers
(All Scheduled Commercial Banks excluding RRBs)
/ Financial Institutions/ Local Area Banks
Dear Sir,
Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Amendment Rules, 2009 – Obligation of banks/Financial institutions
As you are aware Government of India vide its Notification No.13/2009/F.No.6/8/2009-ES dated November 12, 2009, has amended the Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005. A copy of the Notification is enclosedfor ready reference.
2. Some of the salient features of the amendment, relevant to banks and financial institutions, are as under:
- Clause (ca) inserted in sub-rule (1) of Rule 2 defines “non-profit organization”
- Clause (BA) inserted in sub-rule (1) of Rule 3 requires banks/financial institutions to maintain proper record of all transactions involving receipts by non-profit organizations of value more than rupees ten lakh or its equivalent in foreign currency.
- The amended Rule 6 provides that the records referred to in rule 3 should be maintained for a period of ten years from the date of transactions between the client and the banking company/financial institution.
- A proviso has been inserted in sub-rule (3) of Rule 8, which requires that banks /financial institutions and its employees should keep the fact of furnishing suspicious transaction information strictly confidential.
- Rule 9, now requires banks/financial institutions to verify identity of the non-account based customer while carrying out transaction of an amount equal to or exceeding rupees fifty thousand, whether conducted as a single transaction or several transactions that appear to be connected.
- The amended sub-rule (1) of Rule 9, in terms of clause (b) (ii) requires verification of identity of the customer for all international money transfer operations.
- Proviso to Rule 9 (1) regarding the verification of identity of the client within a reasonable time after opening the account/execution of the transaction has been deleted.
3. Accordingly, in view of amendments to the above Rules, banks / financial institutions are required to :
- Maintain proper record of all transactions involving receipts by non- profit organizations of value more than rupees ten lakh or its equivalent in foreign currency and to forward a report to FIU-IND of all such transactions in the prescribed format every month by the 15th of the succeeding month.
- In case of transactions carried out by a non-account based customer, that is a walk-in customer, where the amount of transaction is equal to or exceeds rupees fifty thousand, whether conducted as a single transaction or several transactions that appear to be connected, the customer’s identity and address should be verified. Further, if a bank has reason to believe that a customer is intentionally structuring a transaction into a series of transactions below the threshold of Rs.50,000/- the bank should verify identity and address of the customer and also consider filing a suspicious transaction report (STR) to FIU-IND.
4. Banks/ financial institutions are advised to strictly follow the amended provisions of PMLA Rules and ensure meticulous compliance to these Rules.
Yours faithfully,
(Vinay Baijal)
Chief General Manager
Popularity: 7% [?]
Ready Forward Contracts in Corporate Debt Securities
On January - 9 - 2010 ADD COMMENTS
RBI/2009-10/284
IDMD.DOD. 05 /11.08.38/2009-10
January 8, 2010
To All Market Participants
Ready Forward Contracts in Corporate Debt Securities
A reference is invited to paragraph 111 of the Second Quarter Review of the Annual Policy Statement for 2009-10 regarding the introduction of repo in corporate bonds.
2. It has been decided to introduce repo in corporate bonds. In this regard, the Reserve Bank of India has issued a direction IDMD.DOD.04/11.08.38/2009-10 dated January 08, 2010 under section 45W of the RBI Act, 1934, which has been placed on the Reserve Bank of India website. A copy of the direction is enclosed.
3. The Reserve Bank of India Notification, in exercise of the powers conferred on the Reserve Bank of India under section 16 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) vide Government of India Notification No. 183(E) dated March 1, 2000 issued under Section 29 A of the Act, ibid, is being issued separately.
Yours faithfully,
(K V Rajan)
Chief General Manager
Encl.: as above
RESERVE BANK OF INDIA
INTERNAL DEBT MANAGEMENT DEPARTMENT
23RD FLOOR CENTRAL OFFICE
FORT MUMBAI 400 001
Mumbai, January 08, 2010
Repo in Corporate Debt Securities (Reserve Bank) Directions, 2010
The Reserve Bank of India having considered it necessary in public interest and to regulate the financial system of the country to its advantage, in exercise of its powers conferred by section 45W of the Reserve Bank of India Act, 1934 and of all the powers enabling it in this behalf, hereby gives the following directions to all the persons dealing in repo in Corporate Debt Securities.
1. Short title and commencement of the directions
These directions may be called the Repo in Corporate Debt Securities (Reserve Bank) Directions, 2010 and they shall come into force with effect from March 01, 2010.
2. Definitions
‘Corporate Debt Security’ means non-convertible debt securities, which create or acknowledge indebtedness, including debentures, bonds and such other securities of a company or a body corporate constituted by or under a Central or State Act, whether constituting a charge on the assets of the company or body corporate or not, but does not include debt securities issued by Government or such other persons as may be specified by the Reserve Bank, security receipts and securitized debt instruments”
‘Security Receipts’ means a security as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002)
‘Securitized debt instrument’ means securities of the nature referred to in sub-clause (ie) of clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956(42 of 1956).
3. Eligible securities for repo in Corporate Debt Securities
Only listed corporate debt securities which are rated ‘AA’ or above by the rating agencies, that are held in the security account of the repo seller, in demat form, shall be eligible provided that Commercial Papers (CPs), Certificates of Deposit (CDs) and other instruments including Non-Convertible Debentures (NCDs) of less than one year of original maturity, shall not be eligible securities for undertaking repo.
4. Eligible Participants
The following entities shall be eligible to undertake repo transactions in corporate debt securities:
Any scheduled commercial bank excluding RRBs and LABs;
Any Primary Dealer authorised by the Reserve Bank of India;
Any non-banking financial company registered with the Reserve Bank of India (other than Government companies as defined in section 617 of the Companies Act, 1956);
All-India Financial Institutions, namely, Exim Bank, NABARD, NHB and SIDBI;
Other regulated entities, subject to the approval of the regulators concerned, viz.,
Any mutual fund registered with the Securities and Exchange Board of India;
Any housing finance company registered with the National Housing Bank; and
Any insurance company registered with the Insurance Regulatory and Development Authorit
Any other entity specifically permitted by the Reserve Bank
5. Tenor
Repos in corporate debt securities shall be for a minimum period of one day and a maximum period of one year.
6. Trading
Participants shall enter into repo transactions in corporate debt securities in the OTC market.
7. Reporting of Trades
All repo trades shall be reported within 15 minutes of the trade on the FIMMDA reporting platform.
The trades shall also be reported to any of the clearing houses of the exchanges for clearing and settlement.
8. Settlement of trades
All repo trades in corporate debt securities shall settle either on a T+1 basis or a T+2 basis under DvP I (gross basis) framework.
Repo transactions in corporate debt securities shall settle in the same manner as outright OTC trades in corporate debt securities.
On the date of reversal of repo trades, the clearing houses shall compute the obligations of the parties and facilitate settlement on DvP basis.
9. Prohibition on sale of repoed security
The security acquired under repo shall not be sold by the repo buyer (lender of the funds) during the period of repo.
10. Haircut
A haircut of 25% (or higher as maybe decided by the participants depending on the term of the repo) shall be applicable on the market value of the corporate debt security prevailing on the date of trade of 1st leg.
Participants may refer to the rating-haircut matrix that may be published by the Fixed Income Money Market and Derivatives Association of India (FIMMDA), to determine the appropriate haircut.
11. Valuation
For arriving at the market value of the corporate debt security, the participants undertaking repo in corporate bonds may refer to the credit spreads published by the FIMMDA.
12. Capital Adequacy
The repo transactions in corporate debt securities shall attract capital charge in terms of para 7.3.8 of the Master Circular DBOD No.BP.BC.21/21.06.001/2009-10 dated July 01, 2009.
13. Disclosure
The details of corporate debt securities lent or acquired under repo or reverse repo transactions shall be disclosed in the “Notes on Accounts” to the Balance Sheet.
14. Accounting
The repo transactions in corporate debt securities shall be accounted as per the revised guidelines on uniform accounting for repo/reverse repo transactions in Government securities, which would be issued separately.
15. Computation of CRR/SLR & borrowing limit
The amount borrowed by a bank through repo shall be reckoned as part of its Demand and Time Liabilities (DTL) and the same shall attract CRR/SLR as per the provisions of the Master Circular DBOD.Ret.BC.45/12.01.001/2009-10 dated September 18, 2009.
The borrowings of a bank through repo in corporate bonds shall be reckoned as its liabilities for reserve requirement and, to the extent these liabilities are to the banking system, they shall be netted as per clause (d) of the explanation under section 42(1) of the RBI Act, 1934. Such borrowings shall, however, be subject to the prudential limits for inter-bank liabilities prescribed vide circular DBOD.BP.BC.66/21.01.002/2006-07 dated March 06, 2007.
16. Documentation
The participants shall enter into bilateral Master Repo Agreement as per the documentation finalized by the FIMMDA.
H R Khan
Executive Director
IDMD.DOD. 04 /11.08.38/2009-10
RBI/2009-10/284IDMD.DOD. 05 /11.08.38/2009-10
January 8, 2010
To All Market Participants
Ready Forward Contracts in Corporate Debt Securities
A reference is invited to paragraph 111 of the Second Quarter Review of the Annual Policy Statement for 2009-10 regarding the introduction of repo in corporate bonds.
2. It has been decided to introduce repo in corporate bonds. In this regard, the Reserve Bank of India has issued a direction IDMD.DOD.04/11.08.38/2009-10 dated January 08, 2010 under section 45W of the RBI Act, 1934, which has been placed on the Reserve Bank of India website. A copy of the direction is enclosed.
3. The Reserve Bank of India Notification, in exercise of the powers conferred on the Reserve Bank of India under section 16 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) vide Government of India Notification No. 183(E) dated March 1, 2000 issued under Section 29 A of the Act, ibid, is being issued separately.
Yours faithfully,
(K V Rajan)Chief General Manager
Encl.: as above
RESERVE BANK OF INDIAINTERNAL DEBT MANAGEMENT DEPARTMENT 23RD FLOOR CENTRAL OFFICEFORT MUMBAI 400 001
Mumbai, January 08, 2010 Repo in Corporate Debt Securities (Reserve Bank) Directions, 2010
The Reserve Bank of India having considered it necessary in public interest and to regulate the financial system of the country to its advantage, in exercise of its powers conferred by section 45W of the Reserve Bank of India Act, 1934 and of all the powers enabling it in this behalf, hereby gives the following directions to all the persons dealing in repo in Corporate Debt Securities.
1. Short title and commencement of the directions
These directions may be called the Repo in Corporate Debt Securities (Reserve Bank) Directions, 2010 and they shall come into force with effect from March 01, 2010.
2. Definitions
‘Corporate Debt Security’ means non-convertible debt securities, which create or acknowledge indebtedness, including debentures, bonds and such other securities of a company or a body corporate constituted by or under a Central or State Act, whether constituting a charge on the assets of the company or body corporate or not, but does not include debt securities issued by Government or such other persons as may be specified by the Reserve Bank, security receipts and securitized debt instruments”
‘Security Receipts’ means a security as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002)
‘Securitized debt instrument’ means securities of the nature referred to in sub-clause (ie) of clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956(42 of 1956).
3. Eligible securities for repo in Corporate Debt Securities
Only listed corporate debt securities which are rated ‘AA’ or above by the rating agencies, that are held in the security account of the repo seller, in demat form, shall be eligible provided that Commercial Papers (CPs), Certificates of Deposit (CDs) and other instruments including Non-Convertible Debentures (NCDs) of less than one year of original maturity, shall not be eligible securities for undertaking repo.4. Eligible Participants
The following entities shall be eligible to undertake repo transactions in corporate debt securities:
Any scheduled commercial bank excluding RRBs and LABs;
Any Primary Dealer authorised by the Reserve Bank of India;
Any non-banking financial company registered with the Reserve Bank of India (other than Government companies as defined in section 617 of the Companies Act, 1956);
All-India Financial Institutions, namely, Exim Bank, NABARD, NHB and SIDBI;
Other regulated entities, subject to the approval of the regulators concerned, viz.,
Any mutual fund registered with the Securities and Exchange Board of India;
Any housing finance company registered with the National Housing Bank; and
Any insurance company registered with the Insurance Regulatory and Development Authorit
Any other entity specifically permitted by the Reserve Bank
5. Tenor
Repos in corporate debt securities shall be for a minimum period of one day and a maximum period of one year.
6. Trading
Participants shall enter into repo transactions in corporate debt securities in the OTC market.
7. Reporting of Trades
All repo trades shall be reported within 15 minutes of the trade on the FIMMDA reporting platform.
The trades shall also be reported to any of the clearing houses of the exchanges for clearing and settlement.
8. Settlement of trades
All repo trades in corporate debt securities shall settle either on a T+1 basis or a T+2 basis under DvP I (gross basis) framework.
Repo transactions in corporate debt securities shall settle in the same manner as outright OTC trades in corporate debt securities.
On the date of reversal of repo trades, the clearing houses shall compute the obligations of the parties and facilitate settlement on DvP basis.
9. Prohibition on sale of repoed security
The security acquired under repo shall not be sold by the repo buyer (lender of the funds) during the period of repo.
10. Haircut
A haircut of 25% (or higher as maybe decided by the participants depending on the term of the repo) shall be applicable on the market value of the corporate debt security prevailing on the date of trade of 1st leg.
Participants may refer to the rating-haircut matrix that may be published by the Fixed Income Money Market and Derivatives Association of India (FIMMDA), to determine the appropriate haircut.
11. Valuation
For arriving at the market value of the corporate debt security, the participants undertaking repo in corporate bonds may refer to the credit spreads published by the FIMMDA.
12. Capital Adequacy
The repo transactions in corporate debt securities shall attract capital charge in terms of para 7.3.8 of the Master Circular DBOD No.BP.BC.21/21.06.001/2009-10 dated July 01, 2009.
13. Disclosure
The details of corporate debt securities lent or acquired under repo or reverse repo transactions shall be disclosed in the “Notes on Accounts” to the Balance Sheet.
14. Accounting
The repo transactions in corporate debt securities shall be accounted as per the revised guidelines on uniform accounting for repo/reverse repo transactions in Government securities, which would be issued separately.
15. Computation of CRR/SLR & borrowing limit
The amount borrowed by a bank through repo shall be reckoned as part of its Demand and Time Liabilities (DTL) and the same shall attract CRR/SLR as per the provisions of the Master Circular DBOD.Ret.BC.45/12.01.001/2009-10 dated September 18, 2009.
The borrowings of a bank through repo in corporate bonds shall be reckoned as its liabilities for reserve requirement and, to the extent these liabilities are to the banking system, they shall be netted as per clause (d) of the explanation under section 42(1) of the RBI Act, 1934. Such borrowings shall, however, be subject to the prudential limits for inter-bank liabilities prescribed vide circular DBOD.BP.BC.66/21.01.002/2006-07 dated March 06, 2007.
16. Documentation
The participants shall enter into bilateral Master Repo Agreement as per the documentation finalized by the FIMMDA.
H R Khan Executive Director
IDMD.DOD. 04 /11.08.38/2009-10
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