Saturday, October 7, 2017

Maintenance of SLR and holdings of SLR in HTM category

RBI has reduced the rate of SLR from 20 % to 19.5 % of Net Demand and Term Liabilities from 14/10/2017.
Currently, Banks are permitted to exceed the limit of 25 % of the total investments under HTM category, provided
·        the excess comprises of SLR securities and
·    total SLR securities held under HTM category are not more than 20.5 % of NDTL.
In order to align this ceiling with the mandatory SLR, RBI has decided to reduce the ceiling from 20.5 % to 20 % by 31/12/17 and to 19.5 % by 31/03/18.
Normally, Banks are allowed to shift investments to/from HTM category once a year at the beginning of the accounting year with the approval of the Board of Directors.
In addition to this, RBI has now allowed Banks to shift their excess SLR securities from the HTM category to AFS/HFT, and has also allowed direct sale from HTM category in order to comply with the current SLR requirement.
Such transfer or sale would be excluded from the 5 % cap prescribed for value of sales and transfers of securities to/from HTM category as per extant RBI guidelines.
Based on RBI notification dated 4/10/18. For any further clarification, please refer

Friday, September 15, 2017

Export Data Processing and Monitoring System (EDPMS) Issuance of Electronic Bank Realisation Certificate (eBRC)

In January 2016 RBI had issued guidelines on the implementation and operationalisation of  Export Data Processing and Monitoring System (EDPMS)
In May 2016 RBI advised AD Category-I banks to carry out changes in their IT system / operating procedure, report subsequent export transactions in EDPMS and also capture the details of advance remittances received for exports in EDPMS.
RBI has now directed Banks to update the EDPMS with data of export proceeds on “as and when realised basis”
With effect from 16/10/17, Electronic Bank Realisation Certificate (eBRC) should be  generated only from the data available in EDPMS.
Based on RBI guidelines dated 15/09/2017. Far any further clarification in the matter, please visit

Monday, August 14, 2017

Commercial Paper

Eligible Issuers:
·        Companies, including NBFCs and All India Financial Institutions (AIFIs) subject to the condition that any fund-based facility availed from banks or financial institutions are classified as a standard asset at the time of issue.
·        Other entities like co-operative societies, unions, government entities, trusts, LLPs and any other body corporate in India with a net worth of 100 cr or above subject to the above mentioned condition.
·        Any other entity specifically permitted by RBI.
End use
·        The end use shall be disclosed in the offer document at the time of issue.
Eligible Investors:
·        All residents and non-residents permitted to invest in CPs under FEMA; however, no person can invest in CPs issued by related parties.
·        Investment by regulated financial sector entities will be subject to conditions imposed by the regulator.
Form of the instrument, mode of issuance, rating and documentation procedures
·        A CP shall be issued in the form of a promissory note and held in a dematerialized form through SEBI approved/ registered depositories.
·        A CP shall be issued in a denomination of 5 lakh and multiples thereof.
·        A CP shall be issued at a discount to face value.
·        No issuer shall have the issue of a CP underwritten or co-accepted.
·        Options (call/put) are not permitted on a CP.
Rating Requirement
·        Effective from 1st Oct 2017, those Issuers, whose total CP issuance during a calendar year is 1000 crore or more, shall obtain credit rating from at least two CRAs registered with SEBI
·        Lower of the two ratings should be adopted.
·        Where both ratings are the same, the issuance shall be for the lower of the two amounts for which ratings are obtained.
·        The minimum credit rating shall be ‘A3’ as per rating symbol and definition prescribed by SEBI.
Documentation Procedures
·        Issuers, investors and Issuing and Paying Agents (IPAs) shall follow the standard procedures and documentation prescribed by FIMMDA.
Issue of CP-Credit Enhancement, limits etc.
·        A CP shall be issued as a ‘stand-alone’ product.
·        Banks and FIs may provide stand-by assistance/credit, back-stop facility etc. by way of credit enhancement for a CP issue.
·        Non-bank entities may provide unconditional and irrevocable guarantee for credit enhancement for CP issue provided that
a.     the offer document should properly disclose the net worth of the guarantor company,
b.     the names of the companies to which the guarantor has issued similar guarantees,
c.      the extent of the guarantees offered by the guarantor company,
d.     the conditions under which the guarantee will be invoked.
Secondary market trading and settlement of CP
·        All OTC trades in CP shall be reported within 15 minutes to “F-TRAC” of Clearcorp Dealing System (India) Ltd.
·        The settlement cycle for OTC trades shall be T+0 or T+1.
·        OTC trades in a CP shall be settled through the clearing corporation of any recognized stock exchange or as approved by RBI.
Buyback of CP
·        The buyback of a CP shall be at the prevailing market price.
·        The buyback offer should be extended to all investors.
·        The terms of the buyback should be identical for all investors.
·        The buyback offer may not be made before 30 days from the date of issue.
·        CPs bought back shall stand extinguished.
Duties and Obligations
The duties and obligations of the Issuer, Issuing and Paying Agent (IPA) and Credit Rating Agency (CRA) are set out below:
I. Issuer – The issuer of CP shall
·        Appoint an IPA for issuance of a CP.
·        Comply with all requirements under these directions and furnish a declaration in this regard to the IPA.
·        Ensure that the proceeds from CP issues are for declared end uses.
·        Furnish the board resolution authorizing the company to borrow through issuance of a CP to the IPA.
·        Keep the banks from whom it has outstanding credit facilities informed of its market borrowings, by the end of the month in which a CP was issued.
·        Arrange for crediting the CP to the demat account through the IPA within 7 days of issue.
·        Route all subscriptions/redemptions/buybacks/payments and default details through the IPA.
·        Make disclosures in the offer document.
·        Submit a certificate from the CEO/CFO to the IPAs on quarterly basis that CP proceeds are used for disclosed purposes, and certifying adherence to other conditions of the offer document and the CP directions, within 15 days from the close of the quarter.
·        Inform the CRA and IPA on the same day about any default/delay in CP related payments.
·        The issuer who has defaulted on a CP shall not be allowed to access the CP market for six months from the date of default.
II. Issuing and Paying Agent – The IPA for a CP issuance shall
·        Ensure that the borrower is authorised to borrow through CPs.
·        Verify all information disclosed in the offer document before issuance.
·        Verify all documents submitted by the issuer and issue a certificate that these are in order.
·        Make available the IPA certificate in electronic form on the website of the depositories for the CPs..
·        Verify and hold certified copies of original documents and/or digitally signed documents in its custody.
·        Report the details of issuance of a CP, or its buyback and instances of default on the F-TRAC platform, by close of business hours. Until CCIL advises full operationalisation of F-TRAC, the current reporting arrangements shall continue.
III. Credit Rating Agency
·        A Credit Rating Agency must rate the CP issuances responsibly, continuously monitor the rating and disseminate rating revisions to public.
·        A CRA must publicly disseminate the ratings of the CP and any subsequent change, on the date of rating or change, as the case may be.
Applicability of other directions/regulations etc
Issuers of CPs shall abide by any guideline issued by any regulator or other authority in respect of issue of CPs provided that such guidelines do not conflict with these directions.
Non-applicability of Certain Other Directions
Nothing contained in the NBFC Acceptance of Public Deposits (Reserve Bank) Directions, 1998 shall apply to the raising of funds by issuance of CP, by any NBFC when such funds are raised in accordance with these directions.
Based on RBI circular dated 10th Aug 2017. For any further clarification please refer ........................Poppy