Investment in CICs
RBI advised (19.05.2016) that investment directly or indirectly by any person, whether resident or otherwise, in a CIC, shall not exceed 10% of the equity capital of the investee company. RBI may consider allowing higher FDI limits to entities which have an established track record of running a Credit Information Bureau in a well regulated environment:
a. up to 49%, if their ownership is not well diversified (i.e. one or more shareholders each hold more than 10% of voting rights in the company)
b. up to 100%, if their ownership is well diversified or
If their ownership is not well diversified, at least 50% of the directors of the investee CIC in India, are Indian nationals/ Non-Resident Indians/ Persons of Indian Origin subject to the condition that one third of the directors are Indian nationals resident in India.
c. The investor company should preferably be a listed company on a recognised stock exchange.
FII/FPI investment would be permitted subject to the conditions that:
a. A single entity should directly or indirectly hold below 10% equity;
b. Any acquisition in excess of 1% will have to be reported to RBI as a mandatory requirement;
c. FIIs/FPIs investing in CICs shall not seek a representation on the Board of Directors based upon their shareholding.
4. In case the investor in a Credit Information Company in India is a wholly owned subsidiary (directly or indirectly) of an investment holding company, the conditions as at (2) and (3) above will be applied to the operating group company that is engaged in credit information business and has undertaken to provide technical know-how to the Credit Information Company in India.

Repo / Reverse Repo Transactions with RBI
As per extant RBI guidelines dated 23.03.10, the accounting norms under market repo were not applicable to repo / reverse repo transactions conducted under the Liquidity Adjustment Facility (LAF) with RBI.
RBI decided (19.05.16) to:
(a) align the accounting norms to be followed by market participants for repo/reverse repo transactions under LAF and the Marginal Standing Facility (MSF) of RBI with the accounting guidelines prescribed for market repo transactions. Accordingly, the accounting norms prescribed in terms of the circular dated 23.03.10, will apply, mutatis mutandis, to repo/reverse repo transactions undertaken under LAF/MSF. In order to distinguish repo/reverse repo transactions with RBI from market repo transactions, a parallel set of accounts similar to those maintained for market repo transactions but prefixed with ‘RBI’ may be maintained.
(b) reckon the market value of collateral securities for calculating the haircut instead of face value while initiating the LAF/MSF transactions;
(c) bestow SLR status to the securities acquired by banks under reverse repo with RBI; and
(d) allow re-repo of securities received under LAF reverse repo with market participants subject to the conditions prescribed by RBI (circular dated 05.02.15).
The following accounts may be maintained for RBI-LAF/MSF transactions:
i) RBI Repo Account, ii) RBI Reverse Repo A/c, iii) RBI Reverse Repo Interest Income A/c, iv) RBI Repo Interest Expenditure A/ct, v) RBI Reverse Repo Interest Receivable Account, and vi) RBI Repo Interest Payable Account.
2. In addition to the above mentioned accounts, the following ‘contra’ accounts may also be maintained, viz. i) Securities Sold under RBI Repo Account, (ii) Securities Purchased under RBI Reverse Repo Account, (iii) Securities Receivable under RBI Repo Account and (iv) Securities Deliverable under RBI Reverse Repo Account.
These guidelines shall be applicable to all types of repo/reverse repo transactions with RBI including LAF, variable rate term operations and MSF. These guidelines shall come into effect from October 3, 2016.

Money Transfer Service Scheme – Submission of statement/returns under XBRL
In terms of RBI circular dated 12.03.13, all Authorised Persons, who are Indian Agents under Money Transfer Service Scheme were required to submit quarterly statement of the quantum of remittances received in the prescribed format. RBI advised (19.05.16) to report this statement in eXtensible Business Reporting Language (XBRL) system from the quarter ending June 2016.

Rupee Drawing Arrangement – Submission of statement/returns under XBRL
In terms of extant guidelines, AD Cat- I banks were required to submit statement E on total remittances received every quarter. RBI advised (19.05.16) the AD Cat-1 banks to report the above statement in eXtensible Business Reporting Language (XBRL) system from the quarter ending June 2016.

Discontinuation of Statements on Special Agriculture Credit Plan (SACP)
In order to monitor and augment the flow of credit to Agriculture, Special Agriculture Credit Plans (SACP) were introduced for Public Sector banks in 1994 and extended to Private Sector Banks in 2004. Under SACP, the banks are required to fix self-set targets for achievement during the year (April-March), with an increase of about 25% over the disbursement made in the previous year. The banks were required to forward half yearly statements to RBI (FIDD) indicating their progress of implementation as at the end of March and Sept.
Since the relevant data is received through Priority Sector Returns, RBI decided (05.05.16) to discontinue the submission of this statements from April 2016. Accordingly, banks were advised not to furnish half yearly statements for 2016-17 to FIDD, RBI.

Jilani Committee Recommendations
As per extant guidelines, the implementation status of the recommendations need to be submitted before the Audit Committee of the Board. On a review, RBI decided (28.04.16) that the compliance to the recommendations need not be reported to the ACB. However, banks are to ensure that:
i) Compliance to these recommendations are complete and sustained,
ii) These recommendations are appropriately factored in the internal inspection/audit processes of banks and duly documented in their manual/ instructions, etc.

F-TRAC – Counterparty Confirmation
As per circular dated 19.12.14, RBI had waived the requirement of exchange of physical confirmation of trades matched on the Financial Market Trade Reporting and Confirmation Platform (F- TRAC) of the Clearcorp Dealing Systems (India) Ltd. subject to certain conditions. On a review RBI decided (28.04.16) to allow entities reporting trades on F-TRAC to enter into multilateral agreement drafted by the Fixed Income Money Market and Derivatives Association (FIMMDA) for waiving physical exchange of confirmation for the deals in Commercial Papers (CPs), Certificates of Deposit (CDs), Non-Convertible Debentures (NCDs) of original maturity up to one year and repo trades in corporate debt securities, CPs and CDs.

Opening and Maintenance of Rupee / Foreign Currency Vostro Accounts of Non-Resident Exchange Houses: Rupee Drawing Arrangement
The extant RBI guidelines relating to above aspects regarding collateral cover under Speed Remittance Procedure (SRP), stipulate that the Exchange Houses (EH) shall keep with the AD Category – I bank a cash deposit in any convertible foreign currency equivalent to 3 days’ estimated drawings on which market related interest rate may be paid. The EH can also keep the said collateral in the form of guarantees from a bank of international repute. The adequacy of collateral should be reviewed by the AD Category – I bank at regular intervals. These requirements were relaxed and the collateral requirement was brought down to one day’s estimated drawings.
To further streamline the remittance arrangement under SRP and make remittances cost-effective, RBI decided (28.04.16) to do away with the mandated requirement of maintenance of collateral or cash deposits by the Exchange Houses with whom the banks have entered into the Rupee Drawing Arrangement. The AD banks are free to determine the collateral requirement, if any, based on factors, such as, whether the remittances are pre-funded, the track record of the Exchange House, whether the remittances are effected on gross (real-time) or net (file transfer) basis, etc., and may frame their own policy in this regard.
Transactions in derivatives by regulated institutional entities on electronic platforms
RBI decided (05.05.16) to enable institutional entities regulated by RBI, SEBI, IRDAI, PFRDA and NHB to trade in interest rate swaps on electronic trading platforms.
At present regulated entities, other than scheduled banks, are unable to conduct transactions on electronic platforms for interest rate swaps (IRS) as one party to such transactions has to be either RBI or a scheduled bank or such other agency falling under the regulatory purview of RBI which may be specified by RBI in this regard. RBI specified the Clearing Corporation of India Ltd (CCIL) as an approved counterparty for IRS transactions undertaken on electronic trading platforms where CCIL is the central counterparty w.e.f 1.6.2016.
The regulated entities, subject to the approval of their respective sectoral regulators, may apply for membership of electronic trading platforms in IRS which have CCIL as central counterparty for settlement.

Voluntary surrender of Certificate of Authorisation (COA) by Payment System Operators (PSOs) authorised under PSS Act 2007
RBI issued the guidelines (12.05.16) for voluntary surrender of CoA by entities authorised under PSS Act, 2007. These guidelines are applicable to only to those Payment System Operators (PPI issuers, MTSS- Overseas Principal), which have either, not commenced operations, or intend to discontinue operations.
I. Entity has commenced PSO operations:
1. The entity shall submit the required documents to RBI. Based on the merits, RBI will process the request and advise the entity to initiate the following process as applicable:
i. Issue a public notice in English, Hindi and a vernacular language, in print/visual media, on 3 different occasions about its intent to close its payment systems operations.
ii. Submit monthly report to RBI in extinguishing the customer/merchant liabilities.
2. In case of authorised MTSS- Overseas Principals, this process should be followed in respect of liabilities to customers and Indian Agents.
3. For refund to customers, RBI would also advise respective Escrow a/c bank for allowing one time refund of the balance to the PPI holder’s bank accounts.
4. On completing the process of extinguishing the liability to customers the entity will submit a ‘No liability’ certificate from its chartered accountant to RBI.
5. Based on this information, RBI will process the request for cancellation of COA.
6. On receipt of RBI acceptance of the request for voluntary surrender of COA, the entity shall submit the original COA to CGM, DPSS, CO, Mumbai for cancellation.
II. Entity has not commenced operations as a PSO:
1. Such an entity shall to submit documents to RBI. Based on the information submitted, RBI will process the request for cancellation of such COA.
2. On receipt of the RBI acceptance of the request for voluntary surrender of COA, the entity shall submit the original COA to CGM, DPSS, CO, Mumbai for cancellation.

Import Data Processing and Monitoring Systems (IDPMS)
On the recommendation of a Working Group, RBI developed a robust and effective IT- based system “Import Data Processing and Monitoring System “(IDPMS) on the lines of “Export Data Processing and Monitoring System” (EDPMS) in consultation with the Customs authorities and other stakeholders. The operational aspects are summarized as under (date of operationalization yet to be notified):
1. To track the import transactions through banking system, Customs will modify the Bill of Entry format to display the AD Code of bank concerned, as reported by the importers.
Primary data on import transactions from Customs and SEZ will first flow to the RBI secured server and thereupon depending on the AD code shall be shared with the respective banks for taking the transactions forward.
The AD bank shall enter every subsequent activity, viz. document submission, outward remittance data, etc. in IDPMS so as to update the RBI database on real time basis. It is therefore, necessary that AD banks upload and download data on daily basis.
2. For non EDI (manual) Customs ports, till they are upgraded to EDI (computerised) ports, nodal branch of AD Category – I banks will upload Bills of Entry (BoE) data based on original BoE with stamp/signature of the Customs as submitted by importer.
Under no circumstances, AD category – I banks will process the transactions till the concerned BoE is reflected in the IDPMS.
Customs will share a copy of manual BoE with respective Regional Office of RBI for information as they presently do for shipping bills in the case of exports.
Write off of import bills
i) AD Category I banks can consider closure of bills in IDPMS that involve write off to the extent of 5% of invoice value in cases where the amount declared in BoE varies from the actual remittance marginally due to discounts, fluctuation in exchange rates, change in the amount of freight, insurance, etc. Cases, where write off is on account of quality issues; short shipment or destruction of goods by the port / Customs / health authorities, may be closed with remarks subject to submission of satisfactory documentation for the same, irrespective of the amount involved.
ii) While allowing write off, AD Category – I banks must ensure that:
a. The case is not the subject matter of any pending civil or criminal suit;
b. The importer has not come to the adverse notice of the Enforcement Directorate or the Central Bureau of Investigation or any such other law enforcement agency; and
c. There is a system in place under which internal inspectors or auditors of the AD category – I banks (including external auditors appointed by authorised dealers) should carry out random sample check / percentage check of write-off of import bills; and
iii) Cases not covered by the above instructions / beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India.
iv) The above guidelines are only meant to facilitate closure of bills in IDPMS and do not in any way absolve the importer from remitting / receiving the amount in case circumstances change.
Extension of Time
i) AD Category – I banks can consider granting extension of time for settlement of import dues up to a period of six months at a time (maximum up to the period of three years) irrespective of the invoice value for delays on account of disputes about quantity or quality or non-fulfilment of terms of contract; financial difficulties and cases where importer has filed suit against the seller.
In cases where sector specific guidelines have been issued by Reserve Bank of India for extension of time (i.e. rough, cut and polished diamonds), the same will be applicable.
ii) While granting extension of time, AD Category –I banks must ensure that:
a. The import transactions covered by the invoices are not under investigation by Directorate of Enforcement / Central Bureau of Investigation or other investigating agencies;
b. While considering extension beyond one year from the date of remittance, the total outstanding of the importer does not exceed USD one million or 10 per cent of the average import remittances during the preceding two financial years, whichever is lower; and
c. Where extension of time has been granted by the AD Category – I banks, the date up to which extension has been granted may be indicated in the ‘Remarks’ column.
iii) Cases not covered by the above instructions / beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India.
Follow-up for Evidence of Import
i) As per extant guidelines, AD Category – I banks have to submit a statement on half-yearly basis as at the end of June & December of every year, in form BEF furnishing details of import transactions, exceeding USD 100,000 in respect of which importers have defaulted in submission of appropriate document evidencing import within six months from the date of remittance using the online eXtensible Business Reporting Language (XBRL) system on bank-wide basis to the respective Regional Offices of the RBI.
ii) On operationalization of IDPMS, all outstanding import remittances, irrespective of the amount involved, will be uploaded into the system and submission of a separate BEF statement would be discontinued from a date to be notified separately.
iii) AD Category – I banks are required to follow up submission of evidence of import and remittance within stipulated time irrespective of the amount involved.
RBI desired that the AD category – I banks should be in readiness mode for switching to the proposed IT based system.