IMPORTANT RBI NOTIFICATION SINCE 01/01/2013

APRIL 2013 1. Foreign investment in India by SEBI registered FIIs in Government Securities and Corporate Debt
Eligible Investor Remarks FIIs, QFIs and Long terms Eligible Investors may invest investors registered with SEBI in Treasury Bills only upto Sovereign Wealth Funds USD 5.5 billion within the limit (SWFs), Multilateral Agencies, of USD 25 billion. Pension/ Insurance/ Endowment Funds, Foreign Central Banks. Corporate Debt USD 51 FIIs, QFIs, Long terms Eligible Investors may invest Limit billion investors registered with SEBI in Commercial Papers only - SWFs, Multilateral Agencies, upto USD 3.5 billion within Pension/ Insurance/ the limit of USD 51 billion. Endowment Funds, Foreign Central Banks . The Non-Resident Indians were not subject to any limit for investment in Government Securities as well as corporate debt. 25 Instrument/s Government securities including Treasury Bills Limit USD billion

2. Overseas Direct Investments

Any overseas entity having equity participation directly / indirectly shall not offer such products without the specific approval of the Reserve Bank of India given that currently Indian Rupee is not fully convertible and such products could have implications for the exchange rate management of the country.

3. Trade Credits for Imports into India Review of all-in-cost ceiling

All in cost ceiling as specified below will continue to be applicable till June 30, 2013 Maturity period Up to one year More than one year and up to three years More than three years and up to five years * for the respective currency of credit or applicable benchmark 350 basis points All-in-cost ceilings over 6 months LIBOR*

4. Investment by Navratna Public Sector Undertakings (PSUs), OVL and OIL in unincorporated entities in oil sector abroad
Navratna Public Sector Undertakings (PSUs) and ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) are allowed to invest in overseas unincorporated entities in oil sector (for exploration and drilling for oil and natural gas, etc.), which are duly approved by the Government of India, without any limits under the automatic route. it has now been decided that such facility is also extended to the overseas investments in the incorporated JV / WOS in oil sector (for exploration and drilling for oil and natural gas, etc.) by the Navratna Public Sector Undertakings (PSUs) and ONGC Videsh Ltd (OVL) and Oil India Ltd

(OIL), which are duly approved by the Government of India, without any limits under the automatic route.

5. Memorandum of Instructions governing money changing activities

Authorised Money Changers (AMCs) may sell Indian rupees to foreign tourists /visitors against International Credit Cards / International Debit Cards and should take prompt steps to obtain reimbursement through normal banking channels.

6. New Capital Adequacy Framework: Non-market related Off Balance Sheet Items- Bank Guarantees
Financial guarantees are direct credit substitutes wherein a bank irrevocably undertakes to guarantee the repayment of a contractual financial obligation. It attracts a CCF of 100 per cent is as under: Performance guarantees are essentially transaction-related contingencies that involve an irrevocable undertaking to pay a third party in the event the counterparty fails to fulfil or perform a contractual non-financial obligation. attract a CCF of 50 per cent is as under:

7. Advances guaranteed by Credit Risk Guarantee Fund Trust for Low Income Housing (CRGFTLIH) Risk Weights and Provisioning
Risk weight Banks may assign zero risk weight for the guaranteed portion. The balance outstanding in excess of the guaranteed portion would attract a risk-weight as appropriate to the counter-party. Provisioning In case the advance covered by CRGFTLIH guarantee becomes non-performing, no provision need be made towards the guaranteed portion. The amount outstanding in excess of the guaranteed portion should be provided for as per the extant guidelines on provisioning for nonperforming advances.

8. Core Investment Companies Guidelines on Investment in Insurance

1. The eligibility criteria for joint venture participant will be as under, as per the latest available audited balance sheet. owned funds of CIC : not be less than Rs. 500 crore; Net NPA level : not more than 1% of the total advances; Net profit : continuously for 3 consecutive years; Track record of subsidiaries, if any : satisfactory; Adjusted net worth : not less than 30% of aggregate risk weighted assets 2. No CIC would be allowed to conduct such business departmentally. Further, an NBFC (in its group / outside the group) would normally not be allowed to join an insurance company on risk participation basis and hence should not provide direct or indirect financial support to the insurance venture. 3. Within the group, CICs may be permitted to invest up to 100% of the equity of the insurance company either on a solo basis or in joint venture with other non-financial entities in the group. 4. In case where a foreign partner contributes 26 per cent of the equity with the approval of insurance Regulatory and Development Authority/Foreign Investment Promotion Board, more than one CIC may be allowed to participate in the equity of the insurance joint venture. 5. CICs cannot enter into insurance business as agents.

9. KYC - Simplifying norms for Self Help Groups

As regards KYC verification at the time of credit linking of SHGs, it is clarified that since KYC would have already been verified while opening the savings bank account and the account continues to be in operation and is to be used for credit linkage, no separate KYC verification of the members or office bearers is necessary.

MARCH 2013 10. Maintenance of Collateral by FIIs for transactions in the cash and F & O segments
it has been decided in consultation with the Government of India and the Securities and Exchange Board of India (SEBI), to permit FIIs to use, in addition to already permitted collaterals, their investments in corporate bonds as collateral in the cash segment and government securities and corporate bonds as collaterals in the F & O segment.

11. Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Eighth Amendment) Regulations, 2013
1. Security Receipts issued by Asset Reconstruction Companies provided that the total holding by an individual QFI in each tranche of scheme of Security Receipts shall not exceed 10 per cent of the issue and the total holdings of all eligible investors put together shall not exceed 49 per cent of the paid up value of each tranche of scheme of Security Receipts issued by the Asset Reconstruction Companies; 2. Perpetual Debt instruments eligible for inclusion as Tier I capital and Debt capital instruments as upper Tier II capital issued by banks in India to augment their capital provided that the investment by eligible investors in Perpetual Debt instruments (Tier I) shall not exceed an aggregate ceiling of 49 per cent of each issue, and investment by individual QFI shall not exceed the limit of 10 per cent of each issue; 3. Primary issues of non-convertible debentures / bonds provided such non-convertible debentures / bonds are committed to be listed within 15 days of such investment. In the event of such non-convertible debentures / bonds issued not being listed within 15 days of issuance, for any reason, then the long term investor shall immediately dispose of those non-convertible debentures / bonds either by way of sale to a third party or to the issuer and the terms of offer to long term investors should contain a clause that the issuer of such debt securities shall immediately redeem / buyback those securities from the long term investors in such an eventuality.

12. PERFORMANCE AUDIT OF AGRICULTURAL DEBT WAIVER AND DEBT RELIEF SCHEME, 2008
This would be monitored by the CVOs of the concerned institutions regularly.

13. External Commercial Borrowings (ECB) Policy Corporates under Investigation

It has been decided to permit all entities to avail of ECBs under the automatic route as per the current norms, notwithstanding the pending investigations / adjudications / appeals by the law enforcing agencies, without prejudice to the outcome of such investigations / adjudications / appeals.

14. Risk Management and Inter-Bank Dealings

i. Net Overnight Open Position Limit (NOOPL) for calculation of capital charge on forex risk NOOPL may be fixed by the boards of the respective banks .Such limits should not exceed 25 percent of the total capital (Tier I and Tier II capital) of the bank. 1. Calculation of the Net Open Position in a Single Currency The open position must first be measured separately for each foreign currency. The open position in a currency is the sum of (a) the net spot position, (b) the net forward position and (c) the net options position. a) Net Spot Position = foreign currency assets - foreign currency liabilities b) Net Forward Position This represents the net of all amounts to be received less all amounts to be paid in the future as a result of foreign exchange transactions, which have been concluded. c) Net Options Position The options position is the "delta-equivalent" spot currency position as reflected in the authorized dealer's options risk management system. 2. Calculation of the Overall Net Open Position This involves measurement of risks inherent in a bank's mix of long and short position in different currencies. It has been decided to adopt the "shorthand method" which is accepted internationally for arriving at the overall net open position.

B. Aggregate Gap Limits (AGL) - AGL may be fixed by the boards of the respective banks and communicated to the Reserve Bank immediately. However, such limits should not exceed 6 times the total capital (Tier I and Tier II capital) of the bank.

15. Write-off of unrealized export bills Export of Goods and Services Simplification of procedure
a) Self write-off by an exporter (Other than Status Holder Exporter) ----------------------------------------------------- 5%* b) Self write-off by Status Holder Exporters ------------------------------------------ 10%* c) Write-off by Authorized Dealer bank ------------------------------------------------ 10%* *of the total export proceeds realized during the previous calendar year. The above write-off will be subject to the following conditions: (a) The relevant amount has remained outstanding for more than one year; (b) Satisfactory documentary evidence is furnished in support of the exporter having made all efforts to realize the dues;

16. Money Transfer Service Scheme Revised Guidelines

Money Transfer Service Scheme (MTSS) is a quick and easy way of transferring personal remittances from abroad to beneficiaries in India. Only inward personal remittances into India such as remittances towards family maintenance and remittances favouring foreign tourists visiting India are permissible. No outward remittance from India is permissible under MTSS. Entry Norms The applicant to become an Indian Agent should be an Authorised Dealer Category-I bank or an Authorised Dealer Category-II or a Full Fledged Money Changer or a Scheduled Commercial Bank or the Department of Posts. The applicant should have minimum Net Owned Funds of Rs.50 lakh. Collateral requirement Collateral equivalent to 3 days' average drawings or US $ 50,000, whichever is higher, may be kept by the Overseas Principal in favour of the Indian Agent with a designated bank in India. The minimum amount of US $ 50,000 shall be kept as a foreign currency deposit while the balance amount may be kept in the form of a Bank Guarantee. Other conditions Only cross-border personal remittances, such as, remittances towards family maintenance and remittances favouring foreign tourists visiting India shall be allowed under this arrangement. Donations/contributions to charitable institutions/trusts, trade related remittances, remittance towards purchase of property, investments or credit to NRE Accounts shall not be made through this arrangement. b. A cap of US $ 2500 has been placed on individual remittance under the scheme. Amounts up to Rs.50,000/- may be paid in cash to a beneficiary in India. Only 30 remittances can be received by a single individual beneficiary under the scheme during a calendar year. The Indian Agent should commence its money transfer operations within a period of six months from the date of issuance of permission (authorization) and inform RBI. The minimum Net Worth of Overseas Principals should be at least US $ 1 million Necessary permission to Indian Agents will be issued initially for a period of one year, which may be renewed for one to three years at a time

17. Penal Interest Rates which are linked to the Bank Rate
Item Penal interest rates on shortfalls in reserve requirements (depending on duration of shortfalls). Revised Rate Bank Rate plus 3.0 percentage points (11.50 per cent) or Bank Rate plus 5.0 percentage points (13.50 per cent).

18. Discontinuation of CFMS

Funds transfer through Centralised Funds Management System (CFMS) has been discontinued with effect from January 1, 2013. The access to CFMS information and data would be available up to March 31, 2013 to the member banks.

19. Guidelines on Implementation of Basel III Capital Regulations in India -Clarifications

Start date of implementation of Basel III capital regulations is rescheduled to April 1, 2013 from January 1, 2013. In view of the shift in the start date of Basel III implementation, all instructions applicable as on January 1, 2013, except those relating to Credit Valuation Adjustment (CVA) risk capital charge for OTC derivatives, would become effective from April 1, 2013 with banks disclosing Basel III capital ratios from the quarter ending June 30,2013. The other transitional arrangements would remain unchanged and Basel III will be fully implemented as on March 31, 2018.

20. Priority Sector Lending-Treatment of Contingent Liabilities Clarifications

Some banks have included contingent liabilities/off-balance sheet items as part of priority sector target achievement. This is not in conformity with priority sector lending guidelines.

21. Lead Bank Scheme - Strengthening of Monitoring Information System (MIS)

Banks had prepared 3 years Board approved Financial Inclusion Plans (FIP) from April 2010 to March 2013. Since the 3 year FIP period is expiring in March 2013, we have now advised all banks to prepare next 3 years comprehensive Financial Inclusion Plans from April 2013 to March 2016.

22. Standardization and Enhancement of Security Features in Cheque Forms/Migrating to CTS 2010 standards
All cheques issued by banks (including DDs / POs issued by banks) with effect from the date of this circular shall necessarily conform to CTS-2010 standard. Banks shall not charge their savings bank account customers for issuance of CTS-2010 standard cheques when they are issued for the first time. However, banks may continue to follow their existing policy regarding cheque book issuance for additional issuance of cheques, in adherence to their accepted Fair Practices Code. All residual non-CTS-2010 cheques with customers will continue to be valid and accepted in all clearing houses [including the Cheque Truncation System (CTS) centers] for another four months up to July 31, 2013, subject to a review in June 2013. Cheque issuing banks shall make all efforts to withdraw the non-CTS-2010 Standard cheques in circulation before the extended timeline of July 31, 2013 by creating awareness among customers through SMS alerts, letters, display boards in branches/ATMs, log-on message in internet banking, notification on the web-site etc. No fresh Post Dated Cheques (PDC)/Equated Monthly Installment (EMI) cheques (either in old format or new CTS-2010 format) shall be accepted by lending banks in locations where the facility of ECS/RECS (Debit) is available. Lending banks shall make all efforts to convert existing PDCs in such locations into ECS/RECS (Debit) by obtaining fresh mandates from the borrowers.

23. Scheme for Collection of Dues of (i) Central Board of Direct Taxes (ii) Central Board of Excise and Customs (iii) Departmentalised Ministries Account - Reporting and Accounting of March Transactions - Special Arrangements - Financial Year 2012-13
The Government of India has decided that the date of closure of Residual Transactions for the month of March 2013 be fixed as April 15, 2013 for the Financial Year 2012-13. Accordingly, you may close the relative books of account on April 15, 2013.

24. Prudential norms on Advances to Infrastructure Sector

Most of the projects in India are user-charge based for which the Planning Commission has published Model Concession Agreements (MCAs). These have been adopted for public-private partnership (PPP)

projects and they provide adequate comfort to the lenders regarding security of their debt. In view of the above features, it has been decided that in case of PPP projects, the debts due to the lenders may be considered as secured to the extent assured by the project authority in terms of the Concession Agreement.

25. PPF, 1968) and Senior Citizens Savings Scheme, 2004 (SCSS, 2004) Revision of interest rates
Scheme 5 year SCSS, 2004 PPF, 1968 Rate of Interest w.e.f. 01.04.2012 9.3% p.a 8.8% p.a Rate of Interest w.e.f. 01.04.2013 9.2% p.a 8.7% p.a

26. Facility for Exchange of Notes and Coins

The facility of exchange of cut/mutilated banknotes, in addition to soiled notes and issue of good quality clean banknotes/coins, should be made available at all bank branches (including those of co-operative banks and RRBs). In case a branch, for any reason, is not able to immediately adjudicate the cut/mutilated notes across the counter, it may accept and send such notes to the currency chest to which it is linked, for adjudication and in any case ensure that the tenderer receives the exchange value as per the RBI Note (Refund) Rules, 2009, within a reasonable time, say a fortnight. This above facility should be provided to all members of public without discrimination on all working days.

27. Reporting Platform for OTC Foreign Exchange and Interest Rate Derivatives
The reporting arrangement covering OTC foreign exchange derivative trades between ADs and their clients in the following products should be operationalized with effect from April 02, 2013. a) FCY-INR Forwards b) FCY-FCY Forwards c) FCY-INR Options d) FCY-FCY Options The threshold limit for reporting the trades shall be USD 1 million and equivalent thereof in other currencies. Currently the reporting arrangement will cover transactions involving 14 currencies namely USD, EUR, GBP, JPY, AUD, CAD, CHF, HKD, DKK, NOK, NZD, SGD, SEK and ZAR.

28. Inclusion in the Second Schedule to the Reserve Bank of India Act, 1934
Sumitomo Mitsui Banking Corporation Westpac Banking Corporation

29. Mid-Quarter Monetary Policy Review: March 2013

Repo Rate : 7.50 reduced by 25 basis point Reverse Repo Rate : 7.50 reduced by 25 basis point Marginal Standing Facility : 8.50 reduced by 25 basis point Bank Rate : 8.50 reduced by 25 basis point Indias GDP growth in Q3 of 2012-13, at 4.5 per cent, was the weakest in the last 15 quarters. The year-on-year headline WPI inflation edged up to 6.8 per cent in February 2013 CPI (Base: 2010=100) inflation at a high of 10.9 per cent in February 2013 gross fiscal deficit (GFD)-GDP ratio, at 5.2 per cent, GFD-GDP ratio is programmed to decline to 4.8 per cent in 2013-14 and further down to 3.0 per cent by 2016-17, The Central Statistics Office (CSO) has projected GDP growth for 2012-13 of 5.0 per cent, lower than the Reserve Banks baseline projection of 5.5 per cent set out in the TQR,

FEBRUARY 2013 30. Foreign Exchange Management Act, 1999 - Import of precious and semi-precious stones- Clarification
Suppliers and Buyers Credit (trade credit) including the usance period of Letters of Credit opened for import of precious stones and semi-precious stones should not exceed 90 days from the date of shipment.

31. Change in SLBC responsibility for Jharkhand from ALLAHABAD BANK to BANK OF INDIA
With effect from April 1, 2013.

32. Know Your Customer (KYC) norms/Anti-Money Laundering (AML)

The term "beneficial owner" has been defined as the natural person who ultimately owns or controls a client and/or the person on whose behalf the transaction is being conducted, and includes a person who exercises ultimate effective control over a juridical person. Where the client is a trust, the Authorised Person shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the identity of the settler of the trust, the trustee, the protector, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership.

33. Memorandum of Instructions for Opening and Maintenance of Rupee / Foreign Currency Vostro Accounts of Non-resident Exchange Houses
Under the extant Rupee Drawing Arrangements (RDAs), cross-border inward remittances are received in India by AD Category-I banks through Exchange Houses situated in Gulf countries, Hong Kong, Singapore and Malaysia (for Malaysia only under Speed Remittance Procedure). It has been decided to extend the RDAs only under the Speed Remittance Procedure to Exchange Houses situated in all countries which are FATF compliant. Permitted Transactions have been modified and includes also Payments to medical institutions and hospitals in India, for medical treatment of NRIs / their dependents and nationals of all FATF countries. & Payments to hotels by nationals of all FATF compliant countries/ NRIs for their stay.

34. Opening of NRO accounts by individuals of Bangladesh Nationality

Authorised banks would be permitted to open NRO account of individual/s of Bangladesh nationality without the approval of the Reserve Bank Opening of accounts by entities of Bangladesh ownership shall continue to require approval of Reserve Bank

35. Permission to standalone PDs for membership in SEBI approved Stock Exchanges for trading in corporate bonds
With a view to further developing the debt market in India

36. Security and Risk Mitigation Measures for Electronic Payment Transactions
RBI has mandating additional factor of authentication for all card not present (CNP) transactions. A. Securing Card Payment Transactions All new debit and credit cards to be issued only for domestic usage unless international use is specifically sought by the customer. Such cards enabling international usage will have to be essentially EMV Chip and Pin enabled. (By June 30, 2013) Issuing banks should convert all existing MagStripe cards to EMV Chip card for all customers who have used their cards internationally at least once (for/through e- commerce/ATM/POS) (By June 30, 2013) All the active Magstripe international cards issued by banks should have threshold limit for international usage. The threshold should be determined by the banks based on the risk profile of the customer and accepted by the customer ( By June 30, 2013). Till such time this process is completed an omnibus threshold limit (say, not exceeding USD 500) as determined by each bank may be put in place for all debit cards and all credit cards that have not been used for international transactions in the past.

Banks should ensure that the terminals installed at the merchants for capturing card payments (including the double swipe terminals used) should be certified for PCI-DSS (Payment Card Industry- Data Security Standards) and PA-DSS (Payment Applications -Data Security Standards) (By June 30, 2013). Banks should ensure that all acquiring infrastructure that is currently operational on IP (Internet Protocol) based solutions are mandatorily made to go through PCI-DSS and PA-DSS certification. This should include acquirers, processors / aggregators and large merchants ( By June 30, 2013).

37. Gold Deposit Scheme

Banks may either issue a passbook/statement of account or a certificate/bond to the depositors for deposit of gold, which will be transferable by endorsement and delivery. It has now been decided that the exception from fire assay / destructive assay will be provided for physical Gold tendered by Mutual Funds/ Gold Exchange Traded Funds approved by SEBI and complying with the Good delivery norms of the London Bullion Market Association (LBMA) having a fineness of 995.0 parts per thousand accompanied by a certificate acceptable to the designated bank. Deposits may be made available within a maturity range from 6 months to seven years. Authorised banks would not be required to obtain prior approval of RBI for introducing the scheme.

38. NEFT - Introduction of Continuous Release of Credit Messages

The feature of continuous release of credit messages is being introduced with the objective of providing maximum time to beneficiary/destination banks to process the inward NEFT transactions, thereby facilitating more efficient handling of growing transaction volumes in the system. Feature also envisages the optimum use of network resources and processing capacity by spreading the release of messages throughout the one hour time window between the two batch settlements. The present time frame for return (B+2) will continue to be applicable and should be adhered to in strict conformity.

JANUARY 2013 39. Export of Goods and Services Simplification and Revision of Softex Procedure at SEZs
A revised Softex procedure was first introduced at the 5 designated centres of STPIs from April 1, 2012 and subsequently extended to all STPIs in India. It has now been decided to implement the revised Softex procedure at all SEZs/EPZs/100%EOU/DTA also with immediate effect. As per the revised procedure, a software exporter either under STPIs or SEZs/EPZs/100%EOU/DTA, whose annual turnover is at least Rs.1000 crore or who files at least 600 SOFTEX forms annually on all India basis, will be eligible to submit.

40. Revised Guidelines on Ready Forward Contracts in Corporate Debt Securities

As part of the measures to develop the corporate bond market, repo transactions were permitted in corporate debt securities. Repo in corporate debt shall also be permitted on Commercial Papers, Certificates of Deposit and NonConvertible Debentures of less than one year of original maturity. The minimum haircut, applicable on the market value of the corporate debt securities prevailing on the date of trade of 1st leg, has been revised as under: Rating AAA AA+ AA Revised Minimum Haircut 7.5% 8.5% 10%

The above are minimum stipulated haircuts where the repo period is overnight or where the remargining frequency (in case of longer tenor repos) is daily. In all other cases, the participants may adopt appropriate higher haircuts.

41. External Commercial Borrowings (ECB) Policy Non-Banking Financial Company Infrastructure Finance Companies (NBFC-IFCs)
It has been decided to enhance the ECB limit for NBFC-IFCs under the automatic route from 50 % of their owned funds to 75 % of their owned funds, including the outstanding ECBs. NBFC-IFCs desirous of availing ECBs beyond 75 % of their owned funds would require the approval of RBI and will, therefore, be considered under the approval route. It has also been decided to reduce the hedging requirement for currency risk from 100 percent of their exposure to 75 per cent of their exposure.

42. Guidelines for Issue of Commercial Paper (CP) 1. Eligibility for Issue of CP:
Companies, PDs and FIs are permitted to raise short term resources through CP within the umbrella limits. A company would be eligible to issue CP provided: o the tangible net worth of the company is not less than Rs.4 crore; o company has been sanctioned working capital limit by bank/s or FIs; and o borrowal account of the company is classified as a Standard Asset 2. Issue of CP Credit enhancement, limits, etc. o CP shall be issued as a stand alone product. o Every issue of CP, and every renewal of a CP, shall be treated as a fresh issue. 3. Form of the Instrument, mode of issuance and redemption I. Form CP shall be issued in the form of a promissory note and held in physical form or in a dematerialized form. Fresh investments by all RBI-regulated entities shall be only in dematerialised form. CP shall be issued in denominations of 5 lakh and multiples thereof. The amount invested by a single investor should not be less than 5 lakh (face value). CP shall be issued at a discount to face value as may be determined by the issuer. No issuer shall have the issue of CP underwritten or co-accepted. Options (call/put) are not permitted on CP. II. Tenor o o CP shall be issued for maturities between a minimum of 7 days and a maximum of up to one year from the date of issue. The maturity date of the CP shall not go beyond the date up to which the credit rating of the issuer is valid.

III. Procedure for Issuance o Every issuer must appoint an IPA for issuance of CP. IV. Rating Requirement Eligible participants/issuers shall obtain credit rating for issuance of CP from any one of the SEBI registered CRAs. The minimum credit rating shall be A3 as per rating symbol and definition prescribed by SEBI. V. Documentation Procedures Standardised procedures and documentation for CPs are prescribed in consultation with Fixed Income Money Market and Derivatives Association of India (FIMMDA) in consonance with international best practices.

4. Trading and Settlement of CP All OTC trades in CP shall be reported within 15 minutes of the trade to FIMMDA reporting platform. OTC trades in CP shall be settled through the clearing house of the National Stock Exchange (NSE), i.e., the National Securities Clearing Corporation Limited (NSCCL) and the clearing house of the Bombay Stock Exchange (BSE), i.e., Indian Clearing Corporation Limited (ICCL), as per the norms specified by NSCCL and ICCL from time to time. The settlement cycle for OTC trades in CP shall either be T+0 or T+1. 5. Buyback of CP Issuers may buyback the CP, issued by them to the investors, before maturity. Buyback of CP shall be through the secondary market and at prevailing market price. The CP shall not be bought back before a minimum period of 7 days from the date of issue.

43. Frauds Classification and Reporting

Quarterly Review of Frauds 1. Information relating to frauds for the quarters ending June, September and December may be placed before the Audit Committee of the Board of Directors during the month following the quarter to which it pertains, irrespective of whether or not these are required to be placed before the Board/Management Committee in terms of the Calendar of Reviews prescribed by RBI. 2. A separate review for the quarter ending March is not required in view of the Annual Review for the year-ending March prescribed below. Annual Review of Frauds The reviews for the year-ended March may be put up to the Board before Banks should conduct an annual review of the frauds and place a note before the Board of Directors/Local the end of the next
th

quarter i.e. for the quarter ended June 30 and such reviews need not be sent to RBI. These may be preserved for verification by the Reserve Banks inspecting officers.

44. Guidelines on Credit Default Swaps for Corporate Bonds

1. Objective The objective of introducing Credit Default Swaps (CDS) on corporate bonds is to provide market participants a tool to transfer and manage credit risk in an effective manner through redistribution of risk. 2. CDS for Indian Markets Product Design 2.1 Eligible Participants Participants in the CDS market are classified as under: Users: Entities permitted to buy credit protection (buy CDS contracts) only to hedge their underlying credit risk on corporate bonds. Users are also not permitted to sell protection and are not permitted to hold short positions in the CDS contracts. Market-makers: Entities permitted to quote both buy and/or sell CDS spreads. They would be permitted to buy protection without having the underlying bond. 2.1.1 The eligible entities under market-makers and users categories would be as under: Market-makers Commercial Banks, stand alone Primary Dealers (PDs), Non-Banking Financial Companies (NBFCs) having sound financials and good track record in providing credit facilities and any other institution specifically permitted by the Reserve Bank. Users Commercial Banks, PDs, NBFCs, Mutual Funds, Insurance Companies, Housing Finance Companies, Provident Funds, Listed Corporates, All India Financial Institutions namely, Export Import Bank of India (EXIM), National Bank for Agriculture and Rural Development (NABARD), National Housing Bank (NHB) and Small Industries Development Bank of India (SIDBI), Foreign Institutional Investors (FIIs) and any other institution specifically permitted by the Reserve Bank.

*Insurance companies and Mutual Funds would be permitted as market-makers. Eligibility norms for market-makers Commercial banks who intend to act as market-makers shall fulfill the following criteria: Minimum CRAR of 11 per cent with core CRAR (Tier I) of at least 7 per cent; Net NPAs of less than 3 per cent.

NBFCs may be allowed to act as market-makers, subject to complying with the following criteria: Minimum Net Owned Funds of Rs. 500 crore; Minimum CRAR of 15 per cent; Net NPAs of less than 3 per cent; and Have robust risk management systems in place to deal with various risks. PDs intending to act as market-makers shall fulfil the following criteria: Minimum Net Owned Funds of Rs. 500 crore; Minimum CRAR of 15 per cent; and Have robust risk management systems in place to deal with various risks Requirement of the underlying in CDS The users cannot buy CDS for amounts higher than the face value of corporate bonds held by them and for periods longer than the tenor of corporate bonds held by them. Accounting The accounting norms applicable to CDS contracts shall be on the lines indicated in the Accounting Standard AS-30 Financial Instruments: Recognition and Measurement, AS- 31, Financial Instruments: Presentation and AS-32 on Disclosures. Pricing/Valuation methodologies for CDS Market participants should put in place appropriate and robust methodologies for marking to market the CDS contracts on a daily basis. Reporting Requirements Trade Reporting Market-makers shall report their CDS trades with both users and other market-makers on the reporting platform of CDS trade repository within 30 minutes from the deal time. The users would be required to affirm or reject their trade already reported by the market- maker by the end of the day.

45. Swap Facility for Expansion of Export Credit in Foreign Currency A US Dollar-Rupee swap facility has been introduced to support incremental Preshipment Export Credit in Foreign Currency (PCFC). Scheduled banks (excluding RRBs) have the
option to access rupee refinance to the extent of the swap with RBI under a special export credit refinance facility. The salient features of the new swap facility are as under: (a) The swap facility will be available to scheduled banks (excluding RRBs) from January 21, 2013 till June 28, 2013 for fixed tenor of 3/6 months. During any particular month, the maximum amount of dollars that banks would be eligible to avail of from RBI through swaps would be equal to the incremental PCFC disbursed with reference to a base date (November 30, 2012), subject to a limit. The limits would be communicated to eligible individual banks separately. The limits would be reviewed periodically based on actual utilization and other relevant factors. (b) Under the swap arrangement, a bank can buy US Dollars, up to its eligible swap limit, from RBI and simultaneously sell the same amount of US Dollar forward as per the term of the swap at the prevailing market rates for swaps of similar tenor. At the end of the swap term, the bank will exchange with RBI the US Dollars against Rupee. Reserve Banks decision regarding the pricing of the swap shall be final and no request for any modification/revision to the same would be entertained.

46. Foreign Direct Investment (FDI) in India - Issue of equity shares under the FDI scheme allowed under the Government route
The amended conditions are given as below: Import of capital goods/machineries/equipment (excluding second-hand machineries), There is an independent valuation of the capital goods / machineries /equipment (excluding second-hand machineries) by a third party entity, preferably by an independent valuer from the

country of import along with production of copies of documents /certificates issued by the customs authorities towards assessment of the fair value of such imports;

47. Rupee Export Credit - Interest Subvention

The Scheme will be made available to the Engineering Sector on pre and post shipment export credit on the same terms and conditions as available to other sectors. A list of 134 tariff lines of engineering products approved for inclusion in Interest Subvention. It has also been decided to extend the 2% Rupee Export Credit Interest Rate Subvention Scheme for the following sectors w.e.f. April 1, 2013 to March 31, 2014 on the same terms and conditions: Handicrafts Carpet Handlooms Small and Medium Enterprises (SMEs) Readymade Garments Processed Agriculture Products Sports Goods Toys 134 Tariff lines on Engineering Goods Accordingly, banks may reduce the interest rate chargeable to the exporters as per Base Rate system in the above mentioned sectors eligible for export credit subvention by the amount of subvention available subject to a floor rate of 7%. Banks may ensure to pass on the benefit of 2% interest subvention completely to the eligible exporters.

48. Special Export Credit Refinance Facility

Scheduled banks (excluding RRBs) have the option to access rupee refinance to the extent of the swap with the Reserve Bank under a special export credit refinance facility for which promissory notes will need to be fully backed by eligible export bills under the PCFC. 2. The rupee rate of interest charged on refinance availed of under the special export refinance facility will be the prevailing repo rate under the Liquidity Adjustment Facility (LAF), currently at 8.0 per cent. 3. This facility is available from January 21, 2013 till June 28, 2013.

49. Uploading of Reports on FINnet Gateway

FIU-IND have now advised that the 'go-live' date is October 20, 2012 and that Authorised Persons may discontinue submission of reports in CD format after October 20, 2012, using only FINnet gateway for uploading of reports in the new XML reporting format. Any report in CD format received after October 20, 2012 will not be treated as a valid submission by FIU-IND. All Authorised Persons are accordingly advised to take action as required by FIU-IND and ensure that all reports are submitted in time as per the schedule.

50. PERFORMANCE AUDIT OF AGRICULTURAL DEBT WAIVER AND DEBT RELIEF SCHEME, 2008
Performance Audit of the Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS), 2008 is being undertaken by the Office of the Comptroller and Auditor General (CAG).

51. External Commercial Borrowings (ECB) Policy Repayment of Rupee loans and/or fresh Rupee capital expenditure USD 10 billion scheme
As per the extant guidelines, Indian companies in the manufacturing and infrastructure sector (as defined under the extant ECB policy), which are consistent foreign exchange earners, are allowed to avail of ECBs for repayment of outstanding Rupee loan(s) availed of from the domestic banking system and / or for fresh Rupee capital expenditure. On a review, it has been decided to include Indian companies in the hotel sector (with a total project cost of INR 250 crore or more), irrespective of geographical location as eligible borrowers under this scheme. AD may certify the project cost at the time of forwarding the ECB application to the Reserve Bank.

52. Exchange Earner's Foreign Currency (EEFC) Account, Diamond Dollar Account (DDA) & Resident Foreign Currency (RFC) Domestic Account
EEFC account holders henceforth will be permitted to access the forex market for purchasing foreign exchange only after utilizing fully the available balances in the EEFC accounts.

53. Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards

If the address on the document submitted for identity proof by the prospective customer is same as that declared by him/her, the document may be accepted as a valid proof of both identity and address. If the address indicated on the document submitted for identity proof differs from the current address declared by the customer, a separate proof of address should be obtained.

54. Know Your Customer (KYC) norms /Anti-Money Laundering (AML) Standards
Government of India has since examined the issue and has specified the procedure for determination of Beneficial Ownership. The procedure as advised by the Government of India is as under: A. Where the client is a person other than an individual or trust, the banking company and financial institution, as the case may be, shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the following information: (i) The identity of the natural person, who, whether acting alone or together, or through one or more juridical person, exercises control interest. Explanation: Controlling ownership interest means ownership of/entitlement to more than 25 percent of shares or capital or profits of the juridical person, where the juridical person is a company; ownership of/entitlement to more than 15% of the capital or profits of the juridical person where the juridical person is a partnership; or, ownership of/entitlement to more than 15% of the property or capital or profits of the juridical person where the juridical person is an unincorporated association or body of individuals. (ii) In cases where there exists doubt under (i) as to whether the person with the controlling ownership interest is the beneficial owner or where no natural person exerts control through ownership interests, the identity of the natural person exercising control over the juridical person through other means. Explanation: Control through other means can be exercised through voting rights, agreement, arrangements, etc. (iii) Where no natural person is identified under (i) or (ii) above, the identity of the relevant natural person who holds the position of senior managing official. B. Where the client is a trust, the banking company and financial institution, as the case may be, shall identify the beneficial owners of the client and take reasonable measures to verify the identity of such persons, through the identity of the settler of the trust, the trustee, the protector, the beneficiaries with 15% or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership. C. Where the client or the owner of the controlling interest is a company listed on a stock exchange, or is a majority-owned subsidiary of such a company, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such companies.

55. Know Your Customer (KYC) norms /Anti-Money Laundering (AML) Standards
It has been decided to effect the following modifications to the existing instructions. 2. Shifting of bank accounts to another centre Proof of address: Banks are advised that KYC once done by one branch of the bank should be valid for transfer of the account within the bank as long as full KYC had been done for the concerned account. The customer should be allowed to transfer his account from one branch to another branch without restrictions. In order to comply with KYC requirements of correct address of the person, fresh address proof has to be obtained from him/her upon such transfer by the transferee branch. However, a large number of customers with transferable jobs or those who migrate for jobs are unable to produce a utility bill or other documents in their name as address proof immediately after relocating. In view of this, it has been decided that: (a) Banks may transfer existing accounts at the transferor branch to the transferee branch without insisting on fresh proof of address and on the basis of a self-declaration from the account holder about his/her current address, subject to submitting proof of address within a period of six months. (b) Banks may also accept rent agreement duly registered with State Government or similar registration authority indicating the address of the customer, in addition to other documents listed as proof of address.

Banks should intimate their customers that in the event of change in address due to relocation or any other reason, they should intimate the new address to the bank within two weeks of such a change. While opening new accounts and while periodically updating KYC data, an undertaking to this effect should be obtained. In all these cases customers will have to produce proof of address as mentioned at (a) and (b) above.

56. Interest Rates on and Premature Withdrawal of Rupee Term Deposits

The position has been reviewed and it has now been decided that henceforth only the expression bulk deposit would be used for single Rupee term deposits of ` 1 crore and above. It has been decided that henceforth, the permission to offer differential rates of interest for the deposits of the same maturity will be applicable to bulk deposits of ` 1 crore and above. For deposits below ` 1 crore, the same rate will apply for deposits of the same maturity. it has now been decided that banks will have the discretion to disallow premature withdrawal of a term deposit in respect of bulk deposits of ` 1 crore and above of all depositors, including deposits of individuals and HUFs. Bank should, however, notify such depositors of its policy of disallowing premature withdrawal in advance, i.e., at the time of accepting such deposits. A bank on request from a depositor shall allow withdrawal of a Rupee term deposits of less than ` 1 crore, before completion of the period of the deposit agreed upon at the time of making the deposit. Bank will have the freedom to determine its own penal interest rates for premature withdrawal of term deposits. Bank should ensure that the depositors are made aware of the applicable penal rates along with the deposit rates. 4. The revised guidelines will be applicable with effect from April 1, 2013.

57. Standardisation of Interest Rate Swap (IRS) Contracts

To improve tradability and facilitate centralized clearing and settlement of IRS contracts in future, it has been decided to standardise IRS contracts. To begin with, standardisation shall be mandatory for INR Mumbai Inter Bank Offer Rate (MIBOR)Overnight Index Swap (OIS) contracts. The standardisation requirement shall be mandatory for all IRS contracts other than client trades.

58. Declines in ATM transactions reporting of

Banks are advised to simultaneously place a quarterly review of ATM transactions to its Board of Directors, indicating the denial of services to the customers at ATM sites, reasons thereof and the action taken to avoid recurrence of such instances. Banks are also advised to forward a copy of the report along with the observations of the Board to Reserve Bank of India

59. Disclosure Requirements on Advances Restructured by Banks and Financial Institutions

Banks should disclose in their published Annual Balance Sheets, under "Notes on Accounts", information relating to number and amount of advances restructured, and the amount of diminution in the fair value of the restructured advances under the following categories: Standard Advances Restructured; Sub-Standard Advances Restructured; and Doubtful Advances Restructured. Under each of the category above, advances restructured under CDR Mechanism, SME Debt Restructuring Mechanism and other categories of restructuring are required to be shown separately. 2. The Working Group (WG) constituted by RBI to Review the existing Prudential Guidelines on Restructuring of Advances (Chairman: Shri B. Mahapatra) had recommended that once the higher provisions and risk weights (if applicable) on restructured advances (classified as standard either abinitio or on upgradation from NPA category) revert back to the normal level on account of satisfactory performance during the prescribed period, such advances should no longer be required to be disclosed by banks as restructured accounts in the Notes on Accounts in their Annual Balance Sheets. However, the provision for diminution in the fair value of restructured accounts on such restructured accounts

should continue to be maintained by banks as per the existing instructions. The WG also recommended that banks may be required to disclose: details of accounts restructured on a cumulative basis excluding the standard restructured accounts which cease to attract higher provision and risk weight (if applicable); Provisions made on restructured accounts under various categories; and Details of movement of restructured accounts.

60. Retail issue of Subordinated Debt for raising Tier II capital

With a view to deepening the corporate bond market in India through enhanced retail participation, banks, while issuing subordinated debt for raising Tier II capital, are encouraged to consider the option of raising such funds through public issue to retail investors.

61. Measures to enhance the role of standalone Primary Dealers in Corporate Bond Market
With a view to enhance standalone Primary Dealers (PDs) role i n corporate debt market, it has been decided to: i. Allow PDs a sub-limit of 50% of net owned funds for investment in corporate bonds within the overall permitted average fortnightly limit of 225 per cent of NOF as at the end of March of the preceding financial year for call /notice money market borrowing. ii. Permit PDs to invest in Tier II bonds issued by other PDs, banks and financial institutions to the extent of 10 per cent of the investing PDs total capital funds. iii. Permit PDs to borrow to the extent of 150% of NOF as at the end of March of the preceding financial year through Inter Corporate Deposits.