| RBI notifies rules under Fema to operationalise FDI decisions |
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New Delhi, 11 September The Reserve Bank of India (RBI) has come out with notifications under the Foreign Exchange Management Act ( Fema) to operationalise foreign direct investment ( FDI) policy in multibrand retailing, telecom and others. It has also widened the definition of the term ' control' under the Act which would have repercussions on downstream investment by an entity controlled by foreigners. The notification follows the Cabinet decision of August 2 to relax foreign investment norms. The government had relaxed norms for 51 per cent multi- brand retail trading and eased the mandatory 30 per cent local sourcing norms for companies. The notification says the mandatory 30 per cent local sourcing norms for multibrand retailers was diluted. It now permitted states to include cities with population less than 1 million for allowing multi- brand retailing. The cap in telecom was increased to 100 per cent from 74 per cent. FDI of up to 49 per cent can come through the automatic route. Similarly, a slew of decisions were taken to raise FDI cap in credit information companies, asset reconstruction companies as well as defence production. "The FDI policy is now notified under Fema regulations and is effective from August 22," Department of Economic Affairs Secretary Arvind Mayaram told reporters here. The notification would have to be tabled in Parliament within 30 days of the commencement of the next session, Mayaram said, adding it could also be put to vote in case a member decided to challenge it. The notifictions for multibrand retail were listed for debate in Parliament in the just- concluded session but could not be taken up. According to the new definition, 'control' would include " the right to appoint a majority of directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreement or voting agreements." Under the current policy, ' control' rests with one who has power to appoint the majority of its directors in a company. This would operationalise the controversial Press Notes 2,3 and 4 of 2009. These notes, incorporated later in the consolidated policy, became controversial as these said the entire downstream investment through an investing Indian company would be considered for calculation of indirect foreign investment if an Indian company is 'owned and controlled' by non- residents, and sectoral FDI caps would apply on those. However, there were some exceptions, especially in relation with 100 per cent subsidiaries of investing companies. The press notes suggested the types of instruments for calculating indirect foreign investment into a firm should be foreign direct investments, those by foreign institutional investors, qualified foreign investors, non- resident Indians, those through American depository receipts or global depository receipts, foreign currency convertible bonds, compulsorily and mandatorily convertible preference shares and fully, compulsorily and mandatorily convertible debentures. In this regard, a firm owned by non- residents would mean an Indian firm where over 50 per cent of capital is beneficially owned by foreigners. Also, the Jet- Etihad airline deal had to change its shareholders' agreement earlier to subject itself to this new definition of control. The definition of the term control has been widened and will have repercussions on downstream investment by an entity controlled by foreigners |
| NBFCs raised surrogate deposits: RBI official |
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Mumbai, 11 September Coming down heavily on non- banking finance companies (NBFCs), a Reserve Bank of India ( RBI) official on Wednesday said these were raising surrogate deposits under the garb of non- convertible debentures ( NCDs). "NBFCs were raising surrogate deposits under the garb of NCDs. That was the reason for RBI to come out with the norms for private placement of NCDs," said the official, who asked not to be named. Speaking on the sidelines of a seminar here, the official said a couple of RBI officials had gone incognito to one of the branches of an NBFC and was alarmed by the practices followed by the companies. The central bank recently came out with the guidelines for private placement of NCDs of NBFCs, which had barred them from raising money through the route from more than 49 investors. RBI also said the minimum amount of investment in such NCDs would be ₹ 25 lakh. The official also said RBI was concerned at the unprecedented growth of gold loan NBFCs. " There is huge amount of concentration risk and whenever this is so, there is also strain on capital (and) therefore, there was aneed to come out with regulatory responses. What we are looking at now is standardisation of the value of gold acceptance and standardisation in the value of gold auction." "We are going to come out very shortly with further regulation on ( gold) NBFCs. What we are also going to do is to ensure that all violations are suitably addressed, not softly addressed," said the official. RBI had set up a committee under the chairmanship of K U B Rao, an advisor of the central bank, to look into the sector and its impact on gold loan companies. The committee has given its report. The regulator is yet to come out with final norms based on the Rao committee report. It has, however, capped the loan to value ratio for these companies at 60 per cent of the value of the pledged metal. RBI was clear there should be no dual regulations on microfinance institutions and the central bank should be the sole regulator, the official said. The central bank will put an interest rate cap on MFIs again as the government is not very comfortable with the no- interest- rate- cap situation. RBI has already communicated its views to the government in this regard. |Strict action against companies accepting deposits when they are not authorised to do so |NBFCs were raising surrogate deposits under the garb of NCDs |Final norms for gold loan companies based on KUB Rao committee report soon |The central bank is not in favour of MFIs accepting deposits |Interest rate cap on MFIs will be applied again |Compliance issues with Andhra MFIs |No regulatory forbearance on second restructuring for MFIs CRACKING DOWN What RBI says: |
| Teething troubles for EPFO web portal |
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However, Employees' Provident Fund Organisation central provident fund commissioner K K Jalan says, " The updated EPF balance will be available in 15- 20 days, as the portal will upgrade to an ' annual account updating software'. This will help all subscribers to view their EPF balances till March 2013." One can check the current total balance ( employers' and employees' contribution), excluding the interest accrued, by downloading the e- passbook. For this, a subscriber would have to state his/ her provident fund account number, mobile number and date of birth, along with details of any key document — permanent account number, driving licence, passport, Aadhaar number, etc. After registering, the portal takes four- five working days to prepare the e- passbook. For those who want to know how much they would get when they quit their job, there is a ' know your claim status' facility. Through this, asubscriber would have to click on the link on the portal to find the status of his/ her claim submitted in an EPFO office. Then, the subscriber has to select the EPFO office where his account is maintained and provide his/ her provident fund account number. The subscriber would then be informed if the status of his/ her claim is 'under- process', ' settled' or 'rejected'. One could also register complaints on the website. Jagmohan Atri, EPFO's additional central provident fund commissioner (Haryana & Rajasthan), says, "Any grievance related to the portal claim or services can be registered at the portal. Complaints would be directly routed to the EPF office concerned and would take up to 30 days to be settled." From October, EPFO would also provide a facility for online account transfer claims. Many facilities are, however, yet to be made available; for instance, online transfer of EPF accounts while shifting jobs. Also, in many cases, even if the EPF balance from the previous employer has been transferred offline, it isn't reflected in the account. This defeats the purpose of a single provident fund account across employers. YOGINI JOGLEKAR Currently, only balance till March 2012 available; data update in 2- 3 weeks >YOUR MONEY |
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