reg update apr may 2012 - cclcompliance.com filerbi imposes penalty on credit agricole corporate and...

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CCL Consultants (India) Private Limited

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MAHENDRA ZAVERI

Director, Consultancy

MEENAKSHI IYER


INDEX

LONDON | DUBAI | MUMBAI

RAJENDRA THAKKAR


www.cclcompliance.com

Regulatory Update

India Edition

[email protected] [email protected] [email protected]

ISSUED 10th November 2016

OCTOBER 2016

1.0 RBI REGULATORY UPDATES & DEVELOPMENTS

1.1 NOTIFICATIONS page 3

1.1.1

1.1.2

1.1.3

1.1.4

1.1.5

1.1.6

1.1.7

1.2

1.2.1

1.2.2

1.2.3

Notification to Scheduled Commercial Banks

Notification to AD Banks

Notification to All Primary Dealers

Notification to Payment Banks & Small Finance Bank

Notification to All SGL/CSGL Account Holders

Notification to Authorised Payment System Operators/Banks

Notification to All Credit Institutions

PRESS RELEASES

Four NBFCs Surrender their Certificate of Registration

RBI Cancels Certificate of Eight NBFCs

RBI Signs MoU on “Supervisory Cooperation and Exchange of Supervisory Information” with

the Central Bank of Myanmar

page 3

page 4

page 6

page 6

page 6

page 7

page 7

page 8

page 8

page 8

page 8

2.0 SEBI REGULATORY UPDATES & DEVELOPMENTS

2.1 CIRCULARS page 8

2.1.1

2.1.2

2.1.3

2.1.4

2.1.5

2.1.6

2.2

2.2.1

Investments by Foreign Portfolio Investors (FPIs) in Government Securities

Bullion as Collateral

Facilitating Transactions in Mutual Fund Schemes through the Stock Exchange Infrastructure

Disclosure of Financial Information in Offer Document/Placement Memorandum for

Infrastructure Investment Trusts (InvITs)

Disclosures in Case of Listed Insurance Companies

Freezing of Promoter and Promoter Group Demat Accounts for Non-Compliance with

Certain Provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations,

2015

PRESS RELEASE

SEBI Introduces Online System for Investment Advisers and Research Analysts

page 8

page 8

page 9

page 9

page 10

page 10

page 10

page 10

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DUBAI | LONDON | MUMBAI

CCL Limited, Level 2, Gate Village 7

Dubai International Financial Centre

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w www.cclcompliance.com LONDON | DUBAI | MUMBAI

3.0 INDIA MARKET UPDATES

3.1

3.2

3.3

3.4

Government Plans to Take Away RBI's Debt Management Role in Two Years

RBI Imposes Penalty on Credit Agricole Corporate and Investment Bank (India)

SEBI Considering a Ban on Social Media Stock Tips, Trading Games

SEBI Imposes Fine on Saradha Realty and Three Other Entities

page 11

page 11

page 11

page 11


[email protected] [email protected]

MEENAKSHI IYER


MAHENDRA ZAVERI

Director, Consultancy [email protected]

CONTACTS

RAJENDRA THAKKAR

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1.0 RBI REGULATORY UPDATES & DEVELOPMENTS

1.1 Notifications

1.1.1 Notification to Scheduled Commercial Banks

Change in Bank Rate

With effect from 4th October 2016, the bank rate was reduced from 7.00 per cent to 6.75 per cent. In view of this, all penal interest rates on shortfall in reserve requirements, which are specifically linked to the Bank Rate, also stand revised by 25 basis points. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10629

Liquidity Adjustment Facility – Repo and Reverse Repo Rates

Monetary Policy Committee (MPC) has decided to reduce the Repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points, i.e., from 6.50 per cent to 6.25 per cent with effect from 4th October 2016. Consequent to the change in the Repo rate, the Reverse Repo rate under the LAF will stand adjusted to 5.75 per cent with effect from the above date. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10631

Marginal Standing Facility

Monetary Policy Committee (MPC) has decided to reduce the Repo rate under the Liquidity Adjustment Facility (LAF) from 6.50 per cent to 6.25 per cent with effect from 4th October 2016. Consequent to the change in the Repo rate, the Marginal Standing Facility (MSF) rate will stand adjusted to 6.75 per cent with effect from 4th October 2016. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10632

Priority Sector Lending - Revised Reporting System

RBI has modified the quarterly and annual reporting formats for reporting priority sector lending. These returns are required to be submitted to RBI, Financial Inclusion and Development Department, Statistics Division, Central Office, Mumbai, within fifteen days and one month, respectively from the date of ending of each quarter and financial year. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10634

Section 24 and Section 56 of the Banking Regulation Act, 1949 - Maintenance of Statutory Liquidity

Ratio (SLR)

It has been decided that the SLR securities acquired from RBI under Liquidity Adjustment Facility (LAF) shall be considered as eligible assets for SLR maintenance from 3rd October 2016. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10640

Risk Weights for Exposures to HFCs

Exposures of banks to all Housing Finance Companies (HFCs) would be risk weighted as per the ratings assigned by the rating agencies registered with SEBI and accredited by RBI, in a manner similar to that of corporates, Asset Finance Companies (AFCs), Non-Banking Financial Company - Infrastructure Finance Companies (NBFC-IFCs) and Non-Banking Financial Company - Infrastructure Debt Fund (NBFC-IDFs) as prescribed in Master Circular on Basel III Capital Regulations dated 1st July 2015 read with the circular on ‘Review of Prudential Norms- Risk Weights for Exposures to Corporates, AFCs and NBFC-IFCs’ dated 25th August 2016. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10655

Sovereign Gold Bonds- Maximum Limit of Investment and Acceptance as Collateral- Clarification

The Sovereign Gold Bonds (SGB) are government securities issued under section 3 (iii) of the Government Securities Act, 2006. As the holder of an SGB can create a pledge, hypothecation or lien against the security (in

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10629






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accordance with the provisions of the G-Sec Act 2006/ G.Sec Regulations, 2007), the SGBs may be used as collateral security for any loan. Banks and other eligible holders can acquire more than 500 gms of SGBs in a fiscal year, through transfers, including transfers arising out of recovery proceedings. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10656

1.1.2 Notification to AD Banks

Import Data Processing and Monitoring System (IDPMS)

In order to enhance ease of doing business and facilitate efficient data processing for payment of import transactions and effective monitoring thereof, an Import Data Processing and Monitoring System (IDPMS) has been developed in consultation with the Customs authorities and other stakeholders. The details of IDPMS were advised to the AD Category-I banks, through RBI A.P. (DIR Series) Circular No.65 dated 28th April 2016 and banks were requested to be ready with the required IT changes in their system to generate/submit the data under IDPMS as per the specified message format and technical specification. All AD Category-I banks were advised that IDPMS would go live with effect from 10th October 2016 and are directed to use IDPMS for reporting and monitoring of the import transactions. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10633

Review of Sectoral Caps and Simplification of Foreign Direct Investment (FDI) Policy

The Central Government had reviewed the extant FDI Policy on various sectors and has made amendments in the Consolidated FDI Policy Circular 2015. Some of the salient features are:

a. In all sectors where there is a limit/cap on foreign investment, such limit/cap shall be reckoned in a

composite manner.

b. “Total foreign investment" in an Indian company will be the sum total of direct and indirect foreign

investments.

c. The onus of compliance with the sectoral/statutory caps on foreign investment and attendant conditions, if

any, shall be on the company receiving foreign investment.

d. A company shall be considered as owned by resident Indian citizens if more than 50% of the capital in it is

beneficially owned by resident Indian citizens and/or Indian companies, which are ultimately owned and

controlled by resident Indian citizens.

e. ‘Control’ shall include the right to appoint a majority of the directors or to control the management or

policy decisions by virtue of their shareholding or management rights or shareholders agreement or voting

agreement.

f. Foreign investment in LLP is permitted under the automatic route if the LLP is engaged in a sector, where

100% FDI is allowed and there are no attendant FDI linked performance conditionalities to the sector.

g. Foreign investment up to 100 percent under the automatic route has been permitted in the plantation

sector, which includes tea plantations, coffee plantations, rubber plantations, cardamom plantations, palm

oil tree plantations and olive oil tree plantations.

h. "Real estate business" shall mean dealing in land and immovable property with a view to earning profit

therefrom and does not include development of townships, construction of residential / commercial

premises, roads or bridges, educational institutions, recreational facilities, city and regional level

infrastructure, townships.

i. Manufacturing has been given a precise definition, and foreign investment up to 100% under the automatic

route is permitted in manufacturing, subject to the conditions of the FDI policy and the provisions of the

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India)

Regulations, 2000.

j. An entity engaged in single brand retail trading operating through brick and mortar stores, is permitted to

undertake retail trading through e-commerce.





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Investment by a Foreign Venture Capital Investor (FVCI) Registered under SEBI (FVCI)

Regulations, 2000

The extant regulatory provisions regarding investment in India by Foreign Venture Capital Investors (FVCI), registered with SEBI have been amended. As per the amended notification, any FVCI which has obtained registration under the SEBI (FVCI) Regulations, 2000, will not require any approval from RBI and can invest in the following instruments:

a. Equity or equity linked instrument or debt instrument issued by an Indian company whose shares are not

listed on a recognised stock exchange at the time of issue of the said securities/instruments and engaged in

any of the sectors listed therein.

b. Equity or equity linked instrument or debt instrument issued by an Indian ‘start-up’ irrespective of the

sector in which the start-up is engaged.

c. Units of a Venture Capital Fund (VCF) or of a Category I Alternative Investment Fund (Cat-I AIF)

(registered under the SEBI (AIF) Regulations, 2012) or units of a Scheme or of a fund set up by a VCF or

by a Cat-I AIF.

As per the amended notification, downstream investments by a Venture Capital Fund (VCF) or a Cat-I AIF, which has received investment from FVCI, shall have to comply with the provisions for downstream investment, as laid down in Schedule 11 of the Principal Regulations. Other salient features of the revised regulatory framework are as follows:

a. An FVCI may open a foreign currency account and/or a rupee account with a designated branch of an

Authorised Dealer for the purpose of making transactions only and exclusively under this Schedule.

b. The consideration for all investment by an FVCI shall be paid out of inward remittance from abroad

through normal banking channels or out of sale / maturity proceeds of or income generated from

investment already made.

c. There will be no restriction on transfer of any security/instrument held by the FVCI to any person resident

in or outside India.


Foreign Investment in Other Financial Services

RBI, in consultation with Government of India, has carried out amendments to allow foreign investment up to 100% under the automatic route in ‘Other Financial Services’. Other Financial Services will include activities which are regulated by any financial sector regulator viz, RBI, SEBI, Insurance Regulatory and Development Authority (IRDA), etc. Other salient features of the revised regulatory framework are as follows:

a. In financial services activities which are not regulated or partly regulated by any financial sector regulator, or

where there is lack of clarity regarding regulatory oversight, foreign investment will be allowed up to 100%

under the Government approval route.

b. Foreign investment in an activity, which is specifically regulated by an Act, will be restricted to foreign

investment levels/limits, if any, specified in that Act.

c. Downstream investment by any entity engaged in ‘Other Financial Services” will be subject to extant

sectoral regulations and provisions of Principal Regulations.


Rupee Drawing Arrangement - Trade related remittance limit

It has been decided that the permitted trade transaction, under the Rupee Drawing Arrangements (RDAs) shall not exceed fifteen lakh rupees per transaction. All other instructions issued in terms of A.P. (DIR Series) Circular No. 28 [A. P. (FL/RL Series) Circular No. 02] dated 6th February 2008 will remain unchanged. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10651




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External Commercial Borrowings (ECB) – Extension and conversion

RBI has simplified the process of dealing with matured but unpaid ECBs. Now the powers have been delegated to designated AD Category-I banks to approve requests from borrowers for extension of matured but unpaid ECBs, subject to the following conditions: (i) No additional cost is incurred; (ii) Lender’s consent is available; and (iii) Reporting requirements are fulfilled. Further, powers are also delegated to the designated AD Category – I bank to approve cases of conversion of matured but unpaid ECBs into equity, subject to the same conditions. If the ECB borrower concerned has availed credit facilities from the Indian banking system including overseas branches/subsidiaries, any extension of tenure / conversion of unpaid ECBs into equity (whether matured or not) shall be subject to applicable prudential guidelines issued by the Department of Banking Regulation of RBI, including guidelines on restructuring. Further, such conversion into equity shall also be subject to consent of other lenders, if any, to the same borrower or at least information regarding conversions shall be exchanged with other lenders of the borrower. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10652

External Commercial Borrowings (ECB) by Start-ups

Start-ups are now allowed to raise ECB under the framework as listed in the circular. It may be noted that Start-ups raising ECB in foreign currency, whether having natural hedge or not, are exposed to currency risk due to exchange rate movements and hence are advised to ensure that they have an appropriate risk management policy to manage potential risk arising out of ECBs. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10667

1.1.3 Notification to All Primary Dealers

Standing Liquidity Facility for Primary Dealers

The Monetary Policy Committee (MPC) of RBI has reduced the repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 6.5 per cent to 6.25 per cent with effect from 4th October 2016. Accordingly, the Standing Liquidity Facility provided to Primary Dealers (PDs) (collateralised liquidity support) from the Reserve Bank would be available at 6.25 per cent with effect from the above date. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10630

1.1.4 Notification to Payment Banks & Small Finance Bank

Operating Guidelines for Payments Banks and Small Finance Banks

Considering the differentiated nature of business and financial inclusion focus of Payment Banks and Small Finance Banks, RBI has issued detailed Operating Guidelines in addition to the one issued on 27th November 2014. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10635


1.1.5 Notification to All SGL/CSGL Account Holders

Notification Participation of Foreign Portfolio Investors (FPIs) in Government securities on NDS-

OM platform

Effective from 1st December 2016, FPIs would be allowed to trade Government securities in the secondary market through the primary members of Negotiated Dealing System – Order Matching (NDS-OM) including the Web-module. The primary members of NDS-OM shall be responsible for settlement of the trades, which will be on T+1 basis. The existing OTC route with T+2 settlement shall continue to be available to FPIs and would be subject to review. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10646

NDS-OM Web Module – Access to Gilt Account Holders (GAHs)

It has been decided to make it obligatory for the Primary Members (PM) to offer the web-based NDS-OM module to their constituent gilt account holders (excluding individuals) for online trading in Government securities in the secondary market. Constituents not desirous of availing this facility may do so by opting out in writing. On the other







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hand, individual GAHs, desirous of the NDS-OM web facility, will be provided with the web access based only on specific requests. The access to the Web module of NDS-OM by the GAHs shall be subject to controls by the concerned PM as the PM would continue to be responsible for settlement of trades in respect of its GAHs as is the case at present. All trades executed by the GAHs on NDS-OM Web module shall be subject to the Constituent Subsidiary General Ledger Account (CSGL) guidelines, rules, regulations, notifications and/or any other instructions issued by the Reserve Bank from time to time. https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10647

1.1.6 Notification to Authorised Payment System Operators/Banks

Framework for Imposing Monetary Penalty on Authorised Payment Systems Operators / Banks

under Payment and Settlement Systems Act, 2007

RBI has decided to put in place a framework for imposition of penalty/fine under section 30 of the PSS Act and compounding of contraventions/offences under section 31 of the PSS Act. The details of the framework are as follows:

a. Nature of offences: Types of contraventions/offences that would be considered for levy of penalty /fine

/compounding, as the case may be, in payment systems.

o Contravention of provisions of the Act. o Non-compliance of directions or order made thereunder. o Violations of terms and conditions of authorisation.

b. Compounding: The contravener is required to apply to the Department of Payment and Settlement

System, RBI in the prescribed application form.

c. Operational procedure to be followed:

o Issue of letter to the entity calling for explanation citing the offence. o Based on the explanation and information/evidence submitted by the entity, Reserve Bank will

examine whether the contravention/offences can be considered for compounding or levy of penalty/fine.

o Issue of show cause notice for imposing penalty/fine/compounding, in case Reserve Bank is not satisfied by the explanation.

o Personal hearing to the entity to be given, if requested in writing, before taking any penal action. o Imposition of penalty/fine or compounding of contravention/offences.

d. Amount of Penalty/fine: It would be based on the nature of contravention/offences with a minimum

penalty of INR 5 lakh. Where the contravention/violation is not quantifiable, a penalty of minimum INR 5

lakh with a maximum of INR 1 crore would be levied.

e. Disclosure: Reserve Bank shall make the penalty levied public through its annual financial statements as

also by disclosing the same on its website.

f. Method of payment of penalty/fine: Where the parties are maintaining Current Account with RBI, the

amount of penalty would be recovered by debiting their account after getting mandate to that effect. In

other cases, the parties are required to deposit the amount of penalty in the designated account of RBI

within one week of the issue of return order.

g. Non-payment of penalty/fine: In the event of non-payment of penalty /fine, the provisions of Section 8

of the PSS Act would be applicable and necessary action under PSS Act would be initiated accordingly.


1.1.7 Notification to All Credit Institutions

Money Market Futures

It has been decided to introduce Interest Rate Futures based on any rupee denominated money market interest rate or money market instrument on SEBI authorised stock exchanges. For this, RBI has issued a notification to permit cash settled interest rate futures based on money market benchmarks in general. The purpose of the amendment is to permit futures based on any money market instrument or money market interest rate, other than the 91-day Treasury Bill Futures, which has been already permitted. Registered exchanges



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are free to select the underlying instrument or interest rate and structure other details of the contracts. However, before any new or modified futures contract is introduced for trading on the exchanges, the registered exchanges shall submit complete details of the futures contract, duly ratified by SEBI, to the Reserve Bank for approval. https://rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10668

1.2 Press Releases

1.2.1 Four NBFCs Surrender their Certificate of Registration

Four NBFCs have surrendered the Certificate of Registration granted to them by RBI. RBI, in turn, has cancelled

the Certificate of Registration under the powers conferred on it under Section 45-IA (6) of the RBI Act 1934. These

companies cannot transact the business of a Non-Banking Financial Institution, as laid down in clause (a) of Section

45-I of the RBI Act, 1934.

1.2.2 RBI Cancels Certificate of Eight NBFCs

RBI has cancelled the certificate of registration of Eight NBFCs in exercise of the powers conferred on it under

Section 45-IA (6) of the RBI Act, 1934. Following the cancellation of registration certificate, these companies

cannot transact the business of a Non-Banking Financial Institution, as laid down under clause (a) of Section 45-I of

the RBI Act, 1934.

1.2.3 RBI Signs MoU on “Supervisory Cooperation and Exchange of Supervisory Information” with the

Central Bank of Myanmar

On 19th October 2016, RBI signed a Memorandum of Understanding (MoU) on “Supervisory Cooperation and Exchange of Supervisory Information” with the Central Bank of Myanmar. The Reserve Bank has entered into Memorandum of Understanding, Letter for Supervisory Co-operation and Statement of Co-operation with supervisors of a few countries to promote greater co-operation and share supervisory information. With this, RBI has signed 34 such MoUs, one Letter for Supervisory Co-operation and one Statement of Co-operation. 2.0 SEBI REGULATORY UPDATES & DEVELOPMENTS

2.1 Circulars 2.1.1 Investments by Foreign Portfolio Investors (FPIs) in Government Securities

In partial modification to the circular dated 29th March 2016, SEBI has decided to enhance the limit for investment by FPIs in Government Securities for the next half year. The incremental limits will be effective from 3rd October 2016 and 2nd January 2017 for Long Term FPIs. The following modifications have been brought out:

Type of Instrument Revised Upper Cap with effect from 3rd October 2016 (INR cr)

Revised Upper Cap with effect from 2nd January 2017 (INR cr)

Government Debt 148,000 152,000

Government Debt – Long Term

62,000 68,000

State Development Loans 17,500 21,000

2.1.2 Bullion as Collateral

SEBI has decided to modify the conditions with respect to norms on collaterals. In terms of the amendment, total commodities collateral for any clearing member should not exceed 30% of the total liquid assets of the clearing member, out of which non-bullion collateral should not exceed 15% of the total liquid assets of the clearing member.

https://rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=10668

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Exchanges will make necessary arrangements to enable timely liquidation of collaterals and may stipulate concentration limits for collateral at member level/across all members, as may be necessary, based on their risk perception, capability to hold and arrangements for timely liquidation. 2.1.3 Facilitating Transactions in Mutual Fund Schemes through the Stock Exchange Infrastructure

SEBI had permitted mutual fund distributors to use the infrastructure of recognised stock exchanges to purchase and redeem mutual fund units directly from Mutual Fund / Asset Management Companies. To further increase the reach of this platform, SEBI has now decided to allow SEBI Registered Investment Advisors (RIAs) to use the infrastructure of the recognised stock exchanges to purchase and redeem mutual fund units directly from Mutual Fund/Asset Management Companies on behalf of their clients, including direct plans. 2.1.4 Disclosure of Financial Information in Offer Document/Placement Memorandum for Infrastructure

Investment Trusts (InvITs)

SEBI has issued detailed requirements for disclosure of financial information in offer document/placement memorandum for InvITs. Following are the highlights of the disclosure requirements:

The offer document will need to contain details of financial information, related party transactions and past

performance.

The financial information would be with respect to the last three financial years. These include balance

sheet, statements of profit and loss, income and expenditure, net assets and total returns.

Disclosures would need to be made about commitments, contingent liabilities, earnings per unit, total debt,

net worth, and the debt/equity ratios before and after the completion of issue.

The Trust would have to include a statement about the history of interest and principal payments of the

InvIT and operating cash flows from the projects for the last three years and interim period, if any.

With regard to related party transactions, the InvIT would have to provide relevant disclosures of all related

party transactions such as details of the related party and its relationship with the InvIT, nature and value of

transaction.

In case of any related party transaction involving acquisition or disposal of an InvIT asset, the Trust would

have to disclose the summary of the valuation report, material conditions or obligations in relation to the

transactions, and commissions received by any associate of the related party in relation to the transaction.

The offer document/placement memorandum would need to contain disclosures of the projections of

revenues and operating cash flows of the InvIT, project-wise, over the next three years including related

assumptions.

The InvIT would have to prepare and disclose Management Discussion and Analysis by the Investment

Manager, based on the financial statements.

A statement from the Investment Manager regarding sufficiency of the working capital to fulfil the present

requirements of the InvIT at least 12 months from date of listing would have to be disclosed in the offer

document.

In case of a capital offering subsequent to the initial offer, the market value of the units traded on all the

stock exchanges where the InvIT is listed would have to be disclosed.

InvITs will have to make disclosures about the basis of preparation of financial information, which would

be in accordance with Indian Accounting Standards.

InvITs will have to inform about the framework for calculation of net distributable cash flows and such

cash flows at the SPV and consolidated level.

An offer document of the InvIT would need to include a summary of the audited consolidated financial

statements including the Balance Sheet and Statement of Profit and Loss of the Investment Manager and

the Sponsor for the past three years, prepared in accordance with accounting standards.

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Further, if any of the Investment Manager/Sponsor is a foreign entity and is not legally required to comply

with the Companies Act, 2013, then the financial statements of such entity may be prepared in accordance

with International Financial Reporting Standards (IFRS).

2.1.5 Disclosures in Ccase of Listed Insurance Companies

SEBI had prescribed formats for Unaudited/Audited quarterly financial results to be submitted by the Listed Entities with the stock exchanges as per the Companies Act 2013. However, it was stipulated that Banking Companies and Insurance Companies would follow the formats as prescribed under the respective Acts/Regulations as specified by their Regulators. SEBI has now clarified as below:

The insurance companies (life and non-life) would submit quarterly financial results and Reporting of

Segment wise Revenue, Results and Capital Employed along with the quarterly results disclosures for

quarters ending 30th September 2016 and 31st December 2016 in the format, as specified by the Insurance

Regulatory and Development Authority of India (IRDAI).

The insurance companies would continue to follow the format as specified by SEBI with respect to the

format for Newspaper Publishing Purpose (Standalone/Consolidated). Additional disclosures may also be

made as prescribed by IRDAI.

2.1.6 Freezing of Promoter and Promoter Group Demat Accounts for Non-Compliance with Certain

Provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

SEBI had prescribed a uniform fine structure for non-compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and evolved a Standard Operating Procedure for suspension and revocation of trading of specified securities. It was observed that some of the non-compliant listed entities have not paid the fines levied by the recognized stock exchanges. For effective enforcement, it has been decided to freeze the holdings of promoters and promoter group entities in the manner specified below:

If a non-compliant listed entity fails to pay the fine levied as per the notice issued by the concerned

recognized stock exchange, the concerned recognized stock exchange would, upon expiry of the period

indicated in the notice issued by it, freeze holdings in other securities in the demat accounts of promoter

and promoter group to the extent of the liability, which would be calculated on a quarterly basis.

In case of non-compliance for two consecutive periods, and failure to comply with the notice issued by the

concerned recognized stock exchange, the concerned recognized stock exchange would forthwith intimate

the depositories to freeze the entire shareholding of the promoter and promoter group in such listed entity.

In addition to the freeze of shares in the non-compliant listed entity, the holdings in the demat accounts of

promoter and promoter group in other securities would also be frozen to the extent of the liability, which

would be calculated on a quarterly basis.

While freezing the holdings, as stated above, the recognized stock exchange would have discretion in

determining which of the securities and holdings of which promoter or promoter group entity are to be

frozen.

The depositories would furnish to the exchange, upon receipt of request, all such information pertaining to holdings in the demat accounts of the promoter and promoter group of such listed entities. 2.2 Press Release

2.2.1 SEBI Introduces Online System for Investment Advisers and Research Analysts

To promote ease of operations in terms of e-registration, compliance reporting, etc. SEBI has introduced an online system for Investment Advisers and Research Analysts. Applicants seeking grant of registration as Investment Advisers and Research Analysts are now required to submit only online applications to SEBI.

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3.0 INDIA MARKET UPDATES

3.1 Government Plans to Take Away RBI's Debt Management Role in Two Years

The Government of India plans to transfer the responsibilities of managing public debt on behalf of the Government from RBI to a new independent agency in the next two years. The Government has decided to set up a cell that will advise RBI in finalising the government's market borrowings as well as managing its liabilities. In about two years, the cell would be upgraded to a statutory public debt management agency. 3.2 RBI Imposes Penalty on Credit Agricole Corporate and Investment Bank (India)

RBI has imposed a penalty of INR 10 million on Credit Agricole Corporate and Investment Bank (India) in exercise of the powers vested with it under the provisions of Section 47 (A) (1) (c) read with Section 46(4) (i) of the Banking Regulation Act, 1949 for contravention of the provisions of Section 6 of the Banking Regulation Act, 1949. 3.3 SEBI Considering a Ban on Social Media Stock Tips, Trading Games

SEBI is considering imposing a ban on unauthorised trading tips through SMS, WhatsApp, Twitter, Facebook and other social media platforms, as also games, competitions and leagues relating to securities market. SEBI has also proposed to curb unsolicited investment advice and promotion of investment products through electronic and broadcasting media platforms and has decided to put in checks and balances for online investment advisory services and use of automation or robotic tools. Apart from this, it also proposes to ban 'free trial' offers by investment advisors for their prospective clients and has sought to make it mandatory for even registered research analysts to provide their research reports for all class of investors at the same time. A detailed 'advertisement code' is expected to be issued shortly by SEBI for providing investment advice to check upon any misleading advertisements promising unrealistic returns in the securities market or influencing investment decisions. These initiatives are aimed at bringing "uniform standards" for all intermediaries or persons engaged in providing investment advisory services. 3.4 SEBI Imposes Fine on Saradha Realty and Three Other Entities

SEBI has imposed a penalty of INR Two Crore on Saradha Realty India Ltd and three other entities as they failed to comply with the directions issued by it and carried on as an unregistered Collective Investment Schemes.

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ABOUT CCL

Established in London in 1988, 2006 in Dubai and 2012 in Mumbai, CCL’s Mumbai operation provides specialist

compliance services to organisations that are regulated by RBI and SEBI.

Consultancy & Documentation

Authorisation with RBI and SEBI

Compliance Documentation

Compliance Reviews

Regulatory Analysis, Interpretation and Advice

Regulatory Reporting

Training

Governance, Risk & Compliance

CISI Qualifications

If you wish to discuss how CCL can assist you with any of the issues raised in this Regulatory Update, please

contact one of the principals using the details below:

Tel: +91 22 28381163-64

Email: [email protected]

or write to us at:



M.V. Road, Andheri (E),

Mumbai- 400059

www.cclcompliance.com

This Regulatory Update provides information about the consultative documents and publications issued by the RBI

and SEBI which are still current, proposed changes to the Rules and Guidance set out by RBI and SEBI, actual

changes to Rules and Guidance that have occurred in the months leading up to the update and other matters of

relevance to RBI & SEBI-regulated firms. This Regulatory Update is intended to provide general summarised

guidance only, and no action should be taken in reliance on it without specific reference to the particular RBI and

SEBI Notifications referred to.

mailto:[email protected]

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