Reserve Bank of India introduces prepaid instruments for small-ticket retail payments and digital transactions

  • RBI on December 24 introduced a new type of semi-closed prepaid payment instruments (PPIs) for the Indian consumer.
  • According to RBI, the new PPI can be used only for the purchase of goods and services up to Rs 10,000 per month and Rs 1,20,000 during the entire financial year.
  • The loading/reloading of such PPI will be only from a bank account, and customers will be able to make only digital payments, including bill payments and merchant payments.
  • The consumers can use this feature to make their daily payments at local shops and retail outlets for the purchase of everyday household goods and services but cannot be used for funds transfer.
  • Banks and the existing non-bank PPI players will have the authority to issue PPI after obtaining minimum details of the PPI holder.
  • However, it is mandatory for these issuers to provide an option to close the PPI at any time and also allow to transfer the funds 'back to source' at the time of closing, said a statement issued by the central bank.
  • The minimum details required is to include a mobile number verified with One Time Pin (OTP) and a self-declaration of name and unique identity number of any 'mandatory document' or 'officially valid document' (OVD) listed in the 'Master Direction – Know Your Customer (KYC) Direction, 2016' issued by the Department of Regulation, RBI, the notification said.

Securities Exchange Board of India (SEBI) modifies the framework for listing of Commercial Paper-Amendments

Based on the representations received from the market participants, following paragraphs of Circular on Commercial Papers dated October 22, 2019, where the said framework had been provided, is modified and amended as follows:

  • The proviso to Para 5.2 of Annexure I of CP Circular has been modified to be read as under:
  • Provided that listed issuers (who have already listed their specified securities and/or 'Non-convertible Debt Securities' (NCDs) and/or 'Non- Convertible Redeemable Preference Shares' (NCRPS)) who are in compliance with SEBI (Listing obligations and disclosure requirements) Regulations 2015 (hereinafter "SEBI LODR Regulations"), and/or issuers (who have outstanding listed Commercial Paper (CPs)) who are in compliance with Annexure II of CP Circular may file unaudited financials with limited review for the stub period in the current financial year, subject to making necessary disclosures in this regard including risk factors.
  • Second Para of Para 1.2 of Annexure II of CP Circular has been modified to be read as under:
  • However, if an issuer is required to prepare financial results for the purpose of consolidated financial results of its parent company in terms of Regulation 33 of SEBI LODR Regulations, such issuers shall submit financial results in terms of para 1.1 above or shall submit quarterly financial results that have been prepared for the purpose of consolidation of their parent company.

Ministry of Finance has notified minor amendments to the GST framework

  • The Government has extended the time limit for furnishing of annual return/reconciliation statement in FORM GSTR-9/FORM GSTR-9C for FY 2017-18 till January 31, 2020.
  • Waiver of late fees for non-filing of FORM GSTR-1 by due date for the months/quarter July, 2017 to November, 2019. However, relaxation is only if FORM GSTR-1 for the said periods filed by 10th January, 2020.
  • Another notification seeks to further amend Rule 36(4) of the of the CGST Rules, 2017 to restrict availment of ITC from 20% to 10% of eligible credits available in respect of invoices or debit notes the details of which have been uploaded by the suppliers.
  • The government by notification seeks to expand the scope of blocking of E-way bill from non-filing of GSTR-3B to non- filing of GSTR-1 also for two months or quarter as the case may be.
  • The Commissioner or any officer authorized by him not below the rank of an Assistant commissioner, may not allow use of ITC for discharge of liability or claim of refund where it has reasons to believe that:
    1. The registered supplier is non-existent or
    2. The registered supplier is conducting business from any place for which registration has not been obtained or
    3. The purchaser is not in receipt of goods or services or both or
    4. The registered supplier has not paid tax on invoices issued or
    5. The registered purchaser is non-existent or
    6. The registered purchaser is conducting business from a place for which registration has not been obtained or
    7. The registered purchaser is not in possession of a tax invoice
  • The said restriction is valid for a period one year i.e till 26th December, 2020.

Reserve Bank of India reviews Master Directions of Non-Banking Financial Company –Peer to Peer Lending Platform 2017

  • The review has been put out in reference to Master Directions -Non-Banking Financial Company –Peer to Peer Lending Platform (Reserve Bank) Directions, 2017, dated October 04, 2017. On a review, the RBI has decided that:
    • The aggregate exposure of a lender to all borrowers at any point of time, across all P2P platforms, shall be subject to a cap of Rs. 50,00,000 provided that such investments of the lenders on P2P platforms are consistent with their net-worth.
    • The lender investing more than ₹10,00,000 across P2P platforms shall produce a certificate to P2P platforms from a practicing Chartered Accountant certifying minimum net-worth of ₹50,00,000. Further, all the lenders shall submit declaration to P2P platforms that they have understood all the risks associated with lending transactions and that P2P platform does not assure return of principal/payment of interest.
    • Escrow accounts to be operated by bank promoted trustee for transfer of funds need not be mandatorily maintained with the bank which has promoted the trustee.

Securities Exchange Board of India (SEBI) lays guidelines for filing of placement memorandum and has proposed InvITs to be listed

  • Clarifications are issued to the InvITs by the SEBI through a Circular which are issuing units on private placement basis, wherein units are issued by way of private placement and which are proposed to be listed.
  • SEBI has consecutively laid out a procedure that has to be followed to get the said InvITs to be listed which includes:
    • Filing a draft placement memorandum with the Board and stock exchange(s) through a merchant banker registered with the Board not less than thirty days prior to opening of the issue.
    • As per the Circular, the draft placement memorandum shall contain disclosures as specified in Schedule III of InvIT Regulations and the merchant banker has to submit a due diligence certificate as per Form A (to the extent applicable) of Annexure I of SEBI Circular no. CIR/IMD/DF/55/2016 along with the draft placement memorandum.
    • The Board has been given freedom by the SEBI to issue observations, if any, on the draft placement memorandum within fifteen working days from the later of the following dates:
      1. The date of receipt of the draft placement memorandum by the Board; or
      2. The date of receipt of satisfactory reply from the issuer and/or merchant banker to the issue, where the Board has sought any clarification or additional information from them; or
      3. The date of receipt of clarification or information from any regulator or agency, where the Board has sought any clarification or information from such regulator or agency; or
      4. The date of receipt of a copy of in-principle approval letter issued by the stock exchange(s).
  • The merchant banker to the issue, has the duty to ensure that all comments are suitably incorporated in the draft placement memorandum prior to filing of the placement memorandum in terms of Regulation 14(2)(e) of InvIT Regulations and shall provide the due diligence certificate as per Form B of Annexure I of SEBI Circular no. CIR/IMD/DF/55/2016.
  • The Circular shall come into effect from January 15, 2020 for all InvITs issuing units on private placement basis and are proposed to be listed.

Originally published 28 December 2019

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