In a previous post, Satyajit had discussed the Reserve Bank of India’s (RBI) policy measures announced on August 14, 2013 to restrict overseas direct investments (ODI). Primarily, it was decided to reduce the ODI limits of a company from 400% of its net worth to 100%. Yesterday, the RBI announced some clarifications that mitigate the severity of the above restrictions. First, it clarified that...
RBI releases discussion paper on banking structure in India
The RBI issued guidelines for licensing of new banks in the private sector, vide its press release dated February 22, 2013 (covered here). It was stated in the guidelines that there was a need for an explicit policy on banking structure in India, keeping in view the recommendations of the Narasimham Committee, Raghuram Rajan Committee and other viewpoints. Accordingly, it was announced in the...
RBI revises overseas investment norms
The RBI has just announced the following measures today: (i) It has reduced the limit for Overseas Direct Investment (ODI) under automatic route for all fresh ODI transactions, from 400% of the net worth of an Indian Party to 100% of its net worth. These provisions shall come into effect with immediate effect and would apply to all fresh Overseas Direct Investment proposals on a prospective basis...
RBI makes 1000s of companies anxious by “Are you an unregistered NBFC?” notices
Over last week, Reserve Bank of India has sent notices to thousands – tens of thousands perhaps – of companies asking them whether they are NBFCs. And, if yes, why they have not registered. This is worrying because if a Company is an NBFC and has not registered, it entails serious consequences for the Company and its concerned directors/officers. For example, the law provides for minimum and...
RBI Guidelines on Private Placement of Debentures by NBFCs – Part 2
[The following post is contributed by Nidhi Ladha and Vinita Nair of Vinod Kothari & Co. They can be contacted at [email protected] and [email protected] respectively. This is a continuation of a previous post accessible here] RBI Directions The present Guidelines From June 27, 2013 onwards, any issue of debentures- whether convertible or non convertible, by NBFCs – whether...
RBI Guidelines on Private Placement of Debentures by NBFCs – Part 1
[The following post is contributed by Nidhi Ladha and Vinita Nair of Vinod Kothari & Co. They can be contacted at [email protected] and [email protected] respectively] Non Banking Financial Companies (NBFCs) raise money through the issuance of capital/debt securities (including debentures) by way of public issue or private placement. Lately...
ECBs by Corporates under Investigation
Hitherto, companies that are under investigation by law enforcement agencies such as the Directorate of Enforcement are not entitled to taken on external commercial borrowings (ECBs) under the automatic route, and are required to approach the Reserve Bank of India (RBI) for approval. Through a recent circular, the RBI has relaxed such position. Now, such entities under investigation are eligible...
RBI Guidelines for Licensing of New Private Sector Banks
The Reserve Bank of India (RBI) has issued a final set of guidelines for licensing of new banks in the private sector. These guidelines will becomes operational with effect from July 1, 2013 and applications under them for establishing new banks must be submitted to the RBI before that date. These guidelines are based on the draft issued by the RBI in August 2011. Since then, the RBI has received...
Foreign Investment in Corporate Debt
[Vinita Sithapathy, who is a lawyer and a company secretary, has contributed the following post. Vinita graduated from Government Law College, Mumbai in 2008. She has advised clients on banking and finance and corporate M&A transactions since 2008. She can be contacted at [email protected]] Last month, the Reserve Bank of India (RBI) introduced some amendments to its existing regime...
Draft Guidelines on Debt Restructuring
The Reserve Bank of India (RBI) has issued draft guidelines on “Review of Prudential Guidelines on Restructuring of Advances by Banks and Financial Institutions” that follows from the recommendations of the working group on the subject under the chairmanship of Mr. B. Mahapatra. The draft guidelines contain several technical details regarding prudential norms on income recognition, asset...
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