Tag Archives: Reserve Bank of India

ILN Today Post

Insolvency Code – Resolution of NPAs Vis-À-Vis Defaulting Promoters

Massive expansion and investments, primarily funded through bank loans (despite a weak promoters’ equity base), has given rise to companies which have overleveraged their balance sheets. Coupled with the economic slow-down, industry conditions and global financial crisis in the past, this led to these companies becoming financially stressed. While, certain companies were able to sustain themselves through swapping loans, many have already reached a point where they have financially broken down. Bhushan Steel, Lanco, Essar Steel, Kingfisher, Monnet Ispat and Alok Industries, are just a few reported examples of such broken down stories.

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ILN Today Post

NEW RBI NORMS ON PREPAID PAYMENT INSTRUMENTS

The Reserve Bank of India (“RBI”) has issued various guidelines from time to time on issuance and operations of Prepaid Payment Instruments (“PPIs”) in India. PPIs are defined as payment instruments that facilitate purchase of goods and services, including financial services, remittance facilities, etc., against the value stored on such instruments, and can be classified under three types viz. (i) Closed System PPIs, (ii) Semi-closed System PPIs, and (iii) Open System PPIs.

In view of the numerous technological innovations, progress in fintech and the use of PPIs growing at an exponential rate, RBI with the aim to foster innovation and competition, safety, security, and customer protection, has issued a fresh set of directions relating to issuance and operations of PPIs on October 11, 2017, in the form of RBI (Issuance and Operation of Prepaid Payment Instruments) Directions, 2017 (“Master Directions”). These Master Directions are applicable to PPI Issuers, System Providers, and System Participants, and are effective immediately. Existing authorised PPI issuers have, however, been allowed till December 31, 2017 to comply with the revised requirements (except where otherwise specified in the Directions).

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ILN Today Post

Future of Virtual Currencies in India

The legal status of virtual currencies (“VCs”) such as Bitcoins continues to be debated as it remains unrecognized in India.

The Reserve Bank of India (“RBI”) in the past had issued several advisories clarifying that creation, trading or usage of VCs, as a medium for payment are not authorized by any central bank or monetary authority in India and entails various risks, but RBI stopped short of declaring VCs as illegal. However, pursuant to issuance of these advisories, the Enforcement Directorate did reportedly conduct raids against operators of trading platforms of VCs in India, creating an atmosphere of regulatory uncertainty for the VC industry. In absence of any clear direction or regulation by the Government, the matter of VCs seems to have remained in an uncertain limbo riddled with regulatory pitfalls.  

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ILN Today Post

Liberalization of deferred payments under FEMA

  1. Introduction 

1.1.          Deferment of payments in share purchase transactions between non-resident buyers and resident sellers till recently required prior approval of the Reserve Bank of India (“RBI”) under Regulation 10 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (“FEMA Transfer Regulations”).

1.2.          Further, authorized dealer banks in India were allowed to open escrow accounts towards payment of share purchase consideration (subject to various terms and conditions specified by RBI), but the escrow account could only be operational for a limited period of 6 months.1 In all other cases of opening/maintaining of escrow accounts for FDI related transactions, prior approval from the RBI was necessary.

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ILN Today Post

RBI directed to disclose information under Right to Information Act

The issue of whether the Reserve Bank of India (“RBI”) is bound to disclose information sought under the Right to Information Act, 2005 (“RTI Act”) was recently examined by the Hon’ble Supreme Court in the case Reserve Bank of India and Ors. v. Jayantilal N. Mistry and Ors., decided on December 16, 2015. The case in question dealt with certain orders of Central Information Commissioner (“CIC”) requiring RBI to furnish information sought by the applications filed under the RTI Act seeking certain information of other banks in public interest. 

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