India Law Update
WORLD PRACTICE
Asia  Europe  USA  UK  Middle East  Africa

RBI Releases Draft Guidelines on Loan System for Delivery of Bank Credit

The Reserve Bank of India (RBI) on 11 June, 2018 vide Circular No. RBI /2017-18 / DBR. No. BP. BC……/21.04.048/2017-18 released draft guidelines on loan system for delivery of bank credit which stipulate a minimum level of 'loan component' in fund based working capital finance and a mandatory Credit Conversion Factor (CCF) for the undrawn portion of cash credit/ overdraft limits availed by large borrowers, with a view to enhancing credit discipline among large borrowers.

Banks provide working capital finance by way of cash credit/overdraft, working capital demand loan, purchase/discount of bills, bank guarantee, letter of credit, factoring, etc. Cash credit (CC) is by far the most popular mode of working capital financing. While CC has its benefits, it also poses several regulatory challenges such as perpetual roll overs, transmission of liquidity management from the borrowers to banks/RBI, hampering of smooth transmission of monetary policy, etc. Comments on the draft guidelines are invited from banks and other stakeholders by June 26, 2018.

Read more

SEBI Reviews Investment by Foreign Portfolio Investors (FPI) in Debt

SEBI vide Circular No. IMD/FPIC/CIR/P/2018/101 dated June 15, 2018 has made changes to operational aspects of Foreign Portfolio Investors (FPI) in debt. The circular has been issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992. It has been decided to withdraw minimum residual maturity restriction of three years for investment by FPIs in G-Secs and SDLs. Further, the auction process being carried out by BSE/ NSE shall be discontinued from the date of this circular.

Till date, depositories were monitoring the G-Sec/ SDLs utilization limits and reporting to SEBI. Henceforth, the overall monitoring of G-Sec/ SDLs will be done by Clearing Corporation of India Limited (CCIL). Thus, any circular previously issued by SEBI from time to time for monitoring of G-Sec and SDLs stands withdrawn and hence, shall not be applicable to FPIs for investments in G-Secs and SDLs from June 1, 2018. However, FPIs may be guided by RBI circular dated June 15, 2018 referred above for the requirements of G-Secs and SDLs.

Read more

27 June 2018
In this issue:
 
India Juris
F-116
Lajpat Nagar-1
New Delhi - 110 024, India
Ph: +91-11-29814816 / 29814817
Fax: +91-11-29815116
E: newdelhi@indiajuris.com
www.indiajuris.com
 
 
 
International Desks
 
Asia & Australia
M.P.Mehani
asia@indiajuris.com
 
Americas
Shivkumar Idnani
americas@indiajuris.com
 
UK & Europe
Sameer Rastogi
europe@indiajuris.com
 
Africa
Rahul Gupta
africa@indiajuris.com
 
Middle East
Dinesh Sabharwal
middleast@indiajuris.com
 
INDIA JURIS I www.indiajuris.com I Presentation, Awards & Rankings I Publications I Disclaimer