Even though policy changes undertaken in respect of overseas investment have facilitated the growing cross-border acquisitions by the Indian corporate sector, other structural reforms undertaken since 1992, such as, industrial deregulation, trade liberalisation and relaxation of regulations governing inward FDI, led to major restructuring in the Indian industry. In fact, many of the leading companies owe their competitiveness to the reform process. Greater exposure to internal as well external competition proved to be instrumental in building confidence among the Indian companies to compete with foreign competitors in world market. Apart from liberalised policy environment for overseas investment, India has gained ground as an important investor on the back of (a) rapid economic growth, (b) easy access to financial resources and (c) strong motivations to acquire resources and strategic assets abroad.

The Basel Committee published its Basel III rules in December 2010. I propose to discuss the major features of Basel III in a little more detail. Learning the lessons from the crisis, the objectives of Basel III are to minimise the probability of recurrence of a crisis of such magnitude. Towards this end, the Basel III has set its objectives to improve the shock absorbing capacity of each and every individual bank as the first order of defence and in the worst case scenario, if it is inevitable that one or a few banks have to fail, Basel III has measures to ensure that the banking system as a whole does not crumble and its spill-over impact on the real economy is minimized. Therefore, Basel III will have some micro-prudential elements so that risk is contained in each individual institution; and a macro-prudential overlay that will “lean against the wind” to take care of issues relating to the systemic risk.

In terms of circular IDMD.DOD.11/11.08.36/2009-10 dated June 30, 2010, all RBI-regulated entities are mandated to report their OTC transactions in CDs and CPs on the FIMMDA reporting platform within 15 minutes of the trade for online dissemination of market information. Such trades, however, are being settled between the counterparties on a bilateral basis.

We advise that, on March 5, 2012, we have issued ‘Certificate of Registration’ to Credit Information Bureau (India) Limited (CIBIL) to carry on the business of credit information. The address of the company is as follows:

NBFCs-ND-SI are advised to follow the Guidelines which inter alia, stipulate that individual cases of frauds involving amount less than Rs. 25 lakhs shall be reported to the respective Regional Offices(ROs) of DNBS in whose jurisdiction registered office of the company is located whereas individual cases of frauds involving amount of Rs. 25 lakhs and above may be reported to Frauds Monitoring Cell, Department of Banking Supervision, Reserve Bank of India, Central Office, World Trade Centre, Centre -1, Cuffe Parade, Mumbai- 400 005.

A.P. (DIR Series) Circular No.89 Attention of Authorised Dealer Category – I (AD Category-I) banks is invited to Regulation 5(4) and Schedule 5 of Notification No. FEMA 20/2000-RB dated May 3, 2000, viz., Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000, as amended from time to time, in terms of which the Securities and Exchange Board of India (SEBI) registered FIIs are allowed to invest only in listed non-convertible debentures (NCDs)/bonds issued by an Indian company.

Please refer to paragraph 3 on ‘BC Model’ of our circular DBOD.No.BL.BC.43/ 22.01.009/2010-11 dated September 28, 2010 on the above subject wherein it is stated that while a BC can be a BC for more than one bank, at the point of customer interface, a retail outlet or a sub-agent of a BC shall represent and provide banking services of only one bank.

A.P. (DIR Series) Circular No.88 Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to A.P. (DIR Series) Circular No.24 dated December 30, 2009 in terms of which powers have been delegated to the AD Category-I bank regarding submission of Annual Activity Certificate by BO / LOs, extension of the validity period of LOs and closure of BO / LOs of foreign entities in India.

You are aware, that the Reserve Bank of India (the Bank) conducts inspection of UCBs under the provisions of the Banking Regulation Act, 1949 (AACS) (the Act), to assess the financial position of a bank and its adherence to the various provisions of the Act and directions/instructions issued thereunder. It also monitors the financial position of UCBs based on periodical returns/statements submitted by them. Further, the Reserve Bank initiates supervisory actions based on its assessment of the financial position of a bank.

A.P. (DIR Series) Circular No. 84 In terms of A.P.(DIR Series) Circular No.77 dated March 13, 2004 and A.P. (DIR Series) Circular No. 30 dated February 25, 2008, the Reserve Bank of India had issued guidelines to all AD Category-I banks for compilation of R-Returns and reporting under the Foreign Exchange Transactions – Electronic Reporting System (FETERS). On further review, the Reserve Bank has advised the AD Category-I banks about the following changes in reporting of R-Returns under FETERS from the next financial year (i.e., transactions taking place from April 1, 2012) :