A. Special Liquidity Scheme for Non Banking Finance Companies and Housing Finance Companies

Relevant Date: 01.07.2020

Relevant Notification: By RBI Notification No. RBI/2020-21/01- DoR (NBFC) (PD) CC.No.113/03.10.001/2020-21

What is New under the Notification?

Purpose

As per the notification dated 01.07.2020 the Government of India has approved a Scheme call ‘Special Liquidity Scheme, to improve the liquidity position of NBFC/HFCs through a SPV (Special Purpose Vehicle) to avoid any potential systemic risk to the financial Sector,

Eligibility Criteria for the Scheme

1. NBFCs including Microfinance Institutions that are registered with the RBI under the Reserve Bank of India Act, 1934, excluding those registered as Core Investment Companies;

2. Housing Finance Companies that are registered under the National Housing Bank Act, 1987;

3. CRAR/CAR of NBFCs/HFCs should not be below the regulatory minimum, i.e., 15% and 12% respectively as on March 31, 2019;

4. The net non-performing assets should not be more than 6% as on March 31, 2019;

5. They should have made net profit in at least one of the last two preceding financial years (i.e. 2017-18 and 2018-19);

6. They should not have been reported under SMA-1 or SMA-2 category by any bank for their borrowings during last one year prior to August 01, 2018;

7. They should be rated investment grade by a SEBI registered rating agency;

8. They should comply with the requirement of the SPV for an appropriate level of collateral from the entity, which, however, would be optional and to be decided by the SPV.

Special Purpose Vehicle for the purpose of the Scheme

As per the Government decision, SBICAP which is a subsidiary of the State Bank of India has set up a SPV (SLS Trust) to manage this operation.

The SPV will purchase the short-term papers from eligible NBFCs/HFCs, who shall utilise the proceeds under this scheme solely for the purpose of extinguishing existing liabilities.

 The instruments will be CPs and NCDs with a residual maturity of not more than three months and rated as investment grade.

The facility will not be available for any paper issued after September 30, 2020 and the SPV would cease to make fresh purchases after September 30, 2020 and would recover all dues by December 31, 2020; or as may be modified subsequently under the scheme.

B. Extension of the due date of filling of Return on FLA

FOREIGN LIABILITIES AND ASSETS INFORMATION REPORTING (FLAIR) SYSTEM

Relevant Date: 03.07.2020

By RBI Announcement

Submission of annual return on FLA through the web-based FLAIR portal for financial year 2019-20 has been started.

 Entities which are filing FLA return for the first time/ with revised UIN (Unique identification number) are required to register themselves first for generating login credentials and they can file FLA return. However, the entities which have already registered earlier may submit FLA-2020 using their login credentials.

 The last date for filing of annual return on FLA -2020 has been extended to July 31, 2020.

ABOUT  FLAIR SYSTEM

Relevant Date: 28.06.2019

Relevant Notification:  By RBI Notification RBI/2018-19/226- A.P. (DIR Series) Circular No. 37 dated 28.06.2019

What is new under the Notifications?

All Indian companies which have received FDI and/or made FDI abroad in the previous year(s) including the current year, should file the annual return on Foreign Liabilities and Assets (FLA) in the soft form which can be duly filled-in, validated and sent by e-mail to the Reserve Bank by July 15 of every year.

The coverage was enhanced to reporting of inward and outward foreign affiliate trade statistics (FATS) and reporting by the limited liability partnerships (LLPs) through the subsequent circulars

Purpose of Notification

With the objective to enhance the security-level in data submission and further improve the data quality, the present email-based reporting system for submission of the FLA return will be replaced by the web-based system online reporting portal.

It would facilitate data submission by eligible entities {including the alternative investment funds (AIF) registered with the Securities and Exchange Board of India (SEBI) as also the reporting of foreign investment in the form of capital/profit share contribution received/transferred in case of LLPs and investment by persons resident outside India in an investment vehicle and as defined in Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations 2017, dated November 7, 2017

Main features of the revised Foreign Liabilities and Assets Information Reporting (FLAIR) system:

1. Reserve Bank would provide a web-portal interface https://flair.rbi.org.in to the reporting entities for submitting “User Registration Form” (containing entity identification and business user details, where LLPs and AIFs will no longer required to use dummy CIN). The successful registration on web-portal will enable users to generate RBI-provided login-name and password for using FLA submission gateway and would include system-driven validation checks on submitted data.

2. The form will seek investor-wise direct investment and other financial details on fiscal year basis as hitherto, where all reporting entities are required to provide information on FATS related variables (it was mandatory only for subsidiary companies earlier). In addition, the revised form seeks information on first year of receipt of FDI/ODI and disinvestment.

3. Reporting entities will get system-generated acknowledgement receipt upon successful submission of the form.

4. They can revise the data, if required, and view/download the information submitted.

5. Entities can submit FLA information for earlier year/s after receiving RBI confirmation on their request email.

6. The existing mechanism of email-based submission of FLA forms will be discontinued.

Indian entities not complying with above, will be treated as non-compliant with Foreign Exchange Management Act, 1999 and regulations made thereunder.

These directions will come into force with immediate effect and would be applicable for reporting of information for the year 2018-19. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

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