Monthly Archives: July 2021

monetary penalties on insolvency professionals

IBBI has vide their circular dated 28th July, 2021 standardised the monetary penalties to be levied on insolvency professionals for various violations or breaches carried out them. The salient features are given below.

This comes into force with immediate effect.

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bank a/c details in GST

update from GST portal

Functionality to check and update bank account details.

29/07/2021

How to add bank account in GST registration details.

A functionality to check status of bank account details update for the taxpayers who have taken new registration at GST Portal but have not yet furnished the same, has been introduced, in view of Rule 10A of the CGST Rules 2017. Such taxpayers are required to update their Bank Account Details within 45 days of the first login henceforth.

The taxpayers may login and update Bank Account details through Non-core amendment in the manner as specified in the below table. In case the taxpayers who had not updated bank account after registration and are also failed to update within 45 days of their first login henceforth, the system will prompt and force them to comply with the requirements.


Login to the taxpayer portalGo to ‘Services’Click on ‘Registration’Click on the tab ‘Amendment of Registration Non-Core Fields’Select tab ‘Bank Accounts’Add details of Bank Account (Account No., IFSC, Address, Bank Account type)Click on the verification tab, select authorized signatory, enter a placeSign application using DSC, E-sign or EVC

Note:
After completion of Bank Account update, a success message will appear on the screen, and the acknowledgment will be sent at the registered email and mobile phone. 

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access for non-banks to CPS

RBI guidelines dated 28th July, 2021 whereby they are extending the Centralised Processing System facility to few non bank entities like PPI Issuers, Card Networks, and White Label ATM operators. Read on.

1 Background

1.1 Centralised Payment Systems (CPS) in India are Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) systems, both owned and operated by Reserve Bank. As part of its drive to encourage moving towards digital payments, Reserve Bank has been continuously taking measures to improve the payment ecosystem in general, and CPS in particular. The NEFT and RTGS systems were made available 24x7x365 with effect from December 2019 and December 2020 respectively.

1.2 One of the ways to provide impetus to digital payments is to extend the access to payment systems to more entities. This is also engaging the attention of other central banks globally. Reserve Bank’s Vision Document on Payment and Settlement Systems 2019-2021 includes review of membership of CPS to enable access neutrality between banks and non-banks and to develop a framework for settlement risk management with increased participation of non-banks. The document also refers to the need for a single national settlement account for all authorised card networks.

1.3 Apart from banks, very few select non-banks have been given approval to participate in CPS so far. The non-banks which are permitted membership / access to CPS are standalone primary dealers, clearing corporations of stock exchanges, central counter parties, retail payment system organisations, select financial institutions (NABARD, EXIM Bank) and DICGC.

1.4 Banks have been providing the services to non-banks for their payment and settlement needs. However, if the bank, which provides payment services to non-banks, is impacted, it can cause business disruption to the non-banks also. The disruption, even if temporary, could have the potential to cause and spread instability in the system. Consequently, the customers of the non-banks, who are using their products and services, would also get affected.

2 Direct Access for Non-banks to CPS

2.1 Meaning of Direct Access to CPS

2.1.1 Allotment of a separate Indian Financial System Code (IFSC).

2.1.2 Opening a Current Account with the Reserve Bank in its core banking system (e-Kuber).

2.1.3 Maintaining a settlement account with the Reserve Bank.

2.1.4 Membership of Indian Financial Network (INFINET) and use of Structured Financial Messaging System (SFMS) to communicate with CPS.

2.2 Benefits of Direct Access

2.2.1 Efficiency: For non-banks, the cost of routing payments through banks can be minimised. The risk of failure or delay in execution of fund transfers can be eliminated if the transactions are directly initiated by non-banks.

2.2.2 Competition and innovation: Non-banks increasingly and actively offer financial services which hitherto were the sole domain of banks. They are seen to be agile in coming up with innovative products and solutions as well. Direct access to CPS can further enable them to leverage technology to offer customised choices to consumers. They can use their capabilities to assimilate and analyse data to support their innovations and solutions. As non-banks compete in the same segment that banks operate, direct access can provide level playing field, minimising the need to use intermediaries.

2.2.3 Risk management and stability: As the settlement is carried out in central bank money, it greatly reduces the uncertainty in finality of the payments and settlement risk. Expanding the access and participation facilitates diversity and resiliency of the ecosystem.

2.2.4 Data protection: Direct access to CPS can enable the non-banks to safeguard customer information and fund flows, which may not be possible when using banks to provide payment services.

3 Eligibility

3.1 Entities

3.1.1 Non-banks include entities like Payment System Providers (PSPs) and Non-Banking Financial Companies (NBFCs) that are regulated by Reserve Bank as also entities that are under the remit of other financial sector regulators like PFRDA, IRDAI, SEBI, etc.

3.1.2 To start with, access to non-banks in CPS will be enabled in a phased manner. In the first phase, only the following authorised non-bank PSPs shall be provided access –

  1. Prepaid Payment Instrument (PPI) Issuers;
  2. Card Networks; and
  3. White Label ATM Operators.

3.2 Criteria

3.2.1 Eligibility for non-bank access to CPS shall be as per the criteria prescribed by Reserve Bank.

3.2.2 For access to CPS the non-bank PSPs shall fulfil the following criteria:

  1. Valid Certificate of Authorisation (CoA) from Reserve Bank under the Payment and Settlement Systems Act, 2007 (PSS Act).
  2. Net-worth of ₹25 crore or as prescribed as per CoA, whichever is higher.
  3. Incorporation in India under the Companies Act, 1956 / 2013. Entities not fulfilling this requirement shall empower their Indian subsidiary / associate to enter into valid agreements with RBI.
  4. Implementation of centralised processing systems.
  5. Adequate technical / system readiness including cyber resilience.
  6. Compliance with local payment data storage requirements issued by Reserve Bank from time to time.
  7. Adherence to Master Directions on Access Criteria for Payment Systems, RTGS System Regulations, NEFT Procedural Guidelines and other instructions prescribed by Reserve Bank from time to time.
  8. Satisfactory record of compliance to conditions laid out in CoA and regulatory guidelines.
  9. Recommendations of the concerned regulatory / supervisory department of Reserve Bank.

3.2.3 Entities incorporated outside India shall empower their local offices to carry out all operations in respect of CPS, but the responsibility for all operations and management of any contingency, including settlement obligations, shall remain with the foreign parent institution, which has taken authorisation as PSP.

3.2.4. Reserve Bank shall have the authority to suspend or terminate membership of a PSP, if the PSP is found to be not complying with the access criteria on an ongoing basis.

3.2.5 Non-bank PSPs shall not be eligible for availing Intra-Day Liquidity (IDL) facility from the Reserve Bank. For any shortfall / default in completing the payment / settlement obligations, such entities shall approach their bankers for a ready line of credit facility. They shall ensure that appropriate liquidity support arrangements are in place with their bankers to avoid gridlocks and to ensure business continuity.

3.2.6 Non-bank entities shall not be permitted to sponsor sub-members.

3.2.7 Non-bank entities shall adhere to the terms and conditions specified for maintenance of Current Account in Reserve Bank’s core banking solution (e-Kuber), membership to INFINET, use of SFMS, etc.

3.3 Membership Type and Nature of Transactions

3.3.1 Nature of transactions that can be executed shall depend upon the type of membership approved for RTGS. Based on requirement, some categories of PSPs shall be permitted to participate in NEFT also.

3.3.2 The details of access for non-bank PSPs to CPS shall be as under:

Sl. No.PSPRTGS Membership Type and Nature of TransactionsNEFT
1.PPI IssuersDCustomers, own / other bank / non-bank account transfersYes
2.Card NetworksCMultilateral net settlement batches, own account transfersNo
3.WLA OperatorsDCustomer, own / other bank account transfersNo

3.3.2 Once admitted as members, RTGS and NEFT systems may be used by the non-bank PSPs to execute various types of transactions. A summary of different transaction types and their use-cases is given below:

i. RTGS / NEFT customer payments initiated by:

  1. PPI issuers to merchants / payment aggregators;
  2. WLA operators to agencies handling ATMs; and
  3. Full-KYC PPI customers to load the PPIs from their bank account.

ii. RTGS inter-bank transfers initiated by:

  1. Non-bank PSPs to maintain sufficient balance in their escrow account with member bank/s based on net debit or credit position; and
  2. WLA operators and PPI issuers to other member banks / non-banks.

iii. Multilateral Net Settlement Batches (MNSB) posted in RTGS by:

  1. Card networks for settlements, dispute management, annual fee collections, etc.;
  2. Direct credit to WLA operators in NFS settlements; and
  3. NPCI allowing settlement of transactions of non-bank PSPs without involving their sponsor bank/s.

iv. Own Account Transfer (OAT) between the current and RTGS settlement accounts of the non-bank PSPs to maintain sufficient balances.

3.3.3 Card networks shall not be allowed to use the RBI current account for their settlement guarantee and related activities.

4 Operational Aspects

4.1 Process of Applying for Direct Access to CPS by Non-banks

4.1.1 The detailed process of applying for membership is given in the Master Directions on Access Criteria for Payment Systems issued vide DPSS.CO.OD.No.1846/04.04.009/2016-17 dated January 17, 2017.

4.1.2 All applications for membership to CPS shall be submitted to the Chief General Manager, Department of Payment and Settlement Systems (DPSS), Reserve Bank of India (RBI), Central Office (CO), 14th Floor, Central Office Building, Shahid Bhagat Singh Marg, Fort, Mumbai – 400 001.

4.1.3 The application shall be submitted in the format prescribed in Appendix – 1 “Covering letter for membership to Centralised Payment System”, of Master Directions on Access Criteria for Payment Systems, together with annexures.

4.1.4 Reserve Bank shall endeavour to complete the process of scrutinising the applications, that are complete with all required documents, within 60 days of receipt.

4.1.5 On approval of the application, DPSS, CO shall issue a letter of approval to the non-bank entity with a validity of six months, within which the entity shall ensure participation in CPS. DPSS, CO shall forward the application to RBI, Mumbai Regional Office (MRO), for further processing of RTGS and NEFT membership.

4.1.6 DPSS, MRO shall act as the point of contact for guidance of the non-bank entity.

4.1.7 Non-bank entities shall choose the type of access to the RTGS system, i.e., SFMS member interface, Web service interface or Payment originator module through INFINET, as per their convenience and requirement in consultation with Indian Financial Technology & Allied Services (IFTAS) and Reserve Bank.

4.1.8 Non-bank entities shall approach RBI, MRO for going live in RTGS, NEFT, getting INFINET membership, getting SFMS membership, opening of Current Account (in e-Kuber), opening of Settlement Account in RTGS, for necessary technical support from IFTAS for INFINET connectivity and SFMS integration, etc.

4.1.9 RBI, MRO shall refer the entity to RBI, Primary Data Centre (PDC), Department of Information Technology (DIT), CO for establishing connectivity to RTGS, user acceptance testing, providing sign-off for going live in RTGS, NEFT, etc.

4.2 Other Operational Aspects

4.2.1 RTGS Settlement Account shall be funded from Current Account at start of the day for an approved amount and balance, if any, in RTGS Settlement Account at end of the day, shall be transferred back to the Current Account.

4.2.2 Non-bank entities shall transfer funds from their Current Account to RTGS Settlement Account and vice versa during the operating hours. Non-bank entities shall monitor both their accounts continuously throughout the day. Any disruption in settlements due to insufficient balance in their accounts shall be viewed seriously and attract stringent regulatory / supervisory action, including levy of penalty, suspension / termination of CPS membership, etc.

4.2.3 Non-bank PPI issuers shall transfer funds from their escrow account/s with scheduled commercial bank/s to Current Account with RBI and from Current Account with RBI to the escrow account/s for operational purposes. The balances in Current Account with the Reserve Bank shall not be reckoned for the purpose of maintenance of daily balance in escrow accounts.

4.2.4 For any issue that arises during the course of membership of the non-bank entities, the decision of Reserve Bank shall be final and binding.

4.2.5 Reserve Bank shall review the access type and membership criteria of non-bank entities for further streamlining as and where necessary.

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Moll Flanders

The story of Moll Flanders, the girl who was born in Newgate prison to her whore mother and dumped at the age 8 months to be looked after a succession of sisters in the 17th century England. Story of one misfortune after another each of which she wriggles her way out successfully through her wit and charm and little bit of crookedness.

Story of her whoredom, to marriage with succession of husbands, many of whom died, of her children innumerable there were and all of whom she abandoned, of incest with her husband who later turned out to be her brother and her life in crime for stealing so many items from people and stores. The story takes her from London to Virginia to Ireland to Lancashire back to London to Newgate and thence to Virginia. Looks like a full life story for one debauched woman of that time.

Defoe’s narrative comes of second best, when he rambles on continuously using long sentences sometimes running into paragraphs. None of Moll Flanders’ co characters are given names except the first two brothers Robin and Robert. Everyone is either the husband or Lancashire husband or brother etc.

Goodreads 3/5

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6.01 kms

6.01 kms to start the day. It was pretty humid morning since no rains for last couple of days. Have a great morning.

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fee structure for DP in IFSC

IFSCA circular dated 27th July, 2021 laying down fee structure for setting up a Depository Participant in the IFSC GIFT City.

  1. The depository participants have been permitted to operate in GIFT-IFSC in terms of the applicable provisions under SEBI (International Financial Services Centres) Guidelines, 2015, as amended from time to time.
  2. The fee structure for Depository Participants in GIFT-IFSC shall be as follows:
    i. Application fee of USD 500 at the time of application for registration;
    ii. Registration fee of USD 2,500;
    iii. Fee of USD 2,500 every five years post registration.
  3. The fees shall be remitted to the following account of IFSCA:
    Account Name: International Financial Services Centres Authority
    Account Number: 970105000174
    Type of Account: USD Current Account
    SWIFT Code: ICICINBBIBU
    NOSTRO Details: BOFAUS3N, Bank of America, N.A., New York Branch, A/c no: 6550491848

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schemes filed by AMCs – timelines

SEBI circular dated 23rd July, 2021 wherein they have specified that if SEBI does not suggest modification or review in any scheme documents filed by mutual funds, within 21 days, then it will be deemed as approved. Read on .

In order to promote ease of doing business and bring uniformity in the timelines for processing of scheme related applications filed by AMCs, the following has been decided:

  1. The application filed by AMCs for the following matters may be deemed to be taken on record in case no modifications are suggested or no queries are raised by SEBI within 21 working days:
     Change in the Fundamental Attributes of a scheme
     Merger/Consolidation of Schemes
     Rollover of Close-ended schemes
     Conversion of Close-ended scheme to Open ended scheme
  2. In respect of applications filed by AMCs under Regulation 24 (b) of SEBI (Mutual Funds) Regulations, 1996, no objection will have been deemed to be communicated in case no modifications are suggested or no queries are raised by SEBI within 21 working days.
  3. The timelines mentioned at para 1 and 2 above shall generally be adhered to (a) provided the application is complete in all respects and in compliance with all the relevant Regulations and circulars issued by SEBI. (b) except in cases where subject matter of approval requires a policy view to be taken or presents a unique situation which requires wider
    consultation and deliberation.
  4. The circular shall be applicable for all the applications received on or after September 01, 2021.

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inter operable platform for MF investors

SEBI has vide its circular dated 26th July, 2021 mandated the setting up of an inter operable platform for the mutual fund investors, where in one site they are able to view everything related to their mutual fund investments as well carry out transactions therein, instead of navigating to multiple sites. Salient features are :

  1. RTAs shall implement standardized practices, system interoperability amongst themselves to jointly develop a common industry wide platform that will deliver an integrated, harmonized, elevated experience to the investors across the
    industry. AMCs and Depositories shall facilitate the RTAs for development of the proposed platform.
  2. The aforesaid platform shall, inter alia in phases, enable a user-friendly interface for investors for execution of mutual fund transactions viz. purchase, redemption, switch etc., initiation and tracking of service requests viz. change of email id / contact number / bank account details etc., initiation and tracking of queries and complaints, access investment related reports viz. mutual fund holdings (both in demat and standard Statement of Account), transactions reports (including historic transactions), capital gains/loss report, details of unclaimed dividend/redemption etc. Through this platform, investors will be able to access these services for all Mutual Funds in an integrated manner. In this regard,
    AMCs, RTAs and Depositories shall take necessary measures to provide data via APIs on a real time basis to the proposed platform. Additionally, RTAs and Depositories shall also share their respective data feeds between themselves for generation of investment related reports.
  3. The platform may also over time, provide services to the distributors, registered investment advisors, AMCs, Stock Exchange platforms and digital platforms for transacting in mutual funds to further augment ease of investing and servicing of investors through the above stakeholders in consultation with SEBI.
  4. AMCs, RTAs and Depositories shall review and agree to harmonize the processes across the industry to provide a single-window, integrated, simplified investment and service experience for the investors.
  5. AMCs, RTAs, and Depositories shall adopt the data definitions and standards as provided / recommended by SEBI for data exchange amongst various participants.
  6. The Platform should be scalable with robust cyber security protocols and supported through an API-based architecture. In this regard, the platform shall adopt the Cyber Security and Cyber Resilience framework specified by SEBI from time to time to “MIIs” (Market Infrastructure Institutions such as Stock Exchanges, Depositories and Clearing Corporations) and “Qualified RTAs” (QRTAs). Further, on request basis, APIs could be exposed to other industry
    stakeholders such as distributors, registered investment advisors, Stock Exchange platforms and digital platforms etc. with due approval of the concerned Mutual Fund on mutually agreed terms.
  7. The RTAs are jointly and severally responsible for compliance with all the applicable regulations including system audit and cyber security audit. Further, RTAs shall ensure that the platform complies with the guidelines for Business
    Continuity Plan (BCP) and Disaster Recovery (DR) specified by SEBI from time to time to “MIIs”.
  8. All the stakeholders are advised to collaborate and work together towards the development and implementation of the proposed investor-friendly platform.
  9. AMCs and Depositories shall facilitate and RTAs shall make the aforesaid platform operational in a phased manner (starting with non-financial transactions) and shall be fully operational by December 31, 2021.
  10. AMCs, RTAs, Depositories, AMFI and key stakeholders are advised to create awareness about this initiative amongst the investors.
  11. Any RTA providing its services to Mutual Fund(s), subsequent to issuance of this circular, shall follow the guidelines specified in this circular or amendments thereto as may be intimated by SEBI from time to time.

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certificate of deposits

The IFSCA has issued guidelines for issue of certificates of deposits by Banking Units situated inside the IFSC. Salient features are as follows:

Certificate of Deposit (CD) is a negotiable instrument and issued in dematerialised form or as a Usance Promissory Note against funds deposited at a BU for a specified time period.

  1. IBUs may issue CDs denominated in any freely convertible foreign currency.
  2. Minimum amount of a CD should be USD 2500 or equivalent in any freely convertible foreign currency.
  3. BUs may issue CDs to persons resident in India and persons resident outside India. Issuance of CDs to persons resident in India shall be subject to the provisions of the Foreign Exchange Management Act, 1999.
  4. The maturity period of CDs issued by BUs should not be less than 7 days and not more than one year, from the date of issue. There shall be no lock-in period for the CDs other than the minimum maturity period.
  5. IBUs may issue CDs at a discount on face value or on the basis of fixed or floating coupon rate. In case of CDs issued on floating rate basis the methodology of compiling the floating rate should be objective, transparent and market based. The BU is free to determine such discount / coupon rate.
  6. IBUs have to maintain appropriate reserve requirements, i.e., Retail Deposit Reserve Ratio (RDRR) on the issue price of the CDs issued to individuals.
  7. CDs may be issued in physical form or in demat form.

  1. CDs in physical form are freely transferable by endorsement and delivery. CDs in demat form can be transferred as per the procedure laid down by the depository.
    10.IBUs shall clearly inform subscribers that the CDs issued by them are not covered by Deposit Insurance and also that the lender of Last resort (LOLR) facility is not available in IFSC.
    11.IBUs shall not grant loans against CDs.
    12.IBUs are permitted to buyback CDs before maturity. Buyback of CDs can be made only 7 days after the date of issue of the CD
    13.Since CDs are transferable, the physical certificates may be presented for payment by the last holder. BUs shall take necessary precautions to verify the chain of transfers and make payment only by credit to the account of the presenter held with them or with another BU or with the branch of a bank outside IFSCA. In case of payment to an account held in another BU or with the branch of a bank outside IFSCA, the BU shall obtain complete details of the payee and such bank accounts and keep them on record.
    14.IBUs shall provide any information/ data or statement that may be called for by the Authority.

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Michael Jordan

An ESPN Sports Classic documentary on the life and times of basketball legend Michael Jordan.

Its a nice short documentary with a lot of sound bytes from a lot of people including his team mates, coaches and the media guys with a lot of videos thrown in for good measure.

It starts with his younger days and goes on to his college playing days for North Carolina, his NBA career with Chicago Bulls with whom he won 6 NBA championships. Then his sudden retirement to play baseball and his return to Chicago Bulls again and then he retires again and comes back again for a third and last time as owner of Washington Wizards who couldn’t resist playing basketball.

Nice documentary on the major star in world of sports.

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7.77 kms

7.77 kms to start the day. Rained heavily throughout yesterday and was drizzling almost throughout the run today. Have a great weekend folks.

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FLA return date extended

RBI vide a notice on its FLA return site, has extended the last date for filing of FLA returns for the year ended 31st March, 2021 to 31st July, 2021. It has also sent mails to the stake holders on this matter, which is very sweet of them.

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7.65 kms

7.65 kms to start the day, weather continues to be pleasant here.

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supervisory action on Mastercard

RBI press release dated 14th July, 2021 which is self explanatory.

The Reserve Bank of India (RBI) has today imposed restrictions on Mastercard Asia / Pacific Pte. Ltd. (Mastercard) from on-boarding new domestic customers (debit, credit or prepaid) onto its card network from July 22, 2021. Notwithstanding lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on Storage of Payment System Data. This order will not impact existing customers of Mastercard. Mastercard shall advise all card issuing banks and non-banks to conform to these directions. The supervisory action has been taken in exercise of powers vested in RBI under Section 17 of the Payment and Settlement Systems Act, 2007 (PSS Act).

Mastercard is a Payment System Operator authorised to operate a Card Network in the country under the PSS Act.

Background

In terms of RBI circular on Storage of Payment System Data dated April 6, 2018, all System Providers were directed to ensure that within a period of six months the entire data (full end-to-end transaction details / information collected / carried / processed as part of the message / payment instruction) relating to payment systems operated by them is stored in a system only in India. They were also required to report compliance to RBI and submit a Board-approved System Audit Report conducted by a CERT-In empanelled auditor within the timelines specified therein.

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=51895

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Pierre Boulez

Documentary on the life and times of Pierre Boulez, French composer, conductor, writer and founder of several music institutions.

Since Pierre was a contemporary musician (well almost), there were lot of video footages of him giving sound bytes at various times of his life and career. Interesting to know his views on various subject, including his contempt for musical institutions like the philharmonics.

There is no discussion about his personal life, marriage, kids at all and even wikipedia does not dwell too much on that aspect. So he played musical instruments, wrote several of them and conducted also at several occasions. A sort of a complete music master.

The documentary is available at this link for whomsoever wants to view it.

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