Monitoring of foreign investment limits in listed Indian companies - SEBI / RBI Circular

Monitoring of Foreign Investment limits in Listed Indian Companies

SEBI vide its Circular No. IMD/FPIC/CIR/P/2018/61 April 05, 2018 provides the architecture of the System for Monitoring Foreign Investment Limits in listed Indian companies. It also provides a method for disinvestment in the event of Breach of Limits. 

FEMA	RBI
Prescribes various Foreign Investment Limits in Listed Indian Companies.  These include the aggregate FPI limit, the aggregate NRI limit and the sectoral cap.	The RBI Master Direction (FED Master Direction No. 11/2017-18) dated January 04, 2018 provides a compilation of the instructions issued on Foreign Investment in India and its related aspects under FEMA.
SEBI	Depositories & Stock Exchanges
In order to facilitate the listed Indian companies to ensure compliance with the various foreign investment limits, SEBI in consultation with RBI has decided to put in place a new system for monitoring the foreign investment limits.	The depositories (NSDL and CDSL) shall put in place the necessary infrastructure and IT systems for operationalizing the monitoring mechanism. The Stock Exchanges (BSE, NSE and MSEI) shall also put in place the necessary infrastructure and IT systems for disseminating information on the available investment headroom in respect of listed Indian companies.
Depositories – NSDL & CDSL	Timeline
SEBI issue directions to depositories that they shall issue the necessary circulars and guidelines for collecting data on foreign investment from listed companies. The system for collecting this data from the companies shall go live on the date of the issuance of this circular. The companies shall provide the necessary data to the depositories latest by April 30, 2018.	The new system for monitoring foreign investment limits in listed Indian companies shall be made operational on May 01, 2018. The existing mechanism for monitoring the foreign investment limits shall be done away with once the new system is operationalized.

Pricing of credit by NBFC-MFIs- applicable average base rate

Updated List of Average of Base rates of 5 largest commercial banks – as notified by RBI on the last day of the last working day of the previous quarter, which determines interest rates for the ensuing quarter:

Quarter beginning with	Quarter, FY	Avg. of base rates of 5 largest commercial banks (%)	Link	Avg. of base rates X 2.75 (%)
Circular dated Feb, 7 , 2014			Click here
Quarter beginning July 1, 2014	Q2, 2014-15	10.09	Click here	27.75
Quarter beginning Oct 1, 2014	Q3, 2014-15	10.09	Click here	27.75
Quarter beginning Jan 1, 2015	Q4, 2014-15	10.09	Click here	27.75
Quarter beginning April 1, 2015	Q1, 2015-16	10.09	Click here	27.75
Quarter beginning July 1, 2015	Q2, 2015-16	9.89	Click here	27.2
Quarter beginning Oct1, 2015	Q3, 2015-16	9.82	Click here	27.01
Quarter beginning Jan 1, 2016	Q4, 2015-16	9.45	Click here	25.99
Quarter beginning Apr 1, 2016	Q1, 2016-17	9.44	Click here	25.96
Quarter beginning July 1, 2016	Q2, 2016-17	9.44	Click here	25.96
Quarter beginning Oct 1, 2016	Q3, 2016-17	9.44	Click here	25.96
Quarter beginning Jan 1, 2017	Q4, 2016-17	9.41	Click here	25.88
Quarter beginning Apr 1, 2017	Q1, 2017-18	9.35	Click here	25.71
Quarter beginning July 1, 2017	Q2, 2017-18	9.22	Click here	25.35

Cheers!

Eligible Credit Rating Agencies

Eligible Credit Rating Agencies- Rating of Fixed Deposits

Reserve Bank of India (RBI) vide Circular No. RBI/2017-18/45 DNBR (PD).CC.No.89/03.10.001/2017-18 dated 14-August-2017 allowed rating agency -  "Infomerics Valuation and Rating Private Limited (IVRPL)" to rate the fixed deposit portfolio of NBFCs  [All Deposit Taking NBFCs (except Residuary Non-Banking Companies)] with IVR BBB as the minimum investment grade credit rating. Now, NBFCs can also use the ratings of Infomerics Valuation and Rating Private Limited (IVRPL).

Approved Credit Rating Agencies and Minimum Investment Grade Credit Rating

(As per para 9 of the Master Direction DNBR. PD.002/03.10.119/2016-17 dated August 25, 2016 on Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions)

Name of the agency	Minimum Investment Grade Credit Rating
(a) The Credit Rating Information Services of India Ltd. (CRISIL)	FA- (FA Minus)
(b) ICRA Ltd.	MA- (MA Minus)
(c) Credit Analysis & Research Ltd. (CARE)	CARE BBB (FD)
(d) Fitch Ratings India Private Ltd.	tA-(ind)(FD)
(e) Brickwork Ratings India Pvt. Ltd. (Brickwork)	BWR FBBB
(f) SME Rating Agency of India Ltd.(SMERA)	SMERA A
(g) Infomerics Valuation and Rating Private Limited (IVRPL)	IVR BBB

Cheers!

RBI - FAQs on Priority Sector Lending / Bank Credit to Micro Finance Institutions (MFIs) - Priority Sector Lending

RBI issued FAQs on Priority Sector Lending - Targets and Classification on July 24, 2017 (Link). 

Bank Credit to Micro Finance Institutions (MFIs) - Priority Sector Lending

1. RBI clarified vide FAQ Point No. 10 that Bank Credit to MFIs (NBFC-MFIs, Societies, Trust etc.) extended for on-lending to Individuals and also to members of SHGs / JLGs is eligible for categorisation as priority sector advance under respective categories viz., Agriculture, Micro, Small and Medium Enterprises, Social Infrastructure and Others subject to the criteria laid down in para IX of the Master Circular FIDD.CO.Plan.BC.04/04.09.01/2015-16 dated July 1, 2015 on Priority Sector Lending- Targets and Classification. 

2. RBI further vide FAQ Point No. 5 clarifies that Bank credit to Micro Finance Institutions (MFI) extended for on-lending to individuals/ members of SHGs/ JLGs for water and sanitation facilities is also eligible for classification as priority sector loans under ‘Social Infrastructure’ subject to certain criteria.

Please refer the latest instructions on Priority Sector Lending –Targets and Classification have been issued vide RBI Circular FIDD.CO.Plan.BC.04/04.09.01/2015-16 dated July 1, 2015 (amended up to December 15, 2015). [FAQ Point No. 14]

Pricing of credit by NBFC-MFIs- applicable average base rate

RBI issued notification for capping pricing of Micro Financial Institution (NBFC-MFI) vide Notification No. RBI/2013-14/482 DNBS (PD) CC.No.369/03.10.038/2013-14 dated February 7, 2014 , which came into effect from the quarter beginning April 01, 2014 and made it compulsory for all NBFC - MFI to charge interest rate lower of the following:

i. The cost of funds plus margin as indicated in the company circular DNBS. (PD)CC.No.300/03.10.38/2012-13 dated August 3, 2012 read with circular DNBS(PD) CC.No.327/03.10.038/2012-13 dated May 31, 2013; or

ii. The average base rate of the five largest commercial banks by assets multiplied by 2.75.

The average of the base rates of the five largest commercial banks shall be advised by the Reserve Bank on the last working day of the previous quarter, which shall determine interest rates for the ensuing quarter.

Please refer below compendium of average of base rates of 5 largest commercial banks – as notified by RBI on the last day of the last working day of the previous quarter, which determines interest rates for the ensuing quarter.

Quarter beginning with	Quarter, FY	Average of base rates of 5 largest commercial banks (%)	Download Link
Quarter beginning July 01, 2016	Q2, 2016 - 17	9.44	Click here
Quarter beginning Apr 1, 2016	Q1, 2016 - 17	9.44	Click here
Quarter beginning Jan 1, 2016	Q4, 2015 - 16	9.45	Click here
Quarter beginning Oct1, 2015	Q3, 2015 - 16	9.82	Click here
Quarter beginning July 1, 2015	Q2, 2015 - 16	9.89	Click here
Quarter beginning April 1, 2015	Q1, 2015 - 16	10.09	Click here
Quarter beginning Jan 1, 2015	Q4, 2014 - 15	10.09	Click here
Quarter beginning Oct 1, 2014	Q3, 2014 - 15	10.09	Click here
Quarter beginning July 1, 2014	Q2, 2014 - 15	10.09	Click here
RBI Notification No. Feb 7, 2014			Click here

By BND