WEEKLY UPDATES 15-11-2010 to 21-11-2010

1 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

INDEX PAGE NO. SEBI UPDATES 1. Securities and Exchange Board of India

3-9

(Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2010 RBI UPDATES 1. Exclusion from the Second Schedule to the

10

Reserve Bank of India Act, 1934 – The Bank of Rajasthan Limited 2. Share Linking to Borrowing Norm in Urban Co-operative Banks 3. Exposure to Housing, Real Estate Sector and Commercial Real Estate

11 12-13

– Urban Co-operative Banks 4. Opening of Current Account and Subsidiary General

14

Ledger Account with Reserve Bank and Membership of Indian Financial Network (INFINET) and Real Time Gross Settlement (RTGS) System 5. Second Quarter Review of the Monetary Policy for 2010-11

15-17

Extension of Area of Operation- Liberalisation 6. Processing and Settlement of Export related receipts

18-20

facilitated by Online Payment Gateways 7. Section 23 of the Banking Regulation Act, 1949-

21-22

Relaxations in Branch Licensing Policy 8. Maximum Limit on Unsecured Loans and Advances

23-25

CUSTOM UPDATES 1. Amendment of Handling of Cargo in Customs Areas Regulations, 2009

26-27

LABOUR LAW

1. Swavalamban Yojana Scheme

28

2 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

IRDA

1. Interpretation of ‘First Ten Years of Business’ U/S 40A of the Insurance Act, 1938

29

3 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

SEBI UPDATES THE GAZETTE OF INDIA EXTRAORDINARY PART III – SECTION 4 PUBLISHED BY AUTHORITY NEW DELHI, NOVEMBER 12, 2010 SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, 12 November, 2010 Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2010 No. LAD-NRO/GN/2010-11/19/26456. In exercise of the powers conferred by Section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, namely:1. (i) These regulations may be called the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2010. (ii) These regulations shall come into force on the date of their publication in the Official Gazette. 2. In the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, – (i) in regulation 2,(a) in sub-regulation (1), in clause (zd), after sub-clause (xi), the following sub-clause shall be inserted, namely:“(xii) insurance funds set up and managed by the Department of Posts, India.” (b) in sub-regulation (1), in clause (ze), for the words “one lakh” the words “two lakhs” shall be substituted; (c) in sub-regulation (1), in clause (zf), sub-clause (i) shall be omitted; (d) in sub-regulation (1), in clause (zf), in sub-clause (ii), for the words “one lakh”, the words “two lakhs” shall be substituted. (ii) in regulation 8, in sub-regulation (1), in clause (e), for the words “Schedule VII”, the words “Schedule VIII” shall be substituted.

4 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

(iii) in regulation 9, after sub-regulation (2), the following subregulation shall be inserted, namely:“ (3) The issuer either on the date of filing the draft offer document with the Board or on the next day shall make a public announcement in one English national daily newspaper with wide circulation, one Hindi national daily newspaper with wide circulation and one regional language newspaper with wide circulation at the place where the registered office of the issuer is situated, disclosing to the public the fact of filing of draft offer document with the Board and inviting the public to give their comments to the Board in respect of disclosures made in the draft offer document.” (iv) in regulation 16, in sub regulation (1), in the proviso, after the words “public financial institution” the words “or an insurance company” shall be inserted; (v) in regulation 26, in sub-regulation (5),- , (a) sub-regulation (5) shall be substituted with the following, namely:“(5) No issuer shall make an initial public offer if there are any outstanding convertible securities or any other right which would entitle any person with any option to receive equity shares:” (b) in the proviso, after clause (b), the following clause shall be inserted, namely:“(c) fully-paid up outstanding convertible securities which are required to be converted on or before the date of filing of the red herring prospectus (in case of book-built issues) or the prospectus (in case of fixed price issues), as the case may be.” (vi) in regulation 29, in clause (a), for the words “one lakh”, the words “two lakhs” shall be substituted; (vii) in regulation 34, in clause (b), (a) after the words “where the equity shares”, the words “of the issuer” shall be inserted; (b) the words “of the same class which are proposed to be allotted pursuant to conversion or exchange of convertible securities offered through the offer or are proposed to be allotted in the offer have been listed and” shall be omitted; (viii) in regulation 42, in sub-regulation (4), in clause (g), for the words “one lakh”, the words “two lakhs” shall be substituted. (ix) in regulation 43, in sub-regulation (2), in clause (c), the second proviso shall be omitted; (x) in regulation 50, in sub-regulation (1), in the proviso, for the words “one lakh” , the words “two lakhs” shall be substituted;

5 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

(xi) in regulation 54, the following sub-regulation shall be inserted, namely:“(7) The issuer shall give only one payment option out of the following to all the investors – (a) part payment on application with balance money to be paid in calls; or (b) full payment on application: Provided that where the issuer has given the part payment option to investors, such issuer shall obtain the necessary regulatory approvals to facilitate the same.” (xii) in regulation 55A, for the words “one lakh” , the words “two lakhs” shall be substituted. (xiii) in regulation 60, after sub-regulation (13), the following subregulation shall be inserted, namely:“(14) The merchant bankers shall submit a compliance certificate in the format specified in Part D of Schedule XIII, for the period between the date of filing the draft offer document with the Board and the date of closure of the issue, in respect of news reports appearing in any of the following media: (a) newspapers mentioned in sub-regulation (3) of regulation 9; (b) major business magazines; (c) print and electronic media controlled by a media group where the media group has a private treaty/shareholders’ agreement with the issuer or promoters of the issuer.” (xiv) in regulation 72,(a) after the proviso to sub-regulation (2), the following Explanation shall be inserted,“Explanation: Where any person belonging to promoter(s) or the promoter group has sold his equity shares in the issuer during the six months preceding the relevant date, the promoter(s) and promoter group shall be ineligible for allotment of specified securities on preferential basis.” (b) after sub-regulation (2), the following sub-regulation shall be inserted ,“(3) Where any person belonging to promoter(s) or the promoter group has previously subscribed to warrants of an issuer but failed to exercise the warrants, the promoter(s) and promoter group shall be ineligible for issue of specified securities of such issuer on preferential basis for a period of one year from: (a) the date of expiry of the tenure of the warrants due to non exercise of the option to convert; or

6 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

(b) the date of cancellation of the warrants ” as the case may be.” (xv) in Schedule VIII, (a) in Part A,(I) in item (VIII) i. in sub-item (D), in para. (4), in sub-para (c), for the number “(XII)”, the number “(XVI)” shall be substituted. ii. in sub-item (E), under the heading “Management”, in para.(1), after sub-para (a), the following clauses shall be inserted, namely:“(a)(i) Details of current and past directorship(s) in listed companies whose shares have been / were suspended from being traded on the Bombay Stock Exchange Ltd./National Stock Exchange of India Ltd., as follows: • Name of the Company: • Listed on [give name of the Stock Exchange(s)] • Date of Suspension on stock exchanges: • Suspended more than three months: Yes/No. If yes, reasons for suspension and period of suspension. • Whether suspension revoked: Yes/No. If yes, date of revocation of suspension • Term (alongwith relevant dates) of Director in the above company(ies) Explanation: The above details shall be given with respect to a period of five years prior to date of filing of draft offer document and ought to be updated up-to the date of filing of RHP. In case of offer documents for fast track issues filed under Regulation 10, the period of five years shall be reckoned on the date of filing of prospectus with Registrar of Companies or letter of offer with the designated stock exchange. (a)(ii) Details of current and past directorship(s) in listed companies which have been/ were delisted from the stock exchange(s), as follows: • Name of the Company: • Listed on [give name of the Stock Exchange(s): • Date of delisting on the Stock Exchange(s): • Compulsory or voluntary delisting : • Reasons for delisting:

7 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

• Whether relisted: Yes/No. If yes, date of relisting on [give name of the Stock Exchange/(s)]: • Term (alongwith relevant dates) of Director in the above company/ies:” (II) in item (IX), in sub-item (B) under the heading “Financial Information of the issuer” after para. (22), the following para.. shall be inserted as under: “(23) Proforma Financial Statements (1) In addition to other requirements laid down in these regulations and subject to the stipulation in sub-para. (3) of this para., the issuer shall disclose Proforma Financial Statements in the offer document, if – (a) an acquisition or divestment is made by the issuer after the end of the latest disclosed annual financial results in the offer document, due to which certain companies become / cease to be direct or indirect subsidiaries of the issuer, and (b) the financial statements of such acquired or divested entity is material to the financial statements of the issuer company. Explanation: The financial statements of the acquired or divested entity shall be “material” to the financial statements of the issuer if: (i) the total book value of the assets of the acquired / divested entity amounts to more than 20% of the pre-acquisition / pre-divestment book value of the assets of the issuer; or (ii) the total income of the acquired / divested entity amounts to more than 20% of the pre-acquisition / predivestment total income of the issuer. (2) Proforma Financial Statements shall be disclosed in respect of the following, namely: i. the last completed accounting year, and ii. the period beginning from the date of the end of the last completed accounting year and ending on the date on which financial statements of the issuer have been disclosed in the offer document. (3) Where the said acquisition or divestment does not fulfill the tests of materiality specified in clause 23 (1) (b) above, the fact of the acquisition or divestment along with the consideration paid / received and the mode of financing such acquisition shall be disclosed. (4) The information disclosed as per sub-clause (2) and (3) above shall be certified by the statutory auditor of the issuer.” (III) in item (XI), in sub-item (K), after the words “Reserve Bank of India” the words “or Insurance Regulatory and Development Authority” shall be inserted.

8 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

(b) in Part E, in item (IX), under para. (A), the following sub-paras. shall be inserted“(1) Details of current and past directorship(s) for a period of five years in listed companies whose shares have been / were suspended from being traded on the Bombay Stock Exchange Ltd./National Stock Exchange of India Ltd., as follows: • Name of the Company: • Listed on [give name of the Stock Exchange(s)] • Date of Suspension on stock exchanges: • Suspended more than three months: Yes/No. If yes, reasons for suspension and period of suspension. • Whether suspension revoked: Yes/No. If yes, date of revocation of suspension. • Date and Term of Director in the above company(ies): Explanation: The above details shall be given for a period of five years prior to date of filing of draft offer document and ought to be updated upto the date of filing of the red herring prospectus. In case of offer documents for fast track issues filed under Regulation 10, the period of five years shall be reckoned on the date of filing of prospectus with Registrar of Companies or letter of offer with the designated stock exchange. (2) Details of current and past directorship in listed companies who have been/ were delisted from the stock exchange(s): • Name of the Company: • Listed on [give name of the Stock Exchange(s)]: • Date of delisting on the Stock Exchange(s): • Compulsory or voluntary delisting: • Reasons for delisting: • Whether relisted: Yes/No. If yes, date of relisting on [give name of the Stock Exchange/(s)]. • Date and Term of Director in the above company/ies.” C. B. BHAVE CHAIRMAN

9 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

Footnote: 1. The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 were published in the Gazette of India on 26th August, 2009 vide No. LAD-NRO/GN/200910/15/174471. 2. The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 were subsequently amended on:(a) 11th December, 2009 by Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2009 vide No. LADNRO/GN/2009-10/23/186926. (b) 1st January, 2010 by Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2010 vide No. LADNRO/GN/2009-2010/25/189240. (c) 8th January, 2010 by Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2010 vide No. LADNRO/GN/2009-10/26/190146. (d) 13th April, 2010 by Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2010 vide No. LADNRO/GN/2009-10/15/174471. *****

10 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

RBI UPDATES Circular RBI/2010-11/274 Ref. DBOD.Ret..BC. No. 62/12.06.031/2010-11 November 15, 2010 All Scheduled Commercial Banks Dear Sir, Exclusion from the Second Schedule to the Reserve Bank of India Act, 1934 – The Bank of Rajasthan Limited We advise that the name of “The Bank of Rajasthan Limited” has been excluded from the Second Schedule to the Reserve Bank of India Act, 1934 by notification DBOD.No.PSBD/2866/16.01.056/2010-11 dated August 18, 2010, published in the Gazette of India (Part III – Section-4) dated September 11, 2010 – September 17, 2010. Yours faithfully (P.K.Mahapatra) General Manager

11 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

RBI UPDATES Circular RBI/2010-11/275 UBD.BPD.(PCB). Cir. No. 22 /09.18.201/2010-11 November 15, 2010 The Chief Executive Officers of All Urban Co-operative Banks Dear Sir/Madam, Share Linking to Borrowing Norm in Urban Co-operative Banks The Reserve Bank in its Second Quarter Review of Monetary Policy 2010-11 had proposed exempting well capitalised Urban Co-operative Banks (UCBs) from the share linking to borrowing norm. The relevant paragraph of the Review is reproduced below. “Exemption from Share Linking to Borrowing Norm 96. It is mandatory for borrowers of UCBs to subscribe to the shares of the bank to the extent of 2.5 - 5.0 per cent of their borrowings. In order to provide flexibility to UCBs, which are already well capitalised to extend loans without adding to capital, it is proposed : • to exempt UCBs which maintain a minimum CRAR of 12 per cent on a continuous basis from the mandatory share linking norms. “ 2. Accordingly, it has been decided to exempt UCBs, which maintain capital to riskweighted assets ratio (CRAR) of 12 per cent or above on a continuous basis, from the extant mandatory share linking norms. This exemption would be effective from the date of this circular. Yours faithfully, (A. Udgata) Chief General Manager-in-Charge

12 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

RBI UPDATES Circular RBI/2010-11/276 UBD.BPD. (PCB).Cir. No. 23/13.05.000/2010-11 November 15, 2010 The Chief Executive Officers of All Urban Co-operative Banks Dear Sir/Madam, Exposure to Housing, Real Estate Sector and Commercial Real Estate – Urban Cooperative Banks Please refer to our Circular UBD (PCB) BPD Cir.No.69/09.22.010/2009-10 dated June 9, 2010. As announced in the Second Quarter Review of Monetary Policy 2010-11 (Para 95 - extract appended), it has been decided that the exposure of UCBs to housing, real estate and commercial real estate loans would, henceforth, be limited to 10 per cent of their total assets, instead of 15 per cent of deposits. The total assets may be reckoned based on the audited balance-sheet as on March 31 of the preceding financial year. However, the above ceiling of 10 per cent of total assets can be exceeded by an additional limit of 5 per cent of total assets for the purpose of grant of housing loans to individuals for purchase or construction of dwelling units costing up to Rs. 10 lakh. For reckoning total assets, losses, intangible assets, contra items like bills receivables etc. would be excluded. 2. The above limits of credit exposure to housing, real estate and commercial real estate would be applicable from the date of this circular. UCBs having exposure in excess of the above limits may initiate steps to align their exposure to the revised limits within a period of six months from the date of this circular. Yours faithfully (A. Udgata) Chief General Manager-in-Charge

Second Quarter Review of Monetary Policy 2010-11 (Para No. 95) Exposure of UCBs to Housing Loans 95. At present, UCBs can provide housing, real estate and commercial real estate loans up to 15 per cent of their deposit resources as on March 31 of the previous year. It has now been decided to link housing, real estate and commercial real estate loans of UCBs to their total assets instead of deposits. Accordingly, it is proposed :

13 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

• to replace the existing limit of 15 per cent of deposits for housing, real estate and commercial real estate loans by a limit of 10 per cent of total assets; and • an additional limit of 5 per cent of total assets will be available for housing loans granted to individuals by the UCBs for purchase / construction of dwelling units up to Rs. 10 lakhs.

14 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

RBI UPDATES Circular RBI/2010-11/277 UBD.BPD. (PCB).Cir. No.24/12.05.001/2010-11 November 16, 2010 The Chief Executive Officers of All Urban Co-operative Banks Dear Sir / Madam, Opening of Current Account and Subsidiary General Ledger Account with Reserve Bank and Membership of Indian Financial Network (INFINET) and Real Time Gross Settlement (RTGS) System In the Second Quarter Review of Monetary Policy of the Reserve Bank of India for the Year 2010-11, it was announced that Urban Co-operative Banks (UCBs) would be allowed current account and SGL account with the Reserve Bank as also membership of INFINET and RTGS. The relevant paragraph of the Review is reproduced below. “Access to INFINET Membership, Current/SGL Accounts with the Reserve Bank and RTGS Membership for UCBs 97. In order to enable urban co-operative banks (UCBs) to serve their customers better, it is proposed : • to allow all licensed UCBs (other than those under all inclusive directions) the facility of Indian Financial Network (INFINET) membership, current and Subsidiary General Ledger (SGL) accounts with the Reserve Bank; and • to allow Real Time Gross settlement (RTGS) membership to only well managed and financially sound UCBs having a minimum net worth of Rs. 25 crore.” 2. Accordingly, it has been decided to permit all licensed UCBs, other than those under all inclusive Directions issued under Section 35A of the Banking Regulation Act, 1949 (AACS), to open Current Account and Subsidiary General Ledger (SGL) Account with the RBI. Such UCBs are also allowed to take up membership of the INFINET and RTGS. However, for RTGS membership, the UCBs apart from being financially sound and well managed are required to have a minimum net-worth of Rs. 25 crore. Yours faithfully, (A. Udgata) Chief General Manager-in-Charge

15 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

RBI UPDATES Circular RBI/2010-11/279 UBD.CO.LS.Cir.No.25/07.01.000/2010-11 November 16, 2010 All Primary (Urban) Cooperative Banks Dear Sir / Madam, Second Quarter Review of the Monetary Policy for 2010-11 Extension of Area of Operation- Liberalisation Please refer to paragraph 88 of the Second Quarter Review of the Monetary Policy for 2010-11 (extract appended). As announced therein, it has been decided that in view of overall improvement in the position of the sector, the existing restrictions on grant of Multi-State status to Urban Cooperative Banks (UCBs) and extension of area of operations beyond the State of registration may be withdrawn. Accordingly, it has been decided as under: 1. Well managed and financially sound UCBs that have a minimum assessed net worth of Rs. 50 crore, will henceforth, be allowed to extend their area of operation beyond the State of registration as also to any other State/s of their choice subject to: a. b. c. d. e. f.

CRAR not being less than 10%, Net NPAs being less than 5%. No default in the maintenance of CRR/SLR during the preceding financial year. Continuous net profit for the last three years. Sound internal control systems with at least two professional directors on the Board. Regulatory comfort based on inter alia, record of compliance with the provisions of Banking Regulation Act, 1949 (AACS), RBI Act, 1934 and the instructions / directions issued by RBI from time to time.

2. Tier II UCBs registered or deemed to be registered under the Multi-State Cooperative Societies Act, 2002 satisfying the criteria at a) to f) above, will be permitted to extend their area of operation to the entire State of original registration. 3. In modification of our instructions dated May 06, 2009, well managed and financially sound Uni-state Tier II UCBs satisfying the norms at a) to f) above, will be permitted to extend their area of operations to the entire State of registration. 4. UCBs which have acquired weak banks in other State(s) will be allowed to extend their area of operation to the entire State of registration of the target bank provided they

16 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

have minimum net worth of Rs 50 crore. However, banks acquiring Multi-State status by acquiring a weak bank in another State and whose net worth is below Rs.50 crore will be permitted to extend their area of operations in the State(s) in which they are acquiring banks, only to the extent of the area of operations of the target bank as hitherto. 5. Eligible UCBs may approach the Regional Office concerned of RBI for approval. Yours faithfully, (A Udgata) Chief General Manager-in-Charge

Second Quarter Review of the Monetary Policy for 2010-11 (para 88) Extension of Area of Operation of UCBs 88. In order to further facilitate the growth of well managed and financially sound UCBs, it is proposed: * to withdraw the existing restrictions on granting Multi-State status and extension of area of operation beyond the State of registration for such UCBs having a minimum net worth of `50 crore; * to allow such UCBs which have acquired weak banks in other State(s) to extend the area of operation to the entire State of registration of the target bank provided they have minimum net worth of `50 crore; and * to allow Tier II UCBs registered or deemed to be registered under the Multi-State Cooperative Societies Act, 2002 to extend area of operation to the entire State of original registration Liberalisation of Branch Licensing Policy for UCBs 90. In order to further liberalise the branch licensing policy for urban co-operative banks (UCBs), it is proposed: • to allow well managed and financially sound UCBs to open branches and extension counters within their existing/approved area of operation, beyond the current ceiling of 10 per cent as long as they have sufficient headroom capital for each branch.

17 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

ANNEX-I Category of Centre (Population) A (10 lakh and above) B (5 lakh & above but less than 10 lakh) C (1 lakh & above but less than 5 lakh) D (Less than 1 lakh)

Assessed Net Worth required - Per Branch including Existing Branches Rs. 200 lakh per branch Rs. 100 lakh per branch Rs. 75 lakh per branch Rs. 50 lakh per branch

18 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

RBI UPDATES Circular

RBI/2010-11/281 A.P. (DIR Series) Circular No. 17 November 16, 2010 To All Category - I Authorised Dealer Banks Madam / Sir, Processing and Settlement of Export related receipts facilitated by Online Payment Gateways Of late, Online Payment Gateways have emerged as a popular mode of facilitating ecommerce transactions. Some of these Online Payment Gateway Service Providers (OPGSPs) have also been facilitating cross-border transactions. We have recently reviewed the service model provided by these OPGSPs with reference to the provisions of the Foreign Exchange Management Act (FEMA), 1999. It was observed that a few OPGSPs have not only facilitated conclusion of the transactions but also allowed exporters to retain the export proceeds abroad without repatriation resulting in violation of the provisions of FEMA, 1999. Acknowledging however the importance of the services provided by the OPGSPs to the exporters, particularly in facilitating small value export transactions, it has been considered necessary to issue a set of guidelines to cover such e-commerce arrangements. 2. Accordingly, it has been decided to allow the Authorised Dealer Category- l (AD Category-l) banks to offer the facility of repatriation of export related remittances by entering into standing arrangements with OPGSPs, subject to the following conditions: (i) The AD Category-I banks offering this facility shall carry out the due diligence of the OPGSP. (ii) This facility shall only be available for export of goods and services of value not exceeding USD 500 (US Dollar five hundred). (iii) AD Category-I banks providing such facilities shall open a NOSTRO collection account for receipt of the export related payments facilitated through such arrangements. Where the exporters availing of this facility are required to open notional accounts with the OPGSP, it shall be ensured that no funds are allowed to be retained in such accounts and all receipts should be automatically swept and pooled into the NOSTRO collection account opened by the AD Category-I bank.

19 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

(iv) A separate NOSTRO collection account may be maintained for each OPGSP or the bank should be able to delineate the transactions in the NOSTRO account of each OPGSP. (v) The following debits will only be permitted to the NOSTRO collection account opened under this arrangement: a) Repatriation of funds representing export proceeds to India for credit to the exporters’ account; (b) Payment of fee/commission to the OPGSP as per the predetermined rates / frequency/ arrangement; and (c) Charge back to the importer where the exporter has failed in discharging his obligations under the sale contract. (vi) The balances held in the NOSTRO collection account shall be repatriated and credited to the respective exporter's account with a bank in India immediately on receipt of the confirmation from the importer and, in no case, later than seven days from the date of credit to the NOSTRO collection account. (vii) AD Category -I banks shall satisfy themselves as to the bonafides of the transactions and ensure that the purpose codes reported to the Reserve Bank in the online payment gateways are appropriate. (viii) AD Category -I banks shall submit all the relevant information relating to any transaction under this arrangement to the Reserve Bank, as and when advised to do so. (ix) Each NOSTRO collection account should be subject to reconciliation and audit on a quarterly basis. (x) Resolution of all payment related complaints of exporters in India shall remain the responsibility of the OPGSP concerned. (xi) OPGSPs who are already providing such services as per the specific holding-on approvals issued by the Reserve Bank shall open a liaison office in India within three months from the date of this circular, after duly finalizing their arrangement with the ADCategory-I banks and obtaining approval from the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Central Office, Fort, Mumbai 400 001 for this purpose. In respect of all new arrangements, the OPGSP shall open a liaison office with the approval of the Reserve Bank before operationalising the arrangement. 3. AD Category-I banks desirous of entering into such an arrangement/s should approach the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Central Office, Fort, Mumbai 400 001, for obtaining one time permission in this regard and thereafter report the details of each such arrangement as and when entered into.

20 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

4. AD Category-I banks may bring the contents of this circular to the notice of their constituents concerned. 5. The directions contained in the circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any required under any law. Yours faithfully, ( G. Jaganmohan Rao) Chief General Manager

21 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

RBI UPDATES Circular RBI/2010-11/283 RPCD.CO.RRB.BC No. 28/ 03.05.90-A/2010-11 November 18, 2010 The Chairmen All Regional Rural Banks Dear Sir, Section 23 of the Banking Regulation Act, 1949- Relaxations in Branch Licensing Policy A reference is invited to paragraph 80 of the Second Quarter Review of Monetary Policy for the Year 2010-11 (extract enclosed – Annex I) regarding the proposal to liberalise the extant Branch Licensing for Regional Rural Banks. 2. Accordingly, Reserve Bank of India hereby permits Regional Rural Banks to open branches in Tier 3 to Tier 6 centres (with population up to 49,999 as per Census 2001 – details of classification of centres tier-wise furnished in Annex II) without having the need to take permission from Reserve Bank of India in each case, subject to reporting, provided they fulfil the following conditions as per the latest inspection report:i) CRAR of at least 9%; ii) Net NPA less than 5%; iii) No default in CRR/SLR for the last year; iv) Net profit in the last financial year; 3. Other RRBs will have to continue to approach RBI/ NABARD as hitherto. As RRBs have to be fully CBS compliant by September 30, 2011, after that date, the liberalisation will be available only to such RRBs. 4. All other instructions contained in our Master circular RPCD.CO.RRB.BC No. 8/ 03.05.90-A/2010-11 dated July 1, 2010, on Branch Licensing, remain unchanged. Yours faithfully, (B.P.Vijayendra) Chief General Manager Encls.: As above (02 sheets)

22 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

Annex I Extract of Second Quarter Review of Monetary Policy 2010-11 Liberalisation in Branch Licensing of Regional Rural Banks 80. As part of further liberalisation of the extant branch licensing policy in respect of regional rural banks (RRBs), it is proposed: •

to allow RRBs to open branches in Tier 3 to Tier 6 centres as identified in the Census 2001 (with population up to 49,999) without prior authorisation of the Reserve Bank, subject to their fulfilling certain conditions.

Annex II Details of tier-wise classification of centres based on population (i) Classification of centres(tier-wise) Population(as per 2001 Census) Tier 1 1,00,000 and above Tier 250,000 to 99,999 Tier 320,000 to 49,999 Tier 410,000 to 19,999 Tier 55,000 to 9,999 Tier 6Less than 5000 (ii) Population-group wise classification of centres Rural Centre Population upto 9,999 Semi-urban centre from 10,000 to 99,999 Urban centre from 1,00,000 to 9,99,999 Metropolitan centre 10,00,000 and above

23 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

RBI UPDATES Circular RBI/2010-11/284 UBD. BPD. (PCB) Cir. No. 21/13.05.000/2010-11 November 15, 2010 The Chief Executive Officers of All Urban Co-operative Banks Dear Sir/Madam, Maximum Limit on Unsecured Loans and Advances Please refer to our circular UBD BPD (PCB) Cir. No. 51/13.05.000/2002-03 dated April 29, 2003 and circular UBD BPD (PCB) Cir. No. 22/13.05.000/2005-06 dated December 5, 2005. The Reserve Bank had announced in its Second Quarter Review of Monetary Policy 2010-11 enhancement in the limits on unsecured loans granted by Urban Cooperative Banks (UCBs). The relevant paragraphs of the Review are reproduced below. “ Enhancement of Limits on Unsecured Loans and Advances Granted by UCBs 93. Keeping in view the growth in business of the UCBs over the years, it is proposed : •

to enhance the existing limits on individual unsecured loans and advances extended by the UCBs, which are complying with the regulatory capital to riskweighted assets ratio (CRAR) of 9 per cent, subject to overall ceiling of 10 per cent of total assets.

94. Detailed guidelines in this regard will be issued separately.” 2. Accordingly, it has been decided to enhance the limits on unsecured loans and advances granted by UCBs complying with the regulatory capital to risk-weighed asset ratio (CRAR) of 9 per cent. The enhanced limits for grant of unsecured loans (with or without surety or for cheque purchase) are as under. (a)

Limits for Individual Borrower and Group Borrower Criteria

UCBs with DTL up to Rs. 10 crore Rs.1.00 lakh

UCBs with DTL above Rs. 10 crore & up to Rs. 50 crore Rs. 2.00 lakh

UCBs with DTL above Rs. 50 crore & up to Rs.100 crore Rs. 3.00 lakh

UCBs with DTL above Rs. 100 crore Rs. 5.00 lakh

UCBs having CRAR equal to or more than 9 % UCBs having CRAR less than 9 %

Rs. 0.25 lakh

Rs. 0.50 lakh

Rs. 1.00 lakh

Rs. 2.00 lakh

24 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

(b) Aggregate Limits The total unsecured loans and advances (with surety or without surety or for cheque purchase) granted by a UCB to its members should not exceed 10 per cent of its total assets as per the audited balance-sheet as on 31 March of the preceding financial year. The total assets should be reckoned net of losses, intangible assets and contra items like bills receivables etc. 3. An amending directive UBD.BPD. (PCB) Dir.No.1/13.05.000/2010-11 dated November 15, 2010 is enclosed. 4. The enhanced limits would be applicable from the date of this circular. UCBs having unsecured loans and advances in excess of 10 per cent of its total assets may initiate steps to align their exposure to the revised limits within a period of six months from the date of this circular. Yours faithfully, (A. Udgata) Chief General Manager-in-Charge Encl: Directive

UBD. BPD. (PCB) Dir. No. 1/13.05.000/2010-11 November 15, 2010 The Chief Executive Officers of All Urban Co-operative Banks Maximum Limit on Unsecured Loans and Advances In exercise of the powers conferred under Section 21 read with Section 56 of the Banking Regulation Act, 1949, the Reserve Bank of India, being satisfied that it is necessary and expedient in the public interest and in the interest of depositors to do so, hereby directs, in partial modification of its directives UBD.BPD.(PCB) DIR.6/ 13.05.000/2002-03 dated April 29, 2003 and UBD. No. DIR 2/13.05.000/2005-06 dated December 5, 2005 that : 2. Urban Co-operative Banks (UCBs) may grant unsecured loans and advances (with or without surety or for cheque purchase) within the under noted limits only.

25 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

(a) Limits for Individual Borrower / Group Borrower Criteria

UCBs with DTL up to Rs. 10 crore

UCBs with DTL above Rs. 50 crore & up to Rs.100 crore Rs. 3.00 lakh

UCBs with DTL above Rs. 100 crore

Rs.1.00 lakh

UCBs with DTL above Rs. 10 crore & up to Rs. 50 crore Rs. 2.00 lakh

UCBs having CRAR equal to or more than 9 % UCBs having CRAR less than 9 %

Rs. 0.25 lakh

Rs. 0.50 lakh

Rs. 1.00 lakh

Rs. 2.00 lakh

Rs. 5.00 lakh

(b) Aggregate Limits The total unsecured advances (with surety or without surety or for cheque purchase) granted by a UCB to its members should not exceed 10 per cent of its total assets as per the audited balance-sheet as on 31 March of the preceding financial year. However, UCBs having unsecured advances in excess of the revised limits are permitted to conform to the above limits within six months from the date of this Directive. Explanations 3. For the purpose of this directive: a. The total assets should be reckoned net of losses, intangible assets and contra items like bills receivables etc. b. The total of the Demand and Time Liabilities (DTL) shall be the same as defined in Section 42 of the Reserve Bank of India Act, 1934 / Section 18 of the Banking Regulation Act, 1949 read with Section 56 of the Act ibid. 4. All other conditions in our Directive UBD.PCB.DIR 6/13.05.000/2002-03 dated April 29, 2003 remain unchanged. 5. The modification of the previous directive referred to in this directive shall not in any manner whatsoever affect any action taken by the Reserve Bank under the previous directive and shall not absolve any primary cooperative bank from its liability in respect of any contravention of or any non compliance with the provisions of the said directive. 6. In the event of any dispute relating to interpretation of any of the provisions of this directive, the Reserve Bank’s decision thereon shall be final. (V.K. Sharma) Executive Director

26 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

CUSTOM UPDATES GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) Notification No. 96 / 2010 – Customs (N.T.) th

New Delhi, dated the 12 November, 2010. G.S.R. (E). - In exercise of the powers conferred by sub-section (2) of section 141 read with section 157 of the Customs Act, 1962 (52 of 1962), the Central Board of Excise and Customs hereby makes the following regulations further to amend the Handling of Cargo in Customs Areas Regulations, 2009, namely :1. (1) These regulations may be called the Handling of Cargo in Customs Areas Amendment Regulations, 2010. (2)

They shall come into force on the date of their publication in the Official Gazette.

2. In the Handling of Cargo in Customs Areas Regulations, 2009, (hereinafter referred to as the said regulations),(a)

for regulation 5, the following regulation shall be substituted, namely -

“5.

Conditions to be fulfilled by Customs Cargo Service provider – The Customs Cargo Service provider for custody of imported goods or export goods and for handling of such goods in a customs area shall fulfill the following conditions, namely:-

(1)

Provide the following to the satisfaction of the Commissioner of Customs, namely:

(i)

Infrastructure, equipment and adequate manpower for loading, unloading, stacking, handling, stuffing and de-stuffing of containers, storage, dispatch and delivery of containers and cargo etc., including:(a) standard pavement for heavy duty equipment for use in the operational and stacking area; (b) free of cost or rent fully furnished office accommodation for Customs, Customs Electronic Data Interchange (EDI) Service Centre, with required amenities and facilities and residential accommodation and transportation facilities for customs staff; (c) premises for user agencies with basic amenities and facilities; (d) storage facility, separately for imported, export and transshipment goods; (e) gate complex with separate entry and exit; (f) adequate parking space for vehicles; (g) boundary wall; (h) internal service roads; (i) electronic weigh-bridge and other weighing and measuring devices; (j) computerized system for location and accountal of goods, and processing of documents;

27 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

(k) adequate air-conditioned space and power back up, hardware, networking and other equipment for secure connectivity with the Customs Automated system; and for exchange of information between Customs Community partners; (l) facilities for auction, including by e-auction, for disposal of uncleared, unclaimed or abandoned cargo; (m) facilities for installation of scanning equipment; (n) security and access control to prohibit unauthorized access into the premises, and (o) such other facilities as the Commissioner of Customs may specify having regard to the custody and handling of imported or export goods in a customs area; (ii)

safe, secure and spacious premises for loading, unloading, handling and storing of the cargo for the projected capacity and for the examination and other operations as may be required in compliance with any law for the time being in force;

(iii)

insurance for an amount equal to the average value of goods likely to be stored in the customs area based on the projected capacity, and for an amount as the Commissioner of Customs may specify having regard to the goods which have already been insured by the importers or exporters.

(2)

Undertake to bear the cost of the Customs officers posted, at such customs area, on cost recovery basis, by the Commissioner and shall make payments at such rates and in the manner prescribed, unless specifically exempted by an order of the Government of India in the Ministry of Finance;

(3)

Execute a bond equal to the average amount of duty involved on the imported goods and ten per cent of value of export goods likely to be stored in the customs area during a period of thirty days and furnish a bank guarantee or cash deposit equivalent to ten per cent of such duty: Provided that the condition of furnishing of Bank guarantee or cash deposit shall not be applicable to ports notified under the Major Ports Act, 1962 (38 of 1963) or to the Central Government or State Governments or their undertakings;

(4)

Execute a separate bond for an amount equal to ten percent of value of export goods with a bank guarantee for an amount equal to ten percent of the value of the bond, towards the export goods transported from the customs area to any other customs area for export or transshipment, as the case may be;

(5)

Undertake to comply with the provisions and abide by all the provisions of the Act and the rules, regulations, notifications and orders issued thereunder

(6)

Undertake to indemnify the Commissioner of Customs from any liability arising on account of damages caused or loss suffered on imported or export goods, due to accident, damage, deterioration, destruction or any other unnatural cause during their receipt, storage, delivery, dispatch or otherwise handling. (b) in regulation 6, in sub-regulation (3), after the words “publish and display”, the words “at prominent places including website or webpage of the Customs Cargo Service provider” shall be inserted. [F. No. 450/41/2010-Cus.IV (Pt.)] (Navraj Goyal) Under Secretary to the Government of India

28 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

LABOUR LAW Monday, November 15, 2010 Ministry of Labour & Employment

Swavalamban Yojana Scheme The Union Finance Minister has announced Swavalamban Scheme in the Union Budget 2010-11 to address the longevity risk of poorer sections of the country. Under the Swavalamban, the Government of India shall contribute a sum of Rs. 1,000 to each subscriber account of the New Pension System (NPS) during the current year and the next three years provided the subscriber contributes any amount between Rs. 1,000 to Rs. 12,000 per annum. The Government has targeted to cover ten lakh subscribers each in the four years beginning 2010-11, bringing the total number of subscribers to 40 lakhs by March, 2014. The Operational Guidelines on Swavalamban Scheme have been approved and released which, inter-alia, provide the applicability, benefits, definitions of the unorganized sector, eligibility, funding, operation etc. of the Scheme. The Pension Fund Regulatory and Development Authority (PFRDA) has placed these Guidelines in public domain on its website http://www.pfrda.org.in. The Government has launched the Scheme on 26.09.2010 and the same will be implemented by the PFRDA. PFRDA has appointed various agencies all over the country, such as, Financial Sector entities, Government entities, Civil Society organizations, etc. for enrolment of subscribers and contribution collection under the Swavalamban Scheme. A higher level of enrolments under the Scheme will ensure old age income security for such subscribers in their postretirement phase. The Minister of Labour and Employment Shri Mallikarjun Kharge gave this information in reply to a question in the Lok Sabha today.

29 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]

IRDA The CEOs of all Life Insurers Ref:IRDA/F&I/CIR/EMT/ 183 /11/2010 November 18, 2010

Interpretation of ‘First Ten Years of Business’ u/s 40A of the Insurance Act, 1938 Section 40A of the Insurance Act, 1938 (the Act) lays down the permissible limits for payment of commission or remuneration, in any form, in respect to any policy of life insurance issued in India by an insurer and effected through an insurance agent, in various lines/segments of life insurance business. The proviso to the said section permits life insurers, in the first ten years of business, to pay forty per cent of the first year’s premium payable on the policy, towards commissions. 2. In the light of the fact that a few life insurance companies are completing ten years of business in the current financial year, it is necessary to clarify the exact relevant date to be reckoned for the purpose. 3. It is hereby, clarified that the date of grant of ‘certificate of registration’ in Form IRDA/R3 under IRDA (Registration of Indian Insurance Companies) Regulations, 2000, by IRDA shall be the relevant date for the purpose of computing the first year of commencement of business. 4.

All life Insurers are directed to take note and ensure compliance.

(R.K. Nair)

30 Company Secretary, Shree Krishna Paper Mills & Industries Limited, Daryaganj Phone: 9953620278, E-Mail id : [email protected], [email protected]