Notifications & Circulars

Reserve Bank of India

31.01.2024

Banking

Streamlining of Internal Compliance monitoring function - leveraging use of technology

MANU/RMIC/0014/2024

1. RBI had recently carried out an assessment in select Supervised Entities (SEs) of the prevailing system in place for internal monitoring of compliance with regulatory instructions and the extent of usage of technological solutions to support this function. It is seen that SEs have adopted varying levels of automation to support this function, ranging from use of macro-enabled spreadsheets to workflow-based software solutions. The review brought out that automation of the compliance monitoring process in SEs remains a work in progress with various aspects of this function being carried out with significant manual intervention. There is, thus, a need to implement comprehensive, integrated, enterprise-wide and workflow-based solutions/ tools to enhance the effectiveness of this function.

2. Such a solution/ tool should, among other things, provide for effective communication and collaboration among all the stakeholders (by bringing business, compliance and IT teams, Senior Management, etc. on one platform); have processes for identifying, assessing, monitoring and managing compliance requirements; escalate issues of non-compliance, if any; require recording approval of competent authority for deviations/ delay in compliance submission; and have a unified dashboard view to Senior Management on compliance position of the Regulated Entity (RE) as a whole. The RE, based on the size and complexity of its operations, may decide on the tools/ mechanism it would prefer to deploy for monitoring of compliance and development of the unified dashboard.

3. Accordingly, REs are advised to carry out a comprehensive review of the existing internal compliance tracking and monitoring processes and institute necessary changes to existing systems or implement new systems latest by June 30, 2024.

4. An appropriate monitoring mechanism may also be put in place to review the progress of its implementation.

Tags : Internal Compliance Use Technology

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Reserve Bank of India

15.02.2024

Banking

Restraining of Unauthorized Payment System

MANU/RPRL/0102/2024

1. It has come to the notice of Reserve Bank of India that a Card Network had an arrangement that enables businesses to make card payments through certain intermediaries, to entities that do not accept card payments.

2. Under this arrangement, the intermediary accepts card payments from corporates for their commercial payments and then remits the funds via IMPS/RTGS/NEFT to non-card accepting recipients.

3. On closer scrutiny, it was observed that this arrangement qualified as a payment system. Under the provisions of Payment and Settlement Systems (PSS) Act, 2007, such payment system requires authorization under Section 4 of PSS Act, which has not been obtained in the instant case. The activity was, therefore, without legal sanction.

4. The arrangement has also raised following concerns:

i. The intermediary in the above arrangement pooled large amount of funds into an account which is not a designated account under PSS Act.

ii. Transactions processed under this arrangement did not comply with the originator and beneficiary information requirements, as stipulated under Master Direction on KYC issued by the Reserve Bank.

5. As per information available, only one card network has operationalized this arrangement in the country so far.

6. As the matter is under detailed examination, the Card Network has been advised to keep all such arrangements under abeyance, till further orders. It is clarified that the Reserve Bank has not placed any restriction with respect to normal usage of business credit cards.

Tags : Restraining Unauthorized Payment System

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Ministry of Labour and Employment

14.02.2024

Labour and Industrial

Central Government declares the services engaged in iron & steel industry to be a public utility service for ID Act, 1947 for a further period of six months effective from 17th Feb., 2024

MANU/LABR/0003/2024

Whereas the Central Government is satisfied that public interest so requires that the services engaged in the Iron and Steel, which is covered under item 7 of the First Schedule to the Industrial Disputes Act, 1947 (14 of 1947), to be a public utility service for the purposes of the said Act;

And whereas the Central Government has lastly declared the said industry to be public utility service for the purposes of the said Act vide notification of the Government of India in the Ministry of Labour and Employment number S.O. 3503(E), dated the 4th August, 2023 for a period of six months with effect from the 17th August, 2023;

And whereas the Central Government is of the opinion that public interest requires the extension of the public utility service status to the said industry for a further period of six months;

Now, therefore, in exercise of the powers conferred by the proviso to sub-clause (vi) of clause (n) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947), the Central Government hereby declares the services engaged in the iron and steel industry to be a public utility service for the purposes of the said Act for a further period of six months with effect from the 17th February, 2024.

Tags : Services Iron and steel industry Public utility

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Insolvency and Bankruptcy Board of India

13.02.2024

Insolvency

Compliances for initiation of Voluntary Liquidation of a Financial Service Provider

MANU/NMIC/0053/2024

1. The Code provides for the voluntary liquidation process of corporate persons. However, the definition of 'corporate person' in sub-section (7) of section 3 excludes any financial service provider (FSP). Section 227 read with the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 allows FSPs who have been notified by the Central Government, after consulting financial regulators, to undergo a voluntary liquidation process after obtaining prior permission of the appropriate regulator. It has been noted that some FSPs have commenced the voluntary liquidation process without notification and / or prior permission of the appropriate financial regulator.

2. Accordingly, it is hereby directed that the liquidator shall ensure that, if the corporate person falls under the category of financial service provider, it shall declare that:

(i) the category of Financial Service Providers has been notified by the Central Government under section 227 of the Code, and

(ii) the corporate person has obtained prior permission from the appropriate regulator.

Sharing of final report, Form H, and dissolution order with IBBI

3. It is hereby directed that the liquidator shall submit a copy of Form H and the final report filed before the Adjudicating Authority as per Regulation 38, and the order for dissolution to the Board to the email ID: liqvol@ibbi.gov.in.

4. This is issued in the exercise of the powers conferred under section 196 of the Insolvency and Bankruptcy Code, 2016.

Tags : Compliances Voluntary Liquidation Financial Service Provider

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Securities and Exchange Board of India

13.02.2024

Capital Market

SEBI cautions public against dealing with unregistered entities

MANU/SPRL/0001/2024

The Securities and Exchange Board of India (SEBI) has observed a rising trend of unscrupulous entities and online platforms that falsely claim to be registered with SEBI as intermediaries. These entities often entice the general public by showcasing fake certificates purportedly issued by SEBI and promising or implying assured, high returns on investments.

SEBI hereby cautions investors against placing their money with any entity based on such claims. Investors are urged to conduct due diligence and verify the registration status of any entity claiming to be a SEBI-registered intermediary. It is imperative for investors to understand that investments offering high returns usually involve high risk including fraud risk and there can be no guarantees of assured returns in the securities market.

While investing in securities market, investors are advised to;

i. Verify before investing: Before engaging with any investment service provider, investors are strongly advised to verify the entity's registration status on the SEBI website (www.sebi.gov.in) by following the below path → www.sebi.gov.in → Intermediaries / Market Infrastructure Institutions → Recognised Intermediaries.

ii. Beware of promises of high returns: Investors should be cautious of any entity that promises assured or exceptionally high returns. The principle of 'higher returns come with higher risks of losing your money all-together' holds true in the securities market.

iii. Verify enforcement action by SEBI: The details of any enforcement action taken by SEBI against any entity/ intermediary is available on SEBI website on the following path → www.sebi.gov.in → Enforcement → Orders.

iv. Be well informed: SEBI encourages investors to empower themselves with knowledge about the securities market for a safer investment journey. Knowledge is your best defense against fraud. For comprehensive resources on understanding the basics of investing, recognizing the importance of dealing with registered intermediaries, and more, please visit SEBI's investor education website at https://investor.sebi.gov.in.

Tags : Unregistered entities fake certificates Cautions

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Insolvency and Bankruptcy Board of India

12.02.2024

Insolvency

Sharing of report prepared by resolution professional to both debtor and creditor

MANU/NMIC/0049/2024

1. The resolution professional (RP) in an insolvency resolution process of a debtor under Chapter III of Part III of the Insolvency and Bankruptcy Code, 2016 (Code) examines the application filed under section 94 or 95 of the Code and submits a report to the Adjudicating Authority under sub-section (1) of section 99 of the Code, recommending for approval or rejection of the application. Sub-section (10) of section 99 mandates the RP to share a copy of this report to the debtor or the creditor, as the case may be.

2. It has been observed that in certain cases, the RPs have not shared a copy of the report with both debtor and creditor, leading to a lack of equal information access among them.

3. Therefore, it is hereby advised that the RP shall provide a copy of the report to both debtor and creditor in all cases. This will ensure that the debtor and the creditor are well-informed about the evaluation and recommendations made by the RP, thereby promoting transparency and informed decision-making.

4. This is issued in exercise of powers conferred under section 196 of the Code.

Tags : Sharing Report Debtor and creditor

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