Provision of 0.25% for standard assets of NBFCs

RBI/2010-11/370

DNBS.PD.CC.No.207/ 03.02.002 /2010-11

January 17, 2011

All NBFCs

Dear sir,

Provision of 0.25% for standard assets of NBFCs

1. In terms of Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, and Non-Banking Financial (Non- Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, all NBFCs are required to make necessary provisions for non performing assets. In the interests of counter cyclicality and so as to ensure that NBFCs create a financial buffer to protect them from the effect of economic downturns, it has been decided to introduce provisioning for standard assets also.

2. Accordingly

i) NBFCs should make a general provision at 0.25 per cent of the outstanding standard assets.

(ii) The provisions on standard assets should not be reckoned for arriving at net NPAs.

(iii) The provisions towards Standard Assets need not be netted from gross advances but shown separately as 'Contingent Provisions against Standard Assets' in the balance sheet.

(iv) NBFCs are allowed to include the ‘General Provisions on Standard Assets’ in Tier II capital which together with other ‘general provisions/ loss reserves’ will be admitted as Tier II capital only up to a maximum of 1.25 per cent of the total risk-weighted assets.

3. Accompanying Notifications No. DNBS. 222 CGM(US)2011 and No. DNBS. 223 CGM (US) 2011 both dated January 17, 2011 are enclosed for meticulous compliance.

Yours sincerely,

(Uma Subramaniam)

Chief General Manager-in-Charge

Encl: as above

Double Taxation Agreement - Agreement among the Governments of SAARC Member States

Section 90 of the Income-tax Act, 1961 - Double Taxation Agreement - Agreement among the Governments of SAARC Member States for avoidance of double taxation and mutual administrative assistance in tax matters

NOTIFICATION NO. 3/2011-FTD-II [F.NO.500/96/97-FTD-II], DATED 10-1-2011

WHEREAS the annexed Agreement among the Governments of SAARC (South Asian Association for Regional Cooperation) Member States comprising the People's Republic of Bangladesh, the Kingdom of Bhutan, the Republic of India, the Republic of Maldives, the Kingdom of Nepal, the Islamic Republic of Pakistan and the Democratic Socialist Republic of Sri Lanka for the avoidance of double taxation and mutual administrative assistance in tax matters signed in Dhaka, Bangladesh on the 13th day of November, 2005 shall come into force on the 19th day of May, 2010, being the thirtieth day after the notification dated 19th April, 2010 issued by SAARC Secretariat regarding completion of all formalities, including ratification, wherever applicable, by all Member States, in accordance with Article 16 of the said Agreement;

NOW, THEREFORE, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Agreement shall be given effect to in the Union of India with effect from the 1st day of April, 2011.

ANNEXURE

CIRCULAR NO. 8/2010 on section 192 of the Income Tax Act

Section 192 of the Income-tax Act, 1961 - Deduction of tax at source - Salaries - Income-tax deduction from salaries during the financial year 2010-11

CIRCULAR NO. 8/2010 [F.No. 275/192/2009-IT(B)], DATED 13-12-2010

Reference is invited to Circular No.01/2010 dated 11-1-2010 whereby the rates of deduction of income-tax from the payment of income under the head “Salaries” under section 192 of the Income-tax Act, 1961, during the financial year 2009-10, were intimated. The present Circular contains the rates of deduction of income-tax from the payment of income chargeable under the head “Salaries” during the financial year 2010-11 and explains certain related provisions of the Income-tax Act. The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax Department.

Index

Decisions of the Council of the Institute regarding CPE activities

For information of the members

This is for information of all the members that the Council of the Institute has decided as follows:

1. An online e-learning module would be developed and implemented by ICAI for the all the members shortly. Under the cited e-learning module, the members would be required to answer on-line such number of questions as may be decided by the Council. On successful completion of the prescribed e-learning module, a credit of 3 CPE hours would be granted to the members under structured learning instead of the present category of Unstructured learning.

2. A list of members who have completed the prescribed requirement of CPE hours for the block of 3 years (2008-10) may be hosted on the website of the Institute. The members are requested to verify whether the correct CPE hours have been clocked against their respective names and if there are any variation, kindly inform the CPE Secretariat with supporting evidence for making appropriate correction at their end , if necessary.

3. It may be noted that the Council at its next meeting scheduled in the middle of January, 2011 would deliberate on dealing with the cases of non-compliance with CPE specified requirements in respect of period 2008-10.

Secretary

Continuing Professional Education Committee

Introduction of Derivative Contracts on Foreign Stock Indices

It has been decided to permit Stock Exchanges to introduce derivative contracts (Futures and Options) on foreign stock indices in the equity derivatives segment as per the guidelines mentioned in the circular no.CIR/DNPD/ 2 /2011 dated Januray 11, 2011.

This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Click here for the text of the circular

Master Circular for Mutual Funds

For effective regulation of the Mutual Fund Industry, Securities & Exchange Board of India (SEBI) has been issuing various circulars from time to time. In order to enable the industry and other users to have an access to all the applicable circulars at one place, Master Circular for Mutual Funds has been prepared.

This Master Circular is a compilation of all the circulars issued by SEBI on the above subject, which are operational as on date of this circular.

Clcik here for the text of the Master Circular.

Regulatory Framework for Core Investment Companies

RBI has issued four notifications regarding regulatory framework for core investment companies. Click here for the text of the notifications.

SEBI (Foreign Venture Capital Investors) (Amendment) Regulations, 2010

THE GAZETTE OF INDIA

EXTRAORDINARY

PART –III– SECTION 4

PUBLISHED BY AUTHORITY

NEW DELHI, DECEMBER 21, 2010

SECURITIES AND EXCHANGE BOARD OF INDIA

NOTIFICATION

MUMBAI, 21st DECEMBER, 2010

SECURITIES AND EXCHANGE BOARD OF INDIA

(FOREIGN VENTURE CAPITAL INVESTORS) (AMENDMENT) REGULATIONS,

2010

LAD-NRO/GN/ 2010-11/22/30364. - 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 (Foreign Venture Capital Investors) Regulations, 2000, namely :-

1. These regulations may be called the Securities and Exchange Board of India (Foreign Venture Capital Investors) (Amendment) Regulations, 2010.

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

3. In the Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000, in the First Schedule, in Form A, after paragraph 9., the following paragraphs shall be inserted :-

“10. Please furnish firm commitment letter(s) from your investors for contribution of an amount aggregating to at least US$ 1 million.

11. Please furnish copies of your financial statements as well as those of your investors’ who have provided firm commitment letter(s), for the financial year preceding the one during which this application is being made.

12. Please furnish name, address, contact number and the e-mail address of all your directors.

13. Please furnish name, address, contact number and the e-mail address of all your investor(s) who have provided firm commitment letter(s) required to be furnished under paragraph 10 of this Form.”

C. B. BHAVE

CHAIRMAN

Footnotes:-

(1) Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000, the Principal Regulations, were published in the Gazette of India on September 15, 2000 vide S.O. No.832 (E).

(2) The Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000 were subsequently amended :–

(a) on June 7, 2001 by the SEBI (Foreign Venture Capital Investors) (Amendment) Regulations, 2001 vide S.O. No. 501(E)

(b) on September 27, 2002 by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide S.O. No. 1045 (E).

(c) on March 10, 2004 by the SEBI (Criteria for Fit and Proper Person) Regulations, 2004 vide S.O. No. 398(E).

(d) on April 5, 2004 by the SEBI (Foreign Venture Capital Investors) (Amendment) Regulations, 2004 vide S.O. No. 469(E).

(e) on September 4, 2006 by the SEBI (Foreign Venture Capital Investors) (Amendment) Regulations, 2006 vide S.O. 1443 (E).

(f) on May 26, 2008 by the SEBI (Intermediaries) Regulations, 2008 vide No LADNRO/GN/2008/11/126538.

(g) on June 29, 2009 by the SEBI (Payment of Fees) (Amendment) Regulations, 2009,vide No. LAD-NRO/GN/2009-10/11/167759.