A couple of issues back, I had highlighted about Customer Satisfaction & Customer Delight – good service topped up by simple yet thoughtful gestures. This time I am constrained to highlight about Customer Saga, thanks to mindless processes and lack of understanding of issues by banking officials.
S.Aggarwal was battling a rare, fatal illness that put him completely out of gear and cost him his company. Registrar of Companies struck off his company in 2017 for non-filing of financial statements for 3 years in a row. He realised this when his bank promptly froze his account without giving any notice. It took us nearly 18 months to get him a revival order from NCLT which clearly gave him a 30 day deadline to complete the pending filings with ROC. Obviously he had to use the bank balance to pay the filing fee running into lacs. Aggarwal had to struggle for nearly 25+ days to get his account reopened. Beg, plead, threaten the bank to let him use the funds and complete the filings. It was almost touch and go as we kept chasing him to adhere to the deadline. Wonder why it should take so long to reopen your bank account when there is a clear court order ! As usual the branch level officials either did not know what to do or their process involved taking permission from the central office with umpteen number of documentation. When company strike off has become the order of the day for the past 2 years, can the bankers not get their act together and educate branch level personnel about how to deal with these matters swiftly ?
A.Varma received foreign investment equivalent to Rs. 90,000 from his co-founder. After completing the mandatory RBI reporting he got a ridiculous direction from them asking him to refund a piddle amount of …….take a guess, try……yes, a royal sum of Rs. 267 ! Earlier there was an unwritten understanding we had from RBI that irrespective of the amount of foreign investment received, upto Rs. 2000 could be adjusted as exchange rate fluctuation. Wonder what happened to that internal guideline ? While Varma didn’t have any issues refunding 267 in USD to his co-founder, the bank seemed to. So it appeared. Instead of refunding the amount immediately, they asked for umpteen number of documents and declarations, which they already had since the money came into their bank in the first place. A helpless Varma had to spend hours coordinating for this to send out a small 267 rupees. Else he would be violating a Company Law provision that requires excess share application money to be refunded within 60 days. Banks have a responsibility as Authorised Dealers to guide their clients about FEMA matters but far from guiding they need guidance themselves. So much for their processes and service !
Sheetal gave up her high-paying corporate job and following her passion in education, set up a not-for-profit Section 8 company recently. Soon after, her saga of opening a bank account started. The first salvo fired by the bank at her was a question “You say yours is a section 8 company but the incorporation certificate does not mention this section anywhere. Instead there is reference to section 7. Clarify”. How on earth is a commoner expected to know the legal provisions ? In the first place why is she responsible for how a certificate, digitally signed by a ministry official is issued ? Again why this question from a bank official when he had to figure out the answer internally ? Wasn’t it his lack of knowledge that he had to look for ‘NPL’ in the CIN number of the company ? Again, the flustered entrepreneur had to write back to us and convey the clarification to the banker. Not sure if he is continuing to fire more salvos or has opened the bank account. While most private sector banks are tech enabled, either the employees are not trained well enough or there are just too many unnecessary and unreasonable processes and hierarchy, rendering banking experience into Customer Saga.
The experiences of Aggarwal, Varma & Sheetal (names changed) are real-life and recent and in a seemingly ‘informed city’ like Bangalore. Imagine the situation in other smaller towns. While I do acknowledge several instances of helpful banking personnel and user-friendly systems, the ‘other category’ seems to be on the rise leading to Customer Ire. It is time Ease of Doing Business climbs down from its ‘aerial ranking’ and touches ‘ground zero’ that can be felt and seen !!
Once you have empathised with these characters & reflected on similar such experiences of your own, scroll down to catch up on the regulatory changes that have been announced by MCA, GST, RBI, IT etc. Do keep your date with the 4th quarter Advance Tax payment on 15th March ! For any previous issues of Samhita and the readers feedback, please visit https://sharadasc.com/resource-center/
Mediation is a process where a neutral third party called the Mediator, whom the parties trust, assists the parties to amicably resolve their disputes through structured negotiation. A Mediator is a neutral third party selected by the parties. Generally, parties come to mediation with conflicting positions claiming that they are right and the other party is wrong, supported by law and evidence and a lot of…Read more
MCA updates :
Companies Incorporation Rules – Amended
The Companies (Incorporation) Second Amendment Rules, 2019 shall come into force on 06.03.2019.
✔ A company filing an application for shifting of Registered Office (RO) from one State or Union Territory to another State is to advertise such shifting of RO in the vernacular newspaper in the principal vernacular language in the district and in English in an English newspaper having “widest circulation” in the State in which the Registered Office is situated. Considering the costs involved, this has now been changed to having “wide circulation”.
✔ Fee for filing INC-32 (SPICE), form for incorporation of a Company, will be NIL where authorized share capital of the Company does not exceed INR 15 lakh or where there is no share capital, number of members shall not exceed 20. Earlier it was 0 fees till INR 10 lakh authorized share capital.
Clarification w.r.t RD-1
The unpreparedness of MCA w.r.t deployment of e-Forms even after announcement of changes in the Rules continues. The slip between the cup and the lip continues with a lag in the availability of e-Forms.
MCA has clarified that for application to RD in respect of alignment in the FY (S. 2(41)) and conversion of Public Company into Private Company, “others” radio button in e-Form RD-1 can be used till such time revised form is released.
Application for initiating IRP
The Central Government notifies the following persons who may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudication Authority on behalf of the financial creditor :
✔ A guardian
✔ An executor / administrator of an estate of a financial creditor
✔ A trustee
✔ A person duly authorised by the Board of Directors of a Company
RBI Updates :
Establishment of BO / LO / PO by foreign entities
Applications received from a Non–Government Organisation, Non–Profit Organization, Body / Agency / Department of a foreign government for opening of a Branch Office (BO) / Liaison Office (LO) / PO (Project Office) or any other place of business in India are to be forwarded to the RBI for approval in consultation with the Government of India.
Such entities are not to undertake any activity that is covered under Foreign Contribution Regulation Act, 2010 and any misrepresentation or false information furnished by the entity shall lead to the approval granted as withdrawn without any further notice. A declaration to this effect is to be given by the entity along with the application for establishment of BO / LO / PO as the case may be.
Master Direction – Foreign Investment in India
RBI has issued Master Direction on FDI on 08.03.2019 which consolidates all the provisions relating to regulatory framework on FDI under FEMA including the latest notification issued on 01.02.2019
SEBI updates :
Modified SBO Disclosure to SEBI
Consequent to Companies (Significant Beneficial Owners) Amendment Rules, 2019 notified on February 8, 2019 by MCA, SEBI has issued a Circular dated 12.03.2019 modifying the SBO reporting in alignment with the Companies Act, 2013. The modification lies in reporting the Direct / Indirect holding of shares or exercise of certain rights by the SBO in the Reporting Company.
The SEBI circular will take effect from the quarter ended 30.06.2019.
Income Tax updates :
Angel Tax exemption – CBDT notification
CBDT has granted exemption to startup companies from angel tax w.e.f. 19.02.2019 if such companies fulfil the conditions specified in para 4 of the notification number G.S.R. 127(E), dated the 19.02.2019 issued by DPIIT.
Essentially startup companies recognized by DPIIT and not having a turnover of more than 100 crores are exempt from Angel Tax provided they do not invest in 7 categories of Assets listed in the DPIIT notification and give an undertaking to that effect. For details please refer to our previous issue no. 207 under the heading “Angel Tax Exemption – Devil is in the details!”
The CBDT notification corresponds to the Angel Tax notification issued by DPIIT.
GST Updates :
Summary of Several GST changes
A separate note has been prepared detailing the several changes made to the GST regulations, issued by the CBIC (Central Board of Indirect Taxes and Customs). For more details kindly go through the same.
Note: The contents of this Newsletter are only a summary and has not dealt with any issue in detail. Any action taken or proposed to be taken must be in consultation with professionals and not merely based on the articles / news updates. S. C. Sharada & Associates disclaims all liability on action taken without professional advice.