lexspeak
Hi Folks
Gone are the days when opening a bank account was easy. All that you had to do was to submit a simple, hand-filled form to the Manager of your neighborhood bank with 2 existing account holders signing to confirm that ‘you’ are ‘YOU’. Thanks to technology, bank websites now scream that it is even simpler – just click a button and the Relationship Manager will be there at your doorstep like a genie to complete the seemingly simple but elaborate
paper work. Establishing your identity and place of stay – Know Your Customer or KYC – is a show-spoiler though. Especially if you belong to the politically-attractive but economically-ugly, bottom most strata of the society. Without a PAN or an Election ID card or an Aadhaar or its competitor National Population Registry number, you simply do not exist in the eyes of law.

A couple of months back Anita, my former servant maid came wailing to me complaining that the bank was not allowing her to withdraw the meager sum left in her bank account. Pointing to her chemotherapy pricks and a bald head, she said she needed money to buy food and medicines. Though her pass book showed a balance she was shooed away with some strange demand for documents. She was convinced somebody had instructed the bank to block her account. I was flummoxed and knew something was amiss. Only when I accompanied her to the bank did I realize the bank was fulfilling the KYC requirements. The poor woman had nothing to show. Fortunately, the Manager of the Nationalised Bank, an elderly, considerate and experienced man took pity on her plight, and allowed her to close the account based on my declaration that she was staying with me. A swanky private sector bank would never have allowed this. After about 2 hours of running around from counter to counter, Anita’s account was closed and she could withdraw her money.

Another incident was with my current maid. She had tears of happiness as well as helplessness – her daughter would get a Rs. 500 scholarship every month from the Government for her academic achievements but the rider was the mother needed to have a bank account. As usual, KYC played the spoil sport. This time the Government School Headmaster walked the extra mile and stepped in to issue a letter to make up for the missing proof of identity and residence. Lakshmi’s account was opened and now she is after me to get her a PAN number ! Not for a moment am I trying to undermine the KYC requirements. The point I am trying to make is in the wake of terrorism, money laundering and other scams, every person seems a suspect, unless proved otherwise. Mundane life has been hit the hardest, more so with the multiplicity of ID cards and passwords.
While this issue of Lexspeak focuses on the RBI annual Master Circulars, if you need to refer to any older ones, do visit our Resource Centre on sharadasc.com

Warm regards

As is customary, Reserve Bank of India (RBI) has issued Master Circulars (MC) effective from 1st July, 2013, consolidating the various circulars issued till such date. Some of the important MCs are listed below:

 Master Circular: Foreign Direct Investment (FDI)

 Master Circular: Establishment of Liaison / branch / project offices in India by foreign entities

 Master Circular: Opening of Branch – Subsidiary – JV undertakings abroad by NBFCs

 Master Circular: ECB & Trade Credits

 Master Circular: Export of Goods & Services

 Master Circular: Import of Goods & Services

 Master Circular: NRO Account

 Master Circular: Miscellaneous remittances from India (Facilities for residents)

 Master Circular: Corporate Governance

Foreign investment made prior to 13th February, 2009 shall continue to be governed by the earlier guidelines (FDI Policy Circular, 2013) whereas investments made after the said date must comply with the guidelines notified for the purpose of calculation of total foreign investments in Indian Companies, transfer of ownership, control of Indian Companies and downstream investments by Indian Companies.
Within 90 days from 4th July, 2013 any non-compliance w.r.t. transfer of shares, downstream investments must be reported to RBI through the Authorized Dealer, for regularization.

Directions known as “Mortgage Guarantee Companies (Reserve Bank) Directions, 2008” effective from 1st July, 2013 have been issued which shall
apply to all mortgage guarantee companies registered with RBI.
Finance Ministry, vide its Notification, has made certain procedural changes for claiming service tax exemption by way of refund of service tax paid on
the specified services received by the SEZ Unit or the Developer and used for the authorised operations.
Major changes relating to addition and modification of existing forms are detailed in the said Notification.
Name including phrase “Electoral Trust” is allowed for registration as Section 25 Companies. However, the name application should be accompanied with an affidavit stating that the name so obtained shall be only for the purpose of companies registering under Electoral Trust Scheme notified by CBDT.
The Government of Karnataka has given its consent to permit multi brand retail trading with FDI upto 51% under approval route in Karnataka effective from 4th July, 2013.
CBDT has issued transfer pricing guidelines for R&D centres set up by foreign companies based on the functions, assets and risks undertaken by
such centres. Detailed guidelines for contract R&D centres are enlisted.
Circular No.2 dt.26th March 2013 regarding application of Profit Spilt Method under Transfer pricing stands withdrawn
Effective from 5th July, 2013, electrical energy is under the “freely importable” category as against “restricted” earlier.
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. Lex Valorem disclaims all liability
on action taken without professional advice.

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