{"id":5147,"date":"2023-07-21T15:44:38","date_gmt":"2023-07-21T15:44:38","guid":{"rendered":"https:\/\/zeus.firm.in\/zeus-newsletter-july-2023\/"},"modified":"2023-07-21T15:44:38","modified_gmt":"2023-07-21T15:44:38","slug":"zeus-newsletter-july-2023","status":"publish","type":"post","link":"https:\/\/zeus.firm.in\/zeus-newsletter-july-2023\/","title":{"rendered":"ZEUS Newsletter July 2023"},"content":{"rendered":"

Highlights:<\/strong><\/span><\/h3>\n

Corporate Brief<\/strong><\/span><\/h3>\n
    \n
  • RBI circular on risk management and inter-bank dealing \u2013 Non-Deliverable Derivative Contracts.<\/em><\/li>\n
  • RBI notification on expanding the scope of Trade Receivables Discounting System.<\/em><\/li>\n
  • RBI notification on rationalization of branch authorization policy for Urban Co-operative Banks.<\/em><\/li>\n
  • RBI notification on guidelines on Default Loss Guarantee in digital lending.<\/em><\/li>\n
  • RBI notification for compromise settlement and technical write-offs.<\/em><\/li>\n
  • RBI circular for review of RBI (Call, Notice and Term Money Markets) Directions, 2021.<\/em><\/li>\n
  • RBI circular on remittances to International Financial Services Centers under the Liberalised Remittance Scheme.<\/em><\/li>\n
  • RBI circular on status of MIFOR as significant benchmark.<\/em><\/li>\n
  • RBI master direction on minimum capital requirements for operational risk.<\/em><\/li>\n
  • SEBI master circular for Electronic Gold Receipts.<\/em><\/li>\n
  • SEBI circular on modalities for launching liquidating scheme and for distributing the investments of Alternative Investment Funds (AIFs) in-specie.<\/em><\/li>\n
  • SEBI circular on manner of achieving minimum public unit holding for Real Estate Investment Trusts.<\/em><\/li>\n<\/ul>\n

    RERA Brief<\/strong><\/span><\/h3>\n
      \n
    • Guidelines dated 01\/06\/2023 issued by Real Estate Regulatory Authority, NCT of Delhi regarding registration and extension of registration of projects. <\/em><\/li>\n
    • Guideline dated 01\/06\/2023 issued by Real Estate Regulatory Authority, NCT of Delhi, regarding opening of mandatory bank accounts for registration of projects. <\/em><\/li>\n
    • Guidelines dated 01\/06\/2023, issued by Real Estate Regulatory Authority, NCT of Delhi, for real estate agents. <\/em><\/li>\n
    • Notice dated 08\/06\/2023 issued by Maharashtra Real Estate Regulatory Authority on anti-money laundering, countering the financing of terrorism, and combating proliferation financing for real estate agents. <\/em><\/li>\n
    • Circular dated 09\/06\/2023 issued by GOA Real Estate Regulatory Authority, regarding registration of reporting entities (real estate agents) with Financial Intelligence Unit (FIU-IND). <\/em><\/li>\n
    • Order dated 23\/06\/2023 issued by Chhattisgarh Real Estate Regulatory Authority regarding registration of real estate agents with Financial Intelligence Unit (FIU-IND). <\/em><\/li>\n<\/ul>\n

      NCLT Brief<\/strong><\/span><\/h3>\n
        \n
      • Whether the Compulsorily Convertible Debentures (\u201cCCD\u201d) would be treated as equity or as a debt instrument for the purpose of the Insolvency and Bankruptcy Code (\u201cCode\u201d) and whether the amount due and payable from the CCD would fall within the definition of \u2018Financial Debt\u2019 as defined under the Code?<\/em><\/li>\n<\/ul>\n

        Litigation Brief<\/strong><\/span><\/h3>\n
          \n
        • Elusive errors unveiled through long drawn process of reasoning, are not \u201cErrors on the face of it\u201d<\/em><\/li>\n
        • Case Brief: Institute of Chartered Accountants of India v\/s The Competition Commission of India and Ors.<\/em><\/li>\n
        • WRIT AGAINST THE ORDER OF THE ARBITRATOR, DECIDING THE ARBITRABILITY OF THE DISPUTE, IS MAINTAINABLE ONLY IN EXCEPTIONAL CASES<\/em><\/li>\n<\/ul>\n

          \u00a0<\/strong>Corporate Brief<\/em><\/strong><\/span><\/h2>\n

          \u00a0<\/em>Circular No. 05 dated 06.06.2023 of A.P. (DIR Series)<\/strong> RBI\/2023-24\/36 of the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n

            \n
          • Risk Management And Inter-Bank Dealing \u2013 Non-Deliverable Derivative Contracts (NDDCs)<\/strong><\/li>\n<\/ul>\n

            With an aim to develop the onshore market in Indian currency, the RBI has revised the existing definition of the NDDCs and has now permitted the Authorised Dealer Category-I (AD Cat-I) banks operating IFSC Banking Units (IBUs), in respect of the following:<\/p>\n

              \n
            1. To offer the NDDCs involving Indian currency to resident non-retail users for the purpose of hedging and such transactions to be settled in Indian currency only.<\/li>\n
            2. Flexibility of cash settlement in Indian or foreign currency in such transactions between two AD Cat-I banks, and between an AD Cat-I bank and person resident outside India.<\/li>\n<\/ol>\n

              Notification number CO.DPSS.POLC.No.S-258\/02-01-010\/2023-24 dated 07.06.2023 of the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n

                \n
              • Expanding the scope of Trade Receivables Discounting System (TReDS)<\/strong><\/li>\n<\/ul>\n

                To ease constraints faced by the Micro, Small and Medium Enterprises (MSMEs) in converting their trade receivables to liquid funds, the RBI had issued the \u2018Guidelines for the TReDS (updated as on 02.07.2018. Based on the experience gained, and as announced in the Statement on Developmental and Regulatory Policies dated 08.02.2023, the RBI has decided to make the following enhancements to the TReDS guidelines;<\/p>\n

                  \n
                1. Facilitate insurance for transactions: Financiers place their bids on the TReDS platforms keeping in view the credit rating of buyers. They are generally not inclined to bid for payables of low rated buyers. To overcome this, insurance facility is now being permitted for TReDS transactions, which would aid financiers to hedge default risks, subject to certain conditions.<\/li>\n
                2. Expand the pool of financiers: All entities \/ institutions to undertake factoring business under the Factoring Regulation Act, 2011 and the rules \/ regulations made thereunder, are now permitted to participate as financiers in TReDS. This would augment availability of financiers on TReDS platforms.<\/li>\n<\/ol>\n
                    \n
                  • Enable secondary market for Factoring Units (FUs): TReDS platform operators may, at their discretion, enable a secondary market for transfer of discounted \/ financed FUs within the same TReDS platform.<\/li>\n<\/ul>\n
                      \n
                    1. Settlement of FUs not discounted \/ financed: To overcome the inconvenience cause to MSME sellers and buyers as well as for better reconciliation, TReDS platform operators shall now be permitted to undertake settlement of all FUs \u2013 financed \/ discounted or otherwise using the National Automated Clearing House (NACH) mechanism used for TReDS.<\/li>\n
                    2. Display of bids: To make the process more transparent, the platforms may display details of bids placed for an FU to other bidders; name of the bidder shall, however, not be revealed.<\/li>\n<\/ol>\n

                      Notification Number DOR.CRE.REC.18\/07.10.002\/ 2023-24 dated 08.06.2023 of <\/strong>the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n

                        \n
                      • Rationalization of Branch Authorization Policy for Urban Co-operative Banks (UCBs). <\/strong><\/li>\n<\/ul>\n

                        In order to rationalize the process of branch opening and to enable the UCBs to tap growth opportunities in the sector, it has been decided to grant general permission for branch expansion in the approved area of operation to financially strong UCBs.<\/p>\n

                        Circular Number DOR.CRE.REC.21\/21\/07.001\/ 2023-24 dated 08.06.2023 of <\/strong>the Reserve Bank of India (RBI):<\/strong><\/span><\/p>\n

                          \n
                        • Guidelines on Default Loss Guarantee (DLG) in Digital Lending. <\/strong><\/li>\n<\/ul>\n

                          The recommendation pertaining to the FLDG (First Loss Default Guarantee) was under examination with the RBI. Arrangement between the regulated entities and lending service providers or between two regulated entitles involving Default Loss Guarantee (DLG), commonly known as FLDG, has since been examined by the RBI, it has been decided to permit such arrangements subject to the guidelines provide in the said Circular.<\/p>\n

                          Notification Number DOR.STR.REC.20\/21.04.048\/ 2023-24 dated 08.06.2023 of the Reserve Bank of India (RBI):<\/strong><\/span><\/p>\n

                            \n
                          • Compromise Settlement and Technical Write-offs <\/strong><\/li>\n<\/ul>\n

                            RBI has issued a comprehensive regulatory framework governing compromise settlements and technical write-offs covering all the regulated entities. The Framework provides for the regulated entities to put in place the board-approved policies in respect of the compromise settlements and technical write-offs.<\/p>\n

                            The Framework also prescribes broad framework for delegation of power, prudential treatment, reporting mechanism, oversight by the board, cooling period, treatment of accounts categorized as fraud and willful defaulter, and other legal provisions to be included by the regulated entities in the said policies.<\/p>\n

                            The Framework defines:<\/p>\n

                              \n
                            1. Compromise settlement as referring to negotiated arrangement with the borrower to fully settle the claims of the regulated entities against the borrower in cash, while also sacrificing some amount due from the borrower.<\/li>\n
                            2. Technical write-off as referring to writing-off (fully or partially) the non-performing assets outstanding at the borrowers\u2019 loan account, but for accounting purpose and without waiver of claims \/ recovery of the same.<\/li>\n<\/ol>\n

                              Circular Number RBI\/2023-24\/38 of A.P. (DIR Series) Circular No. 06 dated 08.06.2023 of the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n

                                \n
                              • Reserve Bank of India (Call, Notice and Term Money Markets) Directions, 2021-Review<\/strong><\/li>\n<\/ul>\n

                                The RBI vide the said review of the Directions permitted the scheduled commercial banks (excluding small finance banks and payment banks) to set their own limits for borrowing in call and notice money markets and such banks shall put in place internal board approved limited for borrowing within the prudential limits for inter-bank liabilities.<\/p>\n

                                Circular number 06 of A.P. (DIR Series) RBI\/2023-24\/45 dated 22.06.2023 of the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n

                                  \n
                                • Remittances to International Financial Services Centres (IFSCs) under the Liberalised Remittance Scheme (LRS)<\/strong><\/li>\n<\/ul>\n

                                  Presently, remittances to IFSCs under LRS can be made only for making investments in securities.\u00a0 In view of the gazette notification no. SO 2374(E) dated 23.05.2022 issued by the Central Government, the RBI has now directed that the Authorised Persons may facilitate remittances by resident individuals under purpose \u2018studies abroad\u2019 as mentioned in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000 for payment of fees to foreign universities \/ institutions in IFSC region, for pursing courses which are mentioned in the above gazette notification.<\/p>\n

                                  Circular Number RBI\/2023-24\/46\/FMRD.FMSD.03\/ 03.07.25\/2023-24 dated 23.06.2023 of the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n

                                  The company administering financial benchmarks, that is Financial Benchmarks India Private Limited (FBIL) has been accorded approval to cease the publication of Mumbai Interbank Forward Outright Rate (MIFOR) after 30.06.2023. Accordingly, the MIFOR administered by FBIL shall cease to be a significant benchmark after 30.06.2023. The updated list of \u2018sigificant benchmarks\u2019 administered by FBIl is as follows (effective from 01.07.2023):<\/p>\n

                                    \n
                                  1. Overnight Mumbai Interbank Outright Rate (MIBOR);<\/li>\n
                                  2. USD\/INR Reference Rate;<\/li>\n<\/ol>\n
                                      \n
                                    • Treasury Bill Rates;<\/li>\n<\/ul>\n
                                        \n
                                      1. Valuation of Government Securities;<\/li>\n
                                      2. Valuation of State Development Loans (SDL); and<\/li>\n
                                      3. Modified Mumbai Interbank Forward Outright Rate (MMIFOR).<\/li>\n<\/ol>\n

                                        Master Direction Number RBI\/DOR\/2023-24\/ 103 DOR.ORG.REC.22\/21.06.050\/2023-24 dated 26.06.2023 of the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n

                                          \n
                                        • Master Direction on Minimum Capital Requirements for Operational Risk<\/strong><\/li>\n<\/ul>\n

                                          The RBI has issued Master Direction on Minimum Capital Requirements for Operational Risk for all Commercial Banks.<\/p>\n

                                          The directions are called \u201cthe Reserve Bank of India (Minimum Capital Requirements for Operational Risk) Directions, 2023. The said Directions apply to all Commercial Banks (excluding Local Area Banks, Payments Banks, Regional Rural Banks, and Small Finance Banks).<\/p>\n

                                          The said Directions replace the existing approaches with a new standardised approach, i.e. Basel III Standardised Approach. The Directions has been divided into 4 parts \u2013 Part A contains provisions which are mandatory, Part B specifies guidelines which the banks are encouraged to comply, Part C contains frequently asked questions and Part D contains illustrations.<\/p>\n

                                          The effective date of implementation of these Directions shall be communicated separately by the RBI.<\/p>\n

                                          Master Circular Number SEBI\/HO\/MRD\/MRD-Pod-1\/P\/CIR\/2023\/82 dated 01.06.2023 of the Securities and Exchange Board of India (SEBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n

                                            \n
                                          • Master Circular for Electronic Gold Receipts (EGRs)<\/strong><\/li>\n<\/ul>\n

                                            SEBI has been issuing various circulars from time to time for specifying the framework for EGRs, its risk management, standard operating guidelines for Vault Managers and Depositories, etc. In order to enable the stakeholders to have access to all the provisions mentioned in these circulars at one place, the provisions of the said circulars are incorporated in this Master Circular for EGRs.<\/p>\n

                                            Circular Number SEBI\/HO\/AFD\/PoD-I\/P\/CIR\/2023\/098 dated 21.06.2023 of Securities and Exchange Board of India (SEBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n

                                              \n
                                            • Modalities for launching Liquidating Scheme and for distributing the investments of Alternative Investment Funds (AIFs) in-specie<\/strong><\/li>\n<\/ul>\n

                                              The said Circular dated 21.06.2023 amends the SEBI (Alternative Investment Funds) Regulations, 2012 to provide flexibility to the AIFs to deal with those investments that are not sold due to lack of liquidity during the winding up process. The Circular presents two primary paths for AIFs in such a case:<\/p>\n

                                                \n
                                              1. Liquidation Scheme, that is selling such investment to a new scheme of the same AIF; and<\/li>\n
                                              2. In-specie Distribution of unliquidated investments of a scheme.<\/li>\n<\/ol>\n

                                                Circular No. CIR\/2023\/106 dated 27.06.2023 of the Securities and Exchange Board of India (SEBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n

                                                  \n
                                                • Manner of achieving minimum public unitholding – Real Estate Investment Trusts (REITs)<\/strong><\/li>\n<\/ul>\n

                                                  To facilitate the achievement of minimum 25% (twenty five percent) public holding for listed REITs, SEBI vide its circular dated 27.06.2023, has provided the following methods:<\/p>\n

                                                    \n
                                                  1. Issuance of Units to Public through offer document;<\/li>\n
                                                  2. Offer of sale of units held by Sponsor(s) \/ Manager \/ and their associates \/ related parties and Sponsor Group to public through offer document;<\/li>\n<\/ol>\n
                                                      \n
                                                    • Offer for sale of units held by Sponsor(s) \/ Manager \/ and their associates \/ related parties and Sponsor Group through secondary market;<\/li>\n<\/ul>\n
                                                        \n
                                                      1. Right issue to public unitholders;<\/li>\n
                                                      2. Bonus issue to public unitholders;<\/li>\n
                                                      3. Allotment under Institutional placement;<\/li>\n<\/ol>\n
                                                          \n
                                                        • Sale of units held by Sponsor(s) \/ Manager \/ and their associates \/ related parties and Sponsor Group in the open market in ways as specified;<\/li>\n
                                                        • Transfer of units held by Sponsor(s) \/ Manager \/ and their associates \/ related parties and Sponsor Group to Exchange Traded Fund managed by a SEBI registered mutual fund, subject to maximum of 5% of the paid-up unit capital of REIT; and<\/li>\n<\/ul>\n
                                                            \n
                                                          1. Any other method approved by the SEBI on case-to-case basis.<\/li>\n<\/ol>\n

                                                            RERA Brief<\/em><\/strong><\/span><\/h2>\n

                                                            Guideline no: RERA\/DELHI\/Guidelines\/2\/2023 dated 01\/06\/2023 issued by Real Estate Regulatory Authority, NCT of Delhi regarding registration and extension of registration of projects. <\/strong><\/span><\/p>\n

                                                            The Real Estate Regulatory Authority, NCT of Delhi has issued guidelines for registration of projects and extensions of registration with RERA, namely, \u201cThe National Capital Territory of Delhi Real Estate (Regulation & Development) (Registration of Projects and Extension of Registration) Guidelines, 2023\u201d.<\/p>\n

                                                            The purpose of these guidelines is to define categories of real estate projects that require prior registration with the Real Estate Regulatory Authority, NCT of Delhi. The guidelines also outline the procedures for registration of real estate projects, grant and extension of validity of registration and process to be followed for uploading the details of the registered projects. Additionally, the guidelines cover the process for inclusion of fresh details and prescribe the fees associated with these purposes.<\/p>\n

                                                            As per the said guidelines, the following projects, developed by the promoter themselves or in collaboration, and intended for sale, in full or in part, anywhere in NCT of Delhi, in both planned or unplanned areas, must be registered with the Real Estate Regulatory Authority, NCT of Delhi:<\/p>\n

                                                              \n
                                                            1. Where, the area of land proposed for the development of a building or conversion of an existing building into apartments, or the development of plots for residential, commercial, farmhouses, or residential cum industrial purposes, as the case may be, exceeds an area of five hundred square meters;<\/li>\n
                                                            2. Where, the number of apartments (whether called block, chamber, tower, dwelling unit, flat, office, showroom, shop, godown, premises, suit, tenement, unit or by any other name, means a separate and self-contained part of any immovable property, including one or more rooms or enclosed spaces, located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for any residential or commercial use such as residence, office, shop, showroom or godown or for carrying on any business, occupation, profession or trade, or for any other type of use ancillary to the purpose specified) proposed to be developed exceed eight in all phases, irrespective of the area of plot;<\/li>\n
                                                            3. Any real estate project falling in any of the above categories, in respect of which the promoter had not received a completion certificate before 1\/5\/2017.<\/li>\n<\/ol>\n

                                                              Guideline no: RERA\/NCTD\/guidelines\/1\/2023 dated 01\/06\/2023 issued by Real Estate Regulatory Authority, NCT of Delhi <\/strong>regarding mandatory bank accounts for registration of projects. <\/strong><\/span><\/p>\n

                                                              The Real Estate Regulatory Authority NCT of Delhi, has issued the \u201cThe National Capital Territory of Delhi Real Estate (Regulation & Development) (Mandatory Bank Accounts for Registration of Projects) Guidelines, 2023\u201d to define the types and categories of the accounts to be opened by the promoter prior to registration of the project with Real Estate Regulatory Authority, NCT of Delhi. The guidelines prescribe procedure regarding the operation of accounts and for utilization of funds collected from the allottees.<\/p>\n

                                                              The guidelines provide that the following categories of accounts required to be opened by the promoter prior to registration of the project:<\/p>\n

                                                                \n
                                                              1. Project Master Account (\u201cMaster Account\u201d):<\/li>\n
                                                              2. Separate bank account in a scheduled bank is to be maintained by the promoter and 100% of the receivables from the buyers (allottees) will be deposited in this account;<\/li>\n
                                                              3. This account must be free from any encumbrances, liens, loans, or control of third parties;<\/li>\n<\/ol>\n