Money & Banking
FDI in white label ATMs: Foreign NBFCs have reasons to cheer
With DIPP clarifying on 100% FDI under automatic route in white label ATMs, foreign-owned or controlled NBFCs can offer these services without approvals 
 
In order to expand the reach of ATMs to smaller centres, the Reserve Bank of India (RBI) had given its nod to non-bank entities in June 2012 to install White Label ATMs (WLAs). While seeking RBI authorisation, foreign owned or controlled company (FOCC) non-banking financial company (NBFC) were required to obtain necessary approvals from the competent authority. However, the Department of Industrial Policy and Promotion (DIPP) vide its press note no. 11 dated 1 October 2015 permitted 100% foreign direct investment (FDI) under automatic route in White Label ATM (WLA) operations. 
 
In order to take advantage of this, the object clause of Memorandum of Association (MOA) shall specify that the company can undertake WLAs activity:
 
WLAO shall have a minimum net worth of Rs100 crore as per the latest financial year’s audited balance sheet and the same shall be maintained at all times.
 
Scenario prior to the press note:
  1. In case of any FDI in the applicant entity, necessary approval from the competent authority as required was required to be submitted while seeking authorization.
Scenario post press note: 
  1. Sub-para 6.2.18.8.3 is inserted after para 6.2.18.8 permitting NBFCs under automatic route to undertake WLAO up to 100%;
  2. If the entity is engaged in any other activity, then such entities will have to comply with the minimum capitalisation norms for foreign investments as applicable.
The RBI authorisation for setting up WLA operations is valid for a period of one year. The application made by the applicant shall specify the scheme adopted by the entity and the number of WLAs sought to be installed.
 
 
Some general points:
WLAO shall not transfer/ assign the authorisation without prior approval of RBI;
Switchover from one scheme to another is not permissible;
A certificate indicating adherence to the targets and ratios needs to be submitted  by WLAO to the RBI within a time frame of one month of completion of one year;
Deposits shall not be accepted at the WLAs by the WLAO, their operations is limited to withdrawal of cash;
Transaction effected by the customer at WLAs shall be considered while permitting five/ three free transactions per month for using other bank ATMs.
 
 
*SLA means Service Level Agreement
**After 5 free transactions available per month to a customer for using any other bank’s ATM for withdrawal of cash, fees will start getting debited from the customer’s account for any further usage.
 
Limit on number of free transactions: RBI vide its notification dated 14 August 2014 restricted the number of mandatory free ATM transactions for savings bank account customers at other banks’ ATMs from five to three transactions per month (inclusive of both financial and non-financial transactions) for transactions done at the ATMs located in the six metro centres, Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad. In case the customer withdraws cash or undertake any non-financial transaction viz. balance enquiry, and change in PIN. From WLAs, then the same shall be considered while calculating the limit of free transactions.
 
Timeline for regulatory approval: As per the RBI timelines, the time period required for authorising the company to set-up the WLA is 120 days. However, section 7(4) of the PSS Act, 2007 states that RBI shall endeavour to dispose of applications for authorisation within six months from the date of filing. 
 
Classification of centres: The classification of centres based on population prescribed under Census of India 2011 is as follows:
 
Let us hope that the decision will ease and expedite foreign investment inflows in the activity and thus give a fillip to the government's effort to promote financial inclusion in the country, including the Pradhan Mantri Jan Dhan Yojana as reported in media
 
(Niddhi Parmar works as Deputy Manager in Corporate Law Services Group at Vinod Kothari & Co)
 

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Aircel-Maxis deal: Fresh summons to four accused
 A court here on Monday issued fresh summons to four accused including Malaysian businessman T.A Ananda Krishnan in the Aircel-Maxis deal case.
 
Central Bureau of Investigation Special Judge O.P. Saini issued fresh summons to Krishnan, Augustus Ralph Marshall and two accused firms, Maxis Communications Berhad of Malaysia and Astro All Asia Networks, and fixed the matter for further hearing on July 11, 2016.
 
The order came as CBI told court that process of summons issued against Marshal, Krishnan and two foreign companies have not been received and it filed an application submitting that Malaysian authorities have raised certain queries regarding processes issued by this court and the same are required to be replied diplomatically.
 
The agency further submitted that at least six months time may be granted for ensuring service to the four accused, residing or situated in Malaysia, as authorities in that country are raising certain objections regarding the instant case, which are required to be replied to to their satisfaction through diplomatic channels.
 
Allowing the plea, the court said: "As the four accused are required to be served through diplomatic channels, six months clear time is allowed for the service of fresh summons."
 
The court also directed prosecution to stay in constant touch with the office of Indian High Commission in Malaysia for ensuring service in time.
 
Former communications minister Dayanidhi Maran and authorised representative of accused firm Chennai-based Sun Direct TV were present in the court during the hearing, while Maran's brother Kalanithi Maran sought exemption from personal appearance. His counsel told the court that he is not able to attend proceeding due to recent heavy rainfalls and consequent flooding in Chennai.
 
The court allowed his plea.
 
The court also listed the bail application of Maran brothers and their application challenging the jurisdiction of the special 2G court to try the Aircel-Maxis deal case in which they have been summoned as accused along with others for the same date.
 
The agency has alleged that Dayanidhi Maran used his influence to help Krishnan buy Aircel by coercing its owner Sivasankaran to part with his stake.
 
It was alleged by Sivasankaran that Dayanidhi Maran favoured the Maxis Group in the takeover of his company. In return, he further alleged, the company made investments through Astro Network in a company stated to be owned by the Maran family.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Indian market trends
The Sensex and the Nifty rose 1% each, along with ML Large-cap Index and ML Micro-cap Index for the fortnight ended 2nd December. ML Small-cap Index and ML Mid-cap Index advanced 7% and 3%, respectively.
 

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