Core Banking Solution (CBS) for Urban Co-operative Banks (UCBs)

combinationReserve Bank of India (RBI) has issued notification number RBI/2017-18/47 DCBR.BPD.PCB.Cir.No.03/09.18.300/2017-18 dated 16th August, 2017 for core banking solution (CBS) requirements for Urban Co-operative Banks (UCBs).

RBI circular DCBR.CO.PCB.Cir.No.14/09.18.300/2015-16 dated April 13, 2016 announced the Scheme for providing financial assistance to UCBs for implementation of CBS.

It was mentioned in that circular that a scheme for providing financial assistance to UCBs for implementation of CBS has been formulated in consultation with Institute for Development and Research in Banking Technology (IDRBT) and would be implemented by IDRBT/Indian Financial Technology and Allied Services (IFTAS) (a subsidiary of IDRBT).

Key highlight of the scheme is as follows:

Eligibility:

UCBs which have not yet implemented CBS or partially implemented CBS will be eligible for financial assistance under the scheme. UCBs which are under directions imposed under Section 35A of Banking Regulation Act, 1949 (AACS) will not be eligible.

Implementing Agency

IDRBT will be the implementing agency for implementation of CBS in eligible UCBs, herein after called the Implementing Agency (IA).

Cost of package

The cost of the migration to CBS for a bank will be Rs. 4/- lakhs. Thereafter, the recurring cost will be Rs. 15,000/- per branch per month and the cost also includes redundant net work connectivity. The recurring cost would be subject to review from time to time.

Quantum of Financial Assistant from Reserve Bank of India

Reserve Bank of India will reimburse the cost of migration of the UCBs to CBS amounting to Rs. 4/- lakhs to IA on successful completion of preliminary study and data validation. The recurring cost of Rs. 15,000/- per branch per month will be borne by the UCB.

As stated in that circular, a document dealing with the functional and technical requirements for Core Banking Solution in Urban Co-operative Banks has been prepared by the IDRBT in consultation with the RBI. The document is expected to serve as a reference material for implementing and improving CBS in the banks.

Functional and technical requirements mentioned in the document, in a nutshell, are as follows:-

Functional requirement:

Deposit Accounts (Individuals, Institutions and Cooperatives)

  • Customer Account Management and KYC includes Signature, photo storage and retrieval
  • CASA
  • Suspense Account handling
  • Term Deposit
  • Other configurable account and deposit types like PMJDY, etc.
  • Cheque issue and maintenance
  • Alerts including the interface for SMS and Email. However, the commercials related to sending SMS and send/receive emails to a bank email id may be different.
  • TDS includes issuance of TDS certificate to customers
  • Passbook printing

Loans and Advances

  • Retail, Wholesale/Corporate and Agricultural loans that includes
  • Short/Medium/Long term loans with interest subvention & interest calculation with/without compounding
  • Cash credit & Over Draft
  • Retail Loans and related Account Operations
  • Deposit Loan
  • Gold Loans including for agricultural/rural development purposes
  • Other loan types with configurable interest rates, payment terms, collaterals, etc.
  • Limits
  • Security maintenance includes collateral and other documents storage and retrieval
  • Asset Classification (NPA) and Restructuring Loans
  • Waiver, Write-off & Legal

Remittances and Services

  • Demand Draft and Pay Order Issue & Payments
  • Standing Instructions
  • Service Tax
  • Safe Deposit Lockers
  • Payment Systems and Digital Channels
  • With increasing adoption of digital channels and real-time payment systems, UCBs may also obtain the CBS interfaces for SFMS (NEFT, RTGS, LC and BG) for inter-bank remittances/transfers as a direct/sub member, NFS for ATM Switch, IMPS, AEPS, etc. ECS and NACH
  • Cheque Truncation System (Registration, Verification, File Generation, etc.)
  • Aadhaar integration for KYC, AEPS, etc.
  • SWIFT Integration for FOREX remittances
  • Participation in CCIL related activities for government securities
  • Bancassurance (Corporate, Agent & Referral Mode)
  • Utility Bill payments
  • Mobile Banking for account summary. Adding/updating beneficiary, fund transfer, etc.
  • Internet Banking for account summary. Adding/updating beneficiary, fund transfer, etc.
  • Financial Inclusion in Online mode with Aadhaar integration

Technical requirement

UCBs should ensure applications/software being hosted are thoroughly tested and pass Vulnerability and Penetration testing done by CERT-IN/STQC approved organizations. VAPT has to be done at prescribed regular intervals/also, UCBs leveraging Cloud computing model for CBS and other IT applications can refer to the “IDRBT Cloud Security for Indian Banks” for the contract documents with the service provider. Detailed technical requirements for UCB applications are presented in the document.

The said document CBS_Requirements_for_UCBs can be viewed here.

 

Online Registration Mechanism for Securities Market Intermediaries

online registrationSecurities and Exchange Board of India (SEBI) has issued Press Release No. 53/2017 dated 16th August, 2017 for Online Registration Mechanism for Securities Market Intermediaries

It has been SEBI’s continuous endeavour to improve ease of doing business by adopting technological solutions in its interface with market participants. Accordingly, SEBI has operationalized SEBI Intermediary Portal (https://siportal.sebi.gov.in) for the intermediaries to submit their applications online in paperless manner. The Intermediary Portal provides for online application for registration, processing of application, grant of final registration, application for surrender / cancellation, etc. Link for SEBI Intermediary Portal has been made available on SEBI website – http://www.sebi.gov.in.

The SEBI online dedicated portal for registration is operational for all intermediaries which includes Stock Brokers, Sub-brokers, Depository Participants, Mutual Funds, Merchant Bankers, Underwriters, Registrar to an Issue and Share Transfer Agents, Debenture Trustees, Bankers to an Issue, Credit Rating Agencies, Investment Advisors, Research Analysts, Portfolio Managers, Venture Capital Funds, Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), Alternative investment Funds (AIFs), Custodians and Collective Investment Schemes (CIS).

Hon’ble Minister of Finance, Government of India, in his speech while presenting the Budget for FY 2017-18 on February 01, 2017, had also highlighted that the process

 

Amendment in SEBI (ICDR) Regulations.

amendSecurities and Exchange Board of India (SEBI) has issued notification number SEBI/LAD-NRO/GN/2017-18/016 dated 14th August, 2017 that in exercise of the powers conferred under section 30 of the SEBI Act, 1992 (15 of 1992), the SEBI hereby makes the SEBI (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2017 to further amend the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (principal regulations)

Regulation 70(1) of principal regulations deals with the situations where provisions of preferential allotment mentioned in Chapter VII shall not apply. Regulation 70(1)(c) was amended to include words “or the resolution plan approved by” which is as follows

  1. (1) The provisions of this Chapter shall not apply where the preferential issue of equity shares is made: …(c) in terms of the rehabilitation scheme approved by the Board of Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985 or the resolution plan approved by the Tribunal under the Insolvency and Bankruptcy Code, 2016, whichever applicable:

Provided that the lock-in provisions of this Chapter shall apply to preferential issue of equity shares mentioned in clause (c).

The existing regulations 70(5) deals with conversion of debt into equity under Strategic Debt Restructuring Scheme, was replaced by the new regulation. Both existing and amended regulations were mentioned below for ready reference:

Existing regulation 70(5)

Conversion of debt into equity under Strategic Debt Restructuring Scheme – The provisions of this Chapter shall not apply where the preferential issue of equity shares is made to the consortium of banks and financial institutions pursuant to conversion of their debt, as part of the strategic debt restructuring scheme in accordance with the guidelines specified by the Reserve Bank of India, subject to the following conditions:

(a) conversion price shall be determined in accordance with the guidelines specified by the Reserve Bank of India for strategic debt restructuring scheme, which shall not be less than the face value of the equity shares;

(b) conversion price shall be certified by two independent qualified valuers, and for this purpose ‘valuer’ shall have the same meaning as assigned to it under clause (r) of sub regulation (1) of regulation 2 of the Securities and Exchange Board of India (Issue of Sweat Equity) Regulations, 2002;

(c) equity shares so allotted shall be locked in for a period of one year from the date of trading approval:

Provided that for the purposes of transferring the control, the consortium of banks and financial institutions may transfer their shareholding to an entity before completion of the lock in period subject to continuation of the lock in on such shares for the remaining period with the transferee;

(d) applicable provisions of Companies Act, 2013 are complied with, including the requirement of special resolution.

Amended regulation 70(5)

Conversion of debt into equity under Strategic Debt Restructuring Scheme – (5) The provisions of this Chapter shall not apply where the preferential issue of specified securities is made to the lenders pursuant to conversion of their debt, as part of a debt restructuring scheme implemented in accordance with the guidelines specified by the Reserve Bank of India, subject to the following conditions:

(a) the guidelines for determining the conversion price have been specified by the Reserve Bank of India in accordance with which the conversion price shall be determined and which shall be in compliance with the applicable provisions of the Companies Act, 2013;

(b) the conversion price shall be certified by two independent qualified valuers, and for this purpose ‘valuer’ shall be a person who is registered under section 247 of the Companies Act, 2013 and the relevant Rules framed there under:

Provided that till such date on which section 247 of the Companies Act, 2013 and the relevant Rules come into force, valuer shall mean an independent merchant banker registered with the Board or an independent chartered accountant in practice having a minimum experience of ten years;

(c) specified securities so allotted shall be locked-in for a period of one year from the date of their allotment:

Provided that for the purpose of transferring the control, the lenders may transfer the specified securities allotted to them before completion of the lock-in period subject to continuation of the lock-in on such securities for the remaining period, with the transferee;

(d) the lock-in of equity shares allotted pursuant to conversion of convertible securities issued on preferential basis shall be reduced to the extent the convertible securities have already been locked-in;

(e) the applicable provisions of the Companies Act, 2013 are complied with, including the requirement of special resolution.”

The existing regulations 70(6) was replaced by new regulation. Both existing and amended regulations were mentioned below for ready reference:

Existing regulation 70(6)

The provisions of this Chapter shall not apply when any other secured lenders opt to join the strategic debt restructuring scheme in accordance with the guidelines specified by the Reserve Bank of India and convert their debt into equity share in accordance with sub regulation (5).

Amended regulation 70(6)

The provisions of this Chapter shall not apply where the preferential issue, if any, of specified securities is made to person(s) at the time of lenders selling their holding of specified securities or enforcing change in ownership in favour of such person(s) pursuant to a debt restructuring scheme implemented in accordance with the guidelines specified by the Reserve Bank of India, subject to the following conditions:

(a) the guidelines for determining the issue price have been specified by the Reserve Bank of India in accordance with which the issue price shall be determined and which shall be in compliance with the applicable provisions of the Companies Act, 2013;

(b) the issue price shall be certified by two independent qualified valuers, and for this purpose ‘valuer’ shall be a person who is registered under section 247 of the Companies Act, 2013 and the relevant Rules framed there under:

Provided that till such date on which section 247 of the Companies Act, 2013 and the relevant Rules come into force, valuer shall mean an independent merchant banker registered with the Board or an independent chartered accountant in practice having a minimum experience of ten years;

(c) the specified securities so allotted shall be locked-in for a period of at least three years from the date of their allotment;

(d) the lock-in of equity shares allotted pursuant to conversion of convertible securities issued on preferential basis shall be reduced to the extent the convertible securities have already been locked-in;

(e) a special resolution has been passed by shareholders of the issuer before the preferential issue;

(f) the issuer shall, in addition to the disclosures required under the Companies Act, 2013 or any other applicable law, disclose the following information pertaining to the proposed allottee(s) in the explanatory statement to the notice for the general meeting proposed for passing the special resolution as stipulated at clause (e) of this sub-regulation:

  1. the identity including that of the natural persons who are the ultimate beneficial owners of the shares proposed to be allotted and/ or who ultimately control the proposed allottee(s);
  2. the business model;
  3. a statement on growth of business over the period of time;
  4. summary of audited financials of previous three financial years;
  5. track record in turning around companies, if any;
  6. the proposed roadmap for effecting turnaround of the issuer.
  7. the applicable provisions of the Companies Act, 2013 are complied with.

The amendments came into force on the date of their publication in the Official Gazette.

 

SEBI (SAST) Regulations: Scope of General Exemption Stretched

11883065_mSecurities and Exchange Board of India (SEBI) has issued notification number SEBI/LAD-NRO/GN/2017-18/015 dated 14th August, 2017 that in exercise of the powers conferred under section 30 of the SEBI Act, 1992 (15 of 1992), the SEBI hereby makes the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2017 to further amend the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (principal regulations)

Regulation 10 of principal regulations deals with general exemptions. Acquisitions mentioned in Regulation 10(1) has been exempted from the obligation to make an open offer under regulation 3 and regulation 4 subject to fulfilment of the stipulated conditions.

Acquisition pursuant to a scheme is a subject matter of regulation 10(1)(d), in which following amendments (in bold) were made:-

Amended Regulation 10(1)(d)(ii):- of arrangement involving the target company as a transferor company or as a transferee company, or reconstruction of the target company, including amalgamation, merger or demerger, pursuant to an order of a court or a tribunal or a competent authority under any law or regulation, Indian or foreign; or

Amended Regulation 10(1)(d)(iii):- of arrangement not directly involving the target company as a transferor company or as a transferee company, or reconstruction not involving the target company’s undertaking, including amalgamation, merger or demerger, pursuant to an order of a court or a tribunal or a competent authority under any law or regulation, Indian or foreign, subject to,—

(A) the component of cash and cash equivalents in the consideration paid being less than twenty-five per cent of the consideration paid under the scheme; and

(B) where after implementation of the scheme of arrangement, persons directly or indirectly holding at least thirty-three per cent of the voting rights in the combined entity are the same as the persons who held the entire voting rights before the implementation of the scheme.

After clause (d), the following new clause has been inserted, namely,-

(da) acquisition pursuant to a resolution plan approved under section 31 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016).

The existing regulations 10(1)(i) deals with conversion of debt into equity under Strategic Debt Restructuring Scheme, was replaced by the new regulation. Both existing and amended regulations were mentioned below for ready reference:

Existing regulation 10(1)(i)

Conversion of debt into equity under Strategic Debt Restructuring Scheme – Acquisition of equity shares by the consortium of banks, financial institutions and other secured lenders pursuant to conversion of their debt as part of the Strategic Debt Restructuring Scheme in accordance with the guidelines specified by the Reserve Bank of India:

Provided that the conditions specified under sub-regulation (5) or (6) of regulation 70 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as may be applicable, are complied with.

Amended regulation 10(1)(i)

Conversion of debt into equity under Strategic Debt Restructuring Scheme – Acquisition of shares by the lenders pursuant to conversion of their debt as part of a debt restructuring scheme implemented in accordance with the guidelines specified by the Reserve Bank of India:

Provided that the conditions specified under sub-regulation (5) of regulation 70 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 are complied with.

After clause (i), the following new clause has been inserted, namely,-

(ia) Acquisition of shares by the person(s), by way of allotment by the target company or purchase from the lenders at the time of lenders selling their shareholding or enforcing change in ownership in favour of such person(s), pursuant to a debt restructuring scheme implemented in accordance with the guidelines specified by the Reserve Bank of India:

Provided that in respect of acquisition by persons by way of allotment by the target company, the conditions specified under sub-regulation (6) of regulation 70 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 are complied with:

Provided further that in respect of acquisition by way of purchase of shares from the lenders, the acquisition shall be exempted subject to the compliance with the following conditions:

(a) the guidelines for determining the purchase price have been specified by the Reserve Bank of India and that the purchase price has been determined in accordance with such guidelines;

(b) the purchase price shall be certified by two independent qualified valuers, and for this purpose ‘valuer’ shall be a person who is registered under section 247 of the Companies Act, 2013 and the relevant Rules framed there under:

Provided that till such date on which section 247 of the Companies Act, 2013 and the relevant Rules come into force, valuer shall mean an independent merchant banker registered with the Board or an independent chartered accountant in practice having a minimum experience of ten years;

(c) the specified securities so purchased shall be locked-in for a period of at least three years from the date of purchase;

(d) the lock-in of equity shares acquired pursuant to conversion of convertible securities purchased from the lenders shall be reduced to the extent the convertible securities have already been locked-in;

(e) a special resolution has been passed by shareholders of the issuer before the purchase;

(f) the issuer shall, in addition to the disclosures required under the Companies Act, 2013 or any other applicable law, disclose the following information pertaining to the proposed acquirer(s) in the explanatory statement to the notice for the general meeting proposed for passing special resolution as stipulated at clause (e) of this sub-regulation:

  1. the identity including of the natural persons who are the ultimate beneficial owners of the shares proposed to be purchased and/ or who ultimately control the proposed acquirer(s);
  2. the business model;
  3. a statement on growth of business over the period of time;
  4. summary of audited financials of previous three financial years;
  5. track record in turning around companies, if any;
  6. the proposed roadmap for effecting turnaround of the issuer.
  7. applicable provisions of the Companies Act, 2013 are complied with.

The amendments came into force on the date of their publication in the Official Gazette.

 

 

NSE : Filing of Information on Electronic Platform

online registrationNational Stock Exchange of India Limited (NSE) has issued circular ref no: NSE/CML/2017/23 dated 11th August, 2017 to all the listed companies for Filing of Information on Electronic Platform

In continuation to exchange circular dated October 27, 2016 regarding seamless announcement dissemination and other circular issued thereafter for filing of information on electronic platform,

Exchange is pleased to introduce seamless announcement filing mechanism for below mentioned additional short descriptions (subjects) on NEAPS (NSE ELECTRONIC APPLICATION PROCESSING SYSTEM)

For the benefit of investors and market, the announcement filed under these short descriptions shall also be disseminated directly on the website without Exchange intervention.

  1. Change in Auditors
  2. Change in Director(s)
  3. Declaration of Audit Reports with Un-modified opinion
  4. Reappointment
  5. Statement of Impact of Audit Qualifications
  6. Updates

Under this seamless system, the information will get disseminated as has been filed by listed entity. Listed entity shall exercise due care while filing the announcement and shall be solely answerable for the announcement.

This system will be in effect from August 17, 2017.

The User Manual will be made available on NEAPS Module under the following link: https://www.connect2nse.com/LISTING/ Compliance – Announcements/BM/CA

 

Draft amendments for Companies (Cost Records and Audit) Rules, 2014

bse circular The Ministry of Corporate Affairs (MCA) has issued draft Companies (Cost Records and Audit) Amendment Rules, 2017 to amend the Companies (Cost Records and Audit) Rules, 2014 and also issued notice dated 11th August, 2017 inviting suggestions/comments on the draft amendments.

The Companies (Cost Records and Audit) Rules, 2014 was notified on 30th June, 2014 when financial records of the company were prepared as per the Companies (Accounting Standard) Rules, 2006. After the advent of the Companies (Indian Accounting Standards) Rule, 2015, (here in after referred to as Ind AS Rules) and pursuant to the Rule 4(1)(ii) of the said Ind As Rules, the following companies shall comply with the Ind AS Rules for the accounting periods beginning on or after 1st April, 2016, with the comparatives for the periods ending on 31st March, 2016, or thereafter, namely:-  (a) companies whose equity or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and having Net worth of rupees five hundred crore or more;  (b) companies other than those covered by sub-clause (a) of clause (ii) of sub- rule (1) and having net worth of rupees five hundred crore or more;  (c) holding, subsidiary, joint venture or associate companies of companies covered by sub-clause (a) of clause (ii) of sub- rule (1) and sub-clause (b) Of clause (ii) of sub- rule (1) as the case may be;

Again as per Rule 4(1)(iii) of Ind AS Rules, the following companies shall comply with the Ind AS for the accounting periods beginning on or after 1st April, 2017, with the comparatives for the periods pending on 31st March, 2017, or thereafter, namely:-  (a) companies whose equity or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and having net worth of less than rupees five hundred crore; (b) companies other than those covered in clause (ii) of sub- rule (1) and sub-clause (a) of clause (iii) of sub-rule (1), that is, unlisted companies having net worth of rupees two hundred and fifty crore or more but less than rupees five hundred crore.  (c) holding, subsidiary, joint venture or associate companies of companies covered under sub-clause (a) of clause (iii) of sub- rule (1) and sub-clause(b) of clause (iii) of sub- rule (1), as the case may be:

So, in order to bring parity between financial records and cost records of the company, draft amendments in the Companies (Cost Records and Audit) Rules, 2014 were made public. They shall come into force from the date of their publication in the official gazette and shall be applicable for the financial years commencing on or after 1st April, 2016. A comparative analysis of major amendments are also provided in the notice inviting suggestions/comments latest by 26th August, 2017 through email at comments_cra@mca.gov.in.

 The notice and comparative analysis of amendments can be viewed here. notice_11082017

 

Exemption to Rural Banks from Regulation of Combinations.

exemptionMinistry of Corporate Affairs (MCA) has issued Notification number S.O. 2561(E) dated the 10th August, 2017 that in exercise of the powers conferred by clause (a) of section 54 of the Competition Act, 2002 (12 of 2003), the Central Government, in public interest, hereby exempts the Regional Rural Banks in respect of which the Central Government has issued a notification under sub-section (1) of section 23A of the Regional Rural Banks Act, 1976 (21 of 1976), from the application of provisions of sections 5 and 6 of the Competition Act, 2002 for a period of five years from the date of publication of this notification in the Official Gazette.

Section 5 and 6 of the Competition Act, 2002 deals with combinations and regulation of combinations which are stated herein below for the ready reference:-

Combination

  1. The acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises shall be a combination of such enterprises and persons or enterprises, if—

(a) any acquisition where—

(i) the parties to the acquisition, being the acquirer and the enterprise, whose control, shares, voting rights or assets have been acquired or are being acquired jointly have,—

(A) either, in India, the assets of the value of more than rupees one thousand crores or turnover more than rupees three thousand crores; or

(B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars, including at least rupees five hundred crores in India, or turnover more than fifteen hundred million US dollars, including at least rupees fifteen hundred crores in India; or

(ii) the group, to which the enterprise whose control, shares, assets or voting rights have been acquired or are being acquired, would belong after the acquisition, jointly have or would jointly have,—

(A) either in India, the assets of the value of more than rupees four thousand crores or turnover more than rupees twelve thousand crores; or

(B) in India or outside India, in aggregate, the assets of the value of more than two billion US dollars, including at least rupees five hundred crores in India, or turnover more than six billion US dollars, including at least rupees fifteen hundred crores in India; or

(b) acquiring of control by a person over an enterprise when such person has already direct or indirect control over another enterprise engaged in production, distribution or trading of a similar or identical or substitutable goods or provision of a similar or identical or substitutable service, if—

(i) the enterprise over which control has been acquired along with the enterprise over which the acquirer already has direct or indirect control jointly have,—

(A) either in India, the assets of the value of more than rupees one thousand crores or turnover more than rupees three thousand crores; or

(B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars, including at least rupees five hundred crores in India, or turnover more than fifteen hundred million US dollars, including at least rupees fifteen hundred crores in India; or

(ii) the group, to which enterprise whose control has been acquired, or is being acquired, would belong after the acquisition, jointly have or would jointly have,—

(A) either in India, the assets of the value of more than rupees four thousand crores or turnover more than rupees twelve thousand crores or

(B) in India or outside India, in aggregate, the assets of the value of more than two billion US dollars, including at least rupees five hundred crores in India, or turnover more than six billion US dollars, including at least rupees fifteen hundred crores in India; or

(c) any merger or amalgamation in which—

(i) the enterprise remaining after merger or the enterprise created as a result of the amalgamation, as the case may be, have,—

(A) either in India, the assets of the value of more than rupees one thou sand crores or turnover more than rupees three thousand crores; or

(B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars, including at least rupees five hundred crores in India, or turnover more than fifteen hundred million US dollars, including at least rupees fifteen hundred crores in India; or

(ii) the group, to which the enterprise remaining after the merger or the enter prise created as a result of the amalgamation, would belong after the merger or the amalgamation, as the case may be, have or would have,—

(A) either in India, the assets of the value of more than rupees four-thousand crores or turnover more than rupees twelve thousand crores; or

(B) in India or outside India, in aggregate, the assets of the value of more than two billion US dollars, including at least rupees five hundred crores in India, or turnover more than six billion US dollars, including at least rupees Fifteen Hundred Crores in India.

Explanation.— For the purposes of this section,—

(a) “control” includes controlling the affairs or management by—

(i) one or more enterprises, either jointly or singly, over another enterprise or group;

(ii) one or more groups, either jointly or singly, over another group or enterprise;

(b) “group” means two or more enterprises which, directly or indirectly, are in a position to:

(i) exercise twenty-six per cent or more of the voting rights in the other enterprise; or

(ii) appoint more than fifty per cent of the members of the board of directors in the other enterprise; or

(iii) control the management or affairs of the other enterprise;

(c) the value of assets shall be determined by taking the book value of the assets as shown, in the audited books of account of the enterprise, in the financial year immediately preceding the financial year in which the date of proposed merger falls, as reduced by any depreciation, and the value of assets shall include the brand value, value of goodwill, or value of copyright, patent, permitted use, collective mark, registered proprietor, registered trade mark, registered user, homonymous geographical indication, geographical indications, design or layout- design or similar other commercial rights, if any, referred to in sub-section (5) of section 3.

Regulation of combinations

  1. (1) No person or enterprise shall enter into a combination which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India and such a combination shall be void.

(2) Subject to the provisions contained in sub-section (1), any person or enterprise, who or which proposes to enter into a combination, shall give notice to the Commission, in the form as may be specified, and the fee which may be determined, by regulations, disclosing the details of the proposed combination, within thirty days of—

(a) approval of the proposal relating to merger or amalgamation, referred to in clause (c) of section 5, by the board of directors of the enterprises concerned with such merger or amalgamation, as the case may be;

(b) execution of any agreement or other document for acquisition referred to in clause (a) of section 5 or acquiring of control referred to in clause(b) of that section.

(2A)No combination shall come into effect until two hundred and ten days have passed from the day on which the notice has been given to the Commission under sub-section(2) or the Commission has passed orders under section 31, whichever is earlier.

(3) The Commission shall, after receipt of notice under sub-section (2), deal with such notice in accordance with the provisions contained in sections 29, 30 and 31.

(4) The provisions of this section shall not apply to share subscription or financing facility or any acquisition, by a public financial institution, foreign institutional investor, bank or venture capital fund, pursuant to any covenant of a loan agreement or investment agreement.

(5) The public financial institution, foreign institutional investor, bank or venture capital fund, referred to in sub-section (4), shall, within seven days from the date of the acquisition, file, in the form as may be specified by regulations, with the Commission the details of the acquisition including the details of control, the circumstances for exercise of such control and the consequences of default arising out of such loan agreement or investment agreement, as the case may be.

Explanation.—For the purposes of this section, the expression—

(a) “foreign institutional investor” has the same meaning as assigned to it in clause (a) of the Explanation to section 115AD of the Income-tax Act, 1961(43 of 1961);

(b) “venture capital fund” has the same meaning as assigned to it in (23 FB) of section 10 of the Income-tax Act, 1961(43 of 1961).

So Regional Rural Banks are exempted from provisions of sections 5 (combinations) and 6 (regulation of combinations) of the Competition Act, 2002 for a period of five years from 10th August, 2017.