NO OPENING OF CURRENT ACCOUNT TO A COMPANY OR FIRM SAYS RESERVE BANK OF ...

No Opening of Current Account
to a Company or a Firm says RBI  https://youtu.be/YvEvIcGuXtE

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If your company or firm is having
bank limits more than Rs 5 cr, you can not open current account unless follow
the procedure defined by RBI.

RBI asks banks not to open
current accounts for customers having cash credit, overdraft accounts and
having loan exposure of Rs 5 Crores or more.

DOR.No.BP.BC/7/21.04.048/2020-21dated
August 6, 2020

TO
IMPROVE CREDIT DISCIPLINE

With a view to improve credit discipline, the Reserve Bank on
Thursday barred
banks from opening current accounts for customers who have availed cash credit
or overdraft facilities, stressing that there is a "need for
discipline" on this front.

In a notification, RBI said
that rather than opening a
new current account, all transactions should be routed through Cash Credit (CC)
or OverDraft (OD) account

WHY
SUCH MOVE IS NOW ?

It can be noted that in
recent instances of fraud like the over Rs 4,000 crore PMC co-operative Bank
scam, it was discovered that multiple accounts were opened. Officials in the
know said the move will avoid hoodwinking of the system and reduce the blind
spots, which will ultimately lead to protection of depositors’ money.

There are concerns emanating
from the use of multiple accounts by borrowers which calls for the need for
safeguards for opening of such accounts by borrowers availing credit facilities
from multiple banks.

NEED
FOR DISCIPLINE

there is a "need for discipline" by the banks in opening
current accounts, the RBI said, "no bank shall open current accounts for
customers who have availed credit facilities in the form of Cash Credit (CC)/
OverDraft (OD) from the banking system and all transactions shall be routed
through the CC/ OD account".

DRAWAL
FROM TERM LOANS

"Banks should not route
drawal from term loans through current accounts. Since term loans are meant for
specific purposes, the funds should be remitted directly to the supplier of
goods and services. Expenses incurred by the borrower for day to day operations
should be routed through CC/ OD account, if the borrower has a CC/ OD account,
else through a current account.

t can also be noted that
there is a project to have a single customer ID for every entity’s banking
needs which will help in the monitoring, but the same is not fully in place.

ESCROW
MECHANISM

In case of borrowers where
exposure of the banking system is ₹50 crore or more, banks shall be required to
put in place an escrow mechanism. Accordingly, current accounts of such
borrowers can only be opened/maintained by the escrow managing bank.

Banks are free to open
current accounts of prospective customers who have not availed any credit facilities
from the banking system, subject to necessary due diligence.

Banks should not route
drawal from term loans through current accounts. Since term loans are meant for
specific purposes, the funds should be remitted directly to the supplier of
goods and services. Expenses incurred by the borrower for day to day operations
should be routed through CC/OD account, if the borrower has a CC/OD account,
else through a current account

How
it Works ?

If a customer opens multiple
accounts and there is no monitoring of end use of funds, there is a possibility
that the same customer could indulge in maleficence by drawing down money from
the same bank through a different account. There is also a possibility that the
money could be used to repay the first credit facility and keep using the same
modus operandi which can potentially lead to a wider concern.

If the Designated employee buy Shares in Trading Window Closure period,...

If the Designated employee buy Shares in  Trading Window Closure period, what's the
remedy/penalty to such person.? https://youtu.be/EMAxMEvV6ag

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As per SEBI PIT , whether any Intimation to SEBI or Stock
Exchange is Needed ?

NOT TO TRADE BY DESIGNATED EMPLOYEES DURING WINDOW CLOSURE
PERIOD

The Securities and Exchange Board of India (Prohibition of
Insider Trading) Regulations, 2015 (Insider Trading Regulations) require listed
companies to use a trading window for monitoring trades by designated persons
and their immediate relatives.

The compliance officer is responsible for closing the trading
window under certain circumstances when designated persons are reasonably
expected to be in possession of unpublished price sensitive information. With
certain exceptions, designated persons and their immediate relatives are not
permitted to trade when the trading window is closed. When open, designated
persons are required to apply to the compliance officer for pre-clearance of
trades. Trading has been defined broadly to include subscribing, buying,
selling or dealing in securities, or agreeing to do so.

Restriction under PIT Regulations

The Securities and Exchange Board of India (Prohibition of
Insider Trading) Regulations, (PIT Regulations 2015), restrict “insiders” from
dealing in listed (or to-be-listed) securities when in possession of
unpublished price sensitive information (UPSI). Any trading by insiders when in
possession of UPSI is deemed to be motivated by their knowledge of UPSI.

Yes. The company has to make a qualified report to SEBI

It has to Issue such an employee, a Show cause and should
demand for his explanation.

Listed Company has to need to imitate stock exchange and Suo-moto
penalise the person for trading and also mention about the penalty imposed on
such employee while intimating to stock exchange

In nutshell they have to deposit the profit whatever they
make after purchase / sale the shares to the company.

While on BSE Listing centre INDR under which category such information
has to be uploaded?

Is there any approved 
trading plan?

Refer SEBI circular dated July 19, 2019

General information, regulation 30

There is no specific category for SEBI PIT?

Please note that such incident will have to be recommended to
Audit Committee in Board Meeting.

The listed company need to intimate to stock exchange and
also send the same copy to SEBI.

Report by Listed Company or Intermediary or Fiduciary for
violations related to Code of Conduct under SEBI ( PIT) Regulations 2015.  For listed company , Schedule B read with
Regulation 9 (1) of SEBI (PIT) Regulations 2015.

SEBI PIT REGULATIONS AMENDMENT 2020

Securities and Exchange Board of India (Prohibition of
Insider Trading) (Amendment) Regulations, 2020

b-regulation 5, shall be substituted with the following,
namely-“(5) The  board  of 
directors  or  head(s) 
of  the  organisation 
of  every person required to
handle unpublished price sensitive information shall ensure that a structured  digital database is maintained
containing the nature  of 
unpublished  price  sensitive 
information  and  the 
names  of such persons who have
shared the information and also the names of such  persons 
with  whom  information 
is  shared under  this 
regulation along  with  the 
Permanent  Account  Number 
or  any  other 
identifier authorized by law where Permanent Account Number is not
available.

 Such  database 
shall  not  be 
outsourced  and  shall 
be  maintained internally  with 
adequate  internal  controls 
and  checks  such 
as  time stamping and audit trails
to ensure non-tampering of the database.”

Infosys fined
Independent Director for inadvertently selling shares during market hours

Infosys 1^st March 2019 said it has fined its lead
independent director Kiran Mazumdar-Shaw for “inadvertently “ selling 1,600
shares of the company during the open trading window.

The shares were sold by her portfolio management services
without obtaining clearance, Infosys said in filing to the stock exchanges.
Shaw, who was not aware of the transaction, was fined Rs 9.5 lakh that she
needs to pay to a charity organisation.

The company notified the BSE that this development was
brought to the attention of the Compliance Officer of Infosys on February 13,2019.

“The trade was carried out by the portfolio manager without
the knowledge of Mazumdar-Shaw. In portfolio management services, the investor
does not generally monitor the day-to-day investment decisions. In this case as
well, Mazumdar-Shaw had given no instruction to conduct the trade and she also
had no knowledge of the trade having occurred. The portfolio manager
unilaterally took. the decision to conduct the trade,” said Infosys in its
filing to the BSE.

The company’s Audit Committee determined there was a
violation of insider trading policy and levied a penalty of Rs 9.5 lakh that
she has to pay to a charitable organisation of her choice. However, it also
clarified that it was an inadvertent trade made without intent to violate
insider trading regulations of SEBI as well as of Infosys.

Ex-Director of Infosys

In January 2017, Infosys former board member Ravi Venkatesan
had inadvertently bought 50 shares of the company during the trading closure
window violating its insider trading policy.

Infosys had said Venkatesan did not give instructions for the
purchase of the shares, which was made through his portfolio management
services account, and was unaware of the trade. The trade was made by
Venkatesan’  s fund manager for all his clients.

Mindtree Executive Chairman bought shares during Trading
Window Closure

In another case in 2017, Mindtree executive chairman
Krishnakumar Natarajan had informed the company that he inadvertently violated
its insider trading programme as his portfolio management services company
bought 240 equity shares of the company sold.

Conclusion

“Trading window restrictions shall not apply in respect of
OFS and RE (rights entitlement) transactions carried out in accordance with the
framework specified by the Board from time to time."

Separately, SEBI said listed companies, intermediaries and
fiduciaries will have to promptly inform the stock exchange regarding
violations relating to code of conduct prescribed under the insider trading
norms.

Further, they need to inform the exchanges about the
violations in a prescribed format.

It
said the FINE amount collected from such violations will be credited to the
Investor Protection and Education Fund (IPEF), which is administered by SEBI.

How to merge your various PF accounts with your UAN account ?One Employ...

How to merge your various PF accounts with your
UAN account ? 

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‘One Employee – One EPF account’ will help you to withdraw your PF amount after
retirement and claim pension without Employer’s Intervention

Why you have to Merge your PF accounts with UAN
?

You might have worked in different
organisations and your PF amount may lie in different PF offices across India.
Unless you merge the same with your UAN account , It is difficult to get all
the consolidated PF credits at the time of your retirement and to get pension
benefits for you and your family.

For example , I worked in various companies and
I have withdrawn PF amount from my earlier employer when I resigned from them.
But I have failed to transfer  those
services to my last employer PF account. As such , I am not able to get the
pension benefits and I struggling with concerned PF office for the last two
years.

One Employee – One EPF account’

The Employees Provident
Fund Organisation (EPFO) has brought a new facility to
help employees consolidate funds in their old employee provident
fund (EPF) accounts by linking them with one Universal Account
Number (UAN).

One Employee – One EPF account’, the service is now available on the EPFO
service portal under employee services. It can be availed of for merging as
many as 10 old PF accounts
under one UAN.

How to merge two or more EPFO accounts?

Multiple job changes typically result in
multiple Employee Provident Fund (EPF) accounts being opened, one with each
employer. With the introduction of the UAN (Universal Account Number), it is
possible to consolidate multiple accounts into one single account for each EPFO
member.

UAN activation

Each EPFO member is allotted a UAN which is
usually specified on the salary slip. To activate UAN, the member should visit
the EPFO unified member portal at
https://unifiedportal-mem.epfindia.gov.in/memberinterface/and click on the tab
“Activate UAN”. By entering UAN, name, date of birth and mobile number, an
authorisation pin is generated. The UAN gets activated once this pin is entered
and authenticated.

Merging various PF accounts

To merge two existing EPFO accounts, the member
must visit the EPFO website and under the “Services” tab, click on “One employee – One EPF account” button.

Details

On clicking the link, a form will open for
consolidating multiple EPF accounts. The member must enter his mobile number registered on
the UAN portal. Next, UAN
and current member ID must be entered. On submission of these details,
an OTP will be sent to the registered mobile number for authentication.

Merging of accounts

On entering the OTP, the page for entering old
PF account details for merger will be displayed. Once the old PF account number
is entered and the declaration is accepted and submitted, the request for
merger of that account to the existing PF account will be sent to EPFO.

Why you have to link your UAN with Aadhar ?

The Aadhaar and UAN linking would give you
following benefits.

·      You can Apply for EPF withdrawal directly to
the EPFO. The employer
would not have any role.

·      There would be automatic EPF transfer. You
don’t even need to apply.

·      You can apply for EPF pension withdrawal from UAN member portal
itself.

·      There would not be any discrepancy on personal
detail.

·      The employer can’t delay the approval of Aadhaar.

As you have seen that to link Aadhaar and UAN, your mobile number should be
same in both the database, hence now you should think twice before
changing the mobile number. It is always better to use mobile number
portability instead of adopting a new mobile number.

Requirements to link EPF accounts with UAN
number

·      UAN number

·      Current EPF account number linked with UAN
number

·      EPF KYC details — bank account number, IFSC
code, Aadhaar number, PAN card number — should be verified by your current
employer

·      UAN should be activated, otherwise it would
take 3 days post activation to access the service

Process

Step 1: Go to EPFO web portal by clicking EPO
Application

Step 2: Go to the main menu and click on ‘Our
Services’ tab to access ‘For Employee’ services. Click on the tab – it will
redirect you to a new page with services listed under ‘For Employee’ category.

Step 3: Click on ‘One Employee – One EPF
Account’ listed under the services section on ‘For Employee’ page.

Step 4: Fill the required details and generate
OTP, which is delivered on your registered mobile number linked with the UAN.

Step 5: Provide old EPF ID, accept the
declaration and submit the request.

Linking of Aadhaar with PF account through
offline mode

EPFO has also provided the facility to link the
Aadhaar number with EPF account offline. The EPF has developed an Aadhaar
Linking Application and the employee will have to fill in the application form
along with his UAN and Aadhaar number with other required information.

The employee needs to attach self-attested copies of his UAN,
PAN, and Aadhaar
with this form. These documents need to be submitted at the field offices of
EPFO or Common Services Centres (CSC). Once the verification is completed, the
Aadhaar number will be linked to EPF account. After that, the employee will
receive a message on his registered mobile number.