Sovereign Gold Bond Scheme 2022-23 (Series II) – Issue Price (Subscription open August 22-26, 2022 with Settlement date August 30, 2022)

In terms of Government of India Notification No.4(6)-B(W&M)/2022 dated June 15, 2022, Sovereign Gold Bonds 2022-23 (Series II) will be opened for subscription during the period August 22-26, 2022 with Settlement date August 30, 2022. The issue price of the Bond during the subscription period shall be Rs 5,197 (Rupees five thousand one hundred ninety seven only) per gram, as also published by RBI in their Press Release dated August 19, 2022.          

Government of India in consultation with the Reserve Bank of India has decided to allow discount of Rs 50 (Rupees Fifty only) per gram from the issue price to those investors who apply online and the payment is made through digital mode. For such investors the issue price of Gold Bond will be Rs 5,147 (Rupees five thousand one hundred forty seven only) per gram of gold.

 Press Release 22 Aug 2022

Govt plans to make GST e-invoicing must for companies with Rs 5-cr turnover 

At present, e-invoice is mandatory for businesses with an annual turnover of over Rs.20 crores.

government is planning to make GST e-invoicing mandatory for companies with a turnover of Rs 5 crore and above, thus bringing the threshold down from the current Rs 20 crore, according to a government official.


Cabinet approves Expanding the mandate of Government e Marketplace – Special Purpose Vehicle (GeM – SPV) to allow procurement by Cooperatives as Buyers. Move will help cooperatives in getting competitive prices

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has given its approval for expanding the mandate of GeM to allow procurement by Cooperatives as buyers on GeM.

The Government e Marketplace (GeM) was launched on August 9, 2016 by the Ministry of Commerce and Industry, Government of India to create an open and transparent procurement platform for Government buyers. A Special Purpose Vehicle (SPV) by the name of Government e- Marketplace (GeM SPV) was set up as the National Public Procurement Portal on 17th May, 2017 in pursuance of the approval, of the Union Cabinet accorded on 12th April, 2017. At present, the platform is open for procurement by all government buyers: central and state ministries, departments, public sector enterprises, autonomous institutions, local bodies, etc. As per existing mandate, GeM is not available for use by private sector buyers. Suppliers (sellers) can be from across all segments: government or private.

No. of beneficiaries:

More than 8.54 lakh registered cooperatives and their 27 Crore members would be benefitted with this initiative. GeM portal is open for all the buyers and sellers across the country.


1. GeM is already adequately developed as a one stop portal to facilitate online procurement of common use Goods and Services. It is transparent, efficient, has economy of scale and is speedy in procurement. Cooperative Societies will now be allowed to procure goods and services from GeM.

2. Allowing Cooperative Societies to register on GeM as Buyers would help Cooperatives in getting competitive prices through an. open and, transparent process,

3. The validated list of cooperatives to be onboarded on GeM – for pilot as well as subsequent scale up – will be decided by Ministry of Cooperation in consultation with GeM SPV. This will ensure that technical capacity and logistics requirement of the GeM system are taken into account while deciding the pace of on boarding of Cooperative as buyers on GeM.

4. GeM will provide a dedicated onboarding process for cooperatives, provide the technical infrastructure to support additional users on existing portal, as well as provide assistance to cooperatives for onboarding and transaction journeys, via available contact centers, in-field training and other support services.

5. Ministry of Cooperation would issue necessary advisories to encourage the Cooperative Societies to make use of the GeM platform for procurement of goods and services in order to benefit from increased transparency, efficiency and competitive prices.

6. To protect interests of the broader seller community on GeM and ensure timely payments, the modalities of payment systems shall be decided by GeM in consultation with the Ministry of Cooperation.

Implementation strategy and targets:

GeM will initiate suitable actions, which would inter alia include creation of necessary features and functionalities on GeM portal, upgradation of infrastructure, strengthening of the helpdesk and training ecosystem, and onboarding of cooperatives. The overall pace and mechanism of roll-out would be decided by Ministry of Cooperation. The milestones and target dates will be aligned mutually between Ministry of Cooperation and GeM (Ministry of Commerce and Industry).

Impact including employment generation potential:

The Ministry of Cooperation wanted the Cooperative Societies to be allowed to procure goods and services from GeM as it is already adequately developed as a one stop portal to facilitate online procurement of common use Goods and Services. It is transparent, efficient, has economy of scale and is speedy in procurement. In the above context, allowing Cooperative Societies to register on GeM as Buyers of Goods & Services required by them would help Cooperatives in getting competitive prices through an open and transparent process. Moreover, since the societies have more than 27 Crore members, procurement through GeM would not only economically benefit the common man, but it would also enhance the credibility of the cooperatives.

GeM has also developed a rich understanding of running an advanced procurement portal including the functional needs, managing the technical infrastructure, and dealing with multiple stakeholders involved. It is felt that the rich experience gained in creating the procurement ecosystem in the country can be significantly utilized to produce efficiencies and transparency in procurement processes for cooperatives also. This is also expected to enhance overall “Ease of Doing Business” for cooperatives, while providing a larger Buyer base to the GeM registered sellers also.

Expenditure involved:

While the GeM SPV will continue to leverage the existing platform and organization for supporting the proposed expanded mandate, it may need some investments in additional technology infrastructure, and additional training and support resources. To cover for these incremental costs, GeM may charge an appropriate transaction fee from cooperatives, to be decided in mutual consultation with the Ministry of Cooperation. Such charges shall not be more than the charges which GeM would charge to other Government buyers. This will be planned to ensure self-sustainability of operations for GeM, and hence no major financial implication is expected for government.


The GeM SPV has made significant strides since its inception. The Gross Merchandise Value (GMV) has grown with CAGR of over 84.5% from FY 2018-19 to FY 2021-22. The portal has delivered 178% growth in GMV in the FY 2021-22 and has crossed INR 1 lakh Crore in FY 2021-22 alone, which is higher than the cumulative GMV till FY 2020-21.

Each of the three pillars of GeM viz inclusion, transparency and efficiency have seen significant progress. The contribution by MSMEs to the cumulative transaction value is about 58%. Different independent studies, including those by the World Bank and National Economic Survey 2021, indicated substantial savings due to GeM’s ability to pool in more participation and provide cost effective options.

The cooperative movement in India has grown significantly, playing an important role in addressing the developmental needs of underprivileged classes in India, especially in agricultural, banking and housing sectors. There are currently 8.54 lakh registered cooperatives. These cooperatives collectively procure and sell in large quantities. Presently, the registration of cooperatives as “buyers” was not covered within the existing mandate of GeM.

Press Release dated 01st June 2022

Bar of voting as per Section 188 of the Companies Act, 2013 on related parties operated only at the time of entering into a contract or arrangement  (SEBI Vs R.T. Agro Private Limited (Supreme Court) dated 25 April 2022)



Legal provisions:
188. Related party transactions   (1) Except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party with respect to— (a) sale, purchase or supply of any goods or materials; (b) selling or otherwise disposing of, or buying, property of any kind; (c) leasing of property of any kind; ——————————————————— [Provided that no contract or arrangement, in the case of a company having a paid-up share capital of not less than such amount, or transactions exceeding such sums, as may be prescribed, shall be entered into except with the prior approval of the company by a Special resolution ( Resolution substituted by Companies (Amendment) Act, 2015 and is effective from 29th May, 2015.):   [Provided further that no member of the company shall vote on such [resolution], to approve any contract or arrangement which may be entered into by the company, if such member is a related party:]]

Having heard learned counsel for the appellant-Securities and Exchange Board of India (‘SEBI’) and having perused the material placed on record, we find absolutely no reason to entertain this appeal.

The company R. T. Exports Limited proposed to enter into a transaction with one Neelkanth Realtors Private Limited for purchase of 40,000 sq. ft. of residential space. This proposal was treated as a related party transaction and was required to be approved by the shareholders of the Company. Accordingly, a special resolution was approved by R. T. Exports Limited on 15.07.2014. In terms of Section 188 of the Companies Act, 2013, the related parties abstained from voting on this special resolution. Thereafter, an Extra-Ordinary General Meeting was convened on 16.12.2016 for rescinding the resolution dated 15.07.2014 in which, the related parties also voted.

However, the appellant-SEBI took up the matter on a complaint and issued notice alleging violation of Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Adjudicating Officer, ultimately, proceeded to penalise the present respondents 1 with a cumulative sum of Rs. 35 lakhs for the alleged violation of the said Regulation 23.

The Securities Appellate Tribunal has not approved this order passed by the Adjudicating Officer and has allowed the appeal filed by the present respondents while, inter alia, holding that the bar of voting as per Section 188 of the Companies Act, 2013 on related parties operated only at the time of entering into a contract or arrangement, i.e., when the resolution dated 15.07.2014 was passed; and therein the said related parties indeed abstained from voting. The Appellate Tribunal found no fault in the said parties voting in the recalling/rescinding of the said resolution.

The view, as taken by the Appellate Tribunal, in the given set of facts and circumstances of the present case, appears to be a plausible view of the matter. In fact, nothing of ill-intent on the part of the respondents has been established in the present case. The hyper-technical stance of the appellant could have only been, and has rightly been, disapproved on the given set of facts and circumstances.

The appeal fails and is, therefore, dismissed.

All pending applications stand disposed of.

Strengthening NFRA & more control on Auditors In India

Report of The Company Law Committee (2022) recommends various changes to the Companies Act, 2013 to recognise new concepts, expedite corporate processes, improve compliance requirements, and remove ambiguities from existing provisions. The Report also includes recommendations to enable producer organisations to incorporate under the Limited Liability Partnership Act, 2008.

The CLC has submitted its latest Report (2022) to the Government on 21st March, 2022 which has been placed on the website of the MCA.  It has been decided to invite comments/suggestions on the said Report from all the stakeholders through e-Consultation Platform on the MCA website till 06th May 2022.

One of the recommendations is  strengthening the national financial reporting authority by enhancing NFRA’s ability to take penal action against auditors, provision for dedicated NFRA fund, and  regulations making powers.

Section 132(1) of CA-13 empowers the Central Government to constitute the National Financial Reporting Authority (“NFRA”) for matters relating to accounting and auditing standards for companies.

NFRA seeks to protect public interest and the interests of investors, creditors and others associated with the companies or bodies corporate.

It has powers to investigate misconduct committed by any member or firm of chartered accountants registered under the Chartered Accountants Act, 1949  i.e., it aims to ensure oversight over professionals in their audit and accounting related services to companies.

Sub-sections (3), (3A) and (3B) of Section 132 further provide the composition and manner of appointment of chairperson and members of NFRA.

Section 132(13) obligates NFRA to maintain books of accounts in the form prescribed by the Central Government in consultation with the Comptroller and Auditor General (“CAG”) of India.

While taking note of the provisions concerning NFRA, the Committee deliberated upon the autonomy of NFRA and its powers under CA-13.

In particular, this includes the NFRA’s ability to take penal action against auditors, have a dedicated NFRA fund, and make regulations.

(1) Penal action against companies and auditors for matters other than professional or other misconduct 

Section 132(4) of CA-13 provides that NFRA shall have the power to investigate matters of ‘professional or other misconduct’ committed by any member or firm of chartered accountants.

When such misconduct is proved, it can impose a penalty or debar the member or the firm from being appointed as an auditor or internal auditor or valuer under CA-13 or from undertaking an audit, internal audit and valuation under the Act.

The amount of penalty and period of debarment (both in the case of individuals and firms) has been provided under such provisions.

Professional or other misconduct has the same meaning assigned under Section 22 of the Chartered Accountants Act, 1949, which reads as under:

“For the purposes of this Act, the expression “professional or other misconduct” shall be deemed to include any act or omission provided in any of the Schedules, but nothing in this Section shall be construed to limit or abridge in any way the power conferred or duty cast on the Director (Discipline) under sub-section (1) of Section 21 to inquire into the conduct of any member of the Institute under any other circumstances.”

The First and Second Schedules under the Chartered Accountants Act,1949, contain matters that would be considered “professional misconduct” about chartered accountants in practice, chartered accountants in service, members of the Institute of Chartered

Accountants of India (ICAI) generally, and other misconduct about members of the ICAI generally.

The Committee discussed that NFRA does not have the powers to take actions against individuals and firms for non-compliance with CA-13 and requirements thereunder, which do not qualify as ‘professional or other misconduct’. In particular, it was informed that as per data with the MCA, approximately 11,000 auditors had not filed NFRA 2 – an annual return to be filed by auditors under Rule 5 of the NFRA Rules, 2018.

The Committee was accordingly of the opinion that NFRA should be empowered to take appropriate action against other contraventions in addition to its existing powers to take action against ‘professional or other misconduct’. There should also be specific provisions to enable NFRA to initiate appropriate penal action in case its orders are neither complied with nor any appeal against such an order has been filed in the NCLAT.

(2) Constitution of a NFRA fund

Currently, NFRA receives its funding entirely from the Central Government.

These funds are used for the

(a) salaries and allowances etc., for Chairperson, Members and other officers and employees of NFRA; and

(b) other expenses of NFRA connected with functions and purposes of NFRA under CA-13.

Given their specialised nature, regulatory authorities like NFRA require the necessary capabilities to discharge their functions.  The Committee deliberated the necessity for augmenting the degree of financial autonomy for NFRA.

The Committee was of the opinion that provisions concerning financial autonomy as is present for other regulatory bodies may also be incorporated for NFRA. For example, Section 222 of the IBC establishes the ‘Board Fund’, which is meant to meet the expenses of the IBBI. The Board Fund receives monies from all grants, fees received by the IBBI; all sums received from such other sources as decided by the Central Government; and such additional funds as may be specified by the IBBI or prescribed by the Central


Similarly, Section 51 of the Competition Act, 2002 establishes a Competition Fund, which receives monies from Central Government grants; fees received under the Act; and the interest accrued on the amounts received. It is used for the (a) salaries and allowances of

the Chairperson, Members, and officers of the Competition Commission, and (b) other expenses of the Commission in connection with the discharge of its functions and purposes under the Act.

The Committee was of the opinion that suitable amendments be made to CA-13 for the constitution of a NFRA Fund.

(3) Enabling NFRA to make regulations and granting supervisory powers to the NFRA Chairperson

Section 132 of CA-13 enables the Central Government to make Rules for the functioning of NFRA. For example, the Government has prescribed the (i) NFRA (Manner of appointment & other terms and conditions of service of Chairperson and Members) Rules, 2018; (ii) NFRA Rules, 2018; (iii) NFRA (Meeting for Transaction of Business) Rules, 2019; and (iv) NFRA (Recruitment, Salary, Allowances and other Terms and Conditions of Service of Secretary, Officers and other Employees of Authority) Rules, 2019. Presently, NFRA does not have any regulation-making powers under CA-13.

The Committee received suggestions that Section 132 may be amended to include enabling powers for NFRA to make regulations concerning certain matters. In this light, the Committee deliberated that when Section 132 was notified, it did not include regulation making powers. Any divergence would require due consideration. The Committee believed that certain regulation-making powers, sufficiently encumbered by checks and balances, may be given to NFRA.60 As such, the Committee thought it may be prudent to enable NFRA to make regulations in specific instances that shall be outlined in CA-13. This includes instances where autonomy is required for smoother internal functioning and instances that necessitate subject-matter expertise and immediate requirement for regulation.

The Committee thought granting such powers to NFRA would require accountability and good governance. In this regard, the Committee was apprised of the regulation-making powers of other regulators.

As particular examples, Section 52 of the Airports Economic Regulatory Authority of India Act, 2008, which enables the concerned regulator to make regulations, is encumbered by Section 13 (4), which imposes checks and balances on the regulator by mandating consultations with all stakeholders and documenting and explaining all decisions.  

Similarly, Section 240 of the IBC enables the IBBI to make regulations.  Given good governance practices, IBBI has enacted the IBBI (Mechanism for Issuing Regulations) Regulations, 2018, which govern its regulation-making process and ensure accountability.

Other regulators, particularly the RBI, SEBI,  the Insurance Regulatory and Development Authority of India,66 the Pension Fund Regulatory and Development Authority,  also have regulation-making powers under the parent statute, albeit, with adequate safeguards.

Thus, the Committee recommended that NFRA should be enabled to make regulations for specific matters such as form and manner of filing information with NFRA, and place, timing, and procedure to be followed for meetings of the NFRA.

However, it discussed that in accordance with principles of good governance and accountability followed by the Central Government, such powers should be sufficiently encumbered with safeguards.

In keeping with the need for operational autonomy of NFRA, the Committee also deliberated the need to specify that the Chairperson shall have the powers of general superintendence, direction and control regarding administrative matters of NFRA. Similar provisions are included in Section 13 of the Competition Act, 2002  and Section 191 of the IBC.

It was thus of the opinion that Section 132 be suitably amended to provide the NFRA Chairperson with powers of general superintendence and direction within NFRA.

Note: Extract of Section 132 of the Companies Act, 2013

The Companies Act, 2013

Chapter-IX Accounts of Companies

Section 132: Constitution of National Financial Reporting Authority.

132. (1) The Central Government may, by notification, constitute a National Financial Reporting Authority to provide for matters relating to accounting and auditing standards under this Act.

[(1A) The National Financial Reporting Authority shall perform its functions through such divisions as may be prescribed.]

(2) Notwithstanding anything contained in any other law for the time being in force, the National Financial Reporting Authority shall—

(a) make recommendations to the Central Government on the formulation and laying down of accounting and auditing policies and standards for adoption by companies or class of companies or their auditors, as the case may be;

(b) monitor and enforce the compliance with accounting standards and auditing standards in such manner as may be prescribed;

(c) oversee the quality of service of the professions associated with ensuring compliance with such standards, and suggest measures required for improvement in quality of service and such other related matters as may be prescribed; and

(d) perform such other functions relating to clauses (a), (b) and (c) as may be prescribed.

(3) The National Financial Reporting Authority shall consist of a chairperson, who shall be a person of eminence and having expertise in accountancy, auditing, finance or law to be appointed by the Central Government and such other members not exceeding fifteen consisting of part-time and full-time members as may be prescribed:

Provided that the terms and conditions and the manner of appointment of the chairperson and members shall be such as may be prescribed:

Provided further that the chairperson and members shall make a declaration to the Central Government in the prescribed form regarding no conflict of interest or lack of independence in respect of his or their appointment:

Provided also that the chairperson and members, who are in full-time employment with National Financial Reporting Authority shall not be associated with any audit firm (including related consultancy firms) during the course of their appointment and two years after ceasing to hold such appointment.

[(3A) Each division of the National Financial Reporting Authority shall be presided over by the Chairperson or a full-time Member authorised by the Chairperson.

(3B) There shall be an executive body of the National Financial Reporting Authority consisting of the Chairperson and full-time Members of such Authority for efficient discharge of its functions under sub-section (2) [other than clause (a)] and sub-section (4).]

(4) Notwithstanding anything contained in any other law for the time being in force, the National Financial Reporting Authority shall—

(a) have the power to investigate, either suo motu or on a reference made to it by the Central Government, for such class of bodies corporate or persons, in such manner as may be prescribed into the matters of professional or other misconduct committed by any member or firm of chartered accountants, registered under the Chartered Accountants Act, 1949:

Provided that no other institute or body shall initiate or continue any proceedings in such matters of misconduct where the National Financial Reporting Authority has initiated an investigation under this section;

(b) have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit, in respect of the following matters, namely:—

(i) discovery and production of books of account and other documents, at such place and at such time as may be specified by the National Financial Reporting Authority;

(ii) summoning and enforcing the attendance of persons and examining them on oath;

(iii) inspection of any books, registers and other documents of any person referred to in clause (b) at any place;

(iv) issuing commissions for examination of witnesses or documents;

(c) where professional or other misconduct is proved, have the power to make order for—

(A) imposing penalty of—

(I) not less than one lakh rupees, but which may extend to five times of the fees received, in case of individuals; and

(II) not less than [five lakh rupees], but which may extend to ten times of the fees received, in case of firms;

[(B) debarring the member or the firm from—

I. being appointed as an auditor or internal auditor or undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate; or

II. performing any valuation as provided under section 247,

for a minimum period of six months or such higher period not exceeding ten years as may be determined by the National Financial Reporting Authority.]

Explanation.—For the purposes of his sub-section, the expression “professional or other misconduct” shall have the same meaning assigned to it under section 22 of the Chartered Accountants Act, 1949.

(5) Any person aggrieved by any order of the National Financial Reporting Authority issued under clause (c) of sub-section (4), may prefer an appeal before [the Appellate Tribunal in such manner and on payment of such fee as may be prescribed.]

(6) [***]

(7)  [***]

(8)  [***]

(9)  [***]

(10) The National Financial Reporting Authority shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings in such manner as may be prescribed.

(11) The Central Government may appoint a secretary and such other employees as it may consider necessary for the efficient performance of functions by the National Financial Reporting Authority under this Act and the terms and conditions of service of the secretary and employees shall be such as may be prescribed.

(12) The head office of the National Financial Reporting Authority shall be at New Delhi and the National Financial Reporting Authority may, meet at such other places in India as it deems fit.

(13) The National Financial Reporting Authority shall cause to be maintained such books of account and other books in relation to its accounts in such form and in such manner as the Central Government may, in consultation with the Comptroller and Auditor-General of India prescribe.

(14) The accounts of the National Financial Reporting Authority shall be audited by the Comptroller and Auditor-General of India at such intervals as may be specified by him and such accounts as certified by the Comptroller and Auditor-General of India together with the audit report thereon shall be forwarded annually to the Central Government by the National Financial Reporting Authority.

(15) The National Financial Reporting Authority shall prepare in such form and at such time for each financial year as may be prescribed its annual report giving a full account of its activities during the financial year and forward a copy thereof to the Central Government and the Central Government shall cause the annual report and the audit report given by the Comptroller and Auditor-General of India to be laid before each House of Parliament.


1. Section 68(6) read with Rule 17(3), Companies (Share Capital and Debenture) Rules, 2014

Where a company proposes to buyback its shares/ securities under this section, an affidavit is required to be filed by two directors before the RoC and SEBI to the effect that the company will not be rendered insolvent for one year

2 Section 374(c)

Company registering under Chapter XXI Part I is required to file an affidavit from all members/ partners that in the event of registration, necessary documents or papers shall be submitted to the registering or other authority with which the company was earlier registered

3. Rule 7(4)(i), Companies (Incorporation) Rules, 2014

A company applying to convert into a One Person Company must apply for the RoC in the prescribed form. Such an application is required to be accompanied by an affidavit from the company’s directors confirming that all members and creditors of the company have given their consent for conversion.

4. Rule 8A(1)(j), Companies (Incorporation) Rules, 2014

A name including the phrase ‘Electoral Trust’ may be allowed for registration of companies to be formed under Section 8 of CA-13 following the Electoral Trusts Scheme, 2013, notified by the Central Board of Direct Taxes. For this purpose, the name application is required to be accompanied by an affidavit to the effect that the name obtained shall be only for registration of companies under the said scheme.

5. Rule 10(3)(b), Companies (Registration of Foreign Companies) Rules, 2014

Foreign companies must attach a translation of their documents, where such documents are not submitted to the RoC in English. Where the translation is done in India, it is required to be authenticated by an affidavit of a competent person, having adequate knowledge of both the original language and English, in the opinion of the RoC.

6. Rule 4(3)(iii), The Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016

An application for removal of the name of a company under Section 248(2) of CA-13 made to the RoC is required to be accompanied by an affidavit, in the prescribed form, by every director of the company.

ROC Adjudication order dated 03rd March 2022 for violation of 2nd proviso of Section 149(1) of CA 2013 (Non appointment of women director)

ROC Adjudication order dated 03rd March 2022 for violation of 2nd proviso of Section 149(1) of CA 2013 (Non appointment of women director)

Section reference As per Section 149 : Company to have Board of Directors.—(1) Every company shall have a Board of Directors consisting of individuals as directors and shall have— (a) a minimum number of three directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company; and (b) a maximum of fifteen directors:

Provided that a company may appoint more than fifteen directors after passing a special resolution:

Provided further that such class or classes of companies as may be prescribed, shall have at least one woman director.

172. Penalty.— If a company is in default in complying with any of the provisions of this Chapter and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer who is in default.]

All about RBI Retail Direct Scheme II FAQS on RBI Retail Direct Scheme

What is RBI Retail Direct Scheme?

Retail Direct scheme is a one-stop solution to facilitate investment in Government Securities by Individual Investors. Under this scheme Individual Retail investors can open Gilt Securities Account – “Retail Direct Gilt (RDG)” Account with the RBI.

Who can open Retail Direct Gilt Account?

Retail investors would mean all individuals (natural persons)

  • Retail investors, as defined under the RBI Retail Direct scheme, can register under the Scheme and maintain a RDG Account, if they have the following:
    • Rupee savings bank account maintained in India;
    • Permanent Account Number (PAN) issued by the Income Tax Department;
    • Any OVD for KYC purpose;
    • Valid email id; and
    • Registered mobile number.
  • Non-Resident retail investors eligible to invest in Government Securities under Foreign Exchange Management Act, 1999 are eligible under the scheme.
  • The RDG account can be opened singly or jointly with another retail investor who meets the eligibility criteria.

What are the benefits of the Scheme?

Retail investors (individuals) will have the facility to open and maintain the ‘Retail Direct Gilt Account’ (RDG Account) with RBI.

The investor can place non competitive bids in Primary issuance of all Central Government securities (including Treasury Bills and Sovereign Gold bonds) as well as securities issued by various State Governments.

Under this scheme, the individual can also access Secondary market through “NDS OM” – RBI’s trading system.

The investor will automatically receive any interest paid/maturity proceeds into his linked bank account on due dates.

What are the facilities available on the RBI Retail Direct Portal?

The RBI Retail Direct Online Portal will facilitate the following:

  • On-boarding of Retail Direct Investors,
  • Opening and management of RDG Accounts,
  • Facilitate participation in Non Competitive Bidding in Primary G-sec Auctions through the Clearing Corporation of India (CCIL)
  • Facilitate Investing in Sovereign Gold Bonds (SGBs) through CCIL
  • Facilitate NDS OM access to Retail Direct Investors for secondary market trading and settlement of such trades through CCIL.
  • Provide Investor Services such as:
    • Account Statement
    • Nomination Facility
    • Pledge/Lien
    • Gift Transactions
  • Facilitate Corporate Actions such as:
    • Coupon Payments
    • Coupon Payments

  • What are the documents requiredfor opening a Retail Direct Gilt Account?
  • The individual can login to RBI Retail Direct to open a Retail Direct Gilt Account. The account can be opened online with just PAN, Rupee Savings Account, email id and mobile number of the Individual. With these details, the individual needs to complete seamless online KYC procedure to do registration under this scheme. Investors will have to follow the RBI KYC Guidelines while opening the RDG Account.

What is the procedure for opening a Retail Direct Gilt Account?

  • Eligible Investors will be allowed to register online on the Retail Direct Portal;
  • The eligible retail clients can open RDG Account either singly or jointly;
  • To open an account, the investor will have to furnish details like Full Name, PAN, Mobile Number, Email Address, Residential Address, Bank Account number etc. The mobile number and email address will be authenticated using OTP as all further customer request and services will be OTP based;
  • The user will be provided with a tracking number to track application status;
  • Such Investors will be subject to Know your Customer Guidelines. CCIL will adhere to the RBI KYC Direction 2018 while onboarding the Investor;
  • In case of Joint Accounts, the KYC verification is proposed to be done for both the holders. In case of KYC failures, the individual can make new application or resubmit application after making necessary changes;
  • The Bank Account of the Customer will also be validated
  • Once the KYC is successful, a Retail Direct Gilt (RDG) Account will be opened in the name of the Investor(s);
  • Information related to account number, login id & password to access the Online Portal for participating in primary auctions and accessing other services will be made available to the Customer over mail.
  • It will be mandatory for the Investor to fill in the nomination details at the time of opening of the account. The nomination details will be displayed online to the Investor and the Investor will have to accept the same by uploading and attaching a scanned image of signature.
  • The RDG Account will be available for primary market participation and well as secondary market transactions on NDS-OM

What is permitted under Primary Issuances?

RDG Account holders have been allowed to participate in the primary issuance of CG/SG/T-bill/SGB. CCIL will act as the Aggregator for receiving bids for Primary Auctions from such Retail Direct (RD) Investors;

CCIL will also act as the Receiving Office for receiving bids for Sovereign Gold Bonds (SGB) from such RD Investors;

How will the bidding happen using the RBI Retail Direct Portal?

  • The participation of RDG Account holder, in CG/SG/T-bill Primary Auctions will be on non-competitive basis;
  • CCIL will submit a single aggregate bid (consisting of all RDG Account holders non-competitive bid in a particular security) to RBI on auction date;
  • In case of SGB, the individual bids of each RDG Account holder is proposed to be sent to RBI;
  • The RDG Account holders will be allowed to place bids and withdraw bids during the bidding interval or the period of subscription (for SGBs);
  • Only one active bid will be allowed per retail client in the non-competitive portion for respective Security. In case of CG/SG/T-bill, the bidding will be in minimum & multiple of FV 10,000, in case of SGB, FV unit of 1 gram;
  • The maximum limit per bid specified by RBI (presently Rs 2 crore for CG/T Bill and 1 percent for SG) will be validated;

How will the payment be made for the bids placed on the RBI Retail Direct Portal?

For the Primary Auction market, a Bid is required to be backed by funding based on indicative price and accrued interest alongwith a Markup (as non-competitive allotment price shall be known only after auction cut off) for protection against any adverse price movement till Auction Settlement Date. The Markup will be refunded to the Investor post allocation based on the Cut Off Price for the Auction;

In case of SGBs, the funding will be based on Issue Price declared for the particular Issue;

For making payment for the bids, the retail clients can use services like UPI (Transfer or Block) and Net Banking to transfer funds to a designated current account using Payment Gateways linked to the Online Portal;

The funding of the bids can be done either at the time of bidding or at a later time, but, before the closure of bidding/subscription window. Bids which are not funded as on the date of submission of bids to RBI will be cancelled.

When will the allotment be made and credited to the RDG Account?

Based on the allotment advice received as a part of the auction result, the allotments will be made to the Individual Investors;

In case of full allotment, each bidder will be allocated in full FV for which he/she had submitted the bid. In case of partial allotment, a pro-rata allotment will be made to the bidder based on the partial allocation percentage determined during the result declaration process;

Once the allotment is completed, the revised consideration for allotted bids shall be recomputed based on Weighted Average Price (WAP) declared by RBI in respective Security Auction;

On settlement date of Auction, post settlement at RBI, the RDG account shall be credited with the security to the extent of Face Value allotment;

In case of SGBs, post allotment of SGB units at RBI, the RDG account shall be credited with the SGB unit to the extent of allotment;

RDG account holders shall be provided with requisite queries to view the allotment on the portal. RDG account holders shall also be notified through a SMS message on their registered mobile and registered email;

When will the excess mark up collected at the time of bidding be refunded?

After the weighted average price is announced by RBI, the excess markup,will be refunded to the Retail Direct Investor on the settlement date.

Such refunds will be processed by the online portal and will be remitted to the retail client’s respective bank accounts;

The retail client can view such details on the portal. Email and SMS will also be sent to the client about such updates;

How can the NDS OM Secondary Market Portal be accessed?

The NDS OM Secondary Market Portal can be accessed through the RBI Retail Direct Portal. Each registered RD Investor opting for secondary market trading on NDS OM will be provided a CCIL ID. RDG will be permitted to access NDS-OM Order Matching Segment and Request for Quote (RFQ) Segment.

What is the procedure for carrying out secondary market trades on NDS OM?

RDG Account holders can trade in CG/SG/T-bill/SGB, in the Odd Lot segment. RDG available balances would be transferred to NDS OM at the beginning of the day;

RDG can place sell orders only to the extent of balances available. Other transfers would be permitted in the RDG Account only after end of trading day;

RDG can place buy orders only after remittance of funds using service like UPI(Transfer/Block) and Net Baking through Payment Gateways linked to the NDS OM Retail Portal. Funds remitted by RDG shall be received in the designated current account with the Bank providing Payment Gateway;

How does the secondary market settlement happen?

Trades executed by Retail Direct Investors will flow to CCIL for settlement. Settlement would happen on T+1 day;

Securities credit to RDG in respect of their purchases shall be made post completion of settlement on settlement date;

Fund credit to RDG in respect of their sale shall be made after completion of settlement on settlement date to their registered Bank Accounts;

In case the funds remitted by the Retail Direct Investor using the Payment Gateway is not received by CCIL, the securities purchased by the Retail Direct Investor may not be credited to the RDG Account, till the time the funds are received by CCIL from the Payment Gateway.

In case of a failure by a seller from whom the Retail Direct Investor has purchased a security, to deliver the concerned security, the funds remitted by the Retail Direct Investor will be refunded to the Retail Direct Investor on the settlement day.

  • When will the excess money transferred for secondary market purchase be refunded?
  • The excess funds received from Retail Direct Investor after adjusted the trade consideration shall be refunded back to Retail Direct Investor on the date of receipt/settlement date;

How will the corporate actions (coupon and redemption) on the RDG holdings serviced?

On receipt of coupon/ redemption proceeds from RBI, the exact entitlement of each RDG account holder will be computed based on their holdings;

The exact amount to be paid will be computed and remitted to the respective bank account of each RDG Account holder holding concerned security on the day of receipt from RBI;

The RDG account holders can view such Corporate Action details on the online portal;

How can the Holding Statement of RDG Accounts be viewed?

The RDG Account holder will have access to information about his/her holding balances on a daily basis. Such information can be viewed on the portal by the RDG Account holder. Period Account Statements will also be mailed to the RDG Account Holder;

What are the other services available under the Retail Direct scheme?

The following additional services are proposed to be made available to the Retail Direct Investor on the RBI Retail Direct Portal:

  • Nomination
  • Gifting
  • Pledge/Lein/Transfer

  • What are the charges/fees payable?
  • No fee will be charged for opening and maintaining ‘Retail Direct Gilt account’ with RBI. No fee will be charged by the aggregator for submitting bids in the primary auctions. Fee for payment gateway etc., as applicable, will be borne by the registered investor.

What is the Role of Clearing Corporation of India Ltd (CCIL)?

CCIL is authorized by the Reserve Bank of India to act as an aggregator for Primary Issuances and as Receiving Office for Sovereign Gold Bondsfor the Retail Direct Investors. CCIL is also authorized by RBI to operate the NDS OM platform.