• What does debt fund mean?

    Debt fund is an Alternative Investment Fund (AIF) which invests primarily in debt or debt securities of listed or unlisted investee companies according to the stated objectives of the Fund. These funds are registered under Category II.

    For more information, click here.

  • Could an Alternative investments funds dispatch a reserve/plan of any size?

    No, each scheme of the Alternative Investment Fund (other than angel fund) shall have corpus of at least INR twenty crore. In case of an angel fund, it shall have a corpus of at least INR ten crore.

    For more information, click here.

  • What is the meaning of Angel Fund?

    "Angel Fund” is a sub-category of Venture Capital Fund under Category I Alternative Investment Fund that raises funds from angel investors and invests in accordance with the provisions of AIF Regulations.

    For more information, click here.

  • What are the reporting requirements to SEBI for Alternate Investment Funds registered with SEBI?

    As per circular No.CIR/IMD/DF/10/2013 dated 29th July, 2013, Category I and II AIFs and the Category III AIFs which do not undertake leverage are required to submit report to SEBI on a quarterly basis while Category III AIFs which undertake leverage are required to submit the reports on a monthly basis. The formats for such reports are provided as a part of the said circular. All AIFs shall submit the report irrespective of whether or not the AIF has started activity.  

    Currently, all AIFs shall send reports to SEBI by email to aifreporting@sebi.gov.in. No physical reports are required to be filed with SEBI.

    For more information, click here.

  • What are Category III AIFs?

    Alternate Investment Funds (AIFs), which employ diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives. Various types of funds such as hedge funds, PIPE Funds, etc. are registered as Category III AIFs.

    For more information, click here

  • In what classifications can a candidate look for enrolment as an AIF?

    Applicants can seek registration as an AIF in one of the following categories, and in sub-categories thereof, as may be applicable

    • Category I AIF: 
      • Venture capital funds (Including Angel Funds) 
      • SME Funds
      • Social Venture Funds
      • Infrastructure funds
    • Category II AIF 
    • Category III AIF

    For more information, click here.

  • What are Category II AIFs?

    Alternative Investment Funds (AIF) which do not fall in Category I and III and which do not undertake borrowing other than to meet day-to-day operational requirements and as permitted in the SEBI (Alternative Investment Funds) Regulations, 2012 are Category II AIF.

    Various types of funds such as real estate funds, private equity funds, funds for distressed assets, etc. are registered as Category II AIF.

    For more information, click here

  • In which authoritative documents can an Alternative Investment Fund be set up?

    An alternative investment fund (AIF) under the SEBI (Alternative Investment Funds) Regulations, 2012 can be established or incorporated in the form of a trust or a company or a limited liability partnership or a body corporate.

    For more information, click here

  • What are Category I AIFs?

    Category I of the Alternative Investment Funds (AIF) include funds which invest in start-up, early stage ventures, social ventures, small & medium enterprises (SME), infrastructure or other sectors or areas which the Government or regulators consider as socially or economically desirable.

    It shall include venture capital funds, SME funds, social venture funds, infrastructure funds and such other AIF.

    For more information, click here

  • What is the upper limit for investors under Alternative Investment Fund (AIF)?

    No scheme of Alternative Investment Fund (AIF) shall have more than 1,000 investors, subject to the provisions of the Companies Act, 1956 if the AIF is formed as a company.

    For more information, click here

  • What are the reporting requirements under ECB?

    Borrowings under ECB Framework are subject to following reporting requirements apart from any other specific reporting required under the framework:

    • Loan Registration Number (LRN): Any draw-down in respect of an ECB should happen only after obtaining the LRN from the RBI. To obtain the LRN, borrowers are required to submit duly certified Form ECB, which also contains terms and conditions of the ECB, in duplicate to the bank
    • Changes in terms and conditions of ECB: Changes in ECB parameters in consonance with the ECB norms, including reduced repayment by mutual agreement between the lender and borrower, should be reported to the DSIM through revised Form ECB at the earliest, in any case not later than seven days from the changes effected. While submitting revised Form ECB the changes should be specifically mentioned in the communication 
    • Monthly reporting of actual transactions: The borrowers are required to report actual ECB transactions through Form ECB 2 Return (Annex II) through the AD Bank on monthly basis so as to reach DSIM within seven working days from the close of month to which it relates. Changes, if any, in ECB parameters should also be incorporated in Form ECB 2 Return
  • Are the shipping/airline companies allowed to raise External Commercial Borrowing for import of second hand vessels?

    Yes, shipping and airline companies can raise external commercial borrowings (ECB) for import of vessels and aircrafts, however, only under Track I of the ECB framework.

    For more information, click here

  • Who are eligible lenders under ECB framework?

    Lender for ECB purposes should be:

    • A resident of Financial Action Task Force (FATF) [or International organization of Securities commissions (IOSC) compliant country
    • Multilateral and regional financial institution where India is a member country
    • Individuals, if they are foreign equity holders or for subscription to bond/debentures listed abroad
    • Foreign branches / subsidiaries of Indian Banks – only for FCY ECB except FCCBs and FCEBs
  • What does External Commercial Borrowing (ECB) denote?

    ECBs are commercial loans raised by eligible resident entities from recognised non-resident entities conforming to parameters such as minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc.

    For more information, click here.

  • What is the meaning of “all-in-cost”?

    All-in-cost shall include rate of interest, other fees, expenses, charges, guarantee fees, ECA charges, whether paid in foreign currency or INR but will not include commitment fees and withholding tax payable in INR. In the case of fixed rate loans, the swap cost plus spread should not be more than the floating rate plus the applicable spread

  • What are the hedging requirements under External commercial borrowing?

    Companies in infrastructure sector, Non-Banking Financial Companies -Infrastructure Finance Companies (NBFC-IFCs), NBFCs-Asset Finance Companies (NBFC-AFCs), Holding Companies and Core Investment Companies (CICs) are eligible borrowers. These companies are required to:

    1. Have a board-approved risk management policy and will require to keep their ECB exposure hedged 100 per cent at all times in case the average maturity is less than 5 years.
    2. Further, the designated AD Category-I bank shall verify that 100 per cent hedging requirement is complied with during the currency of ECB and report the position to RBI through ECB 2 returns.
    3. Lastly, the entities raising ECB under the provisions of tracks I and II are required to follow the guidelines for hedging issued, if any, by the concerned sectoral or prudential regulator in respect of foreign currency exposure.

    For more information, click here

  • What is the ceiling prescribed for ECB?

    ​​​​​​The ceiling prescribed

    • For TC is benchmark rate plus 250 basis points spread
    • For ECB is benchmark rate plus 450 basis points spread

    Benchmark rate in case of FCY ECB/TC refers to six-months London Inter-bank Offered rate (LIBOR) of different currencies or any other six-month interbank interest rate applicable to the currency of borrowing, for e.g., Euro Inter-bank Offered Rate (EURIBOR). Benchmark rate in case of Rupee denominated ECB/TC will be prevailing yield of the Government of India securities of corresponding maturity

     

     

  • Can ECB be raised under Track III for general corporate purpose (including working capital)? What will be its minimum average maturity period?

     Yes, ECB can be raised under Track III (i.e. INR denominated ECB) for general corporate purpose (including working capital). The minimum average maturity period will be 3 years for ECB up to $ 50 million or equivalent and 5 years for ECB beyond $ 50 million or equivalent.

    For more information, click here.

  • What are the conditions to be fulfilled in relation to Minimum Average Maturity Period (MAMP)?

    • ECB raised by manufacturing sector: One year (for ECB up to US$50 million or equivalent per FY)
    • ECB raised from foreign equity holder: Five years (if utilized for working capital purposes, general corporate purposes or repayment of rupee loans)
    • Others: Three years
  • How can one channel External Commercial Borrowing loans?

    External Commercial Borrowing (ECB) can be raised either under the automatic route or under the approval route. For the automatic route, a case is examined by the Authorised Dealer (AD) Category-I bank. Under the approval route, the borrower is required to send the request to the Reserve Bank of India (RBI) through the AD for examination. While the regulatory provisions are mostly similar, some differences between the two routes include the amount of borrowing, eligibility of the borrowers and the permissible end-uses.

    For more information, click here.

  • Are NRIs(Non-Resident Indians) allowed to invest in sole proprietorship in India?

    NRI or a person of Indian origin (PIO) can invest in sole proprietorship / partnership firm on non-repatriable basis, except those in agricultural or plantation or real estate business, or in the print media sector. NRIs/PIO may seek prior permission of Reserve Bank for investment in sole proprietorship concerns/partnership firms with repatriation option.

    For more information, click here.

  • Are Non-Resident Indians allowed to make investments in India?

    An NRI can invest in capital of Indian companies on non-repatriation basis provided:

    • The amount is invested by inward remittance or out of NRE/FCNR(B)/NRO account maintained with Authorized Dealers/Authorized banks. 
    • The entity is not engaged in agricultural/plantation or real estate business or construction of farmhouses or dealing in Transfer of Development Rights.
    • Amount invested not eligible for repatriation outside India. For investments on a repatriable basis, provisions of FDI policy apply.

    For more information, click here.

  • What documents are required for sale of shares by a person resident in India?

    The following documents are required for sale of shares by a person resident in India:

    (i) Consent letter duly signed by the seller and buyer or their duly appointed agent indicating the details of transfer i.e. number of shares to be transferred, the name of the investee company whose shares are being transferred and the price at which shares are being transferred. In case there is no formal Sale Agreement, letters exchanged to this effect may be kept on record.

    (ii) Where consent letter has been signed by their duly appointed agent, the Power of Attorney Document executed by the seller/buyer authorizing the agent to purchase/sell shares.

    (iii) The shareholding pattern of the investee company after the acquisition of shares by a person resident outside India showing equity participation of residents and non-residents category-wise (i.e. NRIs/OCBs/foreign nationals/incorporated non-resident entities/FIIs, FPIs) and its percentage of paid up capital obtained by the seller/buyer or their duly appointed agent from the company, where the sectoral cap/limits have been prescribed.

    (iv) Certificate indicating fair value of shares from a Chartered Accountant.

    (v) Copy of Broker’s note if sale is made on Stock Exchange.

    (vi) Undertaking from the buyer to the effect that he is eligible to acquire shares/convertible debentures under FDI policy and the existing sectoral limits and Pricing Guidelines have been complied with.

    (vii) Undertaking from the FII/sub account to the effect that the individual FII/ Sub account ceiling as prescribed by SEBI has not been breached, till it gets registered as FPI.

    Please refer to subsection 5.1 of 'section 1' of Annexure-3 of Consolidated FDI Policy at link for more information.

  • What are the regulations on Remittance on winding up/liquidation of Companies?

    AD Category-I banks have been allowed to remit winding up proceeds of companies in India, which are under liquidation, subject to payment of applicable taxes. Liquidation may be subject to any order issued by the court winding up the company or the official liquidator in case of voluntary winding up under the provisions of the Companies Act 2013 as applicable. AD Category-I banks shall allow the remittance provided the applicant submits:

    a) No objection or Tax clearance certificate from Income Tax Department for the remittance.

    b) Auditor's certificate confirming that all liabilities in India have been either fully paid or adequately provided for.

    c) Auditor's certificate to the effect that the winding up is in accordance with the provisions of the Companies Act, as applicable.

    d) In case of winding up otherwise than by a court, an auditor's certificate to the effect that there are no legal proceeding spending in any court in India against the applicant or the company under liquidation and there is no legal impediment in permitting the remittance.

    Please refer to subsection 1.1(iii) of Annexure-6 of Consolidated FDI Policy at link for more information.

  • Where can complaints against listed company be registered?

    SEBI Complaints Redress System (SCORES) is an online platform designed to help investors lodge their complaints online with SEBI pertaining to securities market  against listed companies and SEBI registered intermediaries. All complaints received by SEBI against listed companies and SEBI registered intermediaries are dealt through SCORES.

    For more information, click here

  • What is the list of case where prior approval is needed by RBI to transfer capital instruments?

    The following cases require prior approval of RBI:

    • Transfer of capital instruments from resident to non-residents by way of sale where:
      • Transfer is at a price which falls outside the pricing guidelines specified by RBI
      • Transfer of capital instruments by the non-resident acquirer involving deferment of payment of the amount of consideration.
    • Transfer of any capital instrument, by way of gift by a person resident in India to a person resident outside India. 

    For more information, click here.

  • What is the capability criteria concerning the Trustee in InvITs?

    Eligibility criteria for the grant of certificate for a trustee in the Infrastructure Investment Trusts (InvITs) are

    1. That the trustee is registered with SEBI under SEBI (Debentures Trustees) Regulations, 1993 and is not an associate of the sponsor or manager
    2. That the trustee has such wherewith with respect to infrastructure, personnel, etc. to the satisfaction of SEBI and in accordance with circulars specified by the Board.

    For more information, click here

  • What is Foreign investment facilitation board?

    The Foreign Investment Facilitation Portal (FIFP) is the new online single point interface of the Government of India for investors to facilitate Foreign Direct Investment. This portal is being administered by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry.

    For more information, click here

  • What is the duration within which capital instruments need to be issued, post receiving inward remittances?

    The capital instruments should be issued within 180 days from the date of receipt of the inward remittance received through normal banking channels including escrow account or by debit to the NRE/FCNR (B) account of the non-resident investor. In case, the capital instruments are not issued within this time, the amount received should be refunded immediately to the non-resident investor by outward remittance through normal banking channels or by credit to the NRE/FCNR (B) account, as the case may be. Non-compliance to this would be reckoned as a contravention under the Foreign Exchange Management Act and would attract penal provisions. In exceptional cases, refund of the amount outstanding beyond 180 days from the date of receipt may be considered by the Reserve Bank of India on the merits of the case.

    For more information, click here

  • What are the guidelines to be followed in the event of a delay in issuing capital instruments?

    If the capital instruments are not issued by the Indian company within 60 days from the date of receipt of the inward remittance, the amount so received must be refunded to the person concerned by outward remittance through banking channels or by credit to the person’s Non-Resident External (NRE)/ Foreign Currency Non-Resident (FCNR) (B) accounts, as the case may be, within 15 days from the date of completion of 60 days.

    Non-compliance of instructions shall be a contravention of Foreign Exchange Management Act 20 (R) notwithstanding the fact that interest for delayed refund has been paid as per the Companies Act, 2013.

    For more information, click here

  • What are the guidelines for interest rates on loans disbursed by commercial banks in India?

    As part of the financial sector liberalisation, all credit related matters of banks including charging of interest have been deregulated by the Reserve Bank of India (RBI) and are governed by the banks' own lending policies. With a view to enhancing transparency in the methodology followed by banks for determining interest rates on advances and the efficiency of monetary policy transmission, from 1 April 2016, banks are required to sanction all their advances with reference to marginal cost of fund-based lending rates (MCLR).

    Banks shall have to provide an option to the customers to switch to the MCLR from Base rate/Benchmark Prime Lending Rate (BPLR) and this should not be treated as a foreclosure of existing facility. 

    For more information, click here

  • Why do small borrowers need to have credit rating?

    With a view to facilitating credit flow to the micro, small and medium enterprises (MSME) and enhancing the comfort-level of the lending institutions, the credit rating of MSMEs done by reputed credit rating agencies should be encouraged. The banks are advised to consider these ratings as per availability and wherever appropriate structure their rates of interest depending on the ratings assigned to the borrowing MSMEs.

    For more information, click here.

  • Is credit rating mandatory for the MSE borrowers?

    Credit rating is not mandatory but it is in the interest of the micro, small and medium enterprises (MSME) to get their credit rating done as it would help in credit pricing of the loans taken by them from the banks.

    For more information, click here.

  • What are the guidelines for delayed payment of dues to the MSE borrowers?

    The buyer is to make payment on or before the date agreed on between him and the supplier in writing or, in case of no agreement, before the appointed day. The agreement between seller and buyer shall not exceed more than 45 days. If the buyer fails to make payment of the amount to the supplier, he shall be liable to pay compound interest with monthly rests to the supplier on the amount from the appointed day or, on the date agreed on, at three times of the Bank Rate notified by Reserve Bank. For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the interest as advised above. In case of dispute with regard to any amount due, a reference shall be made to the Micro and Small Enterprises Facilitation Council, constituted by the respective State Government. To take care of the payment obligations of large corporate borrowers to MSEs, banks have been advised that while sanctioning/ renewing credit limits to their large corporate borrowers (i.e. borrowers enjoying working capital limits of $ 1.5 million and above from the banking system), to fix separate sub-limits, within the overall limits, specifically for meeting payment obligations in respect of purchases from MSEs either on cash basis or on bill basis. Banks are also advised by RBI to closely monitor the operations in the sub-limits, particularly with reference to their corporate borrowers’ dues to MSE units by ascertaining periodically from their corporate borrowers, the extent of their dues to MSE suppliers and ensuring that the corporate pay off such dues before the ‘appointed day’ /agreed date by using the balance available in the sub-limit so created. In this regard the relevant RBI circular; IECD/5/08.12.01/2000-01 dated October 16, 2000 (reiterated on May 30, 2003, vide circular No. IECD.No.20/08.12.01/2002-03 ) available on RBI website.

    For further details please visit link1 or link2.

  • Is it mandatory to put all sick units under rehabilitation by banks?

    No, if a sick unit is found potentially viable it can be rehabilitated by the banks. The viability of the unit is decided by the banks. A unit should be declared unviable only if such a status is evidenced by a viability study.

    For more information. click here.

  • What is the timeline for banks to implement the rehabilitation package?

    Viable or potentially viable micro and small enterprise (MSE), which turns sick despite debt re-structuring needs to be rehabilitated and put under nursing by the bank within six months from the date such enterprise is declared viable or potentially viable. It will be for the bank/financial institution to decide whether a sick MSE unit is potentially viable or not.

    During the six months period of identifying and implementing rehabilitation package, the bank is required to do a ’holding operation’ that allows the sick unit to draw funds from the cash credit account at least to the extent of deposit of sale proceeds.

    For more information, click here

  • Is there any provision for grant of composite loans by banks?

    A composite loan limit of $1.5 mn can be sanctioned by banks to enable the MSME entrepreneurs to avail of their working capital and term loan requirement through Single Window.

    For more information, click here.

  • How do banks assess the working capital requirements of borrowers?

    The banks have been advised to put in place loan policies governing extension of credit facilities for the MSE sector duly approved by their Board of Directors (Refer circular RPCD.SME & NFS.BC.No.102/06.04.01/2008-09 dated 4 May  2009). However, banks have been advised to sanction limits after proper appraisal of the genuine working capital requirements of the borrowers keeping in mind their business cycle and short term credit requirement. As per Nayak Committee Report, working capital limits to SSI units is computed on the basis of minimum 20% of their estimated turnover up to credit limit of $ .7 million. For more details paragraph 4.15.2 of the Master Circular on lending to the MSME sector dated 1 July 2014 may please be seen.


    For further details please visit link1 or link2.

     

  • I intend to work on franchisee model. Can MUDRA help me?

    MUDRA operates a special refinance scheme for traders and shopkeepers. You can avail the facilities under the scheme as per your requirements from any banks/MFIs/NBFCs in the area.

    Please refer to link for more information

  • I want to start my own business. Can Micro Units Development and Refinance Agency help me?

    Micro Units Development and Refinance Agency (MUDRA) does provide loans up to INR10 Lakhs to the non-corporate, non-farm, small/ micro enterprises (SMEs). These loans are given by Commercial bank, RRBs, Small finance bank, Cooperative banks, MFIs and NBFC

    For more information, click here.

  • What are the agencies providing loans under Micro Units Development and Refinance Agency?

    Pradhan Mantri Mudra Yojana (PMMY) loans will be extended by all Public sector Banks such as PSU banks, Regional Rural Banks (RRBs), Cooperative Banks, Private Sector Banks, Foreign Banks, Micro Finance Institutions and Non-Banking Finance Companies.
    For more information, click here.

  • What is the application form to apply for a MUDRA loan?

    Click on any of the 3 categories under MUDRA Scheme for application forms and checklist

    1. Shishu: Covering loans up to INR 50,000

    2. Kishor: Covering loans above INR 50,000 and up to INR 500,000

    3. Tarun: Covering loans above INR 500,000 up to INR 1 m

    Note: MUDRA is a refinance agency and not a direct lending institution. MUDRA provides refinance support to its intermediaries viz. banks, micro finance institutions and non-banking financial companies, who further extend these loans to businesses/ entrepreneurs

    For more information, click here.

  • Who all are eligible under MUDRA?

    Any Indian citizen who has a business plan for a non-farm income-generating activity such as manufacturing, processing, trading or service sector whose credit need is less than INR 1 m can approach either banks, micro finance institutes or non-banking financial companies for availing of MUDRA loans under PMMY. The usual terms and conditions of the lending agency may have to be followed for availing of loans under Pradhan Mantri Mudra Yojana (PMMY). The lending rates are as per the RBI guidelines issued in this regard from time to time.

    For more information, click here.

  • Can Micro Units Development and Refinance Agency provide loans for running a franchise?

    MUDRA Scheme operates a special refinance scheme for traders and shopkeepers. You can avail the facilities under the Scheme as per your requirements from any bank/ micro finance institute/ non-banking financial company in your area.

    For more information, click here.

  • What is the usage of the Micro Units Development and Refinance Agency Card?

    MUDRA Card is an innovative credit product wherein the borrower can avail of credit in a hassle free and flexible manner. It will provide a facility of working capital arrangement in the form of CC/OD to the borrower. Since MUDRA Card will be RuPay debit card, it can be used for drawing cash from ATM or Business Correspondent or make purchase using Point of Sale (POS) machine. Facility is also there to repay the amount, as and when, surplus cash is available, thereby reducing the interest cost.

    For more information, click here

  • Which banks are eligible to provide Micro Units Development and Refinance Agency loans?

    All public-sector banks (PSB), regional rural banks (RRB) and scheduled cooperative banks are allowed to cover all loans up to INR 10 lakhs, sanctioned on or after 8 April 2015, under Pradhan Mantri Mudra Yojana (PMMY).

    For more information, click here

  • What is the list of documents needed for availing MUDRA loans?

    List of documents required for availing MUDRA loans are Application form, Address Proof, ID proof, Bank Statement of defined period, Statutory return and others as may be required. This is just an indicative list.

    For more information, click here.

  • What is the grievance component accessible against bank authorities, in case of non-endorse of advance?

    Any grievance against non-consideration of MUDRA loan can be registered with the higher authorities in the respective Bank like Regional Manager/Zonal Manager of the Bank, provided there is any lapse from the bank officials in sanctioning the loan.

    For more information, click here.

  • What qualifies as a Start-up with the end goal of Government plans?

    Eligibility criteria for recognition as a start-up includes:

    • The start-up should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership
    • Turnover should be less than INR 1 b in any of the previous financial years
    • An entity shall be considered as a start-up up to 10 years from the date of its incorporation
    • The start-up should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth. An entity formed by splitting up or reconstruction of an existing business shall not be considered a start-up

    For more information, click here 

  • For how long an organization can be referred to as Start-up?

    An entity is recognised as a start-up up to seven years from the date of its incorporation/registration. However, in case of start-ups in biotechnology sector, the period is up to ten years from the date of its incorporation/registration.

    For more information, click here

  • Who is the contact person for addressing questions regarding startups?

    The queries could be addressed to the Start-up India Hub through the following details:  
    Toll-Free Number: 1800115565
    Working Hours:10:00 AM to 5:30 PM (Monday to Friday)
    Email: dipp-startups@nic.in

  • What does INVITS entail?

    An Infrastructure Investment Trust (InvIT) is like a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a portion of the income as return. The InvIT is designed as a tiered structure with Sponsor setting up the InvIT which in turn invests into the eligible infrastructure projects either directly or via special purpose vehicles (SPV).

    InvIT are regulated by the SEBI (Infrastructure Investment Trusts) Regulations, 2014.

    For more information, click here

  • What is the procedure for registering as an InvIT?

    No person shall act as an InvIT unless it has obtained a certificate of registration from the Board under SEBI (Infrastructure Investment Trusts) Regulations 2014. An application for grant of certificate of registration as InvIT shall be made by the sponsor on behalf of the trust in Form A as specified in the Schedule I of SEBI (Infrastructure Investment Trusts) Regulations 2014 and shall be accompanied by a non-refundable application fee as specified in Schedule II. The Board on being satisfied that the applicant fulfils the requirements shall send intimation to the applicant and on receipt of the payment of registration fees as specified in Schedule II, grant certificate of registration in Form B under Schedule I.

    Please refer to section 3 and 6 of SEBI (Infrastructure Investment Trusts) Regulations 2014 at the link for more information.

  • What are the key conditions regarding qualification of Sponsor(s)?

    The term ‘sponsor’ means any company or LLP or body corporate which sets up the InvIT. Each sponsor must have a net worth of not less than US$15.38 mn if it is a body corporate or company; or Net tangible assets of value not less than US$15.38 mn in case of an LLP.

    The sponsor(s) together shall hold not less than 15% of total units of InvIT on a post-issue basis for a period of at least 3 years from the date of listing, subject to following:

    a) Sponsors would be responsible to the InvIT for all acts, omissions and representations/covenants;

    b) Sponsor/associate of the sponsor shall act as the project manager for a minimum period of 3 years unless a suitable replacement is appointed by unitholders. However, this conditions shall not apply if the sponsors hold a minimum of 25% stake on post-issue basis for at least 3 years from the date of listing

    c) Minimum experience of 5 years in infrastructure sector for each sponsor and where sponsor is a developer, at least 2 projects of sponsor should be completed.

    Please refer to section 4(d) of SEBI (Infrastructure Investment Trusts) Regulations 2014 at link for more information.

  • What are the key conditions regarding qualification of Investment Manager?

    The key conditions are:

    • Net worth (net tangible assets in case of an LLP) of not less than US$15.38 mn if the investment manager is a body corporate or a company.

    • Experience of not less than five years in fund management or advisory services or development in the infrastructure sector.

    • Has not less than two employees who have at least five years experience each, in fund management or advisory services or development in the infrastructure sector.

    • Has not less than one employee who has at least five years experience in the relevant sub-invest.

    • Has not less than half of its directors in case of a company or members of the governing board in case of an LLP as independent and not directors or members of the governing board of another InvIT.

    • Has an office in India from where the operations pertaining to the InvIT is proposed to be conducted.

    Please refer to section 4(e) of SEBI (Infrastructure Investment Trusts) Regulations 2014 at link for more information

  • What are the provisions regarding disclosures under infrastructure Investment Trust?

    The disclosure guidelines for an Infrastructure Investment Trust (InvIT) include:

    • Disclosure in placement memorandum for privately-placed InvIT in accordance with sub-section (4), section (15), Chapter IV and any circular issued by the Board in this regard.
    • Disclosure in offer document for publicly-offered InvIT in accordance with Schedule III and any circular issued by the Board in this regard.

    For more information, click here 

  • What are the conditions regarding issue and allotment of units in InvITs?

    • An InvIT shall not make an initial offer of its units unless: • The InvIT is registered with the Board under these regulations; • The value of assets held by InvIT is at least INR 500 crores; • The offer size is at least INR 250 crores • Slabs for minimum offer size and public float: • If post issue capital is less than INR 1600 crores: minimum 25% of the total outstanding units of the InvIT or INR 250 crores, whichever is higher • If post issue capital is equal to or more than INR 1600 crores but less than INR 4000 crores: minimum INR 400 crores • If post issue capital is equal to more than INR 4,000 crores: minimum 10% of the total outstanding units of the InvIT • Any units offered to sponsor or manger or their related parties or their associates shall not be counted towards units offered to public • Public float in all cases shall be increased to a minimum of 25% within a period of three years from the date of listing • In case of a privately places InvIT, minimum investment from an investor should be INR 1 crore. However, if such InvIT invests or proposes to invest 80% or more of the value of InvIT assets, minimum investment from an investor shall be INR 25 crore • In case of a public InvIT, minimum subscription from an investor in initial and follow on offer to be INR 10 lakh • Maximum 10% of the amount raised by InvIT by public issue of units could be used for ‘general purposes’ as mentioned in the offer document. Issue related expenses shall not form part of general purpose. • Minimum subscription amount shall be 90% of the fresh issue size as specified in the offer document • If the InvIT fails to make any offer of its units, whether by way of public issue or private placement, within 3 years from the date of registration with the Board, it shall surrender its certificate of registration to the Board and cease to operate as an InvIT Please refer to Chapter IV of SEBI (Infrastructure Investment Trusts) Regulations 2014 at link for more information

  • Which are the registered InvITs under SEBI?

    The list of SEBI registered InvITs as on February 16, 2017 is available at the link.

  • Which are the registered Infrastructure Investment Trusts under Securities and Exchange Board of India?

    The list of SEBI registered InvITs can be accessed from here.

  • What are the venture conditions for Infrastructure Investment Trusts?

    The investment conditions for real estate investment trusts (REIT) are stated in detail in section 18, Chapter V of SEBI (Real Estate Investment Trusts) Regulations, 2014, as amended from time to time.

    For more information, click here.

  • What is a letter of offer?

    A letter of offer is a document addressed to the shareholders of the target company containing disclosures of the acquirer/ PACs, target company, their financials, justification of the offer price, the offer price, number of shares to be acquired from the public, purpose of acquisition, future plans of acquirer, if any, regarding the target company, change in control over the target company , if any, the procedure to be followed by acquirer in accepting the shares tendered by the shareholders and the period within which all the formalities pertaining to the offer would be completed.

    For more information, click here.

  • What are the different kinds of issues which can be made by an Indian company in India?

    The various instruments that can be issued by an Indian company include:


    1) Equity shares; fully, compulsorily and mandatorily convertible debentures/ preference shares

    2) Non-convertible, optionally convertible or partially convertible debentures/ preference shares

    3) Rights issue

    4) Composite issue

    5) Bonus issue

    6) Institutional placement program

    7) Convertible note

    8) Depository receipt (DR)

    9) Foreign currency convertible bonds (FCCB)

    10) Security receipt

    11) Two-way fungibility scheme

    12) Warrants & partly-paid shares

    For more information, click here

     

  • For how long an investment in public issue is required to be kept open?

    The period for which an issue is required to be kept open is:
     1) For Fixed price public issues: 10 working days
     2) For Book built public issues: 7 working days extendable by 3 days in case of a revision in the price band
     3) For Rights issues: 30 days.

    For more information, click here.

  • What is a Right Issue?

    A Right Issue is an issue of shares or convertible securities to existing shareholders as on a particular date (record date) fixed by the issuer. The rights are offered in a particular ratio to the number of shares or convertible securities held as on the record date.

  • Whether a Foreign investor can invest in rights shares issued by an Indian company at a discount?

    There are no restrictions under FEMA for investment in Rights shares issued at a discount by an Indian company under the provisions of the Companies Act, 2013. The offer on rights basis to the person resident outside India shall be:

    • In case of shares of a company listed on a recognized stock exchange in India, at a price, as determined by the company
    • In case of shares of a company not listed on a recognized stock exchange in India, at a price, which is not less than the price at which the offer on right basis is made to resident shareholders
  • What is a Bonus Issue?

    A Bonus Issue is an issue of shares to its existing shareholders without any consideration based on the number of shares already held by them as on a record date. The shares are issued out of the company’s Free Reserve or Share Premium Account in a particular ratio to the number of securities held on a record date.

  • What does composite issue of shares mean?

    A Composite Issue is an issue of shares or Convertible Securities on Public-cum-Right basis, wherein the allotment in both Public Issue and Rights Issue is proposed to be made simultaneously.

    For more information, click here.

  • What does private placement of shares mean?

    A Private Placement is the issue of shares or convertible securities to a select group of persons not exceeding 49%.

    For more information, click here.

  • What does rights issue of shares mean?

    A rights issue is an issue of shares or convertible securities to existing shareholders as on a record date fixed by the issuer. The rights are offered in a ratio to the number of shares or convertible securities held as on the record date.

    For more information, click here.

  • What do offer documents imply?

    An offer document contains all the relevant information about the company, promoters, projects, financial details, objects of raising the money, terms of the issue, etc. and is used for inviting subscription to the issue being made by the issuer. Offer document is called a ’Prospectus’ in case of a Public Issue and ’Letter of Offer’ in case of a Rights Issue.

    For more information, click here

  • What is the qualification criteria with regard to the Sponsor(s) in ReITs?

    The term ‘sponsor group’ has been defined to include:

    • The sponsor

    • Where the sponsor is a body corporate.

    • Entities/persons controlled by such body corporate.

    • Entities/persons controlling such body corporate.

    • Entities/persons controlled by entities/persons controlling such body corporate. 

    • Where the sponsor is an individual.

    • Relatives of such individual.

    • Entities/controlled by such individual for each sponsor group, not less than one person shall be identified as the 'sponsor'. Sponsors and the sponsor group shall collectively hold.

    • A minimum of 25% of the total units on a post issue basis

    • A minimum of 15% of the outstanding units of the REIT at all times.

    • Minimum holding of 5% of outstanding units of REIT at all time.

    • Net worth of at least US$ 15.38 mn on consolidated basis and US$307,692  on individual basis.

    • Minimum experience of 5 years in real estate industry for each sponsor and where sponsor is a developer, at least 2 projects of sponsor should be completed.

    Please refer to section 4(d) and chapter IV of SEBI (Real Estate Investment Trusts) Regulations 2014 at link for more information.

  • What is meant by 'real estate' or 'Property'?

    'Real estate' or 'property' means land and any permanently attached improvements to it, whether leasehold or freehold and includes buildings, sheds, garages, fences, fittings, fixtures, warehouses, car parks, etc. and any other assets incidental to the ownership of real estate but does not include mortgage. However, any asset falling under the purview of 'infrastructure' as defined vide Notification of Ministry of Finance dated October 07, 2013 including any amendments or additions made thereof shall not be considered as 'real estate' or 'property'. Notwithstanding the above, following captured within the above mentioned definition of infrastructure shall be considered under “real estate” or “property”:

    i) Hotels, hospitals and convention centers, forming part of composite real estate projects, whether rent generating or income generating

    ii) Common infrastructure" for composite real estate projects, industrial parks and SEZ.

    Please refer to section 2(zi) of SEBI (Real Estate Investment Trusts) Regulations 2014 at link for more information.

  • What are the venture conditions for Real estate investment trust?

    The real estate investment trusts (REIT) are subject to various investment conditions, including investing only in special purpose vehicles (SPV) or properties or securities or transferable development rights (TDR) in India and at least 50% of the revenues, other than gains from disposal of properties shall be from rental, leasing and letting real estate assets.

    For more information, click here

  • What is the procedure of obtaining registration as a real estate investment trusts from Securities and Exchange Board of India?

    No person shall act as a real estate investment trust (REIT) unless it is registered with the Securities and Exchange Board of India (SEBI) through following steps:

    1. Filing of application – A sponsor shall file an application for grant of the Registration Certificate (RC) in Form A, Schedule I of the SEBI (Real Estate Investment Trusts) Regulations 2014, and shall submit a non-refundable application fee as per Schedule II.
    2. Eligibility criteria – For grant of RC, the Board shall check for all matters relevant to the activities as a REIT
    3. Furnishing of further information – The Board may require the applicant to furnish further information or clarification before processing the application.
    4. Grant of Certificate – On being satisfied with the information received and on receipt of registration fee, the Board shall grant the RC as per Form B, Schedule I
    5. Conditions of Certificate – The RC hence issued shall be subject to abiding by provisions of the Act, by the Code of Conduct specified in Schedule VI and informing the Board of any misleading/ updated information given earlier.

    For more information, click here

  • What is the capability criteria concerning the Trustee in ReITs?

    The eligibility criteria for the trustee of a Real Estate Investment Trust (ReIT) includes:

    1. That the trustee is registered with SEBI under SEBI (Debentures Trustees) Regulations, 1993 and is not an associate of the sponsor or manager
    2. That the trustee has such wherewith with respect to infrastructure, personnel, etc. to the satisfaction of SEBI and in accordance with circulars specified by the Board.

    For more information, click here

  • What is the qualification criteria for Managers in REITs?

    The qualification criteria for managers in REITs include:

    • The manager has a net worth of not less than $1.53 mn if the manager is a body corporate or a Company or net tangible assets of value not less than $1.53 mn in case the manager is a LLP. 
    • The manager or its associate has not less than 5 years’ experience in fund management or advisory services or property management in the real estate industry or in development of real estate.
    • The manager has not less than 2 key personnel who each have not less than 5 years’ experience in fund management or advisory services or property management in the real estate industry or in development of real estate.
    • The manager has not less than half, of its directors in the case of a Company or of members of the governing Board in case of an LLP, as independent and not directors or members of the governing Board of another REIT

    For more information, click here.

  • What is the document checklist for proposal for grant of ‘in principle' approval in viability gap funding (VGF)?

    a) EI memo with Annexures.
    b) Feasibility Report/Detailed Project Report.
    c) RFP Bidding Document:

    1. Vol. I Instruction of Bidders.
    2. Vol. II Draft Concession Agreement.
    3. Vol. III Schedules.

    d) Statement on Deviation from MCA, if any.
    e) Other project agreements as applicable. The above documents and soft copy thereof are to be provided in 6 sets for consideration by member of Empowered Institution

    For more information, click here.

  • What documents would be needed for proposal for grant of final approval?

    The documents required for grant of final approval for viability gap funding (VGF) are:

    1. Empowered Institution (EI) memo for final approval
    2. Appraisal report of the project by Lead Financial Institution
    3. Executed project agreement
    4. Certificate from the sponsoring authority that all conditions specified in the scheme have been complied with

    The above documents and soft copy thereof are to be provided in 6 sets for consideration by member of EI.

    For more information, click here

  • Is there any time lag involved between grant of in-principle approval and disbursement of grant?

    The approvals to a project are given prior to the invitation of bids and actual disbursement takes place once the private entity has expanded its portion of equity. Thus, there is necessarily a time lag involved between the grant of in-principle approval and the disbursement of grant of minimum 12 to 18 months.

    For more information, click here

  • Can the funds from VGF be used for building medical colleges?

    VGF would be admissible only if:

    • The proposed medical college is located in one of the backward districts identified under various schemes of GoI, and  
    • There is no medical college in that district as on the date of in-principle approval of VGF by the competent authority

    For more information, click here.

  • What is the Viability Gap Funding scheme?

    The Viability Gap Funding (VGF) Scheme aims at supporting infrastructure projects that are economically justified but fall marginally short of financial viability. Support under this scheme is available only for infrastructure projects where private sector sponsors are selected through a process of competitive bidding. The total VGF under the scheme does not exceed 20% of the total project cost, however, the Government may decide to provide additional grants up to a limit of a further 20%.

    For more information, click here.

  • Up to what level can ventures be endorsed by Empowered Institution?

    The Empowered Institution may section viability gap funding (VGF) of up to INR 1 b, s.t. budgetary ceilings by the Ministry of Finance. Other proposals are also considered by the Institution and placed before the Empowered Committee.

    For more information, click here

  • What is the procedure for getting Viability Gap Funding?

    The process for availing viability gap funding (VGF) involves:

    1. Submission of project proposals that include requisite information by the Government/ statutory entity owning the underlying asset
    2. Projects based-on model documents would be preferred over standalone documents
    3. Empowered Institution (EI) may seek required details for satisfying eligibility criteria
    4. The EI shall inform the sponsoring Government/ statutory entity whether the project is eligible for financial assistance within 30 to 60 days
    5. The EI may refer the case to Empowered Committee (EC) for further clarity on eligibility
    6. Projects shall be approved and implemented in accordance with the procedures specified from time to time
    7. The inter-se allocation of VGF between an ongoing scheme and this scheme shall be determined by the EC.

    For more information, click here

     

     

     

  • What is the eligibility criteria for VGF funding?

    a) The PPP projects may be posed by the Central Ministries, State Government or Statutory Authorities (like Municipal Authorities and Councils), which own the underlying assets;.
    b) To be eligible for financing under the scheme, the PPP projects should be implemented, i.e. developed, financed, constructed, maintained and operated for the Projects term by a Private Sector Company to be selected by the Government or a statutory entity through a transparent and open competitive bidding process.
    c) The criterion for bidding should be the amount of Viability Gap Funding required by the Private Sector Company for implementing the project where all other parameters are comparable.
    d) The project should provide a service against payment of pre-determined tariff or user charge.
    e) This Scheme will apply only if the contract/concession is awarded in favour of a private sector company.
    f) The approval to projects is given prior to invitation of bids and actual disbursement takes place once the private entity has expended his portion of the equity.
    g) The final VGF is determined through the bidding.

    The detailed VGF guidelines may be accessed at the following link.

  • Which are the areas qualified under Viability Gap Funding conspire?

    List of sectors permissible for viability gap funding (VGF) include:

    • Public infrastructure such as roads, airports
    • Public amenities such as power, water supply, waste management
    • Infrastructure projects in special economic zones (SEZ) and national investment and manufacturing zones (NIMZ)
    • Education, health and skill development

    For more information, click here