THE SECURITISATION COMPANIES AND RECONSTRUCTION COMPANIES (RESERVE BANK) GUIDELINES AND DIRECTIONS, 2003

THE SECURITISATION COMPANIES AND RECONSTRUCTION COMPANIES (RESERVE BANK) GUIDELINES AND DIRECTIONS, 2003

The Reserve Bank of India, having considered it necessary in the public interest, and being satisfied that, for the purpose of enabling the Reserve Bank to regulate the financial system to the advantage of the country and to prevent the affairs of any securitisation company or reconstruction company from being conducted in a manner detrimental to the interest of investors or in any manner prejudicial to the interest of such securitisation company or reconstruction company, it is necessary to issue the guidelines and directions relating to registration, measures of asset reconstruction, functions of the company, prudential norms, acquisition of financial assets and matters related thereto, as set out below hereby, in exercise of the powers conferred by sections 3, 9, 10 and 12 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, issues to every securitisation company or reconstruction company, the guidelines and directions hereinafter specified.

1. Short title and commencement

(1) These guidelines and directions shall be known as THE SECURITISATION COMPANIES AND RECONSTRUCTION COMPANIES (RESERVE BANK) GUIDELINES AND DIRECTIONS, 2003.

(2) They shall come into force with effect from April 23, 2003 and any reference in these guidelines and directions to the date of commencement thereof shall be deemed to be a reference to that date.

2. Applicability of the directions

The provisions of these guidelines and directions shall apply to securitisation companies or reconstruction companies registered with the Reserve Bank of India under section 3 of the Secruitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. However, in respect of the trust(s) mentioned in paragraph 8 herein, the provisions of paragraphs 4, 5, 6, 9, 10(i), 10(iii), 12, 13, 14 and 15 shall not be applicable.

3. Definitions

(1)(i)"Act" means the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

(ii)        "Bank" means the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934;

(iii)       "Date of acquisition" means the date on which the ownership of financial assets has been acquired by seccuritisation company or reconstruction company;

(iv)       "Deposit" means deposit as defined in the Companies (Acceptance of Deposits) Rules, 1975, framed under section 58-A of the Companies Act, 1956;

(v)         "Fair value" means the mean of the earning value and the break up value;

(vi)        "Non-performing asset" (NPA) means an asset in respect of which:--

(a)        interest or principal (or instalment thereof) is overdue for a period of 180 days or more from the date of acquisition or the due date as per contract between the borrower and the originator, whichever is later;

(b)        interest or principal (or instalment thereof) is overdue for a period of 180 days or more from the date fixed for receipt thereof in the plan formulated for realisation of the assets referred to in paragraph 7(1)(6) herein;

(c)        interest or principal (or instalment thereof) is overdue on expiry of the planning period, where no plan is formulated for realisation of the assets referred to in paragraph 7(1)(6) herein; or

(d)        any other receivable, if it is overdue for a period of 180 days or more in the books of the securitisation company or reconstruction company:

PROVIDED that the board of directors of a securitisation company or reconstruction company may, on default by the borrower, classify an asset as a non-performing asset even earlier than the period mentioned above (for facilitating enforcement as provided for in section 13 of the Act).

(vii)       "Overdue" means an amount which remains unpaid beyond the due date;

(viii)      "Owned fund" means the aggregate of paid up equity capital, paid up preference capital to the extent it is compulsorily convertible into equity capital, free reserves (excluding revaluation reserve), credit balance in profit and loss account as reduced by the debit balance on the profit and loss account and miscellaneous expenditure (to the extent not written off or adjusted), book value of intangible assets and under/short provision against NPA/diminution in value of investments, and over recognition of income, if any; and further reduced by the book value of the shares acquired in a securitisation company or reconstruction company, and other deductions required on account of the items qualified by the auditors in their report on the financial statements;

(ix)        "Planning period" means a period not exceeding twelve months allowed for formulating a plant for realisation of non-performing assets (in the books of the originator) acquired for the purpose of reconstruction;

(x)        "Standard asset" means an asset, which is not an NPA;

(xi)        "Trust" means trust as defined in section 3 of the Indian Trusts Act, 1882;

(2) Words or expressions used but not defined herein and defined in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, shall have the same meaning as assigned to them in that Act. Any other words or expressions not defined in that Act shall have the same meaning as assigned to them in the Companies Act, 1956.

4. Registration and matters incidental thereto

(i) Every securitisation company or reconstruction company shall apply for registration in the form of application specified vide Notification No. DNBS. 1/CGM/(CSM)-2003, dated March 7, 2003, and obtain a certificate of registration from the bank as provided under section 3 of the Act;

(ii) A securitisation company or reconstruction company, which has obtained a certificate of registration issued by the bank under section 3 of the Act, can undertake both securitisation and asset reconstruction activities;

(iii) Any entity not registered with the bank under section 3 of the Act may conduct the business of securitisation or asset reconstruction outside the purview of the Act.

5. Owned fund

Every securitisation company or reconstruction company seeking the bank's registration under section 3 of the Act, shall have minimum owned fund of Rs. 2 crore:

PROVIDED that every securitisation company or reconstruction company seeking the Bank's registration under section 3, or carrying on business on commencement of the Securitisation Companies and Reconstruction Companies (Reserve Bank) (Amendment) Guidelines and Directions, 2004, shall have a minimum owned fund not less than fifteen percent of the total financial assets acquired or to be acquired by the securitisation company or reconstruction company on an aggregate basis, or Rs. 100 crore, whichever is less:

PROVIDED FURTHER that--

(i)         the minimum owned fund for any securitisation company or reconstruction company shall in no case be less than Rs. 2 crore;

(ii)         a securitisation company or reconstruction company carrying on business on the commencement of the Securitisation Companies and Reconstruction Companies (Reserve Bank) (Amendment) Guidelines and Directions, 2004 shall reach the level of minimum owned fund specified in the first proviso within three months from such commencement;

(iii)       while computing the amount for the purpose of the first proviso, no account shall be taken whether the assets are transferred to a trust set up for the purpose of securitisation or not;

(iv)        the amount shall be continued to be held by the securitisation company or reconstruction company until realisation of assets and redemption of security receipts issued against such assets;

(v)         the securitisation company or reconstruction company may invest the amount of owned fund, in addition to the modes specified in clause (ii) of paragraph 10, in the security receipts issued by the trust set up for the purpose of securitisation.

6. Permissible business

(i) A securitisation company or reconstruction company shall commence/undertake only the securitisation and asset reconstruction activities and the functions provided for in section 10 of the Act.

(ii) A securitisation company or reconstruction company, which is carrying on any other business, shall cease to do such business by June 20, 2003.

(iii) A securitisation company or reconstruction company shall not raise monies by way of deposit.

7. Asset reconstruction

(1) Acquisition of financial assets

(i)         Every securitisation company or reconstruction company shall frame with the approval of its board of directors, a "financial asset acquisition policy", within 90 days of grant of certificate of registration, which shall clearly lay down the policies and guidelines covering, inter alia,--

(a)        norms and procedure for acquisition;

(b)        types and the desirable profile of the assets;

(c)        valuation procedure ensuring that the assets acquired have realisable value which is capable of being reasonably estimated and independently valued;

(d)        in the case of financial assets acquired for asset reconstruction, the broad parameters for formulation of plans for their realisation.

(ii)         The board of directors may delegate powers to a committee comprising any director and/or any functionaries of the company for taking decisions on proposals for acquisition of financial assets;

(iii) Deviation from the policy should be made only with the approval of the board of directors.

(2) Change or take over of the management/sale or lease of business of the borrower--No securitisation company or reconstruction company shall take the measures specified in sections 9(a) and (b) of the Act, until the bank issues necessary guidelines in this behalf.

(3) Rescheduling of debts--(i) Every securitisation company or reconstruction company shall frame a policy, duly approved by the board of directors, laying down the broad parameters for rescheduling of debts due from borrowers;

(ii) All proposals should be in line with and supported by an acceptable business plan, projected earnings and cash flows of the borrower;

(iii) The proposals should not materially affect the asset liability management of the securitisation company or reconstruction company or the commitments given to investors;

(iv) The board of directors may delegate powers to a committee comprising any director and/or any functionaries of the company for taking decisions on proposals for reschedulement of debts;

(v) Deviation from the policy should be made only with the approval of the board of directors.

(4) Enforcement of security interest--Where taking recourse to the sale of secured assets in terms of section 13(4) of the Act, a securitisation company or reconstruction company may itself acquire the secured assets, either for its own use or for resale, only if the sale is conducted through a public auction.

(5) Settlement of dues payable by the borrower--(i) Every securitisation company or reconstruction company shall frame a policy duly approved by the board of directors laying down the broad parameters for settlement of debts due from borrowers;

(ii) The policy may, inter alia, cover aspects such as cut-off date, formula for computation of realisable amount and settlement of account, payment terms and conditions, and borrower's capability to pay the amount settled;

(iii) Where the settlement does not envisage payment of the entire amount agreed upon in one instalment, the proposals should be in line with and supported by an acceptable business plan, projected earning and cash flows of the borrower;

(iv) The proposal should not materially affect the asset liability management of the securitisation company or reconstruction company or the commitments given to investors;

(v) The board of directors may delegate powers to a committee comprising any director and/or any functionaries of the company for taking decisions or proposals for settlement of dues;

(vi) Deviation from the policy should be made only with the approval of the board of directors.

(6) Plan for realisation--(i) Every securitisation company or reconstruction company may, within the planning period, formulate a plan for realisation of assets, which may provide for one or more of the following measures:--

(a)        Rescheduling of payment of debts payable by the borrower;

(b)        Enforcement of security interest in accordance with the provisions of the Act;

(c)        Settlement of dues payable by the borrower;

(d)        Chance or take over of the management, or sale or lease of the whole or part of business of borrower after formulation of necessary guidelines in this behalf by the bank as stated in paragraph 7(2) hereinabove.

(ii) The plan for realisation shall clearly spell out the steps proposed to reconstruct the assets and realise the same within a specified time frame, which shall not in any case exceed five years from the date of acquisition.

8. Securitisation

(1) Issue of security receipts--A securitisation company or reconstruction company shall give effect to the provisions of sections 7(1) and (2) of the Act through one or more trusts set up exclusively for the purpose.  The securitisation company or reconstruction company shall transfer the assets to the said trusts at the price at which those were acquired from the originator:--

(i)         The trusts shall issue security receipts only to qualified institutional buyers; and hold and administer the financial assets for the benefit of the qualified institutional buyers;

(ii)         The trusteeship of such trusts shall vest with the securitisation company or reconstruction company;

(iii)        A securitisation company or reconstruction company proposing to issue security receipts, shall, prior to such an issue, formulate a policy, duly approved by the board of directors, providing for issue of security receipts under each scheme formulated by the trust;

(iv)        The policy referred to in sub-paragraph (iii) above shall provide that the security receipts issued would be transferable/assignable only in favour of other qualified institutional buyers.

(2) Disclosures--Every securitisation company or reconstruction company intending to issue security receipts shall make disclosures as mentioned in the Annexure.

9. Requirement as to capital adequacy

(1) Every securitisation company or reconstruction company shall maintain, on an ongoing basis, a capital adequacy ratio, which shall not be less than fifteen per cent. of its total risk weighted assets. The risk weighted assets shall be calculated as the weighted aggregate of on balance-sheet and off balance-sheet items as detailed hereunder:

WEIGHTED RISK ASSETS

On balance-sheet items:  Percentage risk weight

(a) Cash deposits with scheduled commercial banks  0

(b) Investments in Government securities  0

(c) Other assets  100

Off balance-sheet items: 

All contingent liabilities  50

(2) Shares held in other securitisation companies or reconstruction companies shall not attract any risk weight.

10. Deployment of funds

(i) A securitisation company or reconstruction company may, as a sponsor and for the purpose of establishing a joint venture, invest in the equity share capital of a securitisation company or reconstruction company formed for the purpose of asset reconstruction;

(ii) A securitisation company or reconstruction company may deploy any surplus available with it only in Government securities and deposits and deposits with scheduled commercial banks on terms of a policy framed in this regard by its board of directors;

(iii) No securitisation company or reconstruction company shall invest out of its owned fund in land and building, provided that this restriction will not apply to funds borrowed as also to owned fund in excess of the minimum prescribed.

11. Accounting year

Every securitisation company or reconstruction company shall prepare its balance-sheet and profit and loss account as on March 31 every year.

12. Asset classification

(1) Classification--(i) Every securitisation company or reconstruction company shall, after taking into account the degree of well-defined credit weaknesses and extent of dependence on collateral security for realisation, classify the assets into the following categories, namely:--

(a)      Standard assets;

(b)      Non-performing assets.

(ii)     The non-performing assets shall be classified further as,--

(a)       "Sub-standard asset" for a period not exceeding twelve months from the date it was classified as non-performing asset;

(b)       "Doubtful asset" if the asset remains a sub-standard asset for a period exceeding twelve months;

(c)       "Loss asset" if the asset is non-performing for a period exceeding 36 months or if the asset is adversely affected by a potential threat of non-recoverability due to either erosion in the value of security or non-availability of security or if it has been identified as loss asset by the securitisation company or reconstruction company or its internal or external auditor.

(iii) Assets acquired by the securitisation company or reconstruction company for the purpose of asset reconstruction may be treated as standard assets during the planning period, if any.

(2) Asset reconstruction: Renegotiated/rescheduled assets--(i) Where the terms of agreement regarding interest and/or principal relating to standard asset have been renegotiated or rescheduled by a securitisation company or reconstruction company (otherwise than during planning period) the asset concerned shall be classified as sub-standard asset with effect from the date of renegotiation/reschedulement or continue to remain as a doubtful asset as the case may be.

(ii) The asset may be upgraded as a standard asset only after satisfactory performance for a period of twelve months as per the renegotiated/rescheduled terms.

(3) Provisioning requirements--Every securitisation company or reconstruction company shall make provision against non-performing assets, as under:--

Asset category  Provision required

Sub-standard assets  A general provision of 10 per cent. of the outstanding;

Doubtful assets  (i) 100 per cent. provision to the extent the asset is not covered by the estimated realisable value of security;

  (ii) In addition to item (i) above   50 per cent. of the remaining outstanding.

Loss assets  The entire asset shall be written off. (If   for any reason the asset is retained in the books   100 per cent. thereof shall be provided for).

13. Investments

All investments should be valued at lower of cost or realisable value.  Where market rates are available, the market value would be presumed to be the realisable value and in cases where market rates are not available, the realisable value should be the fair value. However, investments in other registered securitisation company or reconstruction company shall be treated as long-term investments and valued in accordance with the accounting standards and guidance notes issued by the Institute of Chartered Accountants of India.

14. Income recognition

(i) The income recognition shall be based on recognised accounting principles;

(ii) All the accounting standards and guidance notes issued by the Institute of Chartered Accountants of India shall be followed insofar as they are not inconsistent with the guidelines and directions contained herein;

(iii) Interest and any other charges in respect of all the NPAs shall be recognised only when they are actually realised.  Any such unrealised income recognised by a securitisation company or reconstruction company before the asset became non-performing and remaining unrealised shall be derecognised.

15. Disclosures in the balance-sheet

(1) Every securitisation company or reconstruction company shall, in addition to the requirements of Schedule VI of the Companies Act, 1956 prepare the following schedules and annex them to its balance-sheet:

(i)         the names and addresses of the banks/financial institutions from whom financial assets were acquired and the value at which such assets were acquired from each such bank/financial institutions;

(ii)         dispersion of various financial assets industry-wise and sponsor-wise (dispersion is to be indicated as a percentage to the total assets);

(iii) details of related parties as per accounting standard and guidance notes issued by the Institute of Chartered Accountants of India and the amounts due to and from them; and

(iv)        a statement clearly charting therein the migration of financial assets from standard to non-performing.

(i) The accounting policies adopted in preparation and presentation of the financial statements shall be in conformity with the application prudential norms prescribed by the bank.

(ii) Where any of the accounting policies is not in conformity with these directions, the particulars of departures shall be disclosed together with the reasons therefor and the financial impact on account thereof.  Where such an effect is not ascertainable, the fact shall be so disclosed citing the reasons therefor.

(iii) An inappropriate treatment of an item in balance-sheet or profit and loss account cannot be deemed to have been rectified either by disclosure of accounting policies used or by disclosure in notes to balance-sheet and profit and loss account.

16. Internal audit

Every securitisation company or reconstruction company shall put in place an effective internal control system providing for periodical checks and review of the asset acquisition procedures and asset reconstruction measures followed by the company and matters related thereto.

17. Exemptions

The bank may, if it considers it necessary for avoiding any hardship to securitisation company or reconstruction company, or for any other just and sufficient reason exempt all securitisation companies or reconstruction companies or a particular secrutisation company or reconstruction company or class of securitisation companies or reconstruction companies, from all or any of the provisions of these guidelines and directions either generally or for any specified period, subject to such conditions as the bank may impose.

ANNEXURE

(1) DISCLOSURE IN OFFER DOCUMENT:

A. Relating to the issuer of security receipts:

(i)         Name, place of registered office, date of incorporation, date of commencement of business of the securitisation company or reconstruction company;

(ii)         Particulars of sponsors, shareholders, and a brief profile of the directors on the board of the securitisation company or reconstruction company with their qualifications and experience;

(iii)     Summary of financial information of the company for the last three years or since commencement of business of the company, whichever is shorter;

(iv)        Details of securitisation/asset reconstruction activities handled, if any, in the last three years or since commencement of business, whichever is shorter.

B. Terms of offer:

(i)         Objects of offer;

(ii)         Description of the instrument giving particulars relating to its form, denomination, issue price, etc., together with an averment that the transferability of security receipts is restricted to the qualified institutional buyers;

(iii) Arrangements made for management of assets and extent of management fee charged by securitisation company or reconstruction company;

(iv)        Interest rate/probable yield;

(v)         Terms of payment of principal/interest, date of maturity/redemption;

(vi)        Servicing and administration arrangement;

(vii)       Details of credit rating, if any, a summary of the rationale for the rating;

(viii)      Description of assets being securitised;

(ix)       Geographical distribution of asset pool;

(x)        Residual maturity, interest rates, outstanding principal of the asset pool;

(xi)        Nature and value of underlying security, expected cash-flows, their quantum and timing, credit enhancement measures;

(xii)       Policy for acquisition of assets and valuation methodology adopted;

(xiii)     Terms of acquisition of assets from banks/financial institutions;

(xiv)      Details of performance record with the originators;

(xv)      Terms of replacement of assets, if any, to the asset pool;

(xvi)     Statement of risk factors, particularly relating to future cash-flows and steps taken to mitigate the same;

(xvii)    Arrangements, if any, for implementing asset reconstruction measures in the case of default;

(xviii)    Duties of the trustee;

(xix)    Specific asset reconstruction measures, if any, or which approvals will be sought from investors;

(xx)     Dispute redressal mechanism.

(2) DISCLOSURE ON QUARTERLY BASIS:

(i)        Defaults, prepayment, losses, if any, during the quarter;

(ii)       Change in credit rating, if any;

(iii)      Change in profile of the assets by way of accretion to or realisation assets from the existing pool;

(iv)      Collection summary for the current and previous quarter;

(v)       Any other material information, which has a bearing on the earning prospects affecting the qualified institutional buyers

FORM OF APPLICATION FOR REGISTRATION OF SECURITISATION/RECONSTRUCTION COMPANIES

FORM OF APPLICATION FOR REGISTRATION OF SECURITISATION/RECONSTRUCTION COMPANIES

The Reserve Bank of India, in exercise of the powers, conferred under sub-section (2) of section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, hereby specifies that the form given in the Annexure hereto shall be the form of application to be submitted by the securitisation companies or reconstruction companies seeking registration from the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

2. The securitisation companies or reconstruction companies seeking registration from the Reserve Bank of India shall submit their application duly filled in with all the relevant annexures/supporting documents to the Chief General Manager-in-Charge, Department of Non-Banking Supervision, Central Office, Reserve Bank of India, Centre 1, World Trade Centre, Cuffe Parade, Colaba, Mumbai-400 005.

FORM OF APPLICATION FOR CERTIFICATE OF REGISTRATION TO
COMMENCE/CARRY ON THE BUSINESS OF A SECURITISATION
COMPANY OR RECONSTRUCTION COMPANY

(Vide section 3 of the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002)

By Registered Post AD/Hand Delivery

Name of the company (in block letters) ......................

Address of registered office ...........................

To

The Chief General Manager-in-Charge,

Department of Non-Banking Supervision, Second Floor,

Reserve Bank of India, Central Office,

Centre No. 1, World Trade Centre,

Mumbai-400 005.

Dear Sir,

Application for a certificate of registration to commence/carry on* the business of a securitisation company or reconstruction company

We make this application in terms of sub-section (2) of section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, for issue of a certificate of registration. The required documents/information as per the instructions are furnished.

2. We are desirous of commencing/carrying on* the business of the securitisation company or reconstruction company.  Hence, we hereby request you to kindly issue the necessary certificate of registration under sub-section (1) of section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to enable our company to commence/carry on* the business of securitisation company or reconstruction company.

We solemnly declare that to the best of our knowledge and belief, the information furnished in this application and the annexures hereto and statements enclosed are correct, complete and true.  We are aware that if any of the information furnished herein is found to be incorrect/incomplete/untrue, the application for grant of certification of registration is liable to be rejected and the certificate of registration, if granted, is liable to be cancelled.

            Yours faithfully,

            (Signature of authorised official)

Date .............                                                                                             Name

Place ............                                                                                            Designation:

                                                           Company seal:

*Strike out whichever is not applicable.

ANNEXURE I

IDENTIFICATION PARTICULARS OF THE COMPANY

PART I

1.  Name of the company  : 

2.  List of directors  : 

3.  Whether the company had changed its name earlier? Please see item (10) of instructions  :               Yes/No

4.  Whether the company had changed its sponsors?  If so   details of earlier sponsors  : 

5.  Date of incorporation  : 

6.  Date of commencement of business  : 

7.  State in which the company is registered  : 

8.  Full address of the company   

(i) Registered office .......................................... Phone No. ................ Fax ............... email ........................

(ii) Corporate/Administrative *Office ............................ Phone No. .................. Fax ................. email ..........................

9.  Status (a) Public     (b) Private   

10.  Whether the company was transacting  :                                                                                      Yes/No

  (a) the business of securitisation/asset reconstruction as on June 21   2002   

  If yes   since when (date of commencement of such business)  : 

  (b) any other business including the business of an NBFI.  If yes   since when (date of commencement of such business)   

11.  Name(s) of statutory auditor/s   if appointed   

  Address(es)   

  Phone No./Fax  : 

12.  Name(s) of all bankers   

  Address(es)  : 

  Phone No./Fax  : 

13.  Whether the company or its related party(ies) has/have committed any default in repayment of any loan   advance or any other credit facility availed from any bank/any other financial institution including NBFCs.  :                             Yes/No.

14.  If yes   furnish full details   such as name and branch of lending institution   type of facility   period and quantum of default   etc.  : 

15.  Whether the company/its related party/has/have committed any default in repayment of redeemable debentures/preference shares/deposits  :  Yes/No.

16.  If yes   furnish full details of such defaults  : 

17.  Whether any group company is NBFC  :                                                                                      Yes/No.

18.  If yes   whether it has applied for registration to RBI for grant of a certificate of registration  : 

19.  If yes   whether registered/rejected  : 

20.  If registered   

  Registration No.  : 

  Date of issue of CoR  : 

PART II

Shareholding pattern of sponsor(s) (Please refer item 9 of instructions)

Sl. No.	Name of sponsor and address	No. of shares held	Amount	% to total paid up equity share capital of the company	Whether holding controlling interest
(1)	(2)	(3)	(4)	(5)	(6)
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

            (Signature of the authorised official)

Date .......                                                                                                                                    Name:

Place ......                                                                                                                                    Designation:

                                                                                                      Company Seal:

*Strike out whichever is not applicable.

ANNEXURE II

PART I

STATEMENT OF OWNED FUNDS AS ON ........

(Please refer item No. 11 of the instructions)

           
(Rs. in lakhs)

Item

Amount (Rs.)

(i)  Paid up equity capital  (ii)  Paid up preference capital to the extent compulsorily convertible into equity  (iii)  Free reserves (other than revaluation reserves)    (a) General reserves    (b) Share premium reserve    (c) Capital reserves (representing retained surplus on sale of assets held on separate account)    (d) Debentures and redemption reserve    (e) Capital redemption reserve    (f) Credit balance in P&L Account    (g) Other free reserves (to be specified)  (iv)  Total of (i) to (ii)    Less:  (v)  Accumulated balance of loss  (vi)  Deferred revenue expenditure  (vii)  Other intangible assets  (viii)  Under/short provisioning in value of investments other than those covered under item (xi)  (ix)  Under/short provisioning against NPAs/bad and doubtful debts other than those covered under item (xi) (x)  Over recognition of income  (xi)  Book value of the shares acquired in securitisation company or reconstruction company  (xii)  All other deductions required on account of items qualified by the auditors in their report on the financial statements  (xiii)  Total (v to xii)  (xiv)  Owned fund (iv-xiii)

        (Signature of authorised official)      

Date .......                                                                                                                                 Name:

Place .....                                                                                                                                 Designation:

                                                                                                                                               Company Seal:

*Strike out whichever is not applicable.

AUDITOR'S CERTIFICATE

We have examined the books of account and other records maintained by .... limited in respect of its owned fund as on .... and report that to the best of our knowledge and according to the information and explanations given to us and as shown by the records examined by us, the figures shown in the statement of owned fund are correct.

Date ......                                                          Chartered Accountants/Statutory Auditors*

Place .....

*Certificate to be signed by statutory auditors, if appointed.

ANNEXURE III

INFORMATION ABOUT THE CHAIRMAN, MANAGING DIRECTOR,
DIRECTORS AND THE CHIEF EXECUTIVE OFFICER OF THE COMPANY

1.  Name  : 

2.  Designation/status  :                                Chairman/Manager Director/ Director Chief Executive officer*

3.
4.  Nationality
Age  :                                                                 

5.  Business address  : 

6.  Residential address  : 

7.  Income-tax PAN No.  : 

8.  Educational/professional qualifications  : 

9.  Line of business or vocation  : 

10.  Name(s) of other companies in which the person has held the post of chairman/managing director/director/chief executive officer  : 

11.  (i) Whether associated as sponsor   managing director   chairman or director with any NBFC including a residuary non-banking company.  :                                                           Yes/No

  (ii) If yes   the name(s) of the company (ies) (separate sheet may be attached if necessary)  :  Yes/No

12.  (i) Whether prosecuted/convicted for an offence involving moral turpitude or for any economic offence either in the individual capacity or as a partner/director of any firm/company  : 

  (ii) If yes   particulars thereof  : 

13.  (i) Whether barred by SEBI in the past from becoming director in any company  :  Yes/No

  (ii) If yes   particulars thereof  : 

14.  (i) Whether disqualified in the past to be director of a company under the Companies Act   1956  :  Yes/No

  (ii) If yes   particulars thereof  : 

15.  Experience in the field of finance   securitisation and asset reconstruction (details) (a separate sheet may be attached   if necessary)  : 

16.  Equity shareholding in the applicant company   

  (i) No. of shares   

  (ii) Face value   

  (iii) Percentage of total paid up equity share capital of the company  : 

17.  Whether nominee of or associated with any of sponsor(s)  :            Yes/No

18.  All bank details: A/c Nos.   all bankers' names and addresses  : 

19.  Whether committed any default in repayment of any loan   advance or any other credit facility availed of from any bank/any other financial institution including NBFCs  :  Yes/No

20.  If yes   furnish full details   such as name and branch of lending institution   type of facility period and quantum of default   etc.  : 

I solemnly declare that to the best of my knowledge and belief the information furnished in the statement above is correct, complete and truly stated.

(Signature of the person furnishing information)

Date ........                                                                                                                     Name:

Place ......                                                                                                                      Designation:

I solemnly declare that to the best of my knowledge and belief the information furnished in the statement above is correct, complete and truly stated.

(Signature of Authorised Official of the company)

Date ......                                                                                                                            Name:

Place .....                                                                                                                            Designation:

            Company Seal:

*Strike out whichever is not applicable.

ANNEXURE IV

INFORMATION ABOUT THE SPONSOR/S OF THE COMPANY

1.  Name  : 

2.  Business address  : 

3.  Residential address  : 

4.  Income-tax PAN No.  : 

5.  Line of business or vocation  : 

6.  Bank A/c No.   banker's name and address  : 

7.  Whether committed any default in repayment of any loan   advance or any other credit facility availed of from any bank/any other financial institution including NBFCs.  :                                                                               Yes/No

8.  If yes   furnish full details   such as name and branch of lending institution   type of facility   period and quantum of default   etc.  : 

9.  Whether the company/subsidiary/other companies in the same group has/have committed any default in repayment of redeemable debentures/preference shares/deposits  :                                                          Yes/No

10.  Whether object clause in its memorandum and articles of association permits investment in securitisation company or reconstruction company  :                                                                                                    Yes/No

11.  Extent of investment in reconstruction company or securitisation company;   

  (i) No. of shares  : 

  (ii) Face value  : 

  (iii) Percentage of total paid up equity share capital of the company  : 

12.  Whether sponsor is holding company/or holding controlling interest in the proposed company  : 

I solemnly declare that to the best of my knowledge and belief the information furnished in the statement above is correct, complete and truly stated.

            (Signature of authorised official)

Date .......                                                                                                                                Name:

Place .....                                                                                                                                 Designation:

                                                                                                 Company Seal:

ANNEXURE V

INFORMATION ABOUT RELATED PARTIES

1.  Name of related party  :

2.  Full address  :

3.  Line of business  :

4.  Status: (a) Individual/firm   (b) Public limited company/private limited company  :

5.  Relationship with applicant company  :

6.  Details of exposure  :

 

Item	Amount (Rs. in lakh)
Investment in capital shares   bonds/debentures
Outstanding loans and advances
Deposits
Total

I solemnly declare that to the best of my knowledge and belief the information furnished in the statement above is correct, complete and truly stated.

                        (Signature of authorised official)

Date .....                                                                                                                                     Name :

Place ....                                                                                                                                    Designation:

            Company Seal:                      

DOCUMENTS REQUIRED TO BE ANNEXED TO THE APPLICATION FORM

1. Identification particulars of the company (Annexure I).

2. Statement of owned fund (Annexure II).

3. Information about the management (Annexure III).

4. Information about the sponsor(s) (Annexure IV).

5. Information about related parties as defined in the Accounting Standards and Guidance Notes of ICAI (Annexure V).

6. Certified copy of up-to-date memorandum and articles of association of the company (evidencing therein that the company has been formed for the purpose of undertaking securitisation/asset reconstruction business only).

7. A certified copy each of certificate of incorporations and certificate of commencement of business (in case of public limited companies).

8. A certified copy each of the board of directors resolution, (i) specifically approving the submission of the application to the Reserve Bank of India and its content and names of authorised officials, (ii) stating that the company has not accepted any deposit (as defined in section 45-I (bb) of the Reserve Bank of India Act, 1934/deposit accepted will be repaid in terms of the contract and the company has not defaulted in repayment of deposits/interest thereon so far, (iii) stating whether or not the directors of the company have adequate professional experience in matters related to finance, securitisation and reconstruction, (iv) stating that none of the directors is disqualified to be appointed as directors as per the provisions of the Companies Act, 1956, and (v) stating that the company, if carrying on any other business other than the business of securitisation/asset reconstruction as defined in the Act on or before the date of application, will cease to carry on any such business by June 20, 2003 if the company is granted registration by RBI (carrying out the business of securitisation, which does not fall under the definition of securitisation as in section 2(1)(za) of the Act, will fall under "other activity").

9. A certified copy of board of directors resolution and auditor's certificate (in original) to the effect that:

(i)         the company has not incurred losses in any of the three preceding financial years (for existing companies only);

(ii)         the company has not engaged (for existing companies only)/will not engage in any business other than securitisation and asset reconstruction;

(iii) any of the sponsors is not a holding company of the securitisation company or reconstruction company or does not otherwise hold any controlling interest in such securitisation company or reconstruction company;

(iv)        the board of directors of the company does not consist of more than half of its total number of directors who are either nominees of any sponsor or associated in any manner with the sponsor or any of its subsidiaries.

10. The board of directors should, by means of a report, state that the company has made adequate arrangements for realisation of the financial assets acquired for the purpose of securitisation/asset reconstruction and that it shall be able to service its obligations on respective due dates to the qualified institutional buyers or other persons.

11. A copy each of the profit and loss account and audited balance-sheet for the last three years or for such shorter period as are available (for companies already in existence).

12. Business plan of company for the next three years giving details of its--

(a)             thrust of business;

(b)             amount of financial assets proposed to be acquired;

(c)             market segment;

(d)             projection of investments and income;

(e)             statement of financial assets and liabilities; and

(f)             organisational structure.

*Delete whichever is not applicable.

INSTRUCTIONS

(Application form should be filled up strictly in accordance with these instructions)

GENERAL

1. Application should be made in this form only.  Wherever space is insufficient, information may be furnished in separate sheet(s).

2. Application alongwith enclosures duly completed should be submitted in duplicate on or before March 20, 2003, to the Department of Non-Banking Supervision, Reserve Bank of India, Central Office, Centre I, Second Floor, World Trade Centre, Mumbai-400 005.

3. A photocopy of the application together with enclosures/Annexures, as submitted may be kept with the company for its record.

4. Application should be signed by any of the following officials authorised by the board of directors in this behalf (viz. chairman/managing director/director/chief executive officer/company secretary, hereinafter known as the authorised official).

5. Application should bear the company seal.

6. An acknowledgement for having submitted the application may be obtained from the RBI.

7. Statement of owned fund to be submitted as on date of the latest audited balance-sheet.

ANNEXURE I

8. "Sponsor" as defined in terms of section 2(1)(zh) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

9. "Control" includes the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person, directly or indirectly, including by virtue of his shareholding or management rights or shareholders' agreements or voting agreements or in any other manner.

10 In case the company has changed its name earlier, a list of all the earlier names of the company and date(s) of change together with the names of chief executive officer and chairman at the time of change of name should be furnished.

ANNEXURE II

11. The particulars/information to be furnished in Annexure II of the application should be based on figures as disclosed in the latest audited balance-sheet. However, in the case of a company incorporated on or after June 21, 2002, such particulars/information should be based on the balance-sheet as on a date falling within not more than thirty days preceding the date of application.

12. "Free reserve" includes reserve shown in the balance-sheet and created through an allocation out of profits but not being (a) a reserve created for repayment of any future liability or for depreciation on assets or for bad debts, or (b) a reserve created by revaluation of assets of the company.

13. "Related party" means related parties as per the accounting standards and guidance notes issued by the Institute of Chartered Accountants of India.

14. Under/short provisioning in value of investments, against NPAs and over-recognition of income will be as identified by statutory auditors/internal auditors/RBI inspecting officer.

15. The contents of Annexure II should be certified by a chartered accountant.

ANNEXURE III

16. The information about the sponsor, chairman, managing director, directors and the chief executive officer of the company must be certified by each individual, chairman, managing director, directors and the chief executive officer of the company and countersigned by the authorised official of the applicant company.

17. Separate form should be submitted in this format of each of such functionaries.

ANNEXURE IV

18. Separate form should be submitted in respect of each of the sponsors.

ANNEXURE V

19. Separate form should be submitted in respect of each of the related party.

20. The particulars/information should be based on figures as on date of last audited balance-sheet as given in Annexure II.