The weekly messenger | Edition 20.22
The weekly messenger | Edition 20.22
This newsletter is a weekly compilation of accounting, auditing and related regulatory news from different accounting and regulatory bodies in India and overseas.
Regulatory News
Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2022 – 10 June 2022
The Ministry of Corporate Affairs (MCA) has issued the Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2022, wherein in Rule 6 ‘Compliances required by a person eligible and willing to be appointed as an independent director’, a new sub-rule (5) has been inserted which states that any individual whose name has been removed from the databank under sub-rule (4), may apply for restoration of his name subject to certain specified conditions.
These Rules shall come into force w.e.f. 10 June 2022.
For more information, click here.
Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2022 – 10 June 2022
The MCA has also issued the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2022, wherein the following changes have been made:
- Registrar has been given the powers to call for further information or direct the applicant to remove the defects and re-submit the complete Form STK-2 within 15 days from the date of such information, failing which the Registrar shall treat Form as invalid in the electronic record, and shall inform the applicant;
- Form no. STK 1, STK-5 and STK-5A have been substituted with new forms.
These Rules shall come into force w.e.f. 9 June 2022.
For more information, click here.
National Financial Reporting Authority Amendment Rules, 2022 – 17 June 2022
The MCA has issued the National Financial Reporting Authority (NFRA) Amendment Rules, 2022, wherein clause13 ‘Punishment in case of non-compliance’ has been substituted with a new clause, thereby fixing the maximum penalty of up to five thousand rupees in case of non-compliance of NFRA Rules.
These Rules shall come into force w.e.f. 17 June 2022.
For more information, click here.
Report of the Insolvency Law Committee – May 2022
The Insolvency Law Committee presented its 5th Report to the Honourable Union Minister of Finance and Corporate Affairs, wherein it has made various recommendations to the Government w.r.t. issue on the corporate insolvency resolution (CIRP), liquidation processes etc.
For more information, click here.
Provisioning of Standards assets by NBFCs – Upper Layer – 6 June 2022
The Reserve Bank of India (RBI) vide its Circular dated 22 October 2021 had issued a revised regulatory framework for Non-Banking Financial Companies (NBFCs) i.e., ‘Scale Based Regulation (SBR) Framework for NBFCs’ wherein it was inter alia mentioned that RBI would issue guidelines on differential provisioning to be held by NBFCs classified as NBFC-Upper Layer (NBFC-UL) towards different classes of standard assets. Now, the RBI has issued detailed guidelines with respect to the same, wherein it has been decided that NBFCs classified as NBFC-UL shall maintain provisions in respect of ‘standard’ assets at the following rates for the funded amount outstanding:
Category of Assets | Rate of Provision |
Individual housing loans and loans to Small and Micro Enterprises (SMEs) | 0.25 per cent |
Housing loans extended at teaser rates | 2.00 per cent, which will decrease to 0.40 per cent after 1 year from the date on which the rates are reset at higher rates (if the accounts remain ‘standard’) |
Advances to Commercial Real Estate – Residential Housing (CRE - RH) Sector | 0.75 per cent |
Advances to Commercial Real Estate (CRE) Sector (other than CRE-RH) | 1.00 per cent |
Restructured advances | As stipulated in the applicable prudential norms for restructuring of advances |
All other loans and advances not included above, including loans to Medium Enterprises | 0.40 per cent |
These guidelines shall be effective from 1 October 2022.
For more information, click here.
Discontinuation of Return under Foreign Exchange Management Act, 1999 – 9 June 2022
The RBI has decided to discontinue the return on ‘Details of guarantee availed and invoked from non-resident entities’ under the Foreign Exchange Management Act, 1999 w.e.f. the quarter ending June 2022.
For more information, click here.
Rationalization of regulatory returns and other compliance requirements – 10 June 2022
In order to enhance ease of doing business and reduce compliance burden, the Insurance Regulatory and Development Authority of India (IRDAI) has decided to rationalize the regulatory returns and other compliance requirements from life insurers, wherein:
- The requirement of submission of various returns have been discontinued;
- The frequency of submission of progress report on COVID-19 death claims has been modified from weekly to monthly;
- Certain compliance certifications have been consolidated into a single certificate.
For more information, click here.
Accounting of Premium, claims and related expenses on estimation basis – 15 June 2022
The IRDAI has issued guidelines to govern the accounting and disclosures of premium recognised on estimation basis, wherein it has been clarified that the FRBs/Reinsurers shall ensure that in annual financial statements, no premium should be accrued/ accounted on estimate basis at least upto 3rd quarter of each FY. However, for the fourth quarter ending on 31 March, where the statement of accounts has not been received in time, the premium, losses and related expenses may be accounted on estimation basis, subject to certain conditions.
This circular is effective from FY 2022-23 onwards.
For more information, click here.