Chapter-19B

Chapter-19B
SEBI (Issue of capital And Disclosure Requirements)
Regulations, 2009
1. DEFINITION OF WILFUL DEFAULTER ( Newly inserted definition )
 “Wilful Defaulter” means an issuer who is categorized as a wilful defaulter by any bank or fi-
nancial institution or consortium thereof, in accordance with the guidelines on wilful defaulters
issued by the Reserve Bank of India and includes an issuer whose director or promoter is cat-
egorized as such.

2. AMENDMENT IN REGULATION 4
(a) In sub-regulation (2), Clause (c) omitted by SEBI (Issue of Capital and Disclosure Require-
ments) (Third Amendment) Regulations, 2016. ( Amendment in existing regulation )

 Prior to its omission, clause (c) read as under: ”If the issuer of convertible debt instruments is
in the list of wilful defaulters published by the Reserve Bank of India or it is in default of payment
of interest or repayment of principal amount in respect of debt instruments issued by it to the
public, if any, for a period of more than six months”
(b) After sub-regulation (4), the following sub-regulations (5), (6) & (7) shall be inserted-
( Newly inserted sub-regulations )
Regulation 4(5):
 No issuer shall make,
(i) Public issue of equity securities, if the issuer or any of its promoters or directors is a wilful de-
faulter; or
(ii) a public issue of convertible debt instruments if,
 the issuer or any of its promoters or directors is a wilful defaulter, or
 it is in default of payment of interest or repayment of principal amount in respect of debt instru-
ments issued by it to the public, if any, for a period of more than six months.
Regulation 4(6):
 An issuer making a rights issue of specified securities, shall make disclosures as specified in Part
G of Schedule VIII, in the offer document and abridged letter of offer, if the issuer or any of its
promoters or directors is a wilful defaulter.
Regulation 4(7):
 In case of a rights issue of specified securities referred to in sub-regulation (6) above, promoters

or promoter group of the issuer, shall not renounce their rights except to the extent of renuncia-
tion within the promoter group.

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3. AMENDMENT IN REGULATION 12 - DISPATCH OF ISSUE MATERIAL ( Amendment in
Existing Regulation )
 The lead merchant bankers shall dispatch the offer document and other issue material including
forms for ASBA to the designated stock exchange, syndicate members, registrar to issue and
share transfer agents, depository participants, stock brokers*, underwriters, bankers to the issue,
investors‘ associations and Self Certified Syndicate Banks in advance.
*Words in blue newly inserted.
4. AMENDMENT IN REGULATION 58 - ABRIDGED PROSPECTUS, ABRIDGED LETTER OF
OFFER AND ASBA ( Amendment in Existing Regulation )
(1) The abridged prospectus shall contain the disclosures of the memorandum prescribed under
sub-section (3) of section 56 of the Companies Act, 1956 and additional disclosures as specified
in Part D of Schedule VIII.( Strikedthrough words have been omitted.)
(2) The abridged letter of offer shall contain the disclosures as specified in Part F of Schedule VIII.
(3) The abridged prospectus and abridged letter of offer shall not contain any matter extraneous to
the contents of the offer document.
(4) Every application form including ASBA form distributed by the issuer or any other person in rela-
tion to an issue shall be accompanied by a copy of the abridged prospectus or abridged letter
of offer, as the case may be.

(5) *In all, -

(i) Public issues, the issuer shall accept bids using only ASBA facility in the manner specified by the
Board;
(ii) Rights issues, where not more than one payment option is given, the issuer shall provide the
facility of ASBA in accordance with the procedure and eligibility criteria specified by the Board.
Provided that in case of qualified institutional buyers and non-institutional investors the issuer
shall accept bids using ASBA facility only.
* Sub-regulation 5 has been substituted .

5. AMENDMENT IN REGULATION 65 – POST-ISSUE REPORTS (Amendment in Existing

Regulation )
Sub-regulation (1) and (2) has been substituted.
(1) In public issue, the lead merchant banker shall submit final post-issue report as specified in Part
C of Schedule XVI, within seven days of the date of finalization of basis of allotment or within
seven days of refund of money in case of failure of issue.
(2) In rights issue, the lead merchant banker shall submit post-issue reports as follows:-
(a) initial post issue report as specified in Part B of Schedule XVI, within three days of closure of the
issue;
(b) final post issue report as specified in Part D of Schedule XVI, within fifteen days of the date of
finalization of basis of allotment or within fifteen days of refund of money in case of failure of

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 Chapter-19B
issue.
(3) The lead merchant banker shall submit a due diligence certificate as per the format specified in
Form G of Schedule VI, along with the final post issue report.

6. CHAPTER VI-A CONDITIONS AND MANNER OF PROVIDING EXIT OPPORTUNITY TO DIS-

ENTING SHAREHOLDERS ( Newly inserted regulations )
(i) In the SEBI (ICDR) Regulation, 2009 after chapter VI, chapter VI-A shall be inserted. This chapter
is to read with section 13(8) and section 27(2) of the Companies Act, 2013.
(ii) Section 13(8) of the Companies Act, 2013 deals with the company which has raised money from
public through prospectus and still have un-utilised amount out of the money so raised.
(iii) Section 27(2) deals with the dissenting shareholders who have not agreed to the proposal to
vary the terms of contracts or objects and given to them an exit offer in such manner and condi-
tions as may be prescribed by the SEBI in the regulation.
(a) Regulation 69F - Manner of providing exit to dissenting shareholders.
(i) The notice proposing the passing of special resolution for changing the objects of the issue and
varying the terms of contract, referred to in the prospectus shall also contain information about
the exit offer to the dissenting shareholders.
(ii) In addition to the disclosures required under the provisions of section 102 of the Companies
Act, 2013 read with rule 32 of the Companies (Incorporation) Rules, 2014 and rule 7 of the
Companies (Prospectus and Allotment of Securities) Rules, 2014 and any other applicable law, a
statement to the effect that the promoters or the shareholders having control shall provide an
exit opportunity to the dissenting shareholders shall also be included in the explanatory state-
ment to the notice for passing special resolution.
(iii) After passing of the special resolution, the issuer shall submit the voting results to the recog-
nised stock exchange(s), in terms of the provisions of regulation 44(3) of the Securities and Ex-
change Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
(iv) The issuer shall also submit the list of dissenting shareholders, as certified by its compliance of-
ficer, to the recognised stock exchange(s).
(v) The promoters or shareholders in control, shall appoint a merchant banker registered with the
Board and finalize the exit offer price in accordance with these regulations.
(vi) The issuer shall intimate the recognised stock exchange(s) about the exit offer to dissenting
shareholders and the price at which such offer is being given.
(vii) The recognised stock exchange(s) shall immediately on receipt of such intimation disseminate
the same to public within one working day.
(viii) To ensure security for performance of their obligations, the promoters or shareholders having
control, as applicable, shall create an escrow account which may be interest bearing and deposit
the aggregate consideration in the account at least two working days prior to opening of the
tendering period.
(ix) The tendering period shall start not later than seven working days from the passing of the spe-
cial resolution and shall remain open for ten working days.
(x) The dissenting shareholders who have tendered their shares in acceptance of the exit offer shall

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 Chapter-19B
have option to withdraw such acceptance till the date of closure of the tendering period.
(xi) The promoters or shareholders having control shall facilitate tendering of shares by the share-
holders and settlement of the same through the recognised stock exchange mechanism as
specified by SEBI for the purpose of takeover, buy-back and delisting.
(xii) The promoters or shareholders having control shall, within a period of ten working days from
last date of the tendering period, make payment of consideration to the dissenting shareholders
who have accepted the exit offer.
(xiii) Within a period of two working days from the payment of consideration, the issuer shall furnish
to the recognised stock exchange(s), disclosures giving details of aggregate number of shares
tendered, accepted, payment of consideration and the post-offer shareholding pattern of the
issuer and a report by the merchant banker that the payment has been duly made to all the dis-
senting shareholders whose shares have been accepted in the exit offer.
(b) Regulation 69G - Offer not to exceed maximum permissible non-public shareholding.
 In the event, shares accepted in the exit offer were such that the shareholding of the promoters
or shareholders in control, taken together with persons acting in concert with them pursuant
to completion of the exit offer results in their shareholding exceeding the maximum permis-
sible non-public shareholding, the promoters or shareholders in control, as applicable, shall be
required to bring down the non-public shareholding to the level specified and within the time
permitted under Securities Contract (Regulation) Rules, 1957

7. AMENDMENT IN REGULATION 73 - DISCLOSURES ( Clause h newly inserted )

(1) The issuer shall, in addition to the disclosures required under section 173 of the Companies Act,
1956 or any other applicable law, disclose the following in the explanatory statement to the
notice for the general meeting proposed for passing special resolution:
(a) the objects of the preferential issue;
(b) the proposal of the promoters, directors or key management personnel of the issuer to sub-
scribe to the offer;
(c) the shareholding pattern of the issuer before and after the preferential issue;
(d) the time within which the preferential issue shall be completed;
(e) the identity of the natural persons who are the ultimate beneficial owners of the shares pro-
posed to be allotted and/or who ultimately control the proposed allottees, the percentage of
post preferential issue capital that may be held by them and change in control, if any, in the
issuer consequent to the preferential issue.
Provided that if there is any listed company, mutual fund, bank or insurance company in the
chain of ownership of the proposed allottee, no further disclosure will be necessary.
(f) an undertaking that the issuer shall re-compute the price of the specified securities in terms of
the provision of these regulations where it is required to do so;
(g) an undertaking that if the amount payable on account of the re-computation of price is not
paid within the time stipulated in these regulations, the specified securities shall continue to be
locked- in till the time such amount is paid by the allottees.
(h) disclosures, similar to disclosures specified in Part G of Schedule VIII, if the issuer or any of its

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 Chapter-19B
promoters or directors is a wilful defaulter.
(2) The issuer shall place a copy of the certificate of its statutory auditor before the general meet-
ing of the shareholders, considering the proposed preferential issue, certifying that the issue is
being made in accordance with the requirements of these regulations.
(3) Where specified securities are issued on a preferential basis to promoters, their relatives, as-
sociates and related entities for consideration other than cash, the valuation of the assets in
consideration for which the equity shares are issued shall be done by an independent qualified
valuer, which shall be submitted to the recognised stock exchanges where the equity shares of
the issuer are listed:
 Provided that if the recognised stock exchange is not satisfied with the appropriateness of the
valuation, it may get the valuation done by any other valuer and for this purpose it may obtain
any information, as deemed necessary, from the issuer.
(4) The special resolution shall specify the relevant date on the basis of which price of the equity
shares to be allotted on conversion or exchange of convertible securities shall be calculated.
 Explanation: For the purpose of sub-regulation (3), the term ‘valuer‘ has the same meaning as
is assigned to it under clause (r) of sub-regulation (1) of regulation 2 of the Securities and Ex-
change Board of India (Issue of Sweat Equity) Regulations, 2002

8. AMENDMENT IN REGULATION 84 – PLACEMENT DOCUMENT ( Amendment in existing

regulation )
(1) The qualified institutions placement shall be made on the basis of a placement document which
shall contain all material information, including those specified in Schedule XVIII and disclosures
similar to disclosures specified in Part G of Schedule VIII shall be made, if applicable*.
(*Words in blue are newly added)
(2) The placement document shall be serially numbered and copies shall be circulated only to select
investors.
(3) The issuer shall, while seeking in-principle approval from the recognised stock exchange, furnish
a copy of the placement document, a certificate confirming compliance with the provisions of
this Chapter along with any other documents required by the stock exchange.
(4) The placement document shall also be placed on the website of the concerned stock exchange
and of the issuer with a disclaimer to the effect that it is in connection with a qualified institu-
tions placement and that no offer is being made to the public or to any other category of inves-
tors

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 Chapter-21

Chapter-21
FOREIGN EXCHANGE MANAGEMENT ACT, 1999

1. DEFINITION OF CURRENCY ( Amendment in existing definition )

 Reserve Bank notifies debit cards, ATM cards or any other instrument by whatever name called
that can be used to create a financial liability, as ‘currency’.
 Section 2 (h) “Currency” includes all currency notes, postal notes, postal orders, money orders,
cheques, drafts, travellers cheques, letters of credit, bills of exchange and promissory notes,
credit cards or such other similar instruments, as may be notified by the Reserve Bank;

2. FOREIGN EXCHANGE MANAGEMENT (ACQUISITION AND TRANSFER OF IMMOVABLE

PROPERTY OUTSIDE INDIA) REGULATIONS, 2015 ( Newly inserted regulation )
(1) A person resident in India may acquire immovable property outside India, -
(a) by way of gift or inheritance from a person referred to in sub-section (4) of Section 6 of the Act,
or referred to in clause (b) of regulation 4 (acquired by a person resident in India on or before
8th July 1947 and continued to be held by him with the permission of the Reserve Bank. )
(b) by way of purchase out of foreign exchange held in Resident Foreign Currency (RFC) account
maintained in accordance with the Foreign Exchange Management (Foreign Currency accounts
by a person resident in India) Regulations, 2015;
(c) jointly with a relative who is a person resident outside India, provided there is no outflow of
funds from India;
(2) A person resident in India may acquire immovable property outside India, by way of inheritance
or gift from a person resident in India who has acquired such property in accordance with the
foreign exchange provisions in force at the time of such acquisition.
(3) A company incorporated in India having overseas offices, may acquire immovable property out-
side India for its business and for residential purposes of its staff, in accordance with the direc-
tion issued by the Reserve Bank of India from time to time.
 Explanation: For the purposes of these regulations, ‘relative’ in relation to an individual means
husband, wife, brother or sister or any lineal ascendant or descendant of that individual.

3. FOREIGN EXCHANGE MANAGEMENT (EXPORT OF GOODS & SERVICES) REGULATIONS,

2015 ( Newly inserted regulations )

(1) Short title and commencement:-

(i) These Regulations may be called the Foreign Exchange Management (Export of Goods and Ser-
vices) Regulations, 2015.
(ii) They shall come into force from the date of their publication in the Official Gazette.
(2) Definitions:
 In these Regulations, unless context requires otherwise, -
(i) ‘export’ includes the taking or sending out of goods by land, sea or air, on consignment or by

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way of sale, lease, hire-purchase, or under any other arrangement by whatever name called, and
in the case of software, also includes transmission through any electronic media;
(ii) ‘export value’ in relation to export by way of lease or hire-purchase or under any other similar
arrangement, includes the charges, by whatever name called, payable in respect of such lease or
hire-purchase or any other similar arrangement;
(iii) ‘form’ means form annexed to these Regulations;
(iv) ‘software’ means any computer programme, database, drawing, design, audio/video signals,
any information by whatever name called in or on any medium other than in or on any physical
medium ;
(v) ‘specified authority’ means the person or the authority to whom the declaration as specified in
Regulation 3 is to be furnished;
(3) Declaration of exports:-
 In case of exports taking place through Customs manual ports, every exporter of goods or soft-
ware in physical form or through any other form, either directly or indirectly, to any place out-
side India, other than Nepal and Bhutan, shall furnish to the specified authority, a declaration in
one of the forms set out in the Schedule and supported by such evidence as may be specified,
containing true and correct material particulars including the amount representing –
(i) the full export value of the goods or software; or
(ii) if the full export value is not ascertainable at the time of export, the value which the exporter,
having regard to the prevailing market conditions expects to receive on the sale of the goods
or the software in overseas market, and affirms in the said declaration that the full export value
of goods (whether ascertainable at the time of export or not) or the software has been or will
within the specified period be, paid in the specified manner.
(4) Exemptions- Already covered in Volume 2
(5) Indication of importer-exporter code number:-
 The importer-exporter code number allotted by the Director General of Foreign Trade under
Section 7 of the Foreign Trade (Development & Regulation) Act, 1992 (22 of 1992) shall be indi-
cated on all copies of the declaration forms submitted by the exporter to the specified authority
and in all correspondence of the exporter with the authorised dealer or the Reserve Bank, as the
case may be.
6. Authority to whom declaration is to be furnished and the manner of dealing with the
declaration:-
A. Declaration in Form EDF
(i) The declaration in form EDF shall be submitted in duplicate to the Commissioner of Customs.
(ii) After duly verifying and authenticating the declaration form, the Commissioner of Customs shall
forward the original declaration form/data to the nearest office of the Reserve Bank and hand
over the duplicate form to the exporter for being submitted to the authorised dealer.
B. Declaration in Form SOFTEX
(i) The declaration in Form SOFTEX in respect of export of computer software and audio/video/
television software shall be submitted in triplicate to the designated official of Ministry of Infor-
mation Technology, Government of India at the Software Technology Parks of India (STPIs) or at

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the Free Trade Zones (FTZs) or Special Economic Zones (SEZs) in India.
(ii) After certifying all three copies of the SOFTEX form, the said designated official shall forward
the original directly to the nearest office of the Reserve Bank and return the duplicate to the
exporter. The triplicate shall be retained by the designated official for record.
C. Duplicate Declaration Forms to be retained with Authorised Dealers
 On the realisation of the export proceeds, the duplicate copies of export declaration forms viz.
EDF and SOFTEX and Exchange Control copies of the shipping bills shall be retained by the Au-
thorised Dealers.
7. Evidence in support of declaration:-
 The Commissioner of Customs or the postal authority or the official of Department of Electronics,
to whom the declaration form is submitted, may, in order to satisfy themselves of due compli-
ance with Section 7 of the Act and these regulations, require such evidence in support of the
declaration as may establish that –
(a) the exporter is a person resident in India and has a place of business in India;
(b) the destination stated on the declaration is the final place of the destination of the goods ex-
ported;
(c) the value stated in the declaration represents –
(i) the full export value of the goods or software; or
(ii) where the full export value of the goods or software is not ascertainable at the time of export,
the value which the exporter, having regard to the prevailing market conditions expects to re-
ceive on the sale of the goods in the overseas market.
 Explanation: For the purpose of this regulation, ‘final place of destination’ means a place in a
country in which the goods are ultimately imported and cleared through Customs of that coun-
try.
8. Manner of payment of export value of goods:-
 Unless otherwise authorised by the Reserve Bank, the amount representing the full export value
of the goods exported shall be paid through an authorised dealer in the manner specified in
the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000 as
amended from time to time.
 Explanation: For the purpose of this regulation, re-import into India, within the period specified
for realisation of the export value, of the exported goods in respect of which a declaration was
made under Regulation 3, shall be deemed to be realisation of full export value of such goods.

9. Period within which export value of goods/software/ services to be realised:-

(1) The amount representing the full export value of goods / software/ services exported shall be
realised and repatriated to India within nine months from the date of export, provided
(a) that where the goods are exported to a warehouse established outside India with the permis-
sion of the Reserve Bank, the amount representing the full export value of goods exported shall
be paid to the authorised dealer as soon as it is realised and in any case within fifteen months
from the date of shipment of goods;

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(b) further that the Reserve Bank, or subject to the directions issued by that Bank in this behalf, the
authorised dealer may, for a sufficient and reasonable cause shown, extend the period of nine
months or fifteen months, as the case may be.
(2) (a) Where the export of goods / software / services has been made by Units in Special Economic
Zones (SEZ) / Status Holder exporter / Export Oriented Units (EOUs) and units in Electronics
Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio-Technology
Parks (BTPs) as defined in the Foreign Trade Policy in force, then notwithstanding anything con-
tained in sub-regulation (1), the amount representing the full export value of goods or software
shall be realised and repatriated to India within nine months from the date of export.
Provided further that the Reserve Bank, or subject to the directions issued by the Bank in this be-
half, the authorised dealer may, for a sufficient and reasonable cause shown, extend the period
of nine months.
(b) The Reserve Bank may for reasonable and sufficient cause direct that the said exporter/s shall
cease to be governed by sub-regulation (2);
 Provided that no such direction shall be given unless the unit has been given a reasonable op-
portunity to make a representation in the matter.
(c) On such direction, the said exporter/s shall be governed by the provisions of sub-regulation (1),
until directed otherwise by the Reserve Bank.’
 Explanation: For the purpose of this regulation, the “date of export” in relation to the export of
software in other than physical form, shall be deemed to be the date of invoice covering such
export.

10. Submission of export documents:-

 The documents pertaining to export shall be submitted to the authorised dealer mentioned in
the relevant export declaration form, within 21 days from the date of export, or from the date of
certification of the SOFTEX form:
 Provided that, subject to the directions issued by the Reserve Bank from time to time, the autho-
rized dealer may accept the documents pertaining to export submitted after the expiry of the
specified period of 21 days, for reasons beyond the control of the exporter.

11. Transfer of documents:-

 Without prejudice to Regulation 3, an authorised dealer may accept, for negotiation or collec-
tion, shipping documents including invoice and bill of exchange covering exports, from his con-
stituent (not being a person who has signed the declaration in terms of Regulation 3) :
 Provided that before accepting such documents for negotiation or collection, the authorised
dealer shall –
(a) where the value declared in the declaration does not differ from the value shown in the docu-
ments being negotiated or sent for collection, or
(b) where the value declared in the declaration is less than the value shown in the documents being
negotiated or sent for collection, require the constituent concerned also to sign such declara-
tion and thereupon such constituent shall be bound to comply with such requisition and such

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constituent signing the declaration shall be considered to be the exporter for the purposes of
these Regulations to the extent of the full value shown in the documents being negotiated or
sent for collection and shall be governed by these Regulations accordingly.

12. Payment for the Export:-

 In respect of export of any goods or software for which a declaration is required to be furnished
under Regulation 3, no person shall except with the permission of the Reserve Bank or, subject
to the directions of the Reserve Bank, permission of an authorised dealer, do or refrain from
doing anything or take or refrain from taking any action which has the effect of securing –
(i) that the payment for the goods or software is made otherwise than in the specified manner; or
(ii) that the payment is delayed beyond the period specified under these Regulations; or
(iii) that the proceeds of sale of the goods or software exported do not represent the full export
value of the goods or software subject to such deductions, if any, as may be allowed by the Re-
serve Bank or, subject to the directions of the Reserve Bank, by an authorised dealer;
 Provided that no proceedings in respect of contravention of these provisions shall be instituted
unless the specified period has expired and payment for the goods or software representing the
full export value, or the value after deductions allowed under clause (iii), has not been made in
the specified manner within the specified period.
(iv) Export of services to which no Form specified in these Regulations apply, the exporter may ex-
port such services without furnishing any declaration, (i), (ii) & (iii) above shall apply.

13. Certain Exports requiring prior approval:-

 Exports under trade agreement/rupee credit etc.
(i) Export of goods under special arrangement between the Central Government and Government
of a foreign state, or under rupee credits extended by the Central Government to Govt. of a for-
eign state shall be governed by the terms and conditions set out in the relative public notices
issued by the Trade Control Authority in India and the instructions issued from time to time by
the Reserve Bank.
(ii) An export under the line of credit extended to a bank or a financial institution operating in a
foreign state by the Exim Bank for financing exports from India, shall be governed by the terms
and conditions advised by the Reserve Bank to the authorised dealers from time to time

14. Delay in Receipt of Payment:-

 Where in relation to goods or software export of which is required to be declared on the speci-
fied form and export of services, in respect of which no declaration forms has been made ap-
plicable, the specified period has expired and the payment therefor has not been made as
aforesaid, the Reserve Bank may give to any person who has sold the goods or software or who
is entitled to sell the goods or software or procure the sale thereof, such directions as appear to
it to be expedient, for the purpose of securing,
(a) the payment therefor if the goods or software has been sold and

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(b) the sale of goods and payment thereof, if goods or software has not been sold or reimport
thereof into India as the circumstances permit, within such period as the Reserve Bank may
specify in this behalf ;
 Provided that omission of the Reserve Bank to give directions shall not have the effect of absolv-
ing the person committing the contravention from the consequences thereof.

15. Advance payment against exports:-

(1) Where an exporter receives advance payment (with or without interest), from a buyer / third
party named in the export declaration made by the exporter, outside India, the exporter shall be
under an obligation to ensure that –
(i) the shipment of goods is made within one year from the date of receipt of advance payment;
(ii) the rate of interest, if any, payable on the advance payment does not exceed the rate of interest
London Inter-Bank Offered Rate (LIBOR) + 100 basis points and
(iii) the documents covering the shipment are routed through the authorised dealer through whom
the advance payment is received;
 Provided that in the event of the exporter’s inability to make the shipment, partly or fully, within
one year from the date of receipt of advance payment, no remittance towards refund of unuti-
lized portion of advance payment or towards payment of interest, shall be made after the expiry
of the period of one year, without the prior approval of the Reserve Bank.
(2) Notwithstanding anything contained in clause (i) of sub-regulation (1), an exporter may receive
advance payment where the export agreement itself duly provides for shipment of goods ex-
tending beyond the period of one year from the date of receipt of advance payment.

16. Issue of directions by Reserve Bank in certain cases:-

(1) Without prejudice to the provisions of Regulation 3 in relation to the export of goods or soft-
ware which is required to be declared, the Reserve Bank may, for the purpose of ensuring that
the full export value of the goods or, as the case may be, the value which the exporter having
regard to the prevailing market conditions expects to receive on the sale of goods or software
in the overseas market, is received in proper time and without delay, by general or special order,
direct from time to time that in respect of export of goods or software to any destination or any
class of export transactions or any class of goods or software or class of exporters, the exporter
shall, prior to the export, comply with the conditions as may be specified in the order, namely ;

(a) that the payment of the goods or software is covered by an irrevocable letter of credit or by such
other arrangement or document as may be indicated in the order ;
(b) that any declaration to be furnished to the specified authority shall be submitted to the autho-
rised dealer for its prior approval, which may, having regard to the circumstances, be given or
withheld or may be given subject to such conditions as may be specified by the Reserve Bank by
directions issued from time to time.
(c ) that a copy of the declaration to be furnished to the specified authority shall be submitted to
such authority or organisation as may be indicated in the order for certifying that the value of

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 Chapter-21
goods or software specified in the declaration represents the proper value thereof.
(2) No direction under sub-regulation (1) shall be given by the Reserve Bank and no approval under
clause (b) of that sub-regulation shall be withheld by the Authorised Dealer, unless the exporter
has been given a reasonable opportunity to make a representation in the matter.

17. Project exports:-

(1) Where an export of goods or services is proposed to be made on deferred payment terms or in
execution of a turnkey project or a civil construction contract, the exporter shall, before enter-
ing into any such export arrangement, submit the proposal for prior approval of the approving
authority, which shall consider the proposal in accordance with the guidelines issued by the
Reserve Bank of India from time to time.
(2) In case a guarantee is required to be given prior to post award approval, the same may be is-
sued by an authorized dealer bank/ a person resident in India being an exporting company, for
performance of a project outside India, or for availing of credit facilities, whether fund-based
or non-fund based, from a bank or a financial institution outside India in connection with the
execution of such project, provided that the contract / Letter of Award stipulates such require-
ments.
 Explanation: For the purpose of this Regulation, ‘approving authority’ means the EXIM Bank of
India or the authorised dealer

4. FOREIGN EXCHANGE MANAGEMENT (REALISATION, REPATRIATION AND SURRENDER

OF FOREIGN EXCHANGE) REGULATIONS, 2015 ( Amendment in existing regulation )
(a) Period for surrender of realised foreign exchange:-
 A person not being an individual resident in India shall sell the realised foreign exchange to
an authorised person under clause (a) of sub-regulation (1) of regulation 4, within the period
specified below:-
(i) foreign exchange due or accrued as remuneration for services rendered, whether in or outside
India, or in settlement of any lawful obligation, or an income on assets held outside India, or as
inheritance, settlement or gift, within seven days from the date of its receipt;
(ii) in all other cases within a period of ninety days from the date of its receipt.

(b) Period for surrender in certain cases :-

(i) Any person not being an individual resident in India who has acquired or purchased foreign
exchange for any purpose mentioned in the declaration made by him to an authorised person
under sub-section (5) of Section 10 of the Act does not use it for such purpose or for any other
purpose for which purchase or acquisition of foreign exchange is permissible under the provi-
sions of the Act or the rules or regulations or direction or order made thereunder, shall sur-
render such foreign exchange or the unused portion thereof to an authorised person within a
period of sixty days from the date of its acquisition or purchase by him.
(ii) Notwithstanding anything contained in sub-regulation (1), where the foreign exchange acquired
or purchased by any person not being an individual resident in India from an authorised person

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is for the purpose of foreign travel, then, the unspent balance of such foreign exchange shall,
save as otherwise provided in the regulations made under the Act, be surrendered to an autho-
rised person -
 within ninety days from the date of return of the traveller to India, when the unspent foreign
exchange is in the form of currency notes and coins; and
 within one hundred eighty days from the date of return of the traveller to India, when the un-
spent foreign exchange is in the form of travellers cheques.
(c) Period for surrender of received/ realised/ unspent/ unused foreign exchange by Resi-
dent individuals.-
 A Person being an individual resident in India shall surrender the received/realised/unspent/un-
used foreign exchange whether in the form of currency notes, coins and travellers cheques, etc.
to an authorised person within a period of 180 days from the date of such receipt/realisation/
purchase/acquisition or date of his return to India, as the case may be.

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 Chapter-23D

Chapter-23D
The Securities And Reconstruction Of Financial Assets
And Enforcement Of Security Interest Act, 2002
1. AMENDMENT IN THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS
AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (SARFAESI) VIDE THE ENFORCE-
MENT OF THE SECURITY INTEREST AND RECOVERY OF DEBTS LAWS AND MISCELLA-
NEOUS PROVISIONS (AMENDMENT) ACT, 2016. ( Amendment in existing Sections )
(a) Ministry of Law and Justice on 16th August, 2016 hereby published for general information in
the Official Gazette, the Enforcement of Security Interest and Recovery of Debts Laws and Mis-
cellaneous Provisions (Amendment) Act, 2016.
(b) It is an Act further to amend four laws:
(i) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 (SARFAESI),
(ii) Recovery of Debts due to Banks and Financial Institutions Act, 1993 (RDDBFI),
(ii) Indian Stamp Act, 1899 and
(iv) Depositories Act, 1996, and for matters connected therewith or incidental thereto.
(c) Chapter II, of this amendment Act deals with the amendments to the Securitisation and Recon-
struction of Financial Assets and Enforcement of Security Interest Act, 2002.
(d) This amendment Act is “an act to regulate securitisation and reconstruction of financial assets
and enforcement of security interest and to provide for a central database of security interests
created on property rights, and for matters connected therewith or incidental thereto.”
(e) Following are the relevant amendments in the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (SARFAESI):

 Substitution of references to certain expressions by other expressions.

Throughout the principal Act,—
(i) for the words “securitisation company”, “reconstruction company”, “securitisation or recon-
struction company” , “securitisation company or the reconstruction company” or “securitisation
company or a reconstruction company”, wherever they occur, the words “asset reconstruction
company” shall be substituted;
(ii) for the words “securitisation companies or reconstruction companies”, wherever they occur, the
words “asset reconstruction companies” shall be substituted;
(iii) for the words “qualified institutional buyer”, wherever they occur, the words “qualified buyer”
shall be substituted;
(iv) for the words “qualified institutional buyers”, wherever they occur, the words “qualified buyers”
shall be substituted.

 Amendment of section 2 containing relevant definitions.

Vide this amendment many new definitions have been added and the existing definitions have

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been modified in section 2. These are follows are-
(i) after clause (b), the following clause containing the definition asset reconstruction company
shall be inserted, namely:—
 ‘(ba) “asset reconstruction company” means a company registered with Reserve Bank under sec-
tion 3 for the purposes of carrying on the business of asset reconstruction or securitisation, or
both;’;
(ii) in clause (f), which deals with definition of borrower, after the words “financial institution in
relation to such financial assistance”, the words “or who has raised funds through issue of debt
securities” shall be inserted;
(iii) for clause (ha) which dealt with the definition of debt, the following clause shall be substituted,
namely:—
 ‘(ha) “debt” shall have the meaning assigned to it in clause (g) of section 2 of the Recovery of
Debts Due to Banks and Financial Institutions Act, 1993 and includes—
(a) unpaid portion of the purchase price of any tangible asset given on hire or financial lease or
conditional sale or under any other contract;
(b) any right, title or interest on any intangible asset or licence or assignment of such intangible
asset, which secures the obligation to pay any unpaid portion of the purchase price of such in-
tangible asset or an obligation incurred or credit otherwise extended to enable any borrower to
acquire the intangible asset or obtain licence of such asset;’;
(iv) for clause (j) containing the definition of default, the following clause shall be substituted, name-
ly:—
 ‘(j) “default” means—
(a) non-payment of any debt or any other amount payable by the borrower to any secured creditor
consequent upon which the account of such borrower is classified as non-performing asset in
the books of account of the secured creditor; or
(b) non-payment of any debt or any other amount payable by the borrower with respect to debt
securities after notice of ninety days demanding payment of dues served upon such borrower
by the debenture trustee or any other authority in whose favour security interest is created for
the benefit of holders of such debt securities;’;
(v) in clause (l) containing the definition of financial asset, after sub-clause (v), the following sub-
clauses shall be inserted, namely:—
 “(va) any beneficial right, title or interest in any tangible asset given on hire or financial lease
or conditional sale or under any other contract which secures the obligation to pay any unpaid
portion of the purchase price of such asset or an obligation incurred or credit otherwise pro-
vided to enable the borrower to acquire such tangible asset; or
 (vb) any right, title or interest on any intangible asset or licence or assignment of such intangible
asset, which secures the obligation to pay any unpaid portion of the purchase price of such in-
tangible asset or an obligation incurred or credit otherwise extended to enable the borrower to
acquire such intangible asset or obtain licence of the intangible asset; or”;
(vi) clause (v) containing the definition of reconstruction company ,shall be omitted.
(vii) Definition of secured creditor contained in the clause (zd) of the Principal Act shall be substi-

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tuted with the following:
 ‘(zd) “secured creditor” means—
(a) any bank or financial institution or any consortium or group of banks or financial institutions
holding any right, title or interest upon any tangible asset or intangible asset as specified in
clause (l);
(b) debenture trustee appointed by any bank or financial institution; or
(c) an asset reconstruction company whether acting as such or managing a trust set up by such as-
set reconstruction company for the securitisation or reconstruction, as the case may be; or
(d) debenture trustee registered with the Board appointed by any company for secured debt secu-
rities; or
(e) any other trustee holding securities on behalf of a bank or financial institution,
in whose favour security interest is created by any borrower for due repayment of any financial
assistance.’
(f) Definition of security interest contained in the clause (zf) of the Principal Act shall be substituted
with the following:
 ‘(zf) “security interest” means right, title or interest of any kind, other than those specified in
section 31, upon property created in favour of any secured creditor and includes—
(a) any mortgage, charge, hypothecation, assignment or any right, title or interest of any kind, on
tangible asset, retained by the secured creditor as an owner of the property, given on hire or
financial lease or conditional sale or under any other contract which secures the obligation to
pay any unpaid portion of the purchase price of the asset or an obligation incurred or credit
provided to enable the borrower to acquire the tangible asset; or
(b) such right, title or interest in any intangible asset or assignment or licence of such intangible
asset which secures the obligation to pay any unpaid portion of the purchase price of the intan-
gible asset or the obligation incurred or any credit provided to enable the borrower to acquire
the intangible asset or licence of intangible asset’.

2. AMENDMENT IN SECTION 3 – REGISTRATION OF SECURITISATION COMPANIES OR RE-

CONSTRUCTION COMPANIES ( Amendment in Existing Section )

(i) In sub-section (1), for clause (b)- The following clause shall be substituted, namely-
 “(b) having net owned fund of not less than two crore rupees or such other higher amount as the
Reserve Bank, may, by notification, specify:”
(ii) In sub-section (3),—
(a) for clause (f), the following clause shall be substituted, namely:—
 “(f) that a sponsor of an asset reconstruction company is a fit and proper person in accordance
with the criteria as may be specified in the guidelines issued by the Reserve Bank for such per-
sons;”
(b) clause (d) shall be omitted.

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 Chapter-23D
(iii) In sub-section (6),—
(a) after the words “any substantial change in its management”, the words “including appointment
of any director on the board of directors of the asset reconstruction company or managing di-
rector or chief executive officer thereof” shall be inserted;
(b) in the Explanation, after the words “by way of transfer of shares or”, the words “change affecting
the sponsorship in the company by way of transfer of shares or” shall be inserted.

3. AMENDMENT IN SECTION 5 – ACQUISITION OF RIGHTS OR INTEREST IN FINANCIAL AS-

SETS ( Newly inserted sub-sections )
(i) After sub-section (1), the following sub-section shall be inserted, namely:—
 “(1A) Any document executed by any bank or financial institution under sub-section (1) in favour
of the asset reconstruction company acquiring financial assets for the purposes of asset recon-
struction or securitisation shall be exempted from stamp duty in accordance with the provisions
of section 8F of the Indian Stamp Act, 1899:
 Provided that the provisions of this sub-section shall not apply where the acquisition of the
financial assets by the asset reconstruction company is for the purposes other than asset recon-
struction or securitisation.”;
(ii) After sub-section (2), the following sub-section shall be inserted, namely:—
 “(2A) If the bank or financial institution is holding any right, title or interest upon any tangible
asset or intangible asset to secure payment of any unpaid portion of the purchase price of such
asset or an obligation incurred or credit otherwise provided to enable the borrower to acquire
the tangible asset or assignment or licence of intangible asset, such right, title or interest shall
vest in the asset reconstruction company on acquisition of such assets under sub-section (1).”

4. SUBSTITUTION OF NEW SECTION FOR SECTION 9 - MEASURES FOR ASSETS RECON-

STRUCTION ( Amendment in Existing Section )

 In the principal Act, for section 9, the following section shall be substituted, namely:—
(1) Without prejudice to the provisions contained in any other law for the time being in force, an
asset reconstruction company may, for the purposes of asset reconstruction, provide for any
one or more of the following measures, namely:—
(a) the proper management of the business of the borrower, by change in, or takeover of, the man-
agement of the business of the borrower;
(b) the sale or lease of a part or whole of the business of the borrower;
(c) rescheduling of payment of debts payable by the borrower;
(d) enforcement of security interest in accordance with the provisions of this Act;
(e) settlement of dues payable by the borrower;
(f) taking possession of secured assets in accordance with the provisions of this Act;
(g) conversion of any portion of debt into shares of a borrower company:
 Provided that conversion of any part of debt into shares of a borrower company shall be deemed

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always to have been valid, as if the provisions of this clause were in force at all material times.
(2) The Reserve Bank shall, for the purposes of sub-section (1), determine the policy and issue nec-
essary directions including the direction for regulation of management of the business of the
borrower and fees to be charged.
(3) The asset reconstruction company shall take measures under sub-section (1) in accordance with
policies and directions of the Reserve Bank determined under sub-section(2).

5. AMENDMENT OF SECTION 13 - ENFORCEMENT OF SECURITY INTEREST ( Newly inserted

proviso )
(i) In sub-section (2), the following proviso shall be inserted, namely:—
 “Provided that—
(a) the requirement of classification of secured debt as non-performing asset under this sub-
section shall not apply to a borrower who has raised funds through issue of debt securities; and
(b) in the event of default, the debenture trustee shall be entitled to enforce security interest in the
same manner as provided under this section with such modifications as may be necessary and
in accordance with the terms and conditions of security documents executed in favour of the
debenture trustee;”;
(ii) For sub-section (8), the following sub-section shall be substituted, namely:—
 “(8) Where the amount of dues of the secured creditor together with all costs, charges and
expenses incurred by him is tendered to the secured creditor at any time before the date of
publication of notice for public auction or inviting quotations or tender from public or private
treaty for transfer by way of lease, assignment or sale of the secured assets,—
(a) the secured assets shall not be transferred by way of lease assignment or sale by the secured
creditor; and
(b) in case, any step has been taken by the secured creditor for transfer by way of lease or assign-
ment or sale of the assets before tendering of such amount under this sub-section, no further
step shall be taken by such secured creditor for transfer by way of lease or assignment or sale
of such secured assets.”

6. AMENDMENT OF SECTION 15 - MANNER AND EFFECT OF TAKEOVER OF MANAGEMENT

( Amendment in Existing Section )
 In the principal Act, in section 15, in sub-section (4), the following proviso shall be inserted,
namely:— “Provided that if any secured creditor jointly with other secured creditors or any asset
reconstruction company or financial institution or any other assignee has converted part of its
debt into shares of a borrower company and thereby acquired controlling interest in the bor-
rower company, such secured creditors shall not be liable to restore the management of the
business to such borrower.”

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7. AMENDMENT OF SECTION 17 – RIGHT TO APPEAL ( Amendment in Existing Section )
 In the principal Act, in section 17,—
(i) For the marginal heading “Right to appeal”, the words “Application against measures to recover
secured debts” shall be substituted;
(ii) After sub-section (1), the following sub-sections shall be inserted, namely:—
 “(1A) An application under sub-section (1) shall be filed before the Debts Recovery Tribunal
within the local limits of whose jurisdiction—
(a) the cause of action, wholly or in part, arises;
(b) where the secured asset is located; or
(c) the branch or any other office of a bank or financial institution is maintaining an account in
which debt claimed is outstanding for the time being.”;
(iii) For sub-section (3), the following sub-section shall be substituted, namely-
 “(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and
evidence produced by the parties, comes to the conclusion that any of the measures referred
to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the
provisions of this Act and the rules made thereunder, and require restoration of the manage-
ment or restoration of possession, of the secured assets to the borrower or other aggrieved
person, it may, by order,—
(a) declare the recourse to any one or more measures referred to in sub-section (4) of section 13
taken by the secured creditor as invalid; and
(b) restore the possession of secured assets or management of secured assets to the borrower or
such other aggrieved person, who has made an application under sub- section (1), as the case
may be; and
(c) pass such other direction as it may consider appropriate and necessary in relation to any of the
recourse taken by the secured creditor under sub-section (4) of section 13.”;
(iv) After sub-section (4), the following sub-section shall be inserted, namely:— “(4A) Where—
(i) any person, in an application under sub-section (1), claims any tenancy or leasehold rights upon
the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evi-
dence produced by the parties in relation to such claims shall, for the purposes of enforcement
of security interest, have the jurisdiction to examine whether lease or tenancy,—
(a) has expired or stood determined; or
(b) is contrary to section 65A of the Transfer of Property Act, 1882 or
(c) is contrary to terms of mortgage; or
(d) is created after the issuance of notice of default and demand by the Bank under sub-section (2)
of section 13 of the Act; and
(ii) the Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured
asset falls under the sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) of clause
(i), then notwithstanding anything to the contrary contained in any other law for the time being
in force, the Debt Recovery Tribunal may pass such order as it deems fit in accordance with the
provisions of this Act.”.

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8. AMENDMENT OF SECTION 19 - RIGHT OF BORROWER TO RECEIVE COMPENSATION

AND COSTS IN CERTAIN CASES ( Amendment in Existing Section )

 If the Debts Recovery Tribunal or the Court of District Judge, on an application made under sec-
tion 17 or section 17A or the Appellate Tribunal or the High Court on an appeal preferred under
section 18 or section 18A, holds that the possession of secured assets by the secured creditor
is not in accordance with the provisions of this Act and rules made thereunder and directs the
secured creditors to return such secured assets to the “concerned borrowers or any other ag-
grieved person, who has filed the application under section 17 or section 17A or appeal under
section 18 or section 18A, as the case may be, the borrower or such other person” shall be en-
titled to the payment of such compensation and costs as may be determined by such Tribunal
or Court of District Judge or Appellate Tribunal or the High Court referred to in section 18B.
( Words in blue have been substituted in place of the words “concerned borrowers, such bor-
rowers’’ )

9. INSERTION OF NEW SECTIONS 20A AND 20B ( Newly inserted section )

(a) Section 20A - Integration of registration systems with Central Registry
(1) The Central Government may, for the purpose of providing a Central database, in consultation
with State Governments or other authorities operating registration system for recording rights
over any property or creation, modification or satisfaction of any security interest on such prop-
erty, integrate the registration records of such registration systems with the records of Central
Registry established under section 20, in such manner as may be prescribed.
 Explanation- For the purpose of this sub-section, the registration records includes records of
registration under the Companies Act, 2013, the Registration Act, 1908, the Merchant Shipping
Act, 1958, the Motor Vehicles Act, 1988, the Patents Act, 1970, the Designs Act, 2000 or other
such records under any other law for the time being in force.
(2) The Central Government shall after integration of records of various registration systems re-
ferred to in sub-section (1) with the Central Registry, by notification, declare the date of integra-
tion of registration systems and the date from which such integrated records shall be available;
and with effect from such date, security interests over properties which are registered under
any registration system referred to in sub-section (1) shall be deemed to be registered with the
Central Registry for the purposes of this Act.
(b) Section 20B - Delegation of powers.
 The Central Government may, by notification, delegate its powers and functions under this Chap-
ter, in relation to establishment, operations and regulation of the Central Registry to the Reserve
Bank, subject to such terms and conditions as may be prescribed.

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10. AMENDMENT TO SECTION 23 – FILING OF TRANSACTIONS OF SECURITISATION, RE-
CONSTRUCTION AND CREATION OF SECURITY INTEREST (Amendment in Existing
Section)
 In the principal Act,—
(i) Section 23 shall be numbered as sub-section (1), and in sub-section (1) as so re-numbered,—
(a) the words “within thirty days after the date of such transaction or creation of security,
by the securitisation company or reconstruction company or the secured creditor, as
the case may be” shall be omitted;
(b) the first proviso shall be omitted;
(c) in the second proviso, the word “further” shall be omitted;
(ii) in section 23, after sub-section (1) so renumbered, the following sub-sections shall be inserted,
namely:—
(2) The Central Government may, by notification, require the registration of transaction relating to
different types of security interest created on different kinds of property with the Central Regis-
try.
(3) The Central Government may, by rules, prescribe forms for registration for different types of
security interest under this section and fee to be charged for such registration.

11. INSERTION OF NEW CHAPTER IV A ( Newly inserted chapter )

 In the principal Act, after section 26A, the following chapter shall be inserted, namely:
CHAPTER IVA- REGISTRATION BY SECURED CREDITORS AND OTHER CREDITORS
(a) Section 26B - Registration of Secured creditors and other creditors
(1) The Central Government may by notification, extend the provisions of Chapter IV relating to
Central Registry to all creditors other than secured creditors as defined in clause (zd) of sub-
section (1) of section 2, for creation, modification or satisfaction of any security interest over any
property of the borrower for the purpose of securing due repayment of any financial assistance
granted by such creditor to the borrower.
(2) From the date of notification under sub-section (1), any creditor including the secured creditor
may file particulars of transactions of creation, modification or satisfaction of any security inter-
est with the Central Registry in such form and manner as may be prescribed.
(3) A creditor other than the secured creditor filing particulars of transactions of creation, modifica-
tion and satisfaction of security interest over properties created in its favour shall not be entitled
to exercise any right of enforcement of securities under this Act.
(4) Every authority or officer of the Central Government or any State Government or local authority,
entrusted with the function of recovery of tax or other Government dues and for issuing any or-
der for attachment of any property of any person liable to pay the tax or Government dues, shall
file with the Central Registry such attachment order with particulars of the assessee and details
of tax or other Government dues from such date as may be notified by the Central Government,
in such form and manner as may be prescribed.

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(5) If any person, having any claim against any borrower, obtains orders for attachment of property
from any court or other authority empowered to issue attachment order, such person may file
particulars of such attachment orders with Central Registry in such form and manner on pay-
ment of such fee as may be prescribed.
(b) Section 26C - Effect of the registration of transactions, etc.
(1) Without prejudice to the provisions contained in any other law, for the time being in force,
any registration of transactions of creation, modification or satisfaction of security interest by
a secured creditor or other creditor or filing of attachment orders under this Chapter shall be
deemed to constitute a public notice from the date and time of filing of particulars of such
transaction with the Central Registry for creation, modification or satisfaction of such security
interest or attachment order, as the case may be.
(2) Where security interest or attachment order upon any property in favour of the secured creditor
or any other creditor are filed for the purpose of registration under the provisions of Chapter
IV and this Chapter, the claim of such secured creditor or other creditor holding attachment
order shall have priority over any subsequent security interest created upon such property and
any transfer by way of sale, lease or assignment or licence of such property or attachment order
subsequent to such registration, shall be subject to such claim:
Provided that nothing contained in this sub-section shall apply to transactions carried on by the
borrower in the ordinary course of business.
(c) Section 26D - Right of enforcement of securities.
 Notwithstanding anything contained in any other law for the time being in force, from the date
of commencement of the provisions of this Chapter, no secured creditor shall be entitled to
excercise the rights of enforcement of securities under Chapter III unless the security interest
created in its favour by the borrower has been registered with the Central Registry.
(d) Section 26E - Priority to secured creditors.
 Notwithstanding anything contained in any other law for the time being in force, after the regis-

tration of security interest, the debts due to any secured creditor shall be paid in priority over all
other debts and all revenues, taxes, cesses and other rates payable to the Central Government
or State Government or local authority.
 Explanation- For the purposes of this section, it is hereby clarified that on or after the com-
mencement of the Insolvency and Bankruptcy Code, 2016, in cases where insolvency or bank-
ruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured
creditors in payment of debt shall be subject to the provisions of that Code.”

12. AMENDMENT TO SECTION 27 - PENALTIES ( Amendment in Existing Section )

 The following proviso shall be inserted, namely:—
 “Provided that provisions of this section shall be deemed to have been omitted from the date of
coming into force of the provisions of this Chapter and section 23 as amended by the Enforce-
ment of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amend-
ment) Act, 2016.”

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13. OMISSION OF SECTION 28 ( Amendment in Existing Section )

 In the principal Act, section 28 which deals with the penalties for non-compliance of directions
issued by RBI, shall be omitted.

14. INSERTION OF NEW SECTIONS 30A, 30B, 30C AND 30D. ( Newly inserted sections )
(a) Section 30A - Power of adjudicating authority to impose penalty
(1) Where any asset reconstruction company or any person fails to comply with any direction issued
by the Reserve Bank under this Act the adjudicating authority may, by an order, impose on such
company or person in default, a penalty not exceeding one crore rupees or twice the amount
involved in such failure where such amount is quantifiable, whichever is more, and where such
failure is a continuing one, a further penalty which may extend to one lakh rupees for every day,
after the first, during which such failure continues.
(2) For the purpose of imposing penalty under sub-section (1), the adjudicating authority shall
serve a notice on the asset reconstruction company or the person in default requiring such com-
pany or person to show cause why the amount specified in the notice should not be imposed as
a penalty and a reasonable opportunity of being heard shall be given to such person.
(3) Any penalty imposed under this section shall be payable within a period of thirty days from the
date of issue of notice under sub-section (2).
(4) Where the asset reconstruction company fails to pay the penalty within the specified period
under sub-section (3), the adjudicating authority shall, by an order, cancel its registration:
Provided that an opportunity of being heard shall be given to such asset reconstruction com-
pany before cancellation of registration.
(2) No complaint shall be filed against any person in default in any court pertaining to any failure
under sub-section (1) in respect of which any penalty has been imposed and recovered by the
Reserve Bank under this section.
(3) Where any complaint has been filed against a person in default in the court having jurisdiction
no proceeding for imposition of penalty against that person shall be taken under this section.
 Explanation.- For the purposes of this section and sections 30B, 30C and 30D,—
(i) “adjudicating authority” means such officer or a committee of officers of the Reserve Bank, des-
ignated as such from time to time, by notification, by the Central Board of Reserve Bank;
(ii) “person in default” means the asset reconstruction company or any person which has com-
mitted any failure, contravention or default under this Act and any person incharge of such
company or such other person, as the case may be, shall be liable to be proceeded against and
punished under section 33 for such failure or contravention or default committed by such com-
pany or person
(b) Section 30B - Appeal against penalties
 A person in default, aggrieved by an order passed under sub-section (4) of section 30A, may,
within a period of thirty days from the date on which such order is passed, prefer an appeal to
the Appellate Authority:
 Provided that the Appellate Authority may entertain an appeal after the expiry of the said period

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 Chapter-23D
of thirty days, if it is satisfied that there was sufficient cause for not filing it within such period.
(c) Section 30C - Appellate Authority
(1) The Central Board of Reserve Bank may designate such officer or committee of officers as it
deems fit to exercise the power of Appellate Authority.
(2) The Appellate Authority shall have power to pass such order as it deems fit after providing a
reasonable opportunity of being heard to the person in default.
(3) The Appellate Authority may, by an order stay the enforcement of the order passed by the ad-
judicating authority under section 30A, subject to such terms and conditions, as it deems fit.
(4) Where the person in default fails to comply with the terms and conditions imposed by order un-
der sub-section (3) without reasonable cause, the Appellate Authority may dismiss the appeal.
(d) Section 30D - Recovery of penalties
(1) Any penalty imposed under section 30A shall be recovered as a “recoverable sum” and shall be
payable within a period of thirty days from the date on which notice demanding payment of the
recoverable sum is served upon the person in default and, in the case of failure of payment by
such person within such period, the Reserve Bank may, for the purpose of recovery,—
(i) debit the current account, if any, of the person in default maintained with the Reserve Bank or
by liquidating the securities, if any, held to the credit of such person in the books of the Reserve
Bank;
(ii) issue a notice to the person from whom any amount is due to the person in default, requiring
such person to deduct from the amount payable by him to the person in default, such amount
equivalent to the amount of the recoverable sum, and to make payment of such amount to the
Reserve Bank.
(2) Save as otherwise provided in sub-section (4), a notice issued under clause (b) of sub-section (1)
shall be binding on every person to whom it is issued, and, where such notice is issued to a post
office, bank or an insurance company, it shall not be necessary to produce any pass book, de-
posit receipt, policy or any other document for the purpose of any entry or endorsement thereof
before payment is made, notwithstanding any rule, practice or requirement to the contrary.
(3) Any claim in respect of any amount, arising after the date of issue of notice under sub-section
(1) shall be void as against the demand contained in such notice.
(4) Any person, to whom the notice is sent under sub-section (1), objects to such notice by a state-
ment on oath that the sum demanded or any part thereof is not due to the person in default or
that he does not hold any money for or on account of the person in default, then nothing con-
tained in this section shall be deemed to require, such person to pay such sum or part thereof,
as the case may be.
(5) Where it is found that statement made by the person under sub-section (4) is false in material
particulars, such person shall be personally liable to the Reserve Bank to the extent of his own
liability to the person in default on the date of the notice, or to the extent of the recoverable
sum payable by the person in default to the Reserve Bank, whichever is less.
(6) The Reserve Bank may, at any time, amend or revoke any notice issued under sub-section (1) or
extend the time for making the payment in pursuance of such notice.
(7) The Reserve Bank shall grant a receipt for any amount paid to it in compliance witha notice is-

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 Chapter-23D
sued under this section and the person so paying shall be fully discharged from his liability to
the person in default to the extent of the amount so paid.
(8) Any person discharging any liability to the person in default after the receipt of a notice under
this section shall be personally liable to the Reserve Bank—
(a) to the extent of his own liability to the person in default so discharged; or
(b) to the extent of the recoverable sum payable by the person in default to the Reserve Bank,
whichever is less.
(9) Where the person to whom the notice is sent under this section, fails to make payment in pursu-
ance thereof to the Reserve Bank, he shall be deemed to be the person in default in respect of
the amount specified in the notice and action or proceedings may be taken or instituted against
him for the realisation of the amount in the manner provided in this section.
(10) The Reserve Bank may enforce recovery of recoverable sum through the principal civil court
having jurisdiction in the area where the registered office or the head office or the principal
place of business of the person in default or the usual place of residence of such person is situ-
ated as if the notice issued by the Reserve Bank were a decree of the Court.
(11) No recovery under sub-section (10) shall be enforced, except on an application made to the
principal civil court by an officer of the Reserve Bank authorised in this behalf certifying that the
person in default has failed to pay the recoverable sum.

15. AMENDMENT OF SECTION 31 – NON-APPLICABILITY OF ACT ( Amendment in Existing

Section )
 In the principal Act, in section 31, clause (e) shall be omitted.
 Clause (e) to section 31 in the principal Act is as follows- any conditional sale, hire-purchase or
lease or any other contract in which no security interest has been created

16. AMENDMENT OF SECTION 31A - PROVISIONS OF THE ACT NOT TO APPLY IN SOME
CASES ( Amendment in Existing Section )

 In the principal Act, in section 31A, for sub- section (2), the following sub-sections shall be sub-
stituted, namely: -
(2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft
before each House of Parliament, while it is in session, for a total period of thirty days, and if,
both Houses agree in disapproving the issue of notification or both Houses agree in making any
modification in the notification, the notification shall not be issued or, as the case may be, shall
be issued only in such modified form as may be agreed upon by both the Houses.
(3) In reckoning any such period of thirty days as is referred to in sub-section (2), no account shall
be taken of any period during which the House referred to in sub-section (2) is prorogued or
adjourned for more than four consecutive days.
(4) The copies of every notification issued under this section shall, as soon as may be after it has
been issued, be laid before each House of Parliament.

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17. AMENDMENT OF SECTION 32 - PROTECTION OF ACTION TAKEN IN GOOD FAITH
i ( Amendment in Existing Section )
 No suit, prosecution or other legal proceedings shall lie against the Reserve Bank or the Central
Registry or any secured creditor or any of its officers for anything done or omitted to be done
in good faith under this Act.
(Words in blue have been substituted)

18. AMENDMENT OF SECTION 38 - POWER OF CENTRAL GOVERNMENT TO MAKE RULES

( Amendment in Existing Section )
 In the principal Act, in section 38, in sub-section (2),—
(i) Clause (a) shall be numbered as clause (aa) and before clause (aa) as so renumbered, the follow-
ing clause shall be inserted, namely:—
 other business or commercial rights of similar nature under clause (t) of section 2.
(ii) After clause (bc), the following clauses shall be inserted, namely:—
 (bca) the manner of integration of records of various registration systems with the records of
Central Registry under sub-section (1) of section 20A;
 (bcb) the terms and conditions of delegation of powers by the Central Government to the Re-
serve Bank under section 20B.
(iii) After clause (d), the following clauses shall be inserted, namely:—
 “(da) the form for registration of different types of security interests and fee thereof under sub-
section (3) of section 23;”;`
(iv) After clause (f), the following clauses shall be inserted, namely:—
 “(fa) the form and manner for filing particulars of transactions under sub-section (2) of section
26B;
 (fb) the form and manner of filing attachment orders with the Central Registry and the date un-
der sub-section (4) of section 26B;
 (fc) the form and manner of filing particulars of attachment order with the Central Registry and
the fee under sub-section (5) of section 26B.”

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Chapter- 24
PREVENTION OF MONEY LAUNDERING ACT, 2002
1. AMENDMENT IN SECTION 25 ( Amendment in Existing Section )
 For section 25, the following section shall be substituted, namely: -

The Appellate Tribunal constituted under section 12(1) of the Smugglers and Foreign Exchange
Manipulators (Forfeiture of Property) Act, 1976 shall be the Appellate Tribunal for hearing ap-
peals against the orders of the Adjudicating Authority and the other authorities under this Act.”

2. OMISSION OF SECTION 27, 28, 30, 31, 32, 33 AND 34 ( Amendment in Existing Section )
 Sections 27, 28, 30, 31, 32, 33 and 34 of the Principal Act shall be omitted.

3. AMENDMENT IN SECTION 36, 37, 38 AND 40 ( Amendment in Existing Section )

 In sections 36, 37, 38 and 40, for the word “Chairperson” wherever it occurs, the word “Chair-

man” shall be substituted.

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