Introduction
Reserve Bank of India (“RBI”) has, vide its circular ref no.DNBS.CC.PD. No. 266/03.10.01/
2011-12 dated March 26, 2012, advised all the non banking financial companies (“NBFC”) to
frame a fair practices code ("the Code").
RBI has prescribed broad guidelines on fair practices which, inter alia, include processing of
application for loans, loan appraisal, disbursement of loans including changes in terms and
conditions and certain other conditions which NBFCs need to follow.
Background
ICICI Securities Primary Dealership Limited (“I-Sec PD”) is incorporated under the
Companies Act, 1956 and is registered with RBI as a primary dealer. Being a primary
dealer, I-Sec PD is also required to be registered with RBI under Section 45 IA of the
Reserve Bank of India Act, 1934 as a non-deposit accepting NBFC.
Applicability
As per the RBI guidelines applicable to primary dealers, one of the core activities that a
primary dealer can undertake is lending in call/notice/term/repo/CBLO market.
(a) Lending in Call/Notice/Term Money Market: In this market, I-Sec PD shall lend funds for a
short duration to specified participants subject to dealing /exposure limits fixed for
the counter parties by the Board of Directors of I-Sec PD. The rate of interest would
be market determined. All call/notice money market deals are reported on Negotiated
Dealing System (“NDS”) irrespective of whether the counter party is a member of
NDS or not thereby making the deals transparent.
(b) Lending in Repo market: I-Sec PD is permitted to lend in repo market to scheduled
commercial banks, urban co-operative banks, other primary dealers, NBFCs, mutual funds,
housing finance companies, insurance companies and any listed company
holding SGL Account with RBI or a Gilt Account with a custodian. Repo transactions
shall be undertaken only in Government dated securities, treasury bills and cash
management bills as permitted by RBI from time to time. The exposure limits for the
counterparties are approved by the Board of Directors of I-Sec PD. The repo transactions
are required to be reported on the NDS and settled through the SGL Account /CSGL
Account maintained with the RBI, with the Clearing Corporation of
India Limited (“CCIL”) acting as a central counter party.
(c) Lending under CBLO Market: As a Member of CBLO segment, I-Sec PD has a
Constituent SGL (CSGL) Account with CCIL for depositing securities offered as
collateral for borrowing/lending funds. CCIL provides an automated dealing system
to all the members of CBLO segment through Indian Financial network (INFINET) to
enable them to borrow and lend funds. The exposure limits for the counterparties
are approved by the Board of Directors of I-Sec PD. CCIL acts as a central counterparty
for both borrowers and lenders and there is no settlement risk involved as CCIL
guarantees all the trades.
Clients of I-Sec PD can forward their grievances at customercare@isecpd.com. I-Sec PD has the appropriate grievance
redressal mechanism within the organization to resolve disputes with its clients. Such a mechanism ensures that all disputes
are heard and disposed of at the earliest.
I-Sec PD periodically reviews the compliance of the Fair Practices Code and the functioning of the grievances redressal
mechanism at various levels of management. A consolidated report of such reviews shall be submitted to the Board of
I-Sec PD on a quarterly basis.