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FREQUENTLYASKEDQUESTIONS
Currency
PrioritySectorLendingCertificates(PSLC)
ForeignExchange
(UpdatedasonFebruary17,2017)
GovernmentSecuritiesMarket 1.WhatistheexpirydateofPSLC?
NBFCs AllPSLCswillbevalidtillMarch31standwillexpireonApril1st.
2.WhetherPSLCscanbeissuedforalimitedperiodi.e.,foronereportingquarterandmultiplesthereof?
Others
ThedurationofthePSLCswilldependonthedateofissuewithallPSLCsbeingvalidtillMarch31standexpiringonApril1st.
PaymentSystems
3.Whetherservicetax/stampduty/transactiontaxwillbeapplicablewhilepayingfeeforPSLC?
PSLCsmaybeconstruedinthenatureof'goods'#,dealinginwhichhasbeennotifiedasapermissibleactivityundersection6(1)(o)
of BR Act vide Government of India Notification dated May 4, 2016. The tax implications on account of trading in PSLCs may be
determined by the banks in accordance with the applicable tax laws. Further, as per the extant guidelines, no transaction charge/
feesisapplicableontheparticipatingbankspayabletoRBIforusageofthePSLCmoduleoneKuberportal.
4.WhetherPSLCWeakerSectionsorPSLCExportCreditcanbetraded?
There are only four eligible categories of PSLCs i.e. PSLC General, PSLC Small and Marginal Farmer, PSLC Agriculture & PSLC
MicroEnterprises.
5. Whether Export Credit may form a part of PSLC 'General' and whether banks surplus in Export Credit can be sold as
PSLC 'General? Can foreign banks with less than 20 branches reckon PSLC General towards the incremental target for
lendingtosectorsotherthanexportsbeyondtheoveralltargetof32percent?
'Export Credit' can form a part of underlying assets against the PSLC General. However, any bank issuing PSLCGeneral against
'Export Credit' shall ensure that the underlying 'Export Credit' portfolio is also eligible for priority sector classification by domestic
banks.
Foreignbankswithlessthan20branchesarenotallowedtoreckonPSLCGeneraltowardsfulfilment of their incremental target for
lending to sectors other than exports beyond the overall target of 32 per cent. However, such banks are allowed to reckon PSLC
Agriculture,PSLCMicroEnterprisesandPSLCSF/MFforthesame.
6.Wherecanthebankslookformarketinformationlikeprevailingprices,lotsize,andhistoricaltransactionsdoneby other
marketparticipants?WillthisinformationbeavailableinEKuber?
ThetradesummaryofPSLCmarketisavailabletotheparticipantsthroughtheeKuberportal.Anynewfunctionalitywillbenotified
totheparticipantsvia'News&Announcements'sectionundereKuberportal.
7.IssecondarymarketallowedforPSLCsi.e.,Saleofsurplusatalaterpointintimepostpurchaseinanticipationofdeficit
at a prior point of time. Can the purchasing bank resell the PSLCs? Will only the net PSLC position be reckoned for
ascertainingtheunderlyingasset?
AbankcanpurchaseandissuePSLCsasperitsrequirements.ThenetpositionofPSLCssoldandpurchasedhastobeincluded
while reporting the quarterly and annual priority sector returns. However, with regard to ascertaining the underlying assets, as on
March 31st, the bank must have met the priority sector target by way of the sum of outstanding priority sector portfolio and net of
PSLCsissuedandpurchased.
8.WhathappensiftheRBIinspectionteam, at a later date, declassifies a particular PSLC (which has been already traded
bythebankasPSLC)ineligible?
Themisclassifications,ifany,willhavetobereducedfromtheachievementofPSLCsellerbankonly.Therewillbenocounterparty
riskforthePSLCbuyer,evenif,theunderlyingassetofthetradedPSLCgetsmisclassified.
9.Whilethereisnotransferofassets,willtherebeanyimpactontheANBCcalculation?
The banks may refer to guidelines related to computation of ANBC for priority sector reporting as advised vide Master Circular on
PSLdatedJuly1,2015.
10.Thebuyerwouldpayafeetotheseller of the PSLC which will be market determined. Is there any standard/ minimum
feeprescribedbytheRBI,forpurchaseofanyPSLC?
Thepremiumwillbecompletelymarketdetermined.Nofloor/ceilinghasbeenprescribedbyRBIinthisregard.
11.Howthecharges/commissionshallbepaidthroughEKuberportalorseparateRTGSisrequiredtobemade?
TherewillberealtimesettlementofthematchedpremiumandrespectivecurrentaccountsoftheparticipatingbankswithRBIwillbe
debited/creditedtotheextentofmatchedpremiumaccordingly.
12. Will there be automatic matching of trades or can the buyer/seller select the counterparty? Will partial matching also
happen?
Theordermatchingwillbedoneonanonymousbasisthroughtheportalandthebuyer/sellercannotselectthecounterparty.Partial
matchingwillhappendependingonthematchingofpremiumandavailabilityofcategorywisePSLClotsforsaleandpurchase.

#Informationintheopinionattachedisforgeneralinformationalpurposesonly.Theinformationpresentedintheopinionisnotalegaladvice

oropinioninthematteranditmaynotnecessarilyreflectthemostcurrentlegaldevelopments.Themarketparticipantsshouldseektheadvice
ofthetaxexperts/consultants/specialistsbeforeactinguponanyoftheinformationintheopinionattached.

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