Reporting Requirement on Bank Guarantees (BGs) created out of clients’ funds
This article provides important information regarding the reporting requirement for Bank Guarantees (BGs) created from clients’ funds, as outlined in SEBI Circular No. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/061 dated April 25, 2023, and Exchange Circular No. NSE/INSP/56489 dated April 25, 2023.
Introduction
In compliance with the aforementioned SEBI Circular, it is mandatory to implement the following provisions:
- No creation of new Bank Guarantees (BGs) from clients’ funds
Effective from May 01, 2023, members are prohibited from creating any new Bank Guarantees (BGs) using clients’ funds. - Wind down existing Bank Guarantees (BGs)
Members must ensure that any existing Bank Guarantees (BGs) created from clients’ funds are wound down by September 30, 2023.
Reporting Requirement
As per Para 5 of the SEBI Circular, market participants are mandated to provide a certificate to the Stock Exchange validating the adoption of the guidelines mentioned in the circular. This certificate should be endorsed by their Statutory Auditor and submitted to the Stock Exchange by the specified deadline of October 16, 2023.
This requirement ensures compliance with the regulatory provisions and aids in the effective implementation of the circular’s guidelines for market participants. The submission of the certificate by the designated date is crucial for demonstrating adherence to the regulatory framework and promoting transparency and accountability in the securities market.
Submission of Certificate and Declaration
Members are advised to submit the required certificate in the prescribed format provided in Annexure A. Additionally, members who solely engage in proprietary trading without any clients since the issuance of the SEBI Circular need to submit a one-time declaration.
To facilitate the submission process, an online facility is available for members to submit the Statutory Auditor Certificate or the one-time declaration. For detailed instructions on how to submit the certificate or declaration, please refer to the user manual provided in Annexure B.
Contact Information
For any clarifications or questions, members may contact the respective offices:
| Regional Office | CONTACT NO. | E MAIL ID |
| Ahmedabad (ARO) | 079-49008632 | inspectionahm@nse.co.in |
| Chennai (CRO) | 044- 66309915/17 | inspection_cro@nse.co.in |
| Delhi (DRO) | 011-23459127 / 38 / 46 | delhi_inspection@nse.co.in |
| Kolkata (KRO) | 033-40400412 / 59 | inspection_kolkata@nse.co.in |
| Mumbai (WRO) | 022-26598200 / 022-61928200 | compliance_wro@nse.co.in |
| Central Help Desk | compliance_assistance@nse.co.in | |
Please ensure compliance with the instructions provided in this circular.
Annexure B: Manual for Submission of Certificate
Follow these steps to submit the required certificate or declaration:
- Open an internet browser on your desktop.
- Type “https://inspection.nseindia.com/MemberPortal/” in the address bar and click the Go button.
- Login to the Member Portal. After login, the Inspection module will be displayed under the “Inspection” tab on the left-hand side.
- Double-click on the “Inspection” tab to launch the Inspection module.
- Under the Inspection tab, select “Statement Upload” and then choose “Certificate of BG” from the provided options.
- Follow the appropriate steps depending on whether you are submitting a certificate or a declaration.
- Provide the necessary details and upload the required documents as instructed.
- Verify the successful submission on the screen.
Ensure that all submitted data is accurate and cannot be edited after submission.
Conclusion
Members are advised to carefully follow the reporting requirements for Bank Guarantees (BGs) created from clients’ funds as specified in this circular. The submission of the certificate or declaration should be completed within the designated timeframe. For any further assistance, please refer to the contact information provided or reach out to the Central Help Desk.
Disclaimer:
Estabizz Fintech compiled the material in this article using the most recent Acts, Rules, Circulars, Notifications, Provisions, Press Releases, and material applicable at the time. They ensured the completeness and correctness of the material through due diligence. When using this material, users must consult the relevant, applicable legislation. The given data may change without prior notice and does not constitute professional advice. Estabizz Fintech disclaims all liability for any results from the use of this material.
