RESERVE BANK OF INDIA-——_—_______ DNBS. (CoR-S) No. 1367/62.27.001/2013-14 Dr. Subramanian Swamy Minister for Commerce, Law & Justice, A-77, Nizamuddin (East) New-Delhi-110 013. agiea/ugtaat/Dear Sir/Madam, “vowor sbi org.) September 13, 2013 aaa ar afeare afafar 2005 /Right to Information Act, 2005 ware aad F srearsy 961/2013-14 Our Ref, RIA 961/2013-14 apr at afirere affrr, 2005 % sieht saferrr arrarét wint Bq aren Peat 05 amet , 2013 3% va fam wera car Roar a safe wat oa orp A fo am @| 2. aft art ea sae % aay Hf afta gear card at ea oa At oft Ai atta @ 30 Peat after aredta frag aah germ onfictra wierd ff wa aeoranf, pide Fase, i aa oie Peart, arcdir 400 005 ait srfter az ana S| Thank you for your letter dated August 19, 2013. seeking certain information under the Right to information Act 2005.The replies pertaining to this Department have been furnished in the Annex-A 2. For your information, the First Appellate Authority in Reserve Bank of India is Shri S.— Karuppasamy, Executive Director Reserve Bank of India, Department of — Banking Supervision, World Trade Centre, Cutfe Parade Mumbai — 400 005. Appeal, if any, in respect of the above reply, should be preferred within 30 days to the First Appellate Authority srrémt /Yours faithfully, in Jem (ua wa Pararert/N S Vishwanathan) ars aire aT aferArf/Central Public Information Officer 1 2626, 2218 9131 Fan No feat arena, garam wera Tee,Annexure “A” Sl. | Query > Reply No. 1 Whether it is a fact that the| Reserve Bank of India has not Reserve Bank of India has granted | granted permission under the RBI permission under the RBI Act} Act and/or Banking Regulation Act and/or Banking Regulation Act or | or any other Act to a financial entity any other Act to a financial entity | in Kerala to establish and run an in Kerala to establish and run an} Islamic bank according to the Islamic bank according to the| religious Sharia Code. All entities religious Sharia Code. registered with the RBI are required to comply with the provisions of Reserve Bank of India Act, 1934, Banking Regulation Act, 1949 or the applicable Statutes and the directions issued there under by RBI. e If so, a copy of the letter granting} A copy of the Certificate of permission Registration (CoR) granted to a NBFC, Cheraman Financial Services Limited which may have a bearing on the subject is enclosed 3 All file notings connected with the | Copy of the file noting with respect same to the above mentioned CoR is enclosed. Information exempted from disclosure under clauses (e), (d), (j) and (g) of sub Section 1 of Section 8 of RTI Act, 2005 is severed in terms of Section 10 of RTI Act, 2005. &aredta fier an = theater tem fram fanaerayia —apirr raters RESERVE BANK OF INDIA DEPARTMENT OF NON: BANKING SUPERVISION ‘THI RUVANANTHAPURAM REGIONAL OFFICE wi CERTIFICATE OF REGISTRA’ (sr Bt waraferat irae aes & fee ae Tet) (Not valid for uecepting Public Deposits) ie N= 16,00199 | sed or es safheey, 1934 A omer as a om cee ford dm a ear aft a ria wae Qa afm ahha Mtns, a gad wer Sort edt we Sar 8 sprofera eter fe fe thet fata dem ar atan oe WO / aw & fag ae WSC TANT TT ard) ea In exercise of the powers conferred on the Reserve Bank of India by Section 451A of the Reserve Bank of India Act, 1934 CHERAUAN FINANCIAL SERVICES LIMITED ishereby eranted Certificate of Registration to commence / carry on the business of non-banking Financial institution without accepting. public deposits subject to the conditions given on the reverse. Brena & onion A aoe Bea A ORG g Te at ond frre | Given under my hand at Thizuvananthapuram dayof Ady Too Thad Thirteen a a >. mf EY k. sharma) CRETE / SeerRPERIAE) General Manager / Deputse(Ganasaldenagor [FA / Conditions 1 Sareea SH afin ately one Brn sige orci 9 ee ss arafert, erent A, tt a i, sen at ah 2am art at whee anny aca to Fe offre, 1934 & srara un ares Arelftr ager ‘weed cea erage) oor Pata srery PA TA at er ont oat oem ae th [3 oust ert a te ew ot am sam may, tah, Reena septeh, are ORLA AL me aun én fs ate ome aor ew nar ya far ae | ae ceria uae & fis sik me ened fad 8 aT a | fon rea hesen wo se A an eH fa aR BROT Prd 6a 8 afer Pen or Re eet oe sacha fort te aterm, 1934 a ‘4s 8% siefa eta fort 4 art ont fete ea Be sm ont oat sed fet Ae eet A Fhe gegen ot antara fnte ema ae Tm Fed Her MT sat SPAR nit At nel Poh aa ot) rm FRE a ATA eM aerated A ree ¢ Reh re A tere aE Reda sean meal etter nt en 1. The Certificate of Registration or a certified copy thereof shall be kept displayed a the Registered Oitice | and other offices, brancles, any, of your omnpany. The Cenifcate of Repisivaion is waved te you we te all the: company sutyect to your continued adhen conditions and parameters supulated under Chapter IIL of the Reserve Bank of lucha et, 1944 8 Your company shall be requests comply sith all | the requirements of the Dureetums, unlelines 1 nstitctinns, ete. issued by the Bank and ay appheable ws 11 your company desires 1 indicate dueetly or indireetly in any advertisement, ete that the company 1s having @ Certificate of Ri Reserve Bank of India, such advertixement should | istration issued by the invariably contain a statement as under | "The ct Rep Reserve: npany is having a valid Certificate of ration dated MAY 2, 2013 Bank of Indi under Seeten 45 1A ot the Reserve Bank of In 1. the RBI does wot accept any responsibility or about the wssnied by the Act 1 Howe te present position ay to the financial soundness of the company or for ibe corteciness of any of the statements of representations made or epinions expressed by the company and for repayment of deposits / discharge of | abilities by the company.” 5 comm Het Rosen at sarah ae ae / He saat a 21 6 amt ae Raia e fawe AE amet he at ach aie 2 af al ora ae sama 19 ac aR $4 sae torah ae Se aa} derstha gm oh feet aren a Foote Get Bots sprefers fore are Prfer Cates Yen) are te ote ar RE are at ot fitte opts ra ah ha A a want ean athe $@ Your company is not allowed to aceepi / hold public deposits 6*-Your company must not accept any public deposits | for the time being. After the company has been in | operation for a period of two years, if if intends to raise Public deposits, it may approach the Bank with the audited Balance Sheets for two years and a credit rating for fixed deposits fom one of the recognised rating agencies. Your company will accept public deposits only after obtaining specific approval from us 7 Ae Rtn Pathe wea wr A aan mi ea a | arte 2 ty Ft rer Fee ara on tid Wo, 8 FR ECR TS | rae ce hee TOT Ae PNT a Ae a ae fed ty fetter Saat # fan seam oral ata aR | * S580 9, 907 a a ae a Feira Te aE | am _[ after January 9, 1997 7. The date when your company has commenced business as a non-banking financial institution may be advised tothe Bank. @ Applicable to companies, t0 whom Certieate of Registration has been issued on the basis of their Board | Resolution noi to accep! public deposits without prior written permission of RBI * Applicable to new companies incorporated on orDEPARTMENT OF NON-BANKING SUPERVISION CENTRAL OFFICE ZONAL MONITORING DIVISION - SOUTH {Thiruvananthapuram Reglonal Office (TVM RO))} ‘New Company’ Application for Certificate of Registration — Cheraman Financial Services Limited Cheraman Financial Services Limited with its Registered Office at Ponnurunni, Vyttila P.O, Kochi - 682 019, Kerala had submitted an application dated April 30, 2013 for grant of Certificate of Registration (CoR) as a "New" Company for commencing the business of a Non-Banking Financial Institution (NBFI). As the documents submitted were incomplete, it was advised by the Regional Office to submit the same and the company submitted the complete set of documents on June 5, 2013. The application was processed and forwarded to Central Office on June 06, 2013. It was received at Central Office on June 11, 2013. The final clarifications/documents were received in CO on June 20, 2013. The salient features of the applicant company and its eligibility for grant of CoR are discussed in the following paragraphs: |. Profile of the Company 2. The company was incorporated on November 30, 2009 as a public limited company under the Companies Act 1956 with the name “Al Barakah Financial Services Limited” (corporate identity number U67110KL2009PLC025082). The name of the company was later changed to “Cheraman Financial Services Limited” on October 26, 2012. and an application for issue of CoR was submitted to us. The application was subsequently withdrawn as the company had decided to alter the main ‘object’ clause in the MoA to carry on the business of rendering corporate financial advisory service and manage portfolio of securities. The applicant company, in December 2012, decided to alter its main ‘object’ clause to enable it to carry on NBFC activities, namely financial leasing and equity funding. The company has clarified that though equity funding can be carried out through venture capital fund, it involves higher transaction cost heApplication for Certiticate of Registration. Cheraman Financial Services. Limited compared to an NBFC as the company is looking to finance major Government-backed projects involving huge funds. The main objects to be Pursued by the company are financial leasing and equity funding. The company has not yet commenced its NBFI activities as per its certificate dated April 26, 2013, 3. The company was specifically advised that it should not include/ have any clause in its AoA or MoA, which rolates to interest free transactions, Participatory finance, profit sharing, sharia, Islamic financing/banking, either explicitly or implied. The company has altered its MoA and AoA as advised. As the proposed business model of the company was financial easing, in order to comply with the Bank's guidelines on FPC, it was also advised to furnish the detailed methodology adopted by it for arriving at the IRR, giving details of cost of funds, risk promium, cost of operations, profit margin and other components. Following the Clarifications received from the company, it was advised to use the terms “annualised cost to the borrower” instead of the term “IRR” in its FPC guidelines. It was also advised to intimate the role of the “Sharla Board” in its operations and also submit an undertaking that It would not be accessing public funds and that the entire funding would be through equity financing and retained earnings. The company has furnished the undertaking to that effect and has also clarified that the role of the Sharia Advisory Group is restricted to Providing consultancy for sharia compliant investments and the opinions expressed by the Sharia Advisory Group would be subjected to the discretionary powers of the Board and are not necessarily binding on the Board. aCheraman Financial Services Lit Source of funds 5. The company had been incorporated with paid up capital of Rs. 350.00 lakh, raised in full from the promoters of the company The directors have declared that the source of funds for making investment in the company belongs to them and no investment had been made out of borrowed funds. They have also submittedApplication for Gertticate of Registration- Cheraman Financial Services. Limited documentary evidence like copies of their bank statements indicating transfer of funds towards the initial paid up capital of the company. Foreign Direct Investment (FDI 8. The applicant company has no Foreign Direct Investment as on date as declared by it and certified by its auditor vide certificate dated May 21, 2013. Although four of the Directors are NRIs and one a foreign national, the company has confirmed that all the investments made so far are on non- fepatriable basis. The company however intends to approach the FIPB for permission to access funds in the form of FDI after obtaining NBFC licence. Ill, Management 7. The company is managed by ten directors. The details of their qualifications and experience as also their association with other companies are given below: a) Shri A P M Mohammedhanish IAS (44 years) is the Managing Director of the Company. He is a graduate in Civil Engineering and an officer of the Indian Administrative Service. He has no NBFC experience b) Dr.P. Mohamad All (63 years) is the Chairman of the company. He is an NRI (Sultanate of Oman), holding a diploma in Civil Engineering and his. line of business is construction and hotel management. He has been awarded the Pravasi Bharatiya Samman, Oman Civil Order award Honarary Doctorate in Science from Glasgow Caledonian University UK; V Gangadharan Memorial Kerala Pravasi Award, Business Man Award 1998 and IOD Distinguished Fellowship Award - 2007. He has no NBFC experience.Application for Cortificate of Rogistration- Cheraman Financial Services LimitedApplication for Certificate of Registration- Cheraman Financial Services Limited ¢) Shri C.K. Menon (63 years) an NRI (Doha-Qatar) is a director of the company. He is a Law graduate and an industrialist by profession. He is the recipient of Pravasi Bharatiya Samman, 2006; Padmasree Award, 2009; DICID Award, 2012, Keralean Award, 2012; P.V. SAMI Memorial Cultural Award, 2012, He has no NBFC experience “~&Application for Cortiticate of Rogistration- Choraman Financial Services Limited d) ShriP NC Menon (64 years) is another director of the company. He is a citizen of Sultanate of Oman, but a person of Indian origin. He is engaged in real estate and construction business. He had been awarded the Pravasi Bharatiya Samman Puraskar-2009, Life time achievement Award-2006 and also Global India Splendor Award, 2007. He has no NBFC experience.Application for Certificate of Reegistration- Cheraman Financial Services Limited e) Shri T Balakrishnan (61 years) is another director of the company. He is a post graduate in Political Science and International Relations. He has 7 years of NBFC experienceApplication for Cortificate of Rogistration- Choraman Financial Services Limited f) Dr.P.A. Ibrahimhaji (69 years) an NRI (Dubai) is also a director of the company. He is a diploma holder in Automobile Engineering and Business Management. He has been awarded an honorary Doctorate in Philosophy from American Global International University. He is also engaged in the field of education, automobiles and textiles. He was awarded the Junior Chamber International award of Indian Association, Ras Al Khaima, Giants International Award (Education)- 2010. He has no NBFC experience. (ecApplication for Certificate of Registration- Cheraman Financial Services LimitedApplication for Cortiticato of Rogistration- Cheraman Financial Services Limitod g) Shri P. K. Ahammed (70 years) is one of the directors of the company He is a matriculate. He has no NBFC experience. He is the recipient of a Life time achievement Award from the Govt. of Kerala for his invaluable contribution for industrial development of the State423: Application for Certificate of Registration- Cheraman Financial Services Limited h) Shri P.A. Siddeek (44 years) an NRI (Kingdom of Saudi Arabia) is also a director of the company and he has obtained an honorary Doctorate in Philosophy from Tamil Nadu University. He has one year NBFC experienceApplication tor Cortit Choraman Financial of Rogistration- orvicos Limited He has been awarded the AP. Aslam Award 2012, Pazhassi Raja Business Excellency Award 2011, SION, Award for Excellence in the field of business and charitable services, Vallapara Mohammedkunhi Memorial Award.tae Application for Certiieat of Registration. CCheraman Financial Services. Limited i) Shri P.V. Abdul Wahab (62 years) director is a pre-degree. He has no NBFC experience. He had been awarded Lions Excellence Award, 1997J) Shri E M Najeeb (58 years) is a graduate in English Literature and a Post graduate diploma holder in Journalism and acquired MBA from New Port University, USA. He has no NBFC experience. He was conferred the Kerala Business Award, World Malayalee Council Excellence Award in Tourism Sector and WMC Business Awards. 8. COSMOS database on the names and PAN numbers of the directors have been verified for confirming whether directors of the applicant company are associated with other rejected/ cancelled/ vanishing companies and it is found that the directors are not associated with other rejected/ cancelled/ vanishing companies. Neither the company nor the directors and the companies with which they are associated appear in the defaulters’/ willful defaulters’ list of DBOD. The company's name does not figure in the orders{for Certificate of Registration- raman Financial Services Limited Passed by the Company Law Board (CLB) as observed from the Website of CLB. The names of the applicant company and other group companies do not figure in the approved/ pending list of companies under CDR mechanism CIBIL data of the Directors of the company does not show any adverse observations. IV. Documents! Declarations 9 The company has submitted certified copies of Board Resolutions dated March 15, 2013 & April 30, 2013 a) approving the submission of application for CoR; b) stating that it has not accepted any public deposit as on date and will not accept any public deposit in future without prior approval of RBI; ©) stating that the company has not conducted/ commenced NBFI business and will not conducy commence the same without obtaining Certificate of Registration from the Bank and ¢) adopting the ‘Fair Practices Code! as per the Bank's Circular DNBS. (PD) No.266/ 03. 10.01/ 2011-12 dated March 26, 2012 10. Mis Krishnamoorthy & Krishnamoorthy, CA, Cochin, Statutory Auditors o? the company, have also certified in their certificates dated April 19, 2013 a) that the company is not holding public deposits as on date and ) that the company is not carrying on any NBFI activities as on date. 41.Eyer Application for Corificate of Registra ‘Cheraman Financial Sorvices Linitod 12. All the directors of the company have furnished declarations stating that they are not associated with any unincorporated bodies which are accepting deposits in violation of Section 45S of the Reserve Bank of India Act, 1934 so as to ensure that the financial concems with which the directors are associated, have complied with the provisions of Chapter-lIIC of the Act ibid, relating to acceptance of public deposits. 13. Clause No. Ill (A) of the Memorandum of Association of the applicant ‘company provides for conducting financial business. The company has also altered the clauses of MoA and AoA accordingly. 14, The RO has confirmed that the company has given an undertaking to the effect that it will not access public funds, raised either directly or indirectly through public deposits, commercial paper, debentures, inter corporate deposits, bank finance and other borrowings and that the entire funding would be through equity financing and retained earings only. 15. The bankers’ of the company, Union Bank of India, Kochi and Axis Bank, Kochi vide their certificates dated June 13, 2013 have indicated that the_ conduct of the applicant company’s accounts is satisfactory. 16, The RO has confirmed that satisfactory bankers’ reports have been received in respect of all the companies in which the directors (including the foreign national and four NRIs) are having substantial interest 17. The company has two WOS as certified by its Auditors vide certificate dated April 26, 2013, Name of tha Group Company Activity Regulated Cheraman infrastructure Pvi Ltd | infrastructure NA |__ Development218: ‘Application or Cortiiests of Registration (Cheraman Financial Sorvises Lined 1. Asset Management | ews) Cheraman Funds Management Lid (wos) SEBI has confirmed that they do not have any supervisory concems against M/s Cheraman Funds Management Ltd, 18, Business Plan and viability: The company has been set up with the objective of making effective use of remittances made by non-resident Keralites, in building infrastructure and Promoting overall development of the State. The financial resources needed for the activity of the company are proposed to be mobilized by raising share capital. The financing and investment activities of the company would be limited to financial leasing and equity funding. The company would be primarily focused on the financial lease of durable assets in the areas of industrial machinery, construction and healthcare equipment. The company foresees good business prospects over the coming years, in view of the high value of assets and many of the small and medium players are not in a position for outright purchase and are, therefore looking for financing and leasing. Equity funding to Government projects, therefore, assumes significance, in view of the higher potential for Public Private Partnership (PPP) projects in the State of Kerala Financial Products of the Company Health Care Equipment Financing is one of the untapped business segments and the company targets this segment. With the growth of medical tourism especially in Kerala, the company expects that considerable amount of capital expenditure in the nature of building and sophisticated equipment would be required Construction Equipment Lease is another area that the company intends to target for high volume business. Owing to the thrust given by the State Government for infrastructure development of the State, the construction219i ‘Application for Certicae of Registration: ‘Cheraman Financial Services Linites industry is expected to receive a major flip. The company expects to have a driven demand for specialized construction equipment including crawler, wheeled loaders, excavators compaction equipment, various types of cranes, transit mixtures etc. Industrial Machinery Lease is yet another field which the company intends to finance. Various industries like Food Processing, textile, mat and matting, agricultural harvesting equipment, hardware and software used in IT/ITES Industry, equipment used by ports, logistics Industry etc. are proposed to be leased by the company. The company also proposes to provide equity funding to both Governmental and Non-Governmental projects. The projects designed on PPP mode, viz Kochi Metro, Monorail, Personal Rapid Transport System, Vizhinjam International Sea Port, expansion of Techno Park etc, give much potential for the company and offers the space for low cost equity funding The projected business plan submitted by the company indicates that the business has earning prospects and the projections are viable and achievable. 19, The company has certified that no prohibitory order was issued in the past to it or any other NBFC/ RNBC with which the directors! promoters were associatedApplication for Cortfieate of Regl ‘Cheraman Financial Services 20. It'is indicated against item No. 11 of the respective Annexurediil to the application in respect of all the directors of the applicant company that they were not prosecuted! convicted for any economic offence either in their individual capacity or as partners/ directors of any firm/ company. None of the directors is involved in any criminal case including Section 138 of the Negotiable Instruments Act, 1881 vide their declarations dated October 8, 2011 24. Most of the Directors are professionally well qualified and two of them have NBFC experience All the directors of the company are well- known figures in the field of business or bureaucracy. They do not suffer from other infirmities or charges like action by other regulators, arrests by police or criminality ete. and there are no other adverse remarks against them in our records during their association with the above-mentioned NOFC. Therefore, it may be reasonably assumed that the quality of the management is satisfactory at this point of time. 22. The company has adequate technological infrastructure and capability to enable it to submit information electronically and achieve on-line connectivity through internet. The e-mail Id of the applicant company _ is mail@cheraman.com 23. Keeping in view that (i) the company is new, (ii) there are no adverse observations against the directors of the company, (ii) the company is not Permitted to accept deposits and (iv) the Certificate of Registration issued to it would be subject to review by the Regional Office, after two years, the recommendation of Thiruvananthapuram Regional Office may be accepted and the quality of the management may be considered as satisfactory.‘Application or Certificate of Registration V. Other Regulators’ comments. 24, The applicant company, as certified by its auditor vide certificate dated April 26, 2013, has two WOS, of which M/s Cheraman Funds Management Ltd has been registered with SEBI and, therefore, regulated by them SEBI has confirmed that they do not have any supervisory concerns against M/s Cheraman Funds Management Ltd vi. 25. 26. The applicant company has submitted all the relevant documents and the ‘same are in order. 27. Thiruvananthapuram Regional Office has recommended for issue of Certificate of Registration to the company. 28. As regards the applicant company having a Sharia Advisory Group, the role of the Advisory Group in the company might not hinder the regulatory functions of the Bank and as a precautionary measure, stipulate an additional condition to the usual conditions. VII, Proposal 28. We may approve the issue of Certificate of Registration to Cheraman Financial Services Limited under Section 45-1A (5) of the Reserve Bank of India Act, 1934, subject to usual terms and conditions as applicable to a ‘New’ company. Further. , We may also put anS22 ‘Application for Carseat of Regictration- ‘Cheramer Financial Services Lined additional concition thet “the directions, guidelines, orders, circulars ote. issued thera under by the Reserve Bank shall prevail over tho advices or opinions of the Advisory Group and the company shall not earry on its busimegs in such manner as would rondor it unabla to comply with the provisions of the RBI Act, directions, ete,” ads em we BA ayer” to a4 PCGM Ue