ABN Amro Bank Money Market Mutual Fund as a Money Market Mutual Fund for the purposes of the section 10(23D)(ii) - S. O. 565(E) - Income Tax

ABN Amro Bank Money Market Mutual Fund as a Money Market Mutual Fund for the purposes of the section 10(23D)(ii) NOTIFICATION NO. S. O. 565 ( E ) DATED 8-7-1999 In exercise of the powers conferred by sub-clause ( ii ) of clause (23D) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby specifies ABN Amro Bank Money Market Mutual Fund, set up by the ABN Amro Bank, N. V. 302 Dalamal House, Nariman Point, Mumbai-400 121 and authorised by the Reserve Bank of India, as a Money Market Mutual Fund for the purposes of said clause subject to the conditions specified in the annexure to this notification. ANNEXURE CONDITIONS TO BE COMPLIED WITH BY THE ABN BANK MONEY MARKET MUTUAL FUND 1. Eligibility to set up ABN Amro Bank Money Market Mutual Fund : The ABN Amro Bank Money Market Mutual Fund shall comply with, the guidelines issued by the Reserve Bank of India from time to time, and, the conditions imposed by the Reserve Bank of India while authorising the ABN Amro Bank for setting up of a Money Market Mutual Fund as a department of that bank and such bank shall ensure that there is no infringement of the same. 2. Structure of the ABN Amro Bank Money Market Mutual Fund : 2.1 The ABN Amro Bank Money Market Mutual Fund shall be set up departmentally in the form of a department of the ABN Amro Bank wherein the assets and liabilities of the ABN Amro Bank Money Market Mutual Fund would form part of the eligible institutions' balance-sheet. 2.2 The ABN Amro Bank Money Market Mutual Fund shall be operated as Money Market Deposit Accounts (hereinafter referred to as "MMDAs"). MMDAs Scheme shall be operated either by issuing deposit receipt or through issue of pass book without cheque book facility. The ABN Amro Bank Money Market Mutual Fund may float both open-ended and close ended schemes. 2.3 The day-to-day management of the schemes under the ABN Amro Bank Money Market Mutual Fund shall be managed by a separate fund manager and the said fund shall be set up as a department of the ABN Amro Bank. 2.4 The ABN Amro Bank Money Market Mutual Fund may formulate special schemes as per their requirements subject to the guidelines stipu lated by the Reserve Bank of India. The ABN Amro Bank Money Market Mutual Fund shall forward the details of such scheme together with copies of offer letter and application form, etc., to the Reserve Bank of India at least one month before announcing the launching of any scheme. 3. Who can subscribe : The investors of the ABN Amro Bank Money Market Mutual Fund shall be such investors who are eligible to subscribe to units of other mutual funds in accordance with the regulations made by the Securities and Exchange Board of India established under the Securities and Exchange Board of India Act, 1992 (15 of 1992). However, in respect of investments by non-resident investors, the dividend or income on such subscriptions shall be allowed to be repatriated in accordance with the law for the time being in force. The principal amount of subscription shall not be allowed to be repartriated outside India. 4. Minimum size of investment by a single investor : The ABN Amro Bank Money Market Mutual Fund may determine the minimum size of investment by a single investor. 5. Investment objectives and policies : The investment objectives and policies of the ABN Amro Bank Money Market Mutual Fund shall be laid down by the sponsor bank that is the ABN Amro Bank and every scheme to be launched by the ABN Amro Bank Money Market Mutual Fund shall be in accordance with such broad objec tives and policies and the rules and regulations framed by the Reserve Bank of India in this behalf. While inviting the subscription from the public, the ABN Amro Bank Money Market Mutual Fund shall make a clear statement of investment objectives of the ABN Amro Bank Money Market Mutual Fund and its investment policies and also of the terms and conditions of the Scheme launched by it. The ABN Amro Bank Money Market Mutual Fund shall not give any guarantee or indication as to the rate of return on investments while announcing any scheme. 6. Investments by ABN Amro Bank Money Market Mutual Fund : 6.1 The resources mobilised by the ABN Amro Bank Money Market Mutual Fund shall be invested exclusively in the following money market instruments, namely :--- ( a ) Treasury bills and dated Government Securities having an unexpired maturity upto one year ; ( b ) call/notice money ; ( c ) commercial papers ; ( d ) commercial bills arising out of genuine trade/commercial transactions and accepted/co-accepted by banks ; ( e ) certificates of deposits ; ( f ) rated corporate bonds and debentures with a residual maturity of up to one year. 6.2 The limits of the investment of the ABN Amro Bank Money Market Mutual Fund in the said instruments shall be as follows : Instruments Limit (per cent. of resources of ABN Amro Bank Money Market Mutual Fund) ------- ( a ) Treasury Bills and dated Government No limit. securities having an unexpired maturity up to one year ( b ) Call/Notice money No limit. ( c ) Commercial paper No limit. ( d ) Commercial bills arising out of genu- No limit. ine trade/commercial transactions and accepted/co-accepted by banks ( e ) Certificates of deposit No limit. ( f ) Rated corporated bonds and deben- No limit. (Provided that the invest tures with a residual maturity of ment in commercial paper up to one year. together with rated corporate bonds and debentures with a residual maturity of up to one year in an individual company should not exceed three per cent. of the resources of the ABN Amro Bank Money Market Mutual Fund) ------- 6.3 The investments shall be made in accordance with the prudential guidelines which may be issued by the Reserve Bank of India from time to time. The ABN Amro Bank Money Market Mutual Fund shall not deploy their funds in capital market instruments so that their investments are not exposed to undue risk. 6.4 Switching of assets between schemes shall be at market rate and based on conscious investment decision. 6.5 The borrowing and lending between schemes of the ABN Amro Bank Money Market Mutual Fund as also between the ABN Amro Bank Money Market Mutual Fund and the sponsoring institutions are prohibited. 7. Delivery of instruments : The ABN Amro Bank Money Market Mutual Fund shall invariably take delivery of money market instruments purchased and give delivery of the instruments sold. 8. Reserve requirements : In the case of the ABN Amro Bank Money Market Mutual Fund set up by the bank, the resources mobilised by them shall not be considered as part of their net demand and time liabilities and as such these resources would be free from any reserve requirements. 9. Minimum lock-in period and repurchase : The minimum lock-in period for investments in the ABN Amro Bank Money Market Mutual Fund shall be fifteen days. The ABN Amro Bank Money Market Mutual Fund shall be free to offer repurchase facilities to the investors subject to the minimum lock-in period. The details of the repurchase facility including the procedures shall be made clear in the offer document. 10. Insurance cover : The funds invested in the ABN Amro Bank Money Market Mutual Fund shall not have insurance cover from the Deposit Insurance and Credit Guarantee Corporation of India and this fact shall be clearly brought out in the offer documents by the ABN Amro Bank Money Market Mutual Fund. 11. Application form : The ABN Amro Bank Money Market Mutual Fund may devise suitable application form for subscribing to their schemes. 12. Deposit receipt/pass book : The ABN Amro Bank Money Market Mutual Fund shall be operated as Money Market Deposit Account by issue of statement of account without cheque book facility, and such deposit account shall be signed by two or more authorised signatories. 13. Regulation of the ABN Amro Bank Money Market Mutual Fund The Reserve Bank of India, may, in the interest of banking policy and public interest, issue direction, call for any information, inspect the books and accounts of the ABN Amro Bank Money Market Mutual Fund. 14. Accounting : 14.1 The accounts of the ABN Amro Bank Money Market Mutual Fund shall be kept distinct and separate from those of the parent institution. In the case of "in-house" ABN Amro Bank Money Market Mutual Fund, it shall be ensured that there is no conflict of interest between the ABN Amro Bank Money Market Mutual Fund and its parent Organisation. The transfer of assets between ABN Amro Bank Money Market Mutual Fund and the sponsoring institution shall be at market rate shall be subject to the approval of the sponsoring institution's board. 14.2 Separate books of accounts maintained as aforesaid shall be audited by the qualified auditor other than the auditor of the ABN Amro Bank. The abridged version of the accounts along with the reports of the auditors shall be published for the information of investors. The ABN Amro Bank Money Market Mutual Fund shall be set up as a department of the ABN Amro Bank and the assets and liabilities of the fund shall form part of the balance-sheet of ABN Amro Bank. 14.3 The investment pattern, accounting and valuation of assets, calculation of net asset value shall be subject to regulations made or guidelines issued by the Reserve Bank of India and the Securities and Exchange of Board of India. 15. Statement of accounts and disclosure : 15.1 The ABN Amro Bank Money Market Mutual Fund shall maintain separate accounts of each scheme launched by it, segregating the assets under each scheme. 15.2 The ABN Amro Bank Money Market Mutual Fund shall prepare an annual statement of accounts in respect of each of their schemes which shall contain, inter alia, statements of assets and liabilities and income and expenditure account duly audited by qualified auditors, other than the auditors of the parent Organisation. An abridged version of the annual accounts together with the reports of the auditors should be published for the information of subscribers to the concerned schemes. 16. Management of ABN Amro Bank Money Market Mutual Fund : "In-house" ABN Amro Bank Money Market Mutual Fund shall take adequate and effective measures to ensure that management, accounting and custody of their assets shall be kept distinct and separate from those relating to the ABN Amro Bank. 17. Net asset value : The ABN Amro Bank Money Market Mutual Fund shall calculate Net Asset Value (NAV) of each scheme and disclose the NAVs periodically for the benefit of the investors. To start with, the ABN Amro Bank Money Market Mutual Fund may determine and disclose net asset value once in a week. Thereafter, the net asset value may be determined twice in a week or even daily. The method to be followed for calculation of net asset value should be disclosed in the offer letter of each scheme. 18. Expenses : The total expenses of the ABN Amro Bank Money Market Mutual Fund including pre-issue expenses, management fees, etc., shall be kept at rea sonable levels and shall be disclosed fully in the fund's annual reports and balance-sheets. 19. Furnishing reports to the Reserve Bank of India : The sponsor ABN Amro Bank should furnish to the Reserve Bank of India, in duplicate, the following reports on a regular basis, namely :--- ( a ) quarterly report indicating the performance of ABN Amro Bank Money Market Mutual Fund as a whole and each scheme thereof ; ( b ) audited annual statement of accounts, together with the reports of the auditors ; ( c ) scheme-wise details of investment portfolio of the ABN Amro Bank Money Market Mutual Fund, value of such investments, changes in the portfolio since the annual report and asset-wise exposure ; ( d ) specific information on investments in certain segments of the money market as may be called for by the Reserve Bank of India. 20. Guidelines of Reserve Bank to be applicable : The ABN Amro Bank shall operate the ABN Amro Bank Money Market Mutual Fund as Money Market Deposits Accounts in accordance with guidelines issued by the Reserve Bank of India. 21. Organisation structure of the ABN Amro Bank Money Market Mutual Fund : 21.1 The Money Market Deposit Account shall be managed by the fund manager who will be supported by the Fund Administration Officer and back office personnel. The fund manager will report to the Country Manager, India. 21.2 The fund manager shall be responsible for the following activities, namely :--- ( a ) Buying and selling of securities ; ( b ) Customer interface ; ( c ) Marketing ; ( d ) Compliance ; ( e ) Reporting to the Supervisory Committee which shall include Country Manager, India, Country Treasurer and Chief Manager, Relationship Banking. 21.3 The Supervisory Committee shall oversee the fund with regard to the following : ( a ) Launch of the scheme ; ( b ) Compliance with the regulations ; ( c ) Marketing and administration of the scheme ; ( d ) Investment decisions ; ( e ) Risk management ; ( f ) Accounting and investor servicing. 22. Investment ob jectives : The objective of the ABN Amro Bank Money Market Mutual Fund is to provide an additional short-term investment option to the investors with maximum possible yields and minimal risks. The bank shall use its treasury expertise for the optimum utilisation of funds. 23. Details o f the schemes : 23.1 The ABN Amro Bank Money Market Mutual Fund shall float, first an open ended scheme. The minimum amount of subscription in the initial public offering shall be rupees ten thousand only or in multiples thereof. The Money Market Deposit Account shall be sold and repurchased at net asset value related price after the scheme becomes open. The initial lock in period shall be fifteen days. 23.2 The applicable net asset value for the purpose of sale or repurchase of units shall be the net asset value as on the date of receipt of application for sale or repurchase. 23.3 The details of the scheme shall be subject to approval of the Reserve Bank of India. 24. General conditions : 24.1 Any mutual fund scheme launched by the ABN Amro Bank Money Market Mutual Fund shall not offer any indicative returns to the investors. 24.2 The investment under the scheme shall not be made in securitised debt. 24.3 The scheme shall clearly indicate that the deposit insurance from Deposit Insurance and Credit Guarantee Corporation of India shall not be available to the funds invested in the Money Market Deposit Account. 24.4 The offer of loan facility against the balances in the Money Market Deposit Account, shall be with the prior approval of the Reserve Bank of India. 24.5 The bankers' acceptance, in which the proposed Money Market Deposit Account Scheme proposes to invest, should arise out of genuine trade or commercial bills only. 24.6 The ABN Amro Bank Money Market Mutual Fund shall comply with the prudential norms on investment in commercial papers and rated corporate bonds and debentures with residual maturity of up to one year as specified by the Reserve Bank of India in its circular issued from time to time. 25. The ABN Amro Bank Money Market Mutual Fund shall comply with such further conditions as may be imposed by the Reserve Bank of India for operating as a Money Market Mutual Fund. 26. All the conditions specified shall be monitored by the Reserve Bank of India and the Reserve Bank of India shall ensure compliance with the conditions specified in this notification and the conditions which may be specified by it under paragraph 25. [Notification No. 10997/F. No. 194/3/97-ITA-I]