AKP Banking & Finance Digest- June 5, 2023
Weekly Round-up | Updates
1. Regulatory Updates
1.1.1. Reserve Bank of India (RBI) releases Annual Report for FY 2022-2023
RBI has released its Annual Report for the financial year (“FY”) 2022-2023, detailing an analysis of various aspects of the Indian economy, its monetary policy, developments in the financial sector and the operations of RBI itself. Some key points from the report are:
The Indian economy displayed resilience with steady growth throughout the past FY, despite instability in the global financial system. RBI predicts that this momentum will likely sustain for the present FY.
The gross domestic product (GDP) growth for the current FY is projected at 6.5% (six- point five per cent), and headline inflation to edge down to 5.2% (five points two per cent) from the average level of 6.7% (six points seven per cent) recorded for FY 2022-2023.
In most sectors, the lending rates are back to pre-Covid19 levels. Data on weighted average lending rates (WALR) for various kinds of loans shows that the rate hike of 2.5% (two points five per cent) points administered by RBI’s Monetary Policy Committee between May 2022 to February 2023 has led to a significant increase in retail lending rates and the WALRs in most sectors are below their levels pre-Covid19. RBI
1.1.2. RBI launches survey on foreign liabilities and assets of mutual funds and Asset Management Companies
RBI has launched the 2022-23 round of its annual survey on ‘Foreign Liabilities and Assets of Mutual Funds and Asset Management Companies’. The survey shall collect information on companies’ external financial liabilities and assets, and the surveyed results shall be disseminated in the public domain and used when compiling India’s external sector statistics. RBI
1.1.3. RBI invites comments on draft Master Directions on Cyber Resilience and Digital Payment Security Controls for Payment System Operators
RBI has placed the draft Master Directions on Cyber Resilience and Digital Payment Security Controls for Payment System Operators on its website for feedback from stakeholders. The draft Directions cover governance mechanism for identifying, assessing, monitoring and managing cybersecurity risks including information security risks and vulnerabilities, and specify baseline security measures for ensuring safe and secure digital payment transactions. RBI
1.2. Monetary Penalties
1.2.1. RBI imposed monetary penalties on several banks
Name of the entity
INR 2.20 crore (Rupees Two crore and twenty lakh only)
Contravention of the provisions of section 17(1) of the Banking Regulation Act, 1949 and non-compliance with RBI Directions on ‘Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances – Divergence in NPA Accounts’, ‘Reserve Bank of India (Interest Rate on Deposits) Directions, 2016’ and Advisory on ‘Man in the Middle (miTM) Attacks in ATMs’.
INR 1 lakh (Rupees One lakh only)
Non-compliance with the ‘Master Circular on Investments by Primary (Urban) Co-operative Banks’ as the bank failed to adhere to the prudential inter-bank gross exposure limit and inter-bank counterparty limit.
1.3.1. Requirement of membership with the relevant association for money-changing operations
To streamline the operations of money-changing businesses, it is necessary for licensed money changers to be a member of relevant associations representing the sector. Accordingly, money changers operating in Bangladesh are hereby advised to be a member of the relevant association by June 30, 2023. Central Bank of Bangladesh
1.1.2. Bangladesh Bank issues circular for strengthening of ICC
The Bangladesh Bank has issued a circular to non-banking financial institutions (NBFIs), for strengthening internal control and compliance (ICC), with requirements such as pre-auditing before disbursing amounts above Bangladeshi Taka 1 crore and setting up dashboards to monitor loans, etc. Central Bank of Bangladesh
1.1.3. Bangladesh Bank publishes circular with instructions for the prevention of money laundering and terrorist financing
The Bangladesh Bank has published a circular issued by the Bangladesh Financial Intelligence Unit (BFIU) concerning the prevention of money laundering, terrorist financing and proliferation financing. Financial institutions, inter alia, are required to have board-approved policies on the prevention of money laundering and terrorist financing, which shall incorporate international standards and existing laws, regulations and guidelines issued by BFIU. Central Bank of Bangladesh
2.1. Ma-Money digital lending application launched by Manappuram Finance Ltd.
Manappuram Finance Ltd. has publicly released its own digital lending application called ‘Ma-Money’, in a bid to expand its digital footprint and improve customer reach. The financial products being offered by Manappuram Finance Ltd. will now also be offered on Ma-Money; the types of loans include personal, business, consumer durables, car, etc. Ma-Money is primarily targeted to customers in tier 2 and 3 cities. Crowdfund Insider
2.2. B2B Fintech platform BharatNXT raises $1.2M in seed round
BharatNXT, a B2B Fintech platform, has raised $1.2 million in a seed round led by Inflection Point Ventures (IPV). The funding round saw participation from Japanese venture capital firm Spiral Ventures, Keiretsu Forums, and Panthera Peak Capital. Entrackr
3. Sector Overview
4. Business Updates
4.1. Indian NBFCs double fundraising via bonds in five days
Between the 26th to 30th of May, Indian NBFCs raised around INR 100 billion from bond issues – double that of the preceding work week. More issues are expected as interest rates in the debt market continue to be low, leading to demand picking up as lending rates drop. Economic Times
4.2. More banks and locations to be included in e-Rupee’s pilot project
The ‘e-Rupee’ is the potential Central Bank Digital Currency (CBDC) for India that is under experiment with RBI. A concept note was earlier released by RBI on CBDCs and thereafter, the authority introduced the e-Rupee in wholesale and retail sectors towards the end of 2022. RBI intends to take this effort forward by expanding the ongoing pilot for the e-Rupee by incorporating more use cases and features, as well as including more banks and jurisdictions as part of the project. Business Today
4.3. Google’s Guidelines for Personal Loans Apps
Amid the crackdown on illegal lending apps in the country, Google has come out with a new policy that prohibits apps from accessing sensitive personal data of customers. These guidelines for personal loan apps, which impose several new restrictions on digital lenders, came into effect on May 31. Inc42
4.4. RBI’s ‘100 days 100 payments' campaign
RBI has launched ‘100 Days 100 Pays’ campaign to trace and settle the top 100 unclaimed deposits of every bank. Under the campaign, banks will trace and settle their top 100 deposits in every district of the country. Balances in savings/current accounts which are not operated for 10 years, or term deposits not claimed within 10 years from the date of maturity are classified as “unclaimed deposits”. Economic Times BFSI
The note is prepared for knowledge dissemination and does not constitute legal, financial or commercial advice. AK & Partners or its associates are not responsible for any action taken based on its content.
For further queries or details, you may contact:
Mr Anuroop Omkar,
Partner, AK & Partners