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  • Writer's pictureAK & Partners

AKP Banking & Finance Digest- April 15, 2024

1. Regulatory Updates

1.1. India

1.1.1. RBI to launch a mobile app for retail direct scheme, enhancing access to government securities market

The Reserve Bank of India (“RBI”) Governor Shri Shaktikanta Das announced plans for a mobile app facilitating access to the retail direct scheme, aiming to engage retail investors in the government securities (“G-sec”) market. This initiative, outlined in the monetary policy statement, aims to boost convenience for retail investors and deepen the G-sec market. Currently, retail investors can access various financial instruments through the retail direct portal. The app's introduction is expected to improve transparency and streamline processes. While some see it as a positive step towards a fairer G-sec market, others are concerned about potential disruptions and challenges for market intermediaries. Business Standard  


1.1.2. RBI to introduce UPI-based cash deposit services

RBI has announced a significant decision to introduce cash deposit services in banks using the Unified Payments Interface (“UPI”), a widely-used system for instant inter-bank transactions via mobile phones. Governor Shri Shaktikanta Das has stated that cash deposit machines (CDMs) offer enhanced customer convenience and reduce the burden of cash handling in bank branches. Currently, cash deposits are only possible through debit cards, but due to the popularity and benefits of UPI, the RBI aims to enable cash deposits through this system as well. Detailed instructions for implementation will be provided soon. Financial Express


1.1.3. Monetary Penalties


RBI imposes monetary penalties on the following financial institutions:


Name of the financial institution

Penalty Imposed


INR 1,00,000/- (Indian Rupees One Lakh only)

Contravention of/non-adherence with directions issued by RBI relating to Prudential Norms on Income Recognition, Asset Classification and Provisioning (IRAC).

INR 2,00,000/- (Indian Rupees Two Lakh only)

Contravention of/non-adherence with section 20 (1) and section 26 A (2) read with section 56 of the Banking Regulation Act, 1949 (“BR Act”). 

INR 5,00,000/- (Indian Rupees Five Lakh only)

Contravention of/non-adherence with specific directions issued by RBI under the Supervisory Action Framework (SAF).

INR 4,00,000/- (Indian Rupees Four Lakh only)

Contravention of/non-adherence with directions issued by RBI on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’.

INR 5,00,000/- (Indian Rupees Five Lakh only)

Contravention of/non-adherence with section 26 A (2) read with section 51 of the BR Act.


1.2. Bangladesh

1.2.1. Bangladesh Bank revises loan classification rule in response to IMF condition

The Bangladesh Bank has revised its loan classification rule from 2012, reducing the overdue time for a term loan from six months to three months in line with international standards, as per a condition set by the International Monetary Fund (IMF) for a USD 4.7 billion (United States Dollar Four Billion Seven Hundred Million only) loan package. Under the new rule, a term loan will be considered overdue after three months of non-payment from the fixed expiry date for repayment, with the loan classified as default after six months. This adjustment will be implemented in two phases, with the first phase starting on September 30, 2024. Additionally, a separate circular from the central bank has instructed banks not to increase the instalment size for borrowers amidst rising loan costs. The Business Standard 


1.2.2. Bangladesh Bank introduces incentives for bank mergers with weak institutions

The Bangladesh Bank has introduced new guidelines for mergers, both voluntary and compulsory, between banking companies, including the option for non-bank financial institutions to merge with banks. Under these guidelines, regulatory relaxations will be provided by the central bank, and the government will extend policy support to banking companies merging with weaker banks. The incentives include relaxations regarding minimum capital requirement (MCR), provisioning, cash reserve ratio (CRR), statutory liquidity ratio (SLR) requirements, liquidity coverage ratio (LCR), and net stable funding ratio (NSFR). Additionally, banks can receive cash liquidity support through central bank-issued bonds, permission for issuing shares to raise capital, permission for subordinated bonds, and the transfer of accumulated losses into goodwill. The Business Standard


1.3 Sri Lanka     

1.3.1 Sri Lanka and Bahrain forge partnership in fintech innovation

Sri Lanka took a significant step towards advancing its fintech sector on March 20, 2024, as key players from the Central Bank of Sri Lanka and the Central Bank of Bahrain came together virtually for an unprecedented discussion. Organised by Sri Lanka's Ministry of Technology, the Information Communication Technology Agency, and the Sri Lankan Embassy in Bahrain, this event marks the beginning of a collaborative effort to innovate in Sri Lanka's financial sector. The dialogue covered various important topics, including digital currency policies, open banking frameworks, sandbox models, and cybersecurity protocols. Taking cues from Bahrain's dynamic fintech environment, the discussion highlighted numerous opportunities for mutual cooperation and knowledge-sharing. Daily FT

2. Trends

2.1.  Ashneer Grover to launch a medical loan app 'ZeroPe' in fintech space

Ashneer Grover, co-founder and former managing director of BharatPe, is gearing up for his second venture in the fintech sector with the launch of an app called ZeroPe, aimed at providing medical loans. Developed by Third Unicorn, the app is currently in the testing phase. Mr Grover founded Third Unicorn after departing from BharatPe and previously launched a fantasy gaming platform named CrickPe in 2023. ZeroPe will offer instant pre-approved medical loans of up to INR 5 lakhs (Indian Rupees Five Lakh only) in collaboration with Delhi-based Non-Banking Financial Company (NBFC) Mukut Finvest. However, the service is exclusively available at partnered hospitals, as stated on the ZeroPe app's website. Money Control


3. Sector Overview



4.  Business Updates


4.1. PhonePe partners with eSewa and HAN Pokhara to promote UPI digital payments in Nepal

PhonePe has collaborated with Nepal's eSewa digital wallet service and the Hotel Association of Nepal (“HAN”) Pokhara to promote UPI digital payments through Nepal’s payment processor, Fonepay Network. This partnership is part of the Fewa New Year Festival from April 11-14. PhonePe plans to conduct on-ground activities to raise awareness among local merchants about digital payments and demonstrate their convenience to customers. Through kiosks and interactive demonstrations, PhonePe, eSewa, and HAN Pokhara aim to showcase the simplicity of UPI payments. The Economic Times


4.2. HDFC Bank extends reach to Lakshadweep with new branch opening

HDFC Bank opened a branch on Kavaratti Island in Lakshadweep, becoming the only private bank in the union territory. The branch offers personal and digital banking services, including QR-based transactions for retailers. As of December 2023, HDFC Bank had expanded to 8,091 (eight thousand, ninety-one) branches and 20,688 (twenty thousand six hundred eighty-eight) ATMs across 3,872 (three thousand eight hundred seventy-two) cities, with 52 percent (fifty-two percent) of branches in semi-urban and rural areas. Economic Times


4.3.  Revolut receives RBI approval to offer prepaid payment instruments in India

Revolut India has secured an in-principle approval from RBI to issue Prepaid Payment Instruments (PPI), including prepaid cards and wallets within the country. This approval marks a significant step for the global fintech firm, allowing it to operate domestically in India. In addition to its existing licenses as a Category-II Authorised Money Exchange Dealer (AD II), which enables it to provide multi-currency forex cards and cross-border remittance services, this latest authorisation positions Revolut uniquely to offer both international and domestic payment solutions on a unified platform in India. The London-based neobank has been diligently preparing for its entry into the Indian market, collaborating closely with the RBI over the past couple of years. Business Standard 


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 contents.

For further queries or details, you may contact:

Mr Anuroop Omkar

Partner, AK & Partners


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