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AKP Banking & Finance Digest- April 22, 2024

1. Regulatory Updates

1.1. India

1.1.1. RBI releases draft directions on the regulation of Payment Aggregators

Reserve Bank of India (“RBI”), on April 16, 2024, released two draft directions on the regulation of Payment Aggregators (“PA”). RBI, in its ‘Statement on Development and Regulatory Policies’ dated September 30, 2022, announced the regulation of offline PAs who handle proximity/face-to-face payments. The new draft directions titled ‘New draft directions on the regulation of Payment Aggregators-Physical Point of Sale’ cover such physical Point-of-Sale activities of PAs. Additionally, given the growth in digital transactions and the role of PAs, the current directions on Pas are proposed to be updated as per the draft titled, ‘Amendments to the existing directions on Payment Aggregators’. These updates cover, inter alia, Know Your Customer (KYC) and due diligence of merchants, operations in escrow accounts, etc., and are intended to strengthen the payment ecosystem further. Comments on the draft can be shared by the industry players on or before May 31, 2024. RBI


1.1.2. RBI releases notification on key facts statements for loans and advances

On April 15, 2024, RBI released its notification on the Key Facts Statement (“KFS”) for loans and advances (“KFS Notification”), aimed at harmonising instructions related to the KFS. The objective is to enhance transparency and mitigate information asymmetry concerning financial products offered by commercial banks, primary urban cooperative banks, state cooperative banks, central cooperative banks, and all non-banking financial companies (including housing finance companies), i.e., regulated entities (“REs”). The KFS Notification shall be applicable for all new retail and micro, small and medium enterprise (MSME) term loan products extended by all REs on or after October 01, 2024, including fresh loans to existing customers. Until then, the relevant provisions on the KFS/factsheet under the extant RBI guidelines shall be applicable. Credit card receivables are exempted from the provisions of the KFS Notification. RBI


1.1.3. Monetary Penalties


RBI imposes monetary penalties on the following financial institutions:


Name of the financial institution

Penalty Imposed


INR 3,00,000/- (Indian Rupees three Lakh only)

Contravention of/non-adherence with directions issued by RBI on ‘Exposure Norms and Statutory / Other Restrictions – (Urban) Co-operative Banks (“UCBs”)’.

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

Contravention of/non-adherence with specific directions issued by RBI under SAF for Primary (Urban) UCBs.

INR 3,00,000/- (Indian Rupees three Lakh only)

Contravention of/non-adherence with specific directions issued by RBI under SAF for Primary (Urban) UCBs.

INR 3,00,000/- (Indian Rupees three Lakh only)

Contravention of/non-adherence with specific directions issued by RBI under SAF for Primary (Urban) UCBs.

INR 43,30,000 lakh (Indian Rupees Forty-Three Lakh Thirty Thousand only)

Contravention of/non-adherence with directions issued by RBI on ‘Ban on loans and advances to directors and their relatives, and firms/concerns in which they are interested’, ‘Prohibition on the opening of saving bank accounts in the names of certain bodies/organisations’ and ‘Maintenance of deposit accounts’.

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

Contravention of/non-adherence with section 20(1)(b) and section 26A(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 directions issued by RBI on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’.

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

provisions of section 20 (1)(b) read with section 56 of the BR Act.

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

Contravention of/non-adherence with directions issued by RBI on ‘Basic Cyber Security Framework for Primary (Urban) Cooperative Banks (UCBs), and ‘Comprehensive Cyber Security Framework for Primary (Urban) Cooperative Banks (UCBs) - A Graded Approach’.

INR 10,00,000/- (Indian Rupees Ten Lakh only)

Contravention of/non-adherence with provisions of the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016.


1.2. Bangladesh

1.2.1.  Bangladesh Bank announces halt on approvals of bank mergers

The Bangladesh Bank (‘BB’) has announced that it will no longer grant approvals to bank mergers other than those already underway. This move comes as 5 (five) banks are currently in the process of mergers, which are expected to take about 3 (three) years. Upon the completion of this process, BB will contemplate whether other mergers need to be approved. The Business Standard


1.2.2. IMF revises growth projection for Bangladesh

The International Monetary Fund (“IMF”) has once again lowered its growth projection for Bangladesh's economy, expecting it to grow by 5.7 percent (five point seven percent) in the current fiscal year due to various global and local challenges, including persistent inflation. This marks the second time the IMF has reduced its forecast, with its previous estimate at 6 percent (six percent) in October last year, down from an initial prediction of 6.5 percent (six point five percent). The IMF's revision follows closely after the Asian Development Bank (ADB) forecasted a 6.1 percent (six point one percent) expansion in Bangladesh's gross domestic product (GDP) for the same fiscal year, driven primarily by exports. The Daily Star


1.3. Philippines      

1.3.1. BSP simplifies FX policy for foreign investment registration

Bangko Sentral ng Pilipinas (“BSP”) monetary board has approved amendments to foreign exchange (FX) regulations covering foreign investments in the country. The major amendments relate to dispensing with the issuance of Bangko Sentral registration documents for the foreign investments registered with the BSP through registering authorised agent banks and streamlining the reporting forms/procedures pertaining to these foreign investments. Bangko Sentral ng Pilipinas


2.  Trends

2.1. Amazon Pay India to introduce credit services via UPI

Amazon Pay India is collaborating with the National Payments Corporation of India (“NPCI”) to introduce credit services through the Unified Payments Interface (“UPI”). This initiative aims to provide users with credit lines on UPI, improving customer experience. The move follows RBI’s decision last year to allow linking RuPay credit cards with UPI and enabling commercial banks to offer credit lines via UPI. This credit offering on UPI is akin to buy-now-pay-later (BNPL) schemes, allowing users to make payments using assigned credit without sufficient balance. Inc 42


2.2. NBCC plans to establish its own NBFC for cost-saving purposes

National Buildings Construction Corporation (NBCC) plans to set up its own Non-Banking Financial Company (“NBFC”) later this year to lower its borrowing costs for key infrastructure projects. The construction and real estate developer estimates the move will help it save USD 108 million (United States Dollar One Hundred Eight Million only) in interest costs over the next two years, said the sources, who did not want to be named as the discussions are private. The Indian government owns infrastructure financial institutions, but no other state-run company has created a unit to help it finance projects. Business Standard 


3. Sector Overview



4. Business Updates


4.1. BlackRock and Jio Financial Services form joint venture for new financial offerings in India

A recent filing with the National Stock Exchange of India revealed that BlackRock and Jio Financial Services (“JFS”) are forming a joint venture, with each company holding an equal stake. This venture follows a previous collaboration announced in July, which introduced asset management services tailored to India's investor community. Backed by a USD 300 million (United States  Dollar Three Hundred Million only) investment, the new services leverage JFS's local market expertise, digital infrastructure, and execution capabilities. The partnership aims to expand into regional wealth management and brokerage services, pending regulatory approval. Fintech Futures 


4.2. Fintech startup Cashe introduces CASHe Green for electric two-wheeler financing

Fintech startup Cashe introduces CASHe Green, a new initiative offering tailored finance solutions for electric two-wheelers (“e2Ws”). Partnering with three Original Equipment Manufacturers (“OEMs”), Cashe provides users with a fully digital, user-friendly finance solution. With interest rates below 1 percent (one percent) per month and EMIs spread over 20 (twenty) months, the scheme aims to make e2Ws financially appealing. Users can access up to INR 2 lakh (Indian Rupees Two Lakh only) in credit and have the option to exchange their existing Internal Combustion Engine (ICE) two-wheelers for e2Ws. The financing plan also covers battery replacements and essential upgrades throughout an e2W's ownership. Cashe emphasises aligning with consumers' financial and sustainable goals, offering instant credit application through its platform in collaboration with OEM partners. Inc 42


4.3. Paytm receives approval to transition users to new UPI handles with multiple banks

One97 Communications has received approval from NPCI to transition users from the existing Paytm Payments Bank UPI handle to new Payment System Provider (“PSP”) bank handles. This approval, granted on March 14, 2024, allows Paytm to operate as a third-party application provider (“TPAP”) on the multi-payment service provider API model. Paytm has swiftly integrated with Axis Bank, HDFC Bank, State Bank of India (SBI), and Yes Bank, all of which are now operational on the TPAP platform. This integration facilitates the process of shifting user accounts to these PSP banks. Users will be prompted to consent to using Paytm with a new UPI ID linked to one of the four banks' UPI handles. Financial Express


4.4. Cred receives in-principle approval for PA business

Cred, a fintech unicorn, has received in-principle approval from RBI to operate its PA business. Subsequent to final approval, Cred shall be able to double down on the merchant payments business, joining the ranks of Razorpay and Cashfree. As an online PA, Cred shall be able to offer its merchants payments to any online seller. Presently, Cred primarily runs a credit card bill payment platform. The Economic Times


4.5. Aditya Birla Capital launches its app to scale financial services arm

Aditya Birla Capital, the NBFC arm of Aditya Birla Group, has launched its fintech app ABCD. Through this app, the NBFC is aiming to add 30 million (thirty million) users in the next 3 (three) years. The app — ABCD Aditya Birla Capital — is housed under Aditya Birla Capital Digital Ltd, a wholly owned subsidiary of Aditya Birla Capital Ltd and was incorporated in March 2023. The subsidiary employs over 400 (four hundred) people with experience across financial services. The direct-to-consumer (D2C) platform has 22 (twenty- two) products and services that include products from its lending, insurance and investment businesses. Live Mint


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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