Weekly Round-up | Updates
1. Regulatory Updates
1.1. India
1.1.1. Monetary Penalties
Reserve Bank of India (“RBI”) imposes monetary penalties on the following financial institutions:
Name of the Entity | Penalty Imposed | Reason |
INR 1,50,000 (Indian Rupees One Lakh Fifty Thousand only) | Contravention of RBI directions on ‘Maintenance of Deposit Accounts’ and Section 26-A read with Section 56 of the Banking Regulation Act, 1949 (“BR Act”) | |
INR 20,000 (Indian Rupees Twenty Thousand only) | Contravention of/ non-adherence with directions issued by RBI under the Supervisory Action Framework (“SAF Framework”) and of Know Your Customer Directions, 2016 (“KYC Directions”). | |
INR 1,00,000 (Indian Rupees One Lakh only) | Contravention of / non-adherence with the specific directions of SAF Framework and KYC Directions. | |
INR 1,50,000 (Indian Rupees One Lakh Fifty Thousand only) | Contravention of /non-adherence with directions issued by RBI on Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (“UCBs”) | |
INR 1,00,000 (Indian Rupees One Lakh only) | Contravention of / non-adherence with directions issued by RBI on Exposure Norms and Statutory / Other Restrictions – UCBs. | |
INR 2,00,000 (Indian Rupees Two Lakhs only) | Contravention of / non-adherence with KYC Directions, Maintenance of Deposit Accounts-UCBs and violation of Section 26A read with Section 56 of the BR Act. | |
INR 2,00,000 (Indian Rupees Two Lakhs only) | Contravention of / non-adherence with SAF Framework, KYC Directions and Section 20A read with Section 56 of the BR Act. | |
INR 1,00,000 (Indian Rupees One Lakh only) | Contravention of/ non-adherence with Directions by RBI on Maintenance of Deposit Accounts and KYC Directions. |
1.1.2. RBI cancels licenses of various NBFCs
RBI, under Section 45-IA (6) of the Reserve Bank of India Act, 1934 (the “RBI Act”), has cancelled the Certificate of Registration (COR) of 10 (ten) Non-Banking Financial Companies (“NBFCs”).
NBFC | Ground for Cancellation |
Exit from NBFC business | |
Exit from NBFC business | |
Exit from NBFC business | |
Exit from NBFC business | |
Exit from NBFC business | |
Exit from NBFC business | |
Exit from NBFC business | |
Exit from NBFC business | |
Cease to be a legal identity owing to amalgamation/ merger/dissolution/ voluntary strike-off, etc. | |
Cease to be a legal identity owing to amalgamation/ merger/dissolution/ voluntary strike-off, etc. |
1.2. Bangladesh
1.2.1. Foreign Exchange Investment Department to develop an interactive web platform
To improve foreign investment in Bangladesh, the Foreign Exchange Investment Department has directed the Authorised Dealers (“ADs”) to develop an interactive web platform for Non-Resident Bangladeshis (“NRBs”) to open non-residents investors’ Taka accounts (NITAs). Through this move, NRBs can fill up the account opening forms and upload the necessary documents for opening investor accounts digitally. ADs can cross-check the same and then advise on remitting deposits. Further, ADs have been instructed to design their web portal to facilitate accepting deposits from NRB investors holding international cards and make necessary arrangements to acquire funds from the card issuing authorities. Central Bank of Bangladesh
1.2.2. Bangladesh Bank partners with Fime to launch domestic card scheme
Bangladesh Bank (the “Bank”) has partnered with Fime, a fintech company, for a period of 6 years (Six years) to establish an independent payment infrastructure and launch a domestic card scheme to boost financial inclusion. Fime’s role in the arrangement would be assisting the Bank in defining a payment strategy and preparing a certification body framework before launching the scheme and onboarding users. Fintech Futures
1.3. Nepal
1.3.1. Nepal Rastra Bank takes measures against three banks
Nepal Rastra Bank has issued an order taking action against three banks- Prime Commercial Bank, Kumari Bank, and Himalayan Bank- for non-compliance with banking regulations for the fiscal year 2022-23. While Kumari Bank and Himalayan Bank have been penalised with INR 17 Lakhs (Indian Rupees Seventeen Lakhs only) for engaging in illegal financial activities and failing to maintain a specified credit-deposit ratio. Prime Commercial Bank has been issued a warning for collecting interest by increasing the premium rate contrary to the existing provisions. The Himalayan Times
1.4. Sri Lanka
1.4.1 The Central Bank of Sri Lanka decides to reduce the statutory reserve ratio
The Monetary Board of the Central Bank of Sri Lanka (CBSL) has decided to lower the Statutory Reserve Ratio (“SRR”), which applies to all rupee deposit liabilities of Licensed Commercial Banks (LCBs), by 200 (Two Hundred) basis points, from 4 per cent (Four per cent) to 2 per cent (Two per cent), applicable from the starting of reserve maintenance period on August 16, 2023. The decrease in SRR is anticipated to discharge around INR 200 billion (Indian Rupees Two Hundred Billion) of liquidity in the domestic market and facilitate downward adjustment in lending rates. CBSL would monitor the situation and oversee a faster reduction of market lending rates. CBSL
2. Trends
2.1. Ministry of Electronics and Information Technology to introduce crypto tokens to its national web browser plan
The Ministry of Electronics & Information Technology (MeiTY) will soon introduce a feature for citizens to attest documents using crypto tokens digitally. For brainstorming ideas, MeiTY is anticipated to launch an Indian web browser challenge, inviting Indian-based developers to add web browsers. Financial Express
2.2. RBI to develop a platform for digital loans
RBI intends to roll out an innovative platform to boost the digital loan sector in India. The proposed platform is anticipated to provide digital data to lenders and enable credit facilitation services. It will have an open structure with application programming interfaces and allow participants in the financial sector to connect with the platform through the ‘plug and play’ model. The platform will increase efficiency in the lending process by reducing costs, speedy disbursement and scalability issues. The Economic Times
2.3. Mswipe Technologies expands to UAE, launches uTap payment solutions
Mswipe Technologies, a fintech startup, has extended its services to the UAE through a partnership with Etisalat by e&. The company has introduced uTap, an omnichannel payment solution, to merchants in the UAE. Established in 2011 by Manish Patel, Mswipe offers advanced Point of Sale (POS) terminals supporting offline and online card payments and business management tools through its uTap service, benefiting Small and Medium-sized Businesses (SMBs). This collaboration will also provide additional services, such as cloud pay, table management, and customer management, to enhance operational efficiency. Clients will access continuous digital support and on-field assistance provided by Etisalat by e&. This expansion follows RBI’s approval of a payment aggregator license to Mswipe about a year ago. Inc42
3. Sector Overview
4. Business Updates
4.1. ChainCodeConsulting joins hands with the India Blockchain Forum
ChainCodeConsulting (CCL) joins hands with India Blockchain Forum (IBF) with the support of Google and Polygon to launch the SutR Web3 sandbox. The proposed technology involves Google Cloud providing infrastructure for managing resources and policies within the Google Cloud platform along with functionalities including resource allocation, financial oversight and access to control in the sandbox. It is intended to create, test and execute decentralised applications that government bodies, enterprises, educational enterprises and educational institutes can use. The product has the potential to improve public services. Financial Express
4.2. Tata Capital intends to raise funds via debt
Tata Capital, India’s leading NBFC, intends to raise funds of value INR 280 billion (Indian Rupees Two Hundred Eighty billion only) through debt instruments and bank lines in the current financial year. Its overall bank credit facility is anticipated to grow to 15 per cent (Fifteen per cent). Tata Group’s consolidated loan is INR 1.28 trillion (Indian Rupees One Trillion Twenty-Eight Thousand billion only). Presently, the bulk of the company’s lending is provided to manufacturing companies and clean energy sectors like solar and wind energy, and it plans to set up 200 (Two Hundred) more branches this fiscal year. Economic Times
4.3. Lytus plans to invest in India
Nasdaq-listed Lytus Technologies Holdings, a global technology-driven services firm, will invest USD 50 million (United States Dollar Fifty Million only) in India’s fintech business over the next 5 years (five years). Lytus is set to offer a variety of artificial intelligence-driven financial services customised for Indian customers. The company aims to bridge the gap in the traditional banking sector and provide services in rural and cities. Silicon India
4.4. Visagar Financial is likely to expand into the entertainment industry
Visagar Financial, an NBFC, has unveiled its strategic plan to diversify its portfolio into the media finance business. Through collaborative efforts that combine resources, expertise, and networks, the aim is to establish a holistic and integrated financial environment tailored to meet the unique needs of the entertainment industry. With support from Alliance Global, a UK-based wealth management company, Visagar Financial seeks to energise the entertainment industry by furnishing tailored financial remedies. Zee Business
4.5. Svatantra Microfin to acquire Chaitanya India Fin Credit Private Limited
Svatantra Microfin Private Limited is set to acquire Chaitanya India Fin Credit Private Limited, a subsidiary of Navi Group, for INR 1,479 crore (Indian Rupees One Thousand Four Hundred and Seventy-Nine Crore). Upon completion, this deal will position Svatantra as India's second-largest microfinance company, boasting an extensive network of 1,517 (One Thousand Five Hundred Seventeen) branches across 20 (twenty) states, serving over 3.6 million (Three Million Six Hundred Thousand) active customers. Both Svatantra and Chaitanya are modern non-banking financial company-micro finance institutions (NBFC-MFIs) that have achieved impressive growth and profitability by employing technology to provide financial services and positively impacting rural areas of India. Business Today
Disclaimer
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