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AKP Banking & Finance Digest- August 28, 2023

Updated: Aug 29, 2023

1. Regulatory Updates

1.1. India

1.1.1. RBI revises transaction limit for small value digital payments in offline mode

The Reserve Bank of India (“RBI”) enhances offline transaction limits for small-value digital payments. This step aligns with the previously released statement on development and regulatory policies dated August 10, 2023. As per the notification, the upper limit of an offline payment transaction has been increased to INR 500 (Indian Rupees Five Hundred only). RBI

1.1.2. RBI approves voluntary amalgamation of two co-operative banks

RBI approves the scheme of amalgamation of Akola Merchant Co-operative Bank Ltd., Akola, Maharashtra, with Jalgaon Peoples Co-operative Bank Ltd., Jalgaon, Maharashtra. This has been done under the powers granted to RBI under Section 44A (4), read along with Section 56 of the Banking Regulation Act, 1949. RBI

1.2. Monetary Penalties

Reserve Bank of India imposes monetary penalties on the following financial institutions:

​Name of the entity

Penalty Imposed


INR 2,00,000 (Indian Rupees Two Lakhs only)

Contravention of/ non-adherence with directions issued by RBI under Know Your Customer Directions, 2016 (“KYC Directions”).

INR 2,00,000 (Indian Rupees Two Lakhs only)

Contravention of/ non-adherence with directions issued by RBI under Urban Co-operative Banks (“UCBs”) and KYC Directions.

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

Contravention of / non-adherence with the specific directions under ‘Maintenance of Deposit Accounts - Primary UCBs.'

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

Contravention of / non-adherence with the specific directions under ‘Maintenance of Deposit Accounts - Primary UCBs.'

INR 3,00,000 (Indian Rupees Three Lakh only)

Contravention of / non-adherence with directions issued by RBI on ‘loans and advances to directors, relatives and firms/concerns in which they are interested’.

INR 50,000

(Indian Rupees Fifty Thousand only)

Contravention of / non-adherence with directions issued by RBI on ‘loans and advances to directors, relatives and firms/concerns in which they are interested’.

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

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

INR 30,50,000 (Indian Rupees Thirty Lakh Fifty Thousand only)

Contravention of/ non-adherence with RBI Master Direction on Prepaid Payment Instruments (PPIs).

1.3. Bangladesh

1.3.1. Bangladesh Bank’s profit dropped by 95 per cent due to low gains from foreign exchange

Bangladesh Bank (“BB”) profits dropped by 95 per cent (Ninety-Five per cent), with operating profit for fiscal 2022-23 of TK 15,000 Crore (Bangladeshi Taka Fifteen Hundred Crore) as compared to TK 29,247 Crore (Bangladeshi Taka Twenty- Nine Thousand Two Hundred and Forty-Seven) for fiscal 2021-2022. The fiscal year 2022-23 profits mainly came from the sale of dollars and lending to the government and commercial banks. The Business Standard

1.3.2. Bangladesh Bank signed an agreement with AB Bank for CMSMEs

BB has signed an agreement with AB Bank Limited to enable loan services at low-interest rates and simple conditions to cottage, micro, small, and medium enterprises (CMSMEs). The parties signed the agreement to boost the credit flow for small businesses. Under a pre-finance scheme, a bank typically sets a goal for loan disbursement and collects money from BB in advance before distributing it to consumers. The Business Standard

1.4. Sri Lanka

1.4.1. Sri Lanka rolls out financial consumer protection regulations

The Central Bank of Sri Lanka (“CBSL”) has issued the Financial Consumer Protection Regulation, 2023, to enhance consumer safeguards in the financial sector. These rules apply to all CBSL-regulated financial service providers, aiming to bolster existing protection measures and establish market conduct supervision. The regulations ensure fair treatment, transparency, and improved services for individuals and businesses using financial products. CBSL

1.4.2. The Monetary Board of CBSL decides to maintain policy interest rates at their current level

The Monetary Board of CBSL has decided to carry on with the current Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) at 11 per cent (Eleven per cent) and 12 per cent (Twelve per cent), respectively. The monetary board noticed lenders have been flogging the monetary policy rates by imposing high market interest rates on their products. Furthermore, this move is anticipated to reduce the overall market lending interest rates. CBSL

2. Trends

2.1. India in discussions to extend its UPI services to African countries

India is in talks with various African countries, including Namibia, Mozambique and Kenya, to establish its Unified Payment Interface (“UPI”) infrastructure. India aims to play a vital role in the growth of UPI infrastructure and is keen on sharing its digital public infrastructure with developing countries. Live Mint

2.2. RBI cautious about fintech NBFC licenses amid capital structure concerns

With fintech giants like Cred and Jupiter getting their NBFC licenses approved, various fintechs like OneCard, Uni Cards, Upswing, Fi, and WintWealth have applied for the same to RBI. However, the regulator seems hesitant to approve their applications due to potential overlaps in their capital structures, as some venture capital investors who have funded these fintech companies have also invested in others who recently obtained NBFC licenses. RBI is generally disinclined towards a single business entity holding multiple non-bank licenses, and it appears to be applying a similar approach to venture capital and private equity investors. The Hindu

3. Sector Overview

4. Business Updates

4.1.1. Tamilnad Mercantile Bank ties up with Jocata

Tamilnad Mercantile Bank (“TMB”) has collaborated with the fintech platform Jocata to provide digital lending solutions to Micro, Small and Medium Enterprises (MSMEs). TMB intends to provide end-to-end digital lending solutions to its customers, easing the lending process through this business arrangement. Times of India

4.1.2. Paytm's ambitious AI venture to drive financial security and innovation

Paytm's parent company, One97 Communications Limited, is venturing into artificial intelligence (“AI”) to develop a comprehensive AI software stack. Paytm’s recent annual report highlighted its commitment to advancing AI capabilities and other technologies. This system aims to assist financial institutions in identifying potential risks and fraud while safeguarding against emerging AI-related risks. LiveMint

4.1.3. Navi Technologies enters the digital payments market with the launching of Navi UPI

Navi Technologies, led by Sachin Bansal, is entering the digital payments sector by launching ‘Navi UPI’. The fintech startup's move follows a trend of consumer-focused internet startups like CRED and Zomato launching their own UPI. The startup might be eyeing government subsidies for digital payment facilitators and exploring an in-house payment system to retain control over transactions and merchant data. This expansion occurs amid India's rapidly growing digital payments landscape, with UPI transactions nearing a significant milestone. Founded in 2018 by Sachin Bansal and Ankit Agarwal, Navi Technologies offers various financial services, including insurance and microfinance. Inc 42

4.1.4. Yes Bank launched a co-branded corporate credit card with Zaggle

Yes Bank has introduced a co-branded corporate credit card in collaboration with Zaggle, a spend management specialist. This card is aimed at businesses that allocate a significant portion of their budgets to travel and entertainment expenses. The co-branded card offers direct expense control through features like individual spending limits, merchant category restrictions, and other controls. Cardholders can enjoy benefits such as rewards, golf privileges, lounge access, and travel insurance. This partnership with Zaggle enables businesses to streamline banking transactions, manage expenditures, and monitor overheads through a unified platform, ultimately enhancing operational efficiency. Times of India


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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