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  • Writer's pictureAK & Partners

AKP Banking & Finance Digest- December 18, 2023

1. Regulatory Updates


1.1. India


1.1.1. RBI increases the limit under e-mandates for recurring online transactions

The Monetary Policy Committee, in its statement dated December 08, 2023, proposed an increase in limit under e-mandates for making payments of a recurring nature from INR 15,000 (Indian Rupees Fifteen Thousand Only) to INR 1 lakh (Indian Rupees One Lakh Only). In relation to the same, the Reserve Bank of India ("RBI") has decided to increase the proposed limit for subscriptions to mutual funds, payment of insurance premiums, and credit card bill payments with effect from December 12, 2023. RBI 

 

1.1.2. Monetary Penalties


RBI imposes monetary penalties on the following financial institutions:

Name of the financial institution

Penalty Imposed

Reason

INR 5,00,000 (Indian Rupees Five Lakh Only)

Contravention of/non-adherence with the directions issued by RBI on ‘Reporting of Large Exposures to Central Repository of Information on Large Credits (CRILC)’.

1,00,000 (Indian Rupees One Lakh Only)

Contravention of/non-adherence with the directions issued by RBI on ‘Maintenance of Deposit Accounts - Primary (Urban) Co-operative Banks (“UCBs”)’.

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

Contravention of/non-adherence with the directions issued by RBI on ‘Maintenance of Deposit Accounts – Primary UCBs’.

INR 5,00,000 (Indian Rupees Five Lakh Only)

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

INR 2,00,000 (Indian Rupees Two Lakh Only)

Contravention of/non-adherence with the provisions of Section 26A read with Section 56 of the Banking Regulation Act, 1949 (“BR Act”) and for non-compliance with the directions issued by RBI on ‘The Depositor Education and Awareness Fund’.

INR 10,000 (Indian Rupees Ten Thousand Only)

Contravention of/non-adherence with the directions issued by the National Bank for Agriculture and Rural Development (NABARD) on ‘Review of Frauds–Guidelines on Monitoring and Reporting System’ read with ‘Frauds - Guidelines for Classification, Reporting and Monitoring of Frauds’.


1.1.3. RBI cancels the license of Jaryal Motor Finance Company Limited

RBI has cancelled the Certificate of Registration (“CoR”) of Jaryal Motor Finance Company Limited by exercising its power under Section 45-IA (6) of the Reserve Bank of India Act, 1934 on November 10, 2023. RBI

 

1.1.4. 15 NBFCs surrendered their licenses to RBI

The following Non-Banking Financial Companies (“NBFCs”) have surrendered their CoR to RBI:

Name of the NBFC

Ground for Surrender

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

Exit from NBFC business

Coming under the criteria prescribed for unregistered Core Investment Company (CIC)

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.

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.

Cease to be a legal identity owing to amalgamation/merger/dissolution/voluntary strike-off, etc.


1.2. Bangladesh


1.2.1. Bangladesh Bank scraps minimum interest rate on deposits

The Bangladesh Bank (BB) has removed the lower cap on deposit rates, allowing banks to set interest rates based on their business policies. Previously, in August 2021, the central bank had directed scheduled banks not to offer fixed deposit rates below the inflation rate. The maximum interest rate for loans was capped at 9 per cent (nine per cent), but with the introduction of a market-based interest rate system for loans in July of the current year, there is no longer a limit on loan interest rates. Consequently, the need for a minimum deposit interest rate has been eliminated, leading to the cancellation of the August 08, 2021 instruction. The Business Standard

 

1.3. Pakistan


1.3.1. State Bank of Pakistan's foreign reserves increase to USD 7.04 billion amidst economic challenges

The State Bank of Pakistan (“SBP”) recorded a weekly increase of USD 21 million (United States Dollar Twenty One Million Only) in its foreign exchange reserves, reaching USD 7.04 billion (United States Dollar Seven Billion Forty Million Only) as of December 08, 2023. While the first tranche of approximately USD 1.2 billion (United States Dollar One Billion Two Hundred Million Only) from the International Monetary Fund (“IMF”) in July contributed to boosting SBP reserves, they have faced challenges such as debt repayments, increased import payments after eased restrictions, and a lack of fresh inflows. Business Recorder 

 

2. Trends


2.1. Softbank-backed Juspay is set to become a payment aggregator

Juspay has received an in-principle approval from RBI to operate as a payment aggregator (PA). The company is developing a comprehensive payment gateway capable of facilitating card payments, transactions through UPI, and wallet payments. Juspay will manage funds and conduct settlements in merchant accounts. While existing payment gateways can operate with in-principle approval, new entrants like Juspay require final approval from the RBI to commence operations. Juspay's focus includes creating products for business payments and enabling open credit networks, with a particular emphasis on the Open Network for Digital Commerce (ONDC) platform for emerging use cases. The Economic Times

 

2.2. Shriram Finance unveils 'Shriram One' super app, a comprehensive solution for retail and business customers

Shriram Finance, the largest retail NBFC, has established its supper app to provide a one-stop solution platform for both retail and business customers. The app will be offering approximately 150 (one fifty) to 200 (two hundred) products and services. The super app, ' Shriram One’, will be officially launched in the next 2 (two) to 3 (three) months. The NBFC already has approximately 3.5 (three point five) lakh customers, and following the public announcement of its super app, it is expected to onboard 20 (twenty) to 25 (twenty-five) lakh customers before the public launch.  The Economic Times 

 

2.3. SBI announces to sign LoC worth EUR 70 million with KfW for solar projects

The State Bank of India (SBI) announced its intention to enter into a Line of Credit (“LoC”) agreement with the German Development Bank KfW, amounting to EUR 70 million (Seventy Million Euros Only). The signing ceremony for this agreement is scheduled to take place at the bank's International Financial Services Centre (IFSC) Gift City Branch in Ahmedabad. The primary objective of this LoC is to facilitate and endorse solar projects within the country, particularly in the realm of Solar Photovoltaics (PV). Business Standard


3. Sector Overview


 

4. Business Updates 


4.1. Anq Finance acquires healthcare-focused lending start-up Kiwimoney 

Digital banking platform and prepaid payment instrument (PPI) issuer Anq Finance has acquired healthcare-focused lending start-up Kiwimoney for an undisclosed amount. Anq and Kiwimoney aim to redefine fintech lending and offer customers cutting-edge solutions. With this buyout, Anq aims to ramp up its fintech capabilities while expanding into lending-related businesses, scaling up its portfolio and widening its footprint. Inc 42

 

4.2. Infibeam Avenues acquires 49 per cent stake in Pirimid Fintech for AI-enhanced capital market solutions

Fintech firm Infibeam Avenues has invested INR 25 crore (Indian Rupees Twenty Five Crore Only) to acquire a 49 per cent (forty-nine per cent) equity stake in Pirimid Fintech, based in Ahmedabad. The collaboration aims to integrate Infibeam's digital payments and AI-based systems with Pirimid Fintech's capital market trading software, serving clients both nationally and globally. The move is driven by the growing demand in the global capital markets for AI-backed software, enhancing efficiency in trading, research, and investment processes. Infibeam plans to integrate its flagship payment gateway brand, CCAvenue, with Pirimid Fintech's capital market and digital lending tech software to boost payment transaction processing volumes and increase revenue in its payment business. Business Standard

 

4.3. RBI permits the use of HDFC Bank-Crunchfish AB's offline payments

RBI has approved regulated entities like banks and NBFCs to adopt an offline digital payments solution developed by HDFC Bank in partnership with Sweden's Crunchfish AB. According to RBI's notification, the HDFC Bank-Crunchfish AB product has successfully exited the Regulatory Sandbox (RS) and is now open for use by regulated entities, provided they comply with relevant regulatory standards. The product ‘Offline Retail Payments' lets customers and merchants transact offline. The solution, which functions in the absence of a network connection, is aimed at enhancing the adoption of digital payments in regions that lack sufficient network capacities. Business Standard


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


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