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  • Writer's pictureAK & Partners

AKP Banking & Finance Digest- February 26, 2024

1. Regulatory Updates

1.1. India

1.1.1. Inclusion of CCIL as a FIP under Account Aggregator framework

On November 12, 2021, the Reserve Bank of India (“RBI”) introduced the Retail Direct Scheme, designed to empower individual investors to participate in the government securities market. Through this initiative, individuals can establish Retail Direct Gilt accounts with the bank, allowing them to engage in both primary and secondary transactions of government securities. To consolidate financial data on government securities owned by retail investors in their Retail Direct Gilt accounts, the Clearing Corporation of India Limited has been included as a Financial Information Provider (FIP). RBI


1.1.2. RBI revises PPI regulations for seamless digital payments in public transport

RBI has amended the Master Direction on Prepaid Payment Instruments (“PPIs”) to enhance the convenience, speed, affordability, and safety of online payments for transit services. The revised directives, effective immediately under the Payment and Settlement Systems Act, 2007, allow authorised bank and non-bank PPI issuers to issue PPIs for digital payments across various public transport systems. The update includes revisions to paragraph 10.2 of the Master Direction on PPIs to accommodate these changes. RBI


1.1.3. RBI directs NPCI on Paytm's UPI operations and seamless handle migration

RBI has instructed the National Payments Corporation of India (“NPCI”) to assess One97 Communication's request to become a third-party application provider (“TPAP”) for the Unified Payments Interface (“UPI”) channel to sustain Paytm app's UPI operations. If NPCI grants TPAP status to One97 Communication, it is recommended that '@paytm' handles the transition smoothly from Paytm Payments Bank to newly identified banks to prevent disruptions. The migration process should be completed before adding any new users. NPCI may certify 4-5 (four to five) banks as Payment Service Provider (“PSP”) banks to facilitate the seamless migration, aligning with their norms to mitigate concentration risk. Additionally, for merchants using PayTM QR Codes, One97 Communication may establish settlement accounts with PSP banks other than Paytm Payments Bank. RBI


1.1.4. Monetary Penalties

RBI imposes monetary penalties on the following financial institutions:

Name of the financial institution

Penalty Imposed


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 26,60,000 (Indian Rupees Twenty Six Lakh Sixty Thousand Only)

Contravention of/non-adherence with directions issued by RBI on ‘Customer Protection - Limiting Liability of Customers of Co-operative Banks in Unauthorised Electronic Banking Transactions’ and on ‘Basic Savings Bank Deposit Account’ (BSBD Account).

INR 50,000 (Indian Rupees Fifty Thousand Only)

Contravention of/non-adherence with certain provisions of the directions issued by RBI on ‘Loans and Advances to directors, relatives and firms/concerns in which they are Interested’ read with ‘Loans and Advances to Directors etc. - Directors as surety/guarantors – Clarification’.

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

Contravention of/non-adherence with certain provisions of the directions issued by RBI on ‘Loans and Advances to directors, relatives and firms/concerns in which they are Interested’ read with ‘Loans and Advances to Directors etc. - Directors as surety/guarantors – Clarification’ and on ‘Investments by Primary UCBs’.

INR 50,000 (Indian Rupees Fifty Thousand Only)

Contravention of/non-adherence with certain provisions of the directions issued by RBI on “Frauds in UCBs: Changes in Monitoring and Reporting mechanism” read with the directions issued by RBI on “Master Circular on Frauds-Classification and Reporting” and “Reporting of Frauds on XBRL-FMR submission, FMR 2 discontinuation and introduction of FMR-3”.

1.2. Bangladesh

1.2.1. BRAC Bank launches subordinated bond for capital enhancement

BRAC Bank has introduced a subordinated bond valued at Tk 700 crore (Bangladeshi Taka Seven Hundred Crore Only) to bolster its Tier II Capital base, currently open for investor subscriptions. The bond, with a seven-year tenor, aims to support the bank's capital adequacy needs following substantial balance sheet growth. Individuals or institutions can invest with a minimum threshold of Tk 10 lakh (Bangladeshi Taka Ten Lakh only). The non-convertible, unsecured, fully redeemable bond with a floating rate has received approval from the Securities and Exchange Commission and Bangladesh Bank, according to a statement by BRAC Bank. The Business Standard


1.3. Sri Lanka

1.3.1. Sri Lanka expects inflation to align with 5 per cent target in economic recovery

A Central Bank of Sri Lanka (CBSL) official stated on Wednesday that Sri Lanka's inflation is anticipated to align with the government's 5 per cent (five per cent) target in the last two quarters of the year. This positive outlook is attributed to the stabilisation of the economy following a severe financial crisis. The recent signs of recovery have been supported by a USD 2.9 billion (United States Dollar Two Billion Nine Hundred Million Only) International Monetary Fund (IMF) program, which became crucial as the economy faced a significant downturn in 2022 due to a severe foreign exchange shortage. The CBSL, under a new act introduced last year, is committed to maintaining inflation at 5 per cent (five per cent), and it is expected that price increases resulting from tax hikes will not persist due to subdued demand and the economy operating below its full capacity. Zee Business


2. Trends

2.1. Paytm and Axis Bank to submit key application for UPI operations

Paytm's parent company, One97 Communications, and Axis Bank are preparing to submit a key application to NPCI ahead of the March 15 deadline set by the RBI. The application, categorised as a 'third-party application provider,' is related to UPI operations. The meeting with NPCI officials is significant as the RBI deadline could potentially disrupt UPI transactions on the Paytm app. The NPCI is expected to expedite the process to ensure a smooth experience for the numerous Paytm customers using UPI on the platform. Financial Express


3. Sector Overview

4. Business Updates


4.1. Mswipe Technologies secures RBI approval for payment aggregator license

Mswipe Technologies has been granted a Payment Aggregator (PA) license by RBI, joining the ranks of Zomato, Decentro, Zoho, Juspay, and Razorpay in obtaining regulatory approval for this service. The approval received almost two years after the initial in-principle nod in mid-2022 signifies Mswipe's commitment to expanding its offerings. The company aims to provide secure and efficient payment technology for banking partners, enterprises, and merchants, with a focus on penetrating the online market, especially catering to Micro, Small and Medium Enterprises (“MSMEs”), in addition to its origins in offline payments through point of sale (PoS) devices. Moneycontrol


4.2. Fintech lender Credit Fair secures P2P license from RBI

Credit Fair, a fintech lending platform, has obtained regulatory approval from RBI to engage in peer-to-peer (P2P) lending. The company plans to serve more than one hundred thousand investors within the next three years. The loans offered by Credit Fair will start with a minimum principal of INR 10,000 (Indian Rupees Ten Thousand Only) and require a minimum investment period of six months. The focus will be on providing financial assistance to individuals who are new to credit or those with a credit history. Economic Times


4.3. PayPal registers with India's FIU after six-year legal battle

PayPal, the US-based online payment gateway, has officially registered its operations with India's Financial Intelligence Unit (“FIU”) after a six-year legal dispute. According to PTI, the company recently completed the formalities to be designated as a reporting entity under the Prevention of Money Laundering Act (PMLA) and submitted the necessary documents to the FIU. Initially, PayPal had resisted registering as a reporting entity, contending that it functioned solely as an Online Payment Gateway Service Provider (OPGSP) in India. The FIU, a national agency, is responsible for receiving, processing, analysing, and disseminating information related to suspicious financial transactions. Inc 42


4.4. PhonePe launches Indus Appstore to compete with Google Play Store in India

PhonePe, a fintech owned by Walmart Inc., has introduced the Indus Appstore, an Android-based mobile application store in India. This move positions PhonePe in competition with Google's Play Store as they aim to capitalise on the increasing mobile usage in India. The Indus Appstore boasts over 200,000 (two lakhs) mobile applications and games in 12 (twelve) Indian languages, and developers are exempt from app listing fees until April 01, 2025. Notably, developers have the flexibility to use any third-party payment gateway. PhonePe is also working on partnerships with smartphone manufacturers and aims to be available on most major phone brands by the end of the year. Live Mint


4.5. Signzy acquires Difenz to strengthen AI-driven KYC solutions

Signzy, a fintech Software as a Service (SaaS) startup, has acquired Difenz, a provider of fraud risk management (FRM) solutions, in a cash and equity transaction. The deal, valued at USD 5 million (United States Dollar Five Million Only), aims to enhance Signzy's capabilities in artificial intelligence (“AI”). With this acquisition, Signzy plans to offer AI-driven Know Your Customer (KYC) compliance solutions to financial institutions. Following the transaction, Difenz co-founders have joined Signzy as partners. Inc 42


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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