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  • Writer's pictureAK & Partners

AKP Banking & Finance Digest- January 22, 2024

1. Regulatory Updates

1.1. India

1.1.1. RBI proposes draft framework for Fintech Self-Regulatory Organizations

The Reserve Bank of India (“RBI”) has released a draft framework for the recognition of Self-Regulatory Organizations (“SROs”) in the fintech sector. SROs are non-governmental bodies responsible for establishing and enforcing industry rules to protect customers and promote ethics and professionalism among their members. In response to an RBI directive in September, fintechs were urged to establish their own SROs. The draft emphasises that a fintech SRO (SRO-FT) should uphold impartiality, avoid conflicts of interest, and ensure unbiased oversight of its members. The RBI underscores that independence is crucial for building trust with industry participants and regulators. Stakeholder feedback on the draft framework is invited until the end of February 2024. RBI


1.1.2. RBI proposes withdrawal of exemptions for government-owned NBFCs on credit concentration norms

RBI has proposed the withdrawal of case-by-case exemptions for Government-owned Non-Banking Finance Companies (“NBFCs”) from credit and investment concentration norms. Since their inclusion in prudential regulations in May 2018, the RBI has reviewed exposure norms for these NBFCs. The draft circular suggests that Government NBFCs will now adhere to the exposure norms specified in relevant circulars without the option to seek exemptions. Currently, these NBFCs serving specific sectors can approach the RBI for exemptions from credit and investment concentration norms. The proposed changes allow existing breaches to run off until maturity, addressing implementation challenges for a smooth transition, subject to applicable prudential regulations. Business Standard

1.1.3 Bombay High Court rules: Banks/NBFCs not obligated to restructure MSME loans without application

The Bombay High Court in its recent ruling of A. Navinchandra Steels Pvt. Ltd. and Anr. vs. Union of India and Ors., W.P. No. 4620 of 2022 observed that Banks/NBFCs are not obliged to adopt the restructuring process laid down under the notification dated 29.05.2015 issued under the Section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 on its own without there being any application by the Micro, Small and Medium Enterprises (“MSMEs”). The court observed that, even though Clause 1(1) of the said notification provides that banks are required to identify the stress felt by the MSMEs, considering the fact that there are thousands and thousands of MSMEs who have raised loans from the Banks or NBFCs, such identification is impossible unless the same is brought to the notice of the Bank by the MSME itself.


1.1.4. Monetary Penalties

RBI imposes monetary penalties on the following financial institutions:

Name of the financial institution

Penalty Imposed


INR 50,00,000 (Indian Rupees Fifty Lakh Only)

Contravention of/non-adherence with certain provisions of the ‘RBI Know Your Customer Direction, 2016 (KYC Directions)’.

INR 15,00,000 (Indian Rupees Fifteen Lakh Only)

Contravention of/non-adherence with certain provisions of the directions issued by RBI on ‘Donations/Contributions for public/charitable purposes out of profits of Urban Co-operative Banks (“UCBs”)’.

INR 7,00,000 (Indian Rupees Seven 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’, ‘Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016’ and contravention of the provisions of section 26A (2) read with section 56 of the Banking Regulation Act, 1949 (BR Act).

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

Contravention of/non-adherence with certain provisions of the directions issued by RBI on ‘Placement of Deposits with Other Banks by Primary UCBs’.

INR 10,00,000 (Indian Rupees Ten Lakh Only)

Contravention of/non-adherence with certain provisions of the directions issued by RBI on ‘Donations to Trusts and Institutions where Directors, their relatives hold position or are interested’, ‘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’, ‘Placement of Deposits with Other Banks by Primary UCBs’ and ‘Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016’.

1.2. Bangladesh

1.2.1. Bangladesh Bank unveils measures to combat inflation in upcoming monetary policy

Bangladesh Bank is gearing up to unveil its monetary policy for the second half of the fiscal year 2023-24, aiming to tackle inflation. Central bank officials suggest that the upcoming policy may involve adjustments such as raising the lending policy rate to banks, incorporating a new exchange rate formula, and potentially reducing the private sector loan growth target. In the first half of FY24, the central bank adopted a contractionary monetary policy, restricting money flow to the private sector and revising the private sector credit growth projection to 11 per cent (eleven per cent) for FY24, compared to the earlier target of 14.1 per cent (fourteen point one per cent) set for FY23. The Business Standard


1.3. Vietnam

1.3.1. UK companies explore digital business opportunities in Vietnam during Tech Week Mission

The Vietnamese government prioritises the digital transformation of its economy, targeting a 30 per cent (thirty per cent) contribution from the digital economy to Gross Domestic Product (GDP) by 2030. Focusing on key areas like fintech, e-commerce, digital payments, and emerging technologies such as Artificial Intelligence (AI), blockchain, and internet of things (IoT), Vietnam invites companies to explore business opportunities in Hanoi and Ho Chi Minh City from March 04 to 08, 2024. This initiative, part of the UK-Southeast Asia Tech Week 2024, seeks to foster collaboration between the UK and Vietnam in fintech, financial payment system (FPS), and banking. Delegates will engage with local banks, IT associations, and prominent tech conglomerates during the mission, which aligns with broader discussions at the Tech Week involving regulators, policymakers, investors, and academics. The Fintech Times


2. Trends

2.1. RBI urges banks to prepare for multi-currency shift amidst Rupee internationalisation plans

Senior officials at RBI have advised high-street banks to brace themselves for a changing financial landscape as part of efforts to globalise the Indian rupee. The guidance encourages banks to adapt to a multi-currency environment where the US dollar may no longer be the sole preference for cross-border trades. The move towards internationalising the rupee implies its use and possession beyond national borders, facilitating transactions not only between residents and non-residents but also among residents of foreign countries. The central bank and government are anticipated to take measures, aligning with the findings of a report on rupee internationalisation released in the previous year, to enhance the global acceptance of the Indian currency. The Economic Times


2.2. Jio Financial Services introduces Device as a Service (DaaS) financing model for corporates

Jio Financial Services is launching Device as a Service (“DaaS”), a financing model for businesses allowing them to lease devices instead of purchasing. This approach aims to preserve cash flow and enhance IT fleet management. Jio Financial Services plans to provide finance and operating leases for assets such as air fiber, phones, and laptops, introducing a new market model for consumer devices. In a presentation to investors, the company highlighted the advantages of DaaS, including lower risk associated with asset ownership and the potential for targeted cross-selling based on customer insights. The Economic Times


3. Sector Overview



4. Business Updates


4.1. Google India and NPCI collaborate to expand UPI beyond India's borders

Google India Digital Services and NPCI International Payments Ltd, a subsidiary of the National Payments Corporation of India ("NPCI"), have entered into a Memorandum of Understanding (MoU) to extend the reach of the Unified Payments Interface (“UPI”) beyond India. The MoU outlines three primary objectives: facilitating UPI payments for international travellers, aiding the establishment of UPI-like digital payment systems in other countries, and streamlining cross-border remittances through the UPI infrastructure. This initiative aims to revolutionise global commerce by offering a seamless, secure, and cost-effective payment experience for merchants and customers globally. The Economic Times

4.2. Alteria Capital invests INR 120 crore in fintech unicorn OneCard's parent company

Alteria Capital, a venture debt fund with a portfolio including Rebel Foods, Spinny, Mensa Brands, and Zepto, has invested INR 120 crore (Indian Rupees One Hundred Twenty Crore Only) in the parent entity of fintech unicorn FPL Technologies. OneCard, a service under FPL Technologies, provides credit card-related services, including credit score checks and an expense management application. This funding follows a recent injection of INR 95 crore (Indian Rupees Ninety Five Crore Only) in debt capital from Alteria Capital, and the funds will be utilised by OneCard for product innovation and improving customer experience. Inc 42


4.3. DMI Group acquires fintech startup ZestMoney in distress sale

Delhi NCR-based DMI Group has acquired struggling fintech startup ZestMoney in what seems to be a distressed sale. This move follows recent reports indicating ZestMoney's intention to cease operations by December 2023, leading to the termination of approximately 150 (one hundred fifty) employees. DMI Group stated that the acquisition will allow the integration of ZestMoney's checkout financing platform into its product lineup, expanding customer engagement. The agreement grants DMI Group exclusive rights to utilise all Zest brands, with DMI Finance, the company's NBFC arm, designated as the preferred lender on the Buy Now, Pay Later (BNPL) platform. 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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