Weekly Round-up | Updates
1. Regulatory Updates
1.1. India
1.1.1. Reserve Bank of India (RBI) appoints Shri P. Vasudevan as new Executive Director
RBI has appointed Shri P. Vasudevan as Executive Director (“ED”) with effect from July 03, 2023. P. Vasudevan was the chief general manager in charge of the Department of Payment and Settlement System. As ED, P. Vasudevan will look after the Department of currency management, corporate strategy and budget department (areas other than that of budget and funds) and enforcement department. RBI
1.1.2. RBI refuses in-three principal approval to set up Small Finance Banks
RBI after reviewing the three applications as per the procedure for setting- up a small finance bank has refused to grant approval who are as follows:
Shri Akhil Kumar Gupta
Cosmea Financial Housing
West End Housing Finance Limited RBI
1.1.3. RBI releases a report on the process of creating a road map for the internationalization of the Rupee
The Inter-Departmental Group (IDG) of RBI, on 05 June 2023 released its report on the internalization of Indian Rupee (INR). The objective intended to be achieved through the discussion and recommendations is to create a plan of action for the internalization of INR. RBI
1.1.4. RBI invites stakeholding consultancy on card network for the issue of debit, credit and prepaid cards by card networks
RBI seeks stakeholder consultation with regard to Card Networks for the issue of debit, credit and prepaid cards by Card Networks through its draft circular. The proposed circular mandates card issuers who may be a bank or a non-bank to issue cards on more than one-card network, allowing customer autonomy to choose among multiple card networks. Additionally, the draft also proposes to restrict card issuers from engaging in agreements limiting their function to collaborating with customers with other card networks. RBI
1.1.5. RBI revokes license of cooperative bank Shushruti Soudhara Sahakara Bank Niyamiti, Bengaluru
RBI cancels the license granted to Shushruti Soudhara Sahakara Bank Niyamiti Bengaluru to carry on its business on grounds of inadequate capital and earning prospects causing a violation of Sections 11(1), 22(3) and 56 of the Banking Regulation Act, 1949. This makes it obligatory on the part of the bank to stop conducting the business of ‘banking’ within the meaning of Section 5(b) of the Banking Regulation Act, 1949, including acceptance of deposits from non-members with immediate effect. RBI
1.1.6. RBI cancels the license of Malkapur Urban Co-operative Bank Limited, Maharashtra
RBI revokes the license of the Malkapur Urban Co-operative Bank Limited, Maharashtra on the ground of insufficient capital and earning prospects as being an infringement of Sections 11(1), 22(3) and 56 of the Banking Regulation Act, 1949. With effective immediately, it ceases to engage in the banking business as per the understanding of Section 5(b) of the Banking Regulation Act, 1949, including acceptance of deposits from non-members. Additionally, a winding up order along with the appointment of a liquidator has been issued by the Commissioner for Cooperation Societies, Maharashtra. RBI
1.2. Monetary Penalties
1.2.1. RBI imposed monetary penalties on the following banks:
Name of the entity | Penalty Imposed | Reason |
INR 1,00,000 (Rupees One Lakh only) | Contravention of directions issued by RBI on ‘Loans and advances to directors etc- directors as surety/guarantors- Clarification’. | |
INR 5,000/- (Rupees Five Thousand only) | Contravention of/ non-adherence with the directions issued by RBI on “Exposure Norms and Statutory / Other Restrictions – UCBs” and “Know Your Customer (KYC)”. |
2. Trends
2.1. PhonePe announced the launch of its Point-of-sale device
PhonePe has introduced a Point-of-sale (“POS”) device that allows merchants to accept payments using Debit Cards, Credit Cards, and UPI. The device comes with the PhonePe POS App preinstalled and supports various transaction methods such as tap, swipe, dip, and dynamic QR codes that can be used across platforms. This move by PhonePe intensifies the competition with rival Paytm, who had previously dominated the market with their all-in-one POS machines. These machines were commonly used by check-out counters throughout the country, typically provided by traditional banks. The Economic Times
2.2. Groww introduces a payment feature in its broking app
Groww, a financial investment platform, has introduced a payments feature on its broking app to expand its services. Utilizing the unified payments interface (“UPI”), users can now make peer-to-peer payments and merchant payments by scanning QR codes. In addition to these functionalities, the company is also focusing on bill payment services, enabling users to repay loans, credit cards, pay utility bills, and recharge DTH services.
3. Sector Overview
4. Business Updates
4.1. Shriram Finance Limited partners with Paytm to provide digital lending to small merchants
One97 Communications Limited (OCL) which owns the payments and financial services brand Paytm has partnered with retail NBFC, Shriram Finance to offer financial services to its users including loan products. Through this collaboration, Paytm aims to leverage Shriram Finance's extensive branch network and customer base to expand its loan offerings. The partnership will enable Paytm to provide small businesses with access to collateral-free loans, allowing them to meet their working capital requirements and drive business growth. Paytm is focused on supporting the financial inclusion of underserved segments, and this partnership aligns with its goal of empowering small businesses with easy access to credit. The Times of India
4.2. My ShubhLife partners with PayWorld to credit and finance MSMEs
My ShubhLife, an embedded finance platform, has partnered with PayWorld, India’s leading retailer payment app, to provide flexible and affordable credit offerings to Micro, Small and Medium Enterprises (“MSMEs”). It has planned to fortify its business using hold of the PayWorld network that includes more than 10 (ten) lakh banking points, 720 (seven hundred twenty) districts and 28 (twenty- eight) states. MyShubh Life platform provides services to clients through the use of data analytics and artificial intelligence (AI). The Financial Express
4.3. RBI’s data shows 91 (ninety-one) NBFC surrenders in only the first half of 2023
As per the data by RBI, 91 (ninety-one) NBFCs have surrendered their licenses so far in 2023. Out of the total, 49 (forty- nine) NBFCs have ceased to do business and 31 (thirty- one) have dissolved their legal identities owing to amalgamation, merger, dissolution or voluntary strike-off, while the rest do not need licensing as per the guidelines. The tightening of regulatory norms and a significant increase in the minimum Net Owned Fund (NOF) requirement for licensing have been the reasons for the surrender of licenses. The dormant NBFCs in order to escape the compliance burden have also exited the market. Money Control
4.4. Two banks in Bangladesh resorting to Indian Rupees transaction to counter the drop in forex reserves
Eastern Bank and Sonali Bank in Bangladesh are in a plan to introduce trade transactions denominated in INR on account of continuously falling forex reserves. The banks intend to offer trade operations in INR in order to strengthen the foreign exchange reserves as well as to reduce the dependency on dollars. The service offered, as part of the emerging global trend of reducing reliance on dollars and promoting regional currencies as a tactic to safeguard foreign exchange reserves, has been offered under the belief that this service would reduce the exchange cost and the cost of doing business. The initiative has been considered to be promising in the interest of the economy of Bangladesh not only for the business people but also for the commoners as Bangladesh Central Bank also plans to introduce a taka and rupee debit card in order to stabilize the forex reserve and to lessen exchange cost for all. Bloomberg
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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.
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