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  • Writer's pictureAK & Partners

AKP Banking & Finance Digest- July 24, 2023

Updated: Jul 31, 2023

Weekly Round-up | Updates

1. Regulatory Updates

1.1. India

The Reserve Bank of India (RBI) cancelled the license of the United India Co-operative Bank Limited, Nagina, Bijnor, Uttar Pradesh, as the bank failed to maintain adequate capital and earning prospects resulting in a violation of Sections 11(1), 22(3) and 56 of the Banking Regulation Act.

1.2. Bhutan

Following the cross-border payment initiative between Bhutan and India, NPCI International Payments Ltd (NIPL), an international arm of the National Payments Corporation of India (NPCI), has issued over 10,000 (Ten thousand) RuPay cards in Bhutan. RuPay is a global card payment network from India. NIPL’s strategic alliance with the Royal Monetary Authority of Bhutan- Bhutan National Bank Ltd (BNBL) enabled BNPL RuPay debit cards to be used for cash withdrawals, balance inquiries, and purchases in India. This alliance will promote digital financial inclusion and low-cost digital payment solutions. NPCI

1.3. Sri Lanka

The Department of foreign exchange, with the view to facilitate international transactions, has issued an order relaxing certain limitations on outward remittances for capital transactions and has removed the restrictions on current transfers of emigrants. This new order was brought into effect from June 28, 2023, for 6 (six) months. Central Bank of Sri Lanka

1.4. Bangladesh

The Central Bank of Bangladesh (BB) has issued a clean-note policy v worn-out notes from circulation. To facilitate the same, high-speed automatic note-sorting machines have already been installed in Dhaka and Bogura offices. Under the said policy, more machines will be installed across its branches to expedite the process of discarding old and torn notes. Financial Express

2. Trends

2.1. Cashfree rolls out its ‘BNPL Plus’ service

Cashfree Payments has launched its buy-now-pay-later (“BNPL”) service called 'BNPL Plus'. BNPL Plus is a fintech service which enables businesses to offer flexible payment options. It integrates seamlessly with websites and popular platforms like WooCommerce and Shopify, providing attractive offers and no-cost EMI choices to customers automatically. It caters to various D2C businesses, including e-commerce, edtech, travel, and hospitality, alleviating the issue of cart abandonment due to large upfront payments. Business Line, The Hindu

2.2. India to soon introduce project on tax and financial crime investigation

India, in collaboration with Organisation for Economic Co-operation and Development (OECD) for the South Asian Region, is ready to launch a pilot program on tax and financial crime investigation as a measure to fight financial crimes, including tax evasion, corruption and money laundering. The Indian Express

2.3. Fintech infrastructure company Decentro acquires Neowise

Decentro, a fintech infrastructure company, has acquired Neowise, a start-up which provides software as a service (SaaS) platform to lenders for digitising debt recovery and collections. As a result, Neowise shall be integrated as Decentro’s wholly-owned subsidiary. The acquisition shall help Decentro offer an end-to-end embedded payment, banking Application Programming Interface (APIs), and debt recovery technology. The Times of India

2.4. Jio Financial Services demerger sparks fears of disruption in the Indian fintech market

As Jio Financial Services separates from Reliance Industries, industry insiders believe that Jio Financial will likely follow the successful Reliance playbook by targeting the masses with its deep pockets and extensive reach. The company is expected to disrupt the market, particularly in consumer lending, leveraging its large user base and retail stores to create a robust distribution channel. Indian fintech founders fear Jio's entry could pose a significant challenge as it competes for a substantial share of the consumer lending market. The Economic Times

2.5. ADB retains India’s growth forecast at 6.4 per cent for the current fiscal year

Asian Development Bank (ADB) has maintained India's economic growth forecast at 6.4 per cent (Six points Four per cent) for the fiscal year 2023-24 (“FY24”), citing a recovery in consumption demand in both rural and urban areas. However, suppressed exports due to the global economic slowdown will challenge India's growth. The inflation projection for FY24 has been lowered to 4.9 per cent (Four point Nine per cent) due to softening crude oil prices, but core inflation is expected to remain high. The ADB expects India's economy to grow at 6.7 per cent (Six points Seven per cent) in FY24, assuming normal rainfall and no further geopolitical shocks. Moneycontrol

3. Sector Overview

4. Business Updates

4.1. Fintech startups OneCard and WintWealth to apply for NBFC license

Two Indian unicorn startups, OneCard, based in Pune and WintWealth, headquartered in Bengaluru, have applied for licenses to operate as Non-Banking Financial Companies (“NBFCs”). These startups aim to join prominent fintech companies like Cred, Groww, and Jupiter that have recently obtained lending licenses. Another platform, Upstox, focused on stock investing, also explores entry into the credit sector. Initially, Upstox plans to form partnerships with existing NBFCs and banks before eventually venturing into independent lending. Following RBI’s introduction of digital lending licenses, major fintech players are seeking regulation and seeking to increase their presence in the lending market.

4.2. Cert-In alerts issues advisory against ‘Akira’ attack

Indian Computer Emergency Response Team (“Cert-In”) officials, who are the central technology arm to combat cyber-attacks and provide safe internet, have issued an advisory warning against the currently active computer malware named ‘Akira’, which targets Linux and Microsoft-based systems accessing the Virtual Private Network (VPN), terminates active Windows services and encrypts files found in hard drive folders, excluding Recycle Bin, Boot, System Volume Information, and Window folders. It typically targets users without multi-factor authentication, and in case the target user does not pay the money, the attackers release the user’s data on their dark web blog. In this regard, Cert-In has urged users to enforce strong password policies, activate multi-factor authentication (MFA) and avoid using resources from unofficial channels to counter cyber and ransomware attacks. National Herald India

4.3. SEBI to engage in pan-freezing of trading accounts of top executives to prevent insider trading

The market regulator, The Securities and Exchange Board of India (SEBI), extends the trading window closure restriction to the top 1,000 (One Thousand) listed firms effective October 01, 2023. Trading window closure is essentially a restriction period that begins from the end of every quarter until 48 (Forty-eight) hours after the declaration of financial results, where the permanent account number for key designated persons (those with access to unpublished sensitive information) is frozen. Priorly, this applied only to companies part of the Sensex and Nifty50 index. Business Standard

4.4. RBI seeks enhanced reporting on rising digital frauds

During its annual inspection, RBI is intensifying its focus on digital fraud in the banking system. With the rise of Unified Payments Interface (UPI) transactions, the volume of digital frauds has nearly doubled, prompting the RBI to inquire about banks' fraud prevention mechanisms and customer awareness campaigns. Considering the same, RBI has asked lenders to report all sizes of digital frauds, and not only those amounting above INR 1 lakh (Indian Rupees One Lakh only). Financial Express

4.5. Cert-In issues a warning against the use of Google Chrome

Cert-In officials have said that owing to the multiple vulnerabilities associated with Google Chrome for desktops, a remote attacker could execute arbitrary code, bypass security restrictions or cause a denial-of-service condition on the targeted system. To counter the potential cyber-attack, Cert-In has advised users to update their system aptly, as per the directions of Google Chrome. The Economic Times

4.6. ICICI Bank prepares to move to the ECL framework

The executive director of ICICI bank Sandeep Batra, revealing its intention to move to an ECL (Expected Credit Loss) based framework, stated that they are waiting for RBI guidelines to be finalised. The ECL framework requires the banks to assess expected loss on their overall financial assets and make provisions thereafter, instead of making it after the loan becomes a Non-Performing Asset (NPA). Under the ECL framework, banks must classify their financial assets into sub-categories based on the bank’s assessment of any credit loss on the assets. Only scheduled commercial banks excluding regional rural banks fall under the ECL framework. Moneycontrol

4.7. Bain Capital soon to acquire 90 % of stake in Adani Capital and Adani Housing

Bain Capital, a US-based investment company, has signed a pact to acquire 90 per cent (Ninety per cent) of Adani Capital, an NBFC of the Adani Group, and Adani Housing. Bain Capita is acquiring the stake in exchange for USD 120 million (United States Dollar One Hundred Twenty Million only) for Adani capital along with an additional liquidity line of USD 50 million (United States Dollar Fifty Million only) in the form of Non-Convertible Debentures. The Economic Times

4.8. Ministry of Corporate Affairs to exclude Rural banks from CCI purview

The central government, in its executive order, has decided to exclude Regional Rural Banks (“RRBs”) from the ambit of the Competition Commission of India (CCI) merger control regime for the initial five years. RRBs are hybrid-micro banking institutions intending to serve the credit needs of small and marginal farmers, agricultural labourers, and socio-economically weaker sections and to strengthen the development of agriculture, trade, commerce, industry etc. Currently, the central government owns 50 per cent stake (Fifty per cent), Sponsor Banks own 35 per cent (Thirty-five per cent), and the rest 15 per cent (Fifteen per cent) is held by the State government in each of these RRBs. The Business Line

4.9. India and Sri Lanka signed network to network UPI agreement

In order to boost the fintech connectivity, India and Sri Lanka signed network to network UPI agreement during Sri Lankan President Ranil Wickremesinghe’s visit to India. This move is intended to bring in seamless, real-time and secure cross-border transactions. The National Payments Corporation of India (NPCI) is also in talks with the USA, Europe and West Asia to extend UPI services. BFSI, The Economic Times


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 & Partner


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