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  • Writer's pictureAK & Partners

AKP Banking & Finance Digest- March 11, 2024

1. Regulatory Updates

1.1. India

1.1.1. RBI directs flexibility in credit card network choices for customers

The Reserve Bank of India (“RBI”) has issued directives under the Payment and Settlement Systems Act, 2007 to address concerns about restrictions on customer choice in credit card networks. Card issuers, whether banks or non-banks are now prohibited from entering into agreements that limit them from using services from multiple card networks. Additionally, card issuers must offer eligible customers the option to choose from various card networks when obtaining a credit card. These directives apply to existing agreements upon renewal or amendment and to new agreements. The rules do not apply to credit card issuers with fewer than 10 lakh (ten lakh) active cards, and issuers using their own authorized card networks are exempted. The specified directives will be effective six months from the date of this circular. RBI


1.1.2. RBI imposes restrictions on JM Financial for IPO and debenture financing issues

RBI has directed JM Financial Products Limited to immediately halt all financing against shares and debentures, including loans for Initial Public Offers (“IPOs”) and debenture subscriptions. This action comes in response to serious deficiencies found in the company's loans for IPO financing and debenture subscriptions. The review revealed lax credit underwriting, with the company facilitating a group of customers in bidding for IPOs and debentures using borrowed funds. Governance issues and regulatory violations were also identified, prompting business restrictions. The restrictions will be reviewed after a special audit, with ongoing examination of any regulatory violations by the bank(s) involved. RBI


1.1.3. RBI imposes immediate restrictions on IIFL Finance's gold loan operations

RBI has directed IIFL Finance Ltd. to immediately stop approving or disbursing new gold loans and cease any transfer or sale of existing ones. The decision follows an RBI inspection that revealed concerns in the company's gold loan portfolio, including issues with gold purity certification, loan-to-value ratio breaches, excessive cash transactions, non-compliance with auction processes, and lack of transparency in customer charges. Despite ongoing discussions with the company's management, no meaningful corrective actions have been taken, leading to the imposition of business restrictions in the interest of customers. The restrictions will be reviewed after a special audit, and additional regulatory actions may follow. RBI


1.2. Bangladesh

1.2.1. Meghna Bank partners with Sonali Bank for convenient digital payments

Meghna Bank PLC has formed a partnership with Sonali Bank PLC, allowing customers to conveniently pay various government bills and fees through Meghna Bank's digital platform via Sonali Bank's payment gateway. The collaboration enables interoperable fund transfers between MeghnaPay Account and Sonali Bank accounts, along with the receipt of government disbursements in the MeghnaPay wallet through Sonali Bank. The services were inaugurated by the Chairman of Meghna Bank PLC, HN Ashequr Rahman, and the CEO & Managing Director of Sonali Bank PLC, Md Afzal Karim. The collaboration is seen as a significant step towards advancing the national vision of a cashless society and promoting digital transactions. Dhaka Tribune


1.3. Indonesia  

1.3.1. RBI and Bank Indonesia sign MoU for cross-border transactions in local currencies

RBI and the Bank Indonesia (BI) have signed a Memorandum of Understanding (“MoU”) to establish a framework promoting the use of local currencies, the Indian Rupee (“INR”) and the Indonesian Rupiah (“IDR”), for cross-border transactions. The MoU, signed by RBI Governor Shaktikanta Das and Bank Indonesia Governor Perry Warjiyo, aims to facilitate bilateral use of INR and IDR in various transactions, covering current account and permissible capital account transactions. This framework will allow exporters and importers to invoice and pay in their respective domestic currencies, fostering the development of an INR-IDR foreign exchange market. The initiative is expected to optimise costs and settlement time for transactions, contributing to strengthened bilateral cooperation and trade promotion between India and Indonesia. Bank Indonesia


2. Trends

2.1. India launches inaugural tech summit in the Philippines for bilateral collaboration

The inaugural India-Philippine Tech Summit (IPTS) was launched by the Indian Embassy in the Philippines to enhance technological and digital collaboration with Manila. During the summit held in Taguig City, Indian Ambassador Shambhu Kumaran emphasised the importance of developing partnerships among developing countries, focusing on security, people-to-people connections, and the economy. The event featured Indian 'unicorns'—privately owned startup companies valued at over USD 1 billion (United States Dollar One Billion Only)—and other startups in sectors such as agriculture, healthcare, and financial technology. Secretary Ivan John Uy from the Department of Information and Communications Technology (DICT) expressed the Philippine government's commitment to maintaining partnerships with the private sector. The Economic Times


3. Sector Overview



4. Business Updates


4.1. Go Digit General Insurance receives SEBI approval for IPO

Go Digit General Insurance Ltd, backed by Canada's Fairfax Group, has received approval from the Securities and Exchange Board of India (“SEBI”) to proceed with its IPO. The funds raised will be utilised for enhancing the company's capital base, maintaining solvency levels, and general corporate purposes. SEBI's observation letter, received on March 01, signifies approval for the public issue. Despite an initial filing in August 2022, compliance issues related to the employee stock appreciation rights scheme led to SEBI returning the draft IPO papers on January 30, 2023. After re-submitting the documents in April 2023, Go Digit is now set to proceed with the IPO. The company offers various insurance products, including motor, health, travel, property, marine, and liability insurance. Business Standard


4.2. Cashfree introduces Embedded Payments for seamless business transactions on software platforms

Cashfree Payments, a fintech platform, has introduced a new payment solution called ‘Embedded Payments’. This solution is designed for software platforms, such as enterprise resource planning (ERPs), customer relationship management (CRM), SaaS, or billing platforms, to streamline the payment process for businesses. Embedded Payments facilitates direct payments between the software platforms and their users. Cashfree claims that the solution enables platforms to provide clients with access to over 120 (one hundred twenty) payment modes seamlessly, without the need for redirects or external interfaces. Users can initiate payments, and the funds are transferred directly to the designated account within the platform's environment. Inc 42


4.3. NPCI and Indian Institute of Science forge partnership for blockchain and AI research

The National Payments Corporation of India (“NPCI”) has entered a long-term agreement with the Indian Institute of Science (“IISc”), Bangalore, to jointly research blockchain and Artificial Intelligence (“AI”) technology. This collaboration will foster innovation through the establishment of the 'NPCI-IISc Centre of Excellence (CoE) for Deep Tech Research & Development,' with a specific focus on scalable blockchain platforms and multi-modal analytics over fintech data. The partnership involves faculty members from various departments at IISc working alongside NPCI researchers to address practical challenges in areas such as scalability, privacy-preserving designs, neural networks, Graph AI, and Large Language Models. BFSI


4.4. RBI approves merger of Fincare Small Finance Bank with AU Small Finance Bank

RBI has granted approval for the merger of Fincare Small Finance Bank Ltd with AU Small Finance Bank Ltd, as announced over four months ago. AU Small Finance Bank initiated the merger in October, marking the first amalgamation of two small finance banks. The merger aligns with the RBI's 2014 policy aimed at enhancing financial inclusion by providing savings outlets and credit access for various sectors. While AU Small Finance Bank commenced operations in April 2017, Fincare Small Finance Bank (originally Disha Microfin) began operations in July 2017. As of December 31, 2024, AU Small Finance Bank reported assets totalling INR 1.01 trillion (Indian Rupees One Trillion Ten Billion Only). While AU Small Finance Bank is publicly listed, Fincare Small Finance Bank is not. Live Mint


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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