Weekly Round-up | Updates
1. Regulatory Updates
1.1. India
1.1.1. Reserve Bank of India (RBI) asks regulated entities to ensure the complete transition from LIBOR from July
RBI has issued an advisory to the regulated entities, asking them to take steps to ensure a complete transition away from the London Interbank Offered Rate (“LIBOR”) from July 01, 2023. The key messages in the advisory include the following:
Financial Institutions (“FIs”) are advised to ensure that no new transaction undertaken by them or their customers relies on or is priced using the United States Dollar LIBOR or the Mumbai Interbank Forward Outright Rate (“MIFOR”).
The Financial Benchmarks India Private Limited (“FBIL”) shall cease to publish MIFOR after June 30, 2023.
FIs are advised to take all necessary steps to ensure the insertion of fallbacks at the earliest in all remaining legacy financial contracts that reference United States Dollar LIBOR (including transactions that reference MIFOR).
FIs are expected to have developed the systems and processes to manage the complete transition away from LIBOR. RBI
1.1.2. RBI withdraws rupees 2,000 bank notes from circulation; will remain legal tender.
RBI has through a notification withdrawn ₹ 2,000 notes from circulation and people can exchange or deposit them in their bank accounts by September 30, 2023. RBI’s 19 regional offices and other banks will start taking notes for exchange with lower denomination ones from May 23, 2023. However, the ₹ 2,000 notes will continue to remain legal tender. RBI
1.2. Monetary Penalties
RBI imposes monetary penalties on the following banks-
Entity | Penalty | Reason |
Mizoram Rural Bank | ₹5 lakhs | Contravention of/ non-adherence with the directions issued by RBI on ‘Strengthening of Prudential Norms- Provisioning, Asset Classification and Exposure Limit’ and ‘Regional Rural Banks- Income Recognition, Asset Classification and Provisioning Norms- Non-Performing Assets (NPAs)’. RBI |
Tripura Gramin Bank | ₹2 lakhs | Contravention of/ non-adherence with the directions issued by RBI on ‘Strengthening of Prudential Norms- Provisioning, Asset Classification and Exposure Limit’ and ‘Regional Rural Banks- Income Recognition, Asset Classification and Provisioning Norms- Non-Performing Assets (NPAs)’. RBI |
Manipur Rural Bank | ₹10 thousand | Contravention of/non-adherence with the directions issued by RBI on ‘Strengthening of Prudential Norms - Provisioning, Asset Classification and Exposure Limit’ and ‘Regional Rural Banks - Income Recognition, Asset Classification and Provisioning Norms - Non-Performing Assets (NPAs)’. RBI
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1.3. Bangladesh
1.3.1. Bangladesh Bank grants financial institution license to Nagad Finance PLC
Bangladesh Bank grants Nagad Finance PLC a license to carry on financing business under Section 4(1) of the Financial Institutions Act, 1993. Bangladesh Bank
1.3.2. Bangladesh Bank issues guidelines on cloud computing
The Department of Banking Regulations and Policy issued “Guidelines on Cloud Computing”, including training and awareness raising on cloud technology. The directive issued by the banking regulation and policy department is also applicable to financial institutions. Bangladesh Bank
2. Trends
2.1. Sri Pramod Bhasin gets appointed as the new Chairman of the Data Security Council of India
Sri Pramod Bhasin, the founder of Genpact and current Chairman of ICREIR, has been appointed as the new Chairman of the Data Security Council of India (“DSCI”), effective from April 1, 2023. Sri Bhasin has replaced Sri Rajendra S Pawar, the Chairman and Co-Founder of NIIT Group, who served as the DSCI Chairman for the past three years. People Matters
2.2. Tide and Transcorp introduce India’s first recycled PVC Rupay card
Transcorp International Limited, an RBI-regulated Prepaid Payment Instrument (PPI) license holder, has announced its partnership with Tide. The entities, along with MCT Cards & Technology Pvt. Ltd. and National Payments Corporation of India, are planning to launch India’s first recycled Rupay Card. SME Street
2.3. North East Small Finance Bank migrates its core banking system to the Turing CBS platform
The platform has been supplied by M2P. It shall include a debit card management system, unified payments interface, national automated clearing house system, treasury, loan origination, digital identity, a centralised processing system for KYC, and solutions for AML compliance. Fintech Futures
2.4. Banks’ outstanding credit to NBFCs spikes by 30.2% YoY in Mar’23 at INR13.3 lakh crore
As per CareEdge, banks' outstanding credits to NBFCs remain robust and rise by 30.2% YoY in Mar’23 to INR13.3 lakh crore. This growth may be ascribed to a number of factors, including the base effect, NBFCs' stronger financial situation and growth visibility, and the fact that banks continue to provide lower interest rates than capital market returns. Livemint
3. Sector Overview
4. Business Updates
4.1. Credit card spending in Forex to be Governed by Foreign Exchange Management (Current Account Transactions) Rules, 2023
The amendment to the Foreign Exchange Management (Current Account Transactions) Rules, 2023 has been notified by the government to include foreign credit card payments in the Liberalised Remittance Scheme (LRS). Any transfer in excess of USD 2.5 lakh or its equivalent in foreign currency will require approval by RBI. Previously, the use of international credit cards (ICCs) to pay for costs incurred when travelling outside of India was not included in the LRS limit. Ministry of Finance
4.2. USD 1.2 billion raised by fintech startups in the first quarter of 2023
Tracxn has reported that there has been a 126% increase in investment in fintech startups from the USD 523 million raised in the fourth quarter of 2022. According to Tracxn, India is the second-highest funded jurisdiction after the United States in the field of fintech. The most active investors are Sequoia Capital, AngelList and Y Combinator, while the top investors in Q1 2023 were Y Combinator, Lets Venture, and Premji Invest. The Hindu
4.3. Competition Commission of India clears merger of Credit Suisse Group with the UBS Group
The Competition Commission of India (CCI) announced that it has approved Credit Suisse Group AGs planned merger with UBS Group AG. According to the regulator, UBS is largely focused on brokerage services in India, whereas Credit Suisse's activities include wealth management and investment banking services. Both are international investment banks and financial services firms headquartered in and operating in several countries throughout the world. Economic Times
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