AKP Banking & Finance Digest- November 06, 2023
1. Regulatory Updates
1.1.1. RBI releases circular on regulation of payment aggregator operations for cross-border transactions
The Foreign Exchange Department of the Reserve Bank of India (“RBI”) under the Foreign Exchange Management Act, 1999 (FEMA) issued a draft circular dated April 07, 2022, on processing and settlement of low-value export and import-related payments, which were enabled by Online Export-Import Facilitators (OEIFs). In response to feedback received on the draft circular, the guidelines have been revised. The aim is to regulate entities that facilitate payment and settlement for online cross-border export/import transactions as payment aggregators–cross border (PA-CB) under the Payment and Settlement Systems Act, 2007. RBI
1.1.2. RBI appoints Shir Manoranjan Mishra as Executive Director
RBI has appointed Shri Manoranjan Mishra as Executive Director (“ED”) starting from November 01, 2023. Before his appointment as ED, Shri Mishra held the position of Chief General Manager in the Department of Regulation. Shri Mishra has worked in the areas of regulation of banks and Non-Banking Financial Companies (“NBFCs”), supervision of banks and currency management for the last three decades and contributed towards formulation of regulatory and supervisory policies. As ED, Shri Mishra will oversee the Enforcement Department, Risk Monitoring Department and Department of External Investments and Operations. RBI
1.1.3. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
Name of the financial institution
INR 10,00,000 (Indian Rupees Ten Lakh Only)
Contravention of/non-adherence with certain provisions of the direction issued by RBI on ‘RBI (Know Your Customer) Directions, 2016’ (“KYC Directions”).
INR 13,38,000 (Indian Rupees Thirteen Lakh Thirty-Eight Thousand Only)
Contravention of/non-adherence with directions issued by RBI on ‘Non-Banking Financial Company-Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016’.
INR 30,00,000 (Indian Rupees Thirty Lakh Only)
Contravention of/non-adherence with certain provisions of the direction issued by RBI on ‘KYC Directions’.
INR 72,00,000 (Indian Rupees Seventy-Two Lakh Only)
Contravention of/non-adherence with directions issued by RBI on ‘RBI (Interest Rate on Deposits) Directions, 2016’, ‘RBI (Interest Rate on Advances) Directions, 2016’ and ‘Master Circular on Customer Service in Banks’.
INR 1,00,000 (Indian Rupees One Lakh Only)
Contravention of/non-adherence with 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’ Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (“UCB”)’.
INR 2,00,000 (Indian Rupees Two Lakh Only)
Contravention of/non-adherence with directions issued by RBI on ‘KYC Directions’.
INR 7,00,000 (Indian Rupees Seven Lakh Only)
Contravention of/non-adherence with directions issued by RBI on ‘Placement of Deposits with Other Banks by Primary UCB’.
INR 2,00,000 (Indian Rupees Two Lakh Only)
Contravention of/non-adherence with directions issued by RBI on ‘Housing Finance’ applicable to State Co-operative Banks.
INR 1,10,000 (Indian Rupees One Lakh Ten Thousand Only)
Contravention of/non-adherence with directions issued by RBI on ‘KYC Directions’ and ‘Membership of Credit Information Companies’.
1.2.1. Bangladesh launches national debit card 'TakaPay' to reduce foreign currency outflow
Bangladesh Bank has introduced its inaugural national debit card, named ‘TakaPay’, in an effort to decrease dependency on international cards such as Visa and Mastercard. The primary objective is to curtail the outflow of foreign currency. Prime Minister Sheikh Hasina virtually inaugurated the card from Ganabhaban, with the participation of Sonali Bank, City Bank, and Brac Bank during the launch ceremony. Prior to TakaPay, all payment cards in Bangladesh were under foreign companies. Banks provided these card services for a fee, with a portion going to the foreign-owned card providers. Moreover, extra charges were imposed when using cards at ATMs of other banks. Dhaka Tribune
1.3. Sri Lanka
1.3.1. Sri Lanka launches LANKAQR for cashless payments & financial inclusion
The Central Bank of Sri Lanka (CBSL) has introduced the widespread implementation of ‘LANKAQR’, a cost-effective digital payment solution. This initiative serves the dual purpose of reducing cash dependency and enhancing financial inclusivity. LANKAQR allows customers to directly pay merchants and service providers using payment apps from certified financial institutions. It especially targets small and medium-sized enterprises and operates on a national QR code standard. Through scanning the LANKAQR code, customers can complete payments without any charges. Merchants are provided with LANKAQR stickers after paying a fee to the issuing bank for the code's use. Fintech Futures
2.1. India expands digital payment solutions across government sectors
In alignment with the digital India policy, the Indian government is actively engaged in the development of applications that facilitate digital payments, settlements, and invoicing across various government departments. Initially, the primary focus was on the digitisation of traffic fines. However, the government's vision has broadened to encompass the extension of digital payment solutions to the grassroots level, including Panchayat tax payments and municipal corporation dues. Furthermore, the National Informatics Centre (NIC) is collaborating with payment major Worldline to test the digitisation of temple donations. Such pilot programs are currently ongoing in Tamil Nadu as well. ET Government
2.2. Canara Bank prepares the launch of its credit card subsidiary
Canara Bank is in the process of transforming its subsidiary, Canbank Computer Services (“CCS”), into a credit card unit, aiming to maximise the value of its unsecured business segment. In this endeavour, Canara Bank intends to acquire Bank of Baroda and DBS's stakes in the subsidiary, although Karur Vysya Bank's approval for the plan is pending. At present, CCS primarily focuses on IT and software development services, BPO services, ATM services, and consultancy services. In accordance with RBI regulations, banks in India can engage in the credit card business either departmentally or through a subsidiary and for setting up a subsidiary regulator's prior approval is needed. The Economic Times
3. Sector Overview
4. Business Updates
4.1. Mufin Green Finance Limited to be listed on the National Stock Exchange
Mufin Green Finance Limited (“Mufin”), a non-deposit-taking NBFC, has announced that it has received approval to get its equity shares listed on the National Stock Exchange. Mufin is in the business of investing in shares and stocks and providing loans. It will be India’s first listed NBFC dealing with 100 per cent (hundred per cent) green financing in India. Dalal Street Investment Journal
4.2. AngelOne acquires the team of fintech startup Dstreet Finance
Stockbroking platform AngelOne has acquired the team of fintech startup Dstreet Finance. Dstreet Finance has expertise in creating content for young investors. The objective behind this strategic acquisition is to widen the horizon of services provided by AngelOne by providing content generation and education for investment for the Gen Z community. This is AngelOne’s first tech startup acquisition. Times of India
4.3. SBI Card collaborates with Reliance to launch Reliance SBI Card
State Bank of India (“SBI”) Card has revealed a partnership with Reliance Retail, resulting in the introduction of the Reliance SBI Card. This credit card is a co-branded product designed to enhance the shopping experience at various Reliance Retail outlets. The card is focused on lifestyle, offering a wide array of programs and exclusive benefits to cater to individuals with diverse spending requirements. It comes in two variations: the Reliance SBI Card and the Reliance SBI Card PRIME. Cardholders will enjoy special rewards and privileges when making transactions within Reliance Retail's extensive and diverse ecosystem. Live Mint
4.4. NPCI initiates stricter security measures for Aadhaar-enabled Payment System (AePS)
The National Payments Corporation of India (“NPCI”) is urging Aadhaar-enabled Payment System (“AePS”) providers to implement increased security measures due to an increase in fraud incidents. NPCI has directed banks and payment companies to introduce mandatory security protocols similar to those on debit cards to safeguard AePS transactions. NPCI has instructed banks to cease AePS services for accounts inactive in AePS transactions for over 12 (twelve) months by the upcoming month's end and immediately disable AePS for accounts where the sole AePS transaction in the past year was identified as fraudulent. NPCI wants explicit customer consent for this service and mandates banks to allow customers to choose to 'enable' or 'disable' AePS as a debit mode through various channels such as mobile banking, branches, and call centers. BFSI
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