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AKP Banking & Finance Digest- October 16, 2023

Updated: Oct 23, 2023

1. Regulatory Updates


1.1. India


1.1.1. RBI directs Bank of Baroda to suspend onboarding of customers onto ‘bob World’ application

The Reserve Bank of India (“RBI”) has directed the Bank of Baroda (“BOB”) to immediately suspend further onboarding of customers onto ‘bob World’, a mobile application, on the grounds of material supervisory concerns observed in the manner of onboarding customers. However, this suspension could be revoked in the future, subject to the rectification of deficiencies by BOB. Furthermore, RBI has also instructed BOB to ensure that the customers who have already been onboarded to the mobile application do not face any disruption owing to the suspension. RBI


1.1.2. RBI cancels licenses of various NBFCs

RBI, under Section 45-IA (B) of the Reserve Bank of India Act, 1934 (“RBI Act”), has cancelled the Certificate of Registration (“COR”) of 10 (ten) Non-Banking Financial Companies (“NBFCs”).


NBFC

Ground for Cancellation

Exit from Non-Banking Financial Institution (“NBFI”) business

Exit from NBFI business

Exit from NBFI business

Exit from NBFI business

Exit from NBFI business

Exit from NBFI business

Exit from NBFI business

Exit from NBFI business

Exit from NBFI business

Exit from NBFI business

Cease to be a legal identity owing to amalgamation/merger/dissolution/voluntary strike-off, etc.

Cease to be a legal identity owing to amalgamation/merger/dissolution/voluntary strike-off, etc.

Cease to be a legal identity owing to amalgamation/merger/dissolution/voluntary strike-off, etc.

​Cease to be a legal identity owing to amalgamation/merger/dissolution/voluntary strike-off, etc.

1.1.3. RBI cancels the license of Ind Bank Housing Ltd.

RBI has cancelled the license of Ind Bank Housing Ltd, a housing finance company, on the grounds of contravention of renewal of registration requirement under 29A (6) of the National Housing Bank Act, 1987. Furthermore, RBI has also clarified that the company shall neither transact the business of a Housing Finance Institution nor an NBFI. RBI

1.1.4. Monetary Penalties

RBI imposes monetary penalties on the following financial institutions:

Name of the Institution

Penalty Imposed

Reason

INR 4,50,000 (Indian Rupees Four Lakh Fifty Thousand)

Contravention of/non-adherence with directions issued by RBI on ‘Interest Rates on Deposits’ and ‘Maintenance of Deposit Accounts’.

INR 3,00,000 (Indian Rupees Three Lakh)

Contravention of/non-adherence with directions issued by RBI on ‘Know Your Customer Directions, 2016’ (“KYC Directions”) and not transferring funds to the Depositor Education and Awareness Fund.

INR 1,00,000 (Indian Rupees One Lakh)

Contravention of/non-adherence with directions issued by RBI on ‘Maintenance of Deposit Accounts- Primary (Urban) Co-operative Banks’ (“UCBs”).

INR 6,00,000 (Indian Rupees Six Lakh)

Contravention of/non-adherence with Supervisory Action Framework (SAF), KYC Directions and ‘Maintenance of Deposit Accounts- Primary UCBs

INR 13,00,000

(Indian Rupees Thirteen Lakh only)

Contravention of/non-adherence with directions issued by RBI on ‘Interest Rate on Deposits’.

INR 5,39,00,000 (Indian Rupees Five Crore Thirty-Nine Lakh only)

Contravention of/non-adherence with directions issued by RBI on KYC Directions, ‘RBI Guidelines for Licensing of Payments Banks’ read with ‘Enhancement of maximum balance at the end of the day’, ‘Cyber security framework in banks’ read with ‘Guidelines on reporting of unusual cyber security incidents’ and ‘Securing mobile banking applications including Unified Payments Interface ecosystem’.

INR 4,00,000 (Indian Rupees Four Lakh only)

Contravention of/non-adherence with Directions by RBI on ‘KYC Direction’, ‘Maintenance of Deposit Accounts - Primary UCBs’, and ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’.

INR 1,20,000 (Indian Rupees One Lakh Twenty Thousand only)

Contravention of/non-adherence with RBI’s direction on ‘KYC Directions’ and ‘Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016’.

INR 1,00,000 (Indian Rupees One Lakh only)

Contravention of/non-adherence with RBI’s direction on KYC Directions.

INR 1,00,000 (Indian Rupees One Lakh only)

Contravention of/non-adherence with RBI’s direction on ‘Frauds Monitoring and Reporting Mechanism’.

INR 64,00,000 (Indian Rupees Sixty-Four Lakh only)

Contravention of/non-adherence with ‘RBI (Prior approval for the acquisition of shares or voting rights in private sector banks) Directions, 2015’.

INR 1,00,00,000 (Indian Rupees One Crore only)

​Contravention of/non-adherence with RBI’s direction on ‘Loans and Advances – Statutory and Other Restrictions’.

INR 8,50,000 (Indian Rupees Eight Lakh Fifty Thousand only)

Contravention of/non-adherence with RBI’s direction on ‘Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016’ issued by RBI.

1.2. Bangladesh


1.2.1. Bangladesh Bank releases data indicating a rise in non-performing loans in NBFIs

As per the data released by the Bangladesh Bank (“BB”), defaulting of loans has risen to TK 24,418 Crore (Bangladeshi Taka Twenty-Four Thousand Four Hundred and Eighteen Crore) in the April-June quarter of FY 2023. The value of the loan default amount stood at TK 1,56,039 Crore (Bangladeshi Taka One Lakh Fifty-Six Thousand Thirty-Nine Crore) in June 2023, which accounted for 10.11 per cent (Ten point eleven per cent) of the outstanding loans. Bangladesh currently faces the problem of rising non-performing loans, and the probable reason could be the withdrawal of relaxed loan repayment policies and reduced business activities. The Business Standard


1.2.2. Bangladesh Bank enters into an agreement with National Bank Limited to promote the ‘Financial Inclusion Credit Guarantee Scheme.’

BB has entered into an agreement with National Bank Limited (“NBL”) to launch the ‘Financial Inclusion Credit Guarantee Scheme’. Under this scheme, NBL will be offering collateral-free loans at 7 per cent (seven per cent), targeting low-income professionals, marginalised farmers, and school bank account holders. The loan amount under the scheme will be up to TK 50,100 (Bangladeshi Taka Fifty Thousand One Hundred). Investing


1.3. Bhutan


1.3.1. Royal Monetary Authority launches ‘Bhutanese Living Abroad Investment Initiative’

To bolster inward remittance and investments along with investments from Bhutanese Living Abroad (“BLA”), the Royal Monetary Authority of Bhutan, in collaboration with financial service providers, has launched the ‘Bhutanese Living Abroad Investment Initiative’. Through this, BLA can access relevant financial information and offer investments with lucrative interest rates. Royal Monetary Authority


2. Trends


2.1. Federal Bank allows NRIs to avail its UPI services on its mobile banking application

Federal Bank has launched Unified Payments Interface (“UPI”) technology for its non-resident Indians (“NRI”) customer base in an attempt to provide them flexibility in terms of making transactions. This service can be availed through its mobile banking application, FedMobile. With this move, NRIs from the United Kingdom, United States of America, Singapore, Australia, Malaysia, Canada, Hong Kong, Oman, Qatar, Saudi Arabia and the United Arab Emirates can do both global and local UPI transactions through their dedicated non-residential external accounts. Inc42


2.2. Axis Bank and fintech firm Fibe launches India’s first numberless credit card

Axis Bank and fintech firm Fibe have jointly launched ‘Fibe Axis Bank Credit Card’, India’s first numberless credit card without Card Verification Value (CVV). This product will help tackle the issues of unauthorised access and identity theft. Presently, the product offers a tap-and-pay feature for all offline retail stores across India and offers a flat 3 per cent (three per cent) cashback offer across all restaurant aggregators, commute/ride applications, online ticket platforms, etc. Business Standard


2.3. Indian Bank ties up with subsidiaries of Tata Motors to enter supply chain financing business

Indian Bank, a public sector bank, has tied up with Tata Motors Passenger Vehicles Ltd. and Tata Passenger Electric Mobility Ltd., the subsidiaries of Tata Motors Ltd., to enter the supply chain financing business. In this arrangement, the bank will provide inventory financing solutions to dealers of Tata Motors Ltd. This initiative is anticipated to benefit the Micro, Small and Medium Enterprises (“MSMEs”) enterprises segment. Business Standard


3. Sector Overview



4. Business Updates


4.1. Razorpay launches ‘Optimizer’

Razorpay, a digital payments company, has launched ‘Optimizer’, a new product enabling large businesses with voluminous transactions to make real-time transactions without failure. This platform shall allow them to have access to different bank payment gateways through a single integration. BFSI


4.2. SBI Mutual Fund receives a green signal from RBI to acquire stakes in Induslnd Bank

RBI has given its nod to approving the business proposition of State Bank of India (“SBI”) Mutual Fund, the mutual fund arm of SBI, to acquire up to 9.99 per cent (Nine point nine-nine per cent) stake in Induslnd Bank. The acquiring of shareholding as per the instruction should not exceed 9.99 per cent (Nine point nine-nine per cent) of the paid-up share capital or the voting rights at any given time. The Financial Express


4.3. Manappuram Finance enters into a MOU with JCB India

Manappuram Finance, an Indian NBFC, has entered into a Memorandum of Understanding (MOU) with JCB India, a construction and equipment manufacturer, for providing finance to the latter’s equipment and engineering products. This move shall benefit both parties in boosting their business growth. Economic Times




Disclaimer


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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