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AKP Banking & Finance Digest- October 30, 2023

1. Regulatory Updates

1.1. India

1.1.1. RBI amends Non-Banking Financial Companies-AA Directions, 2016

The Reserve Bank of India (“RBI”) has observed that some entities eligible to be Financial Information Providers (“FIPs”) in the Account Aggregator (“AA”) system have only joined as Financial Information Users (“FIUs”). This means they access financial data from other providers but do not provide the financial information held by them. To make the AA system more effective and efficient, Regulated Entities (“REs”) of the bank joining as FIUs must also become FIPs if they fall under the definition of FIP. RBI

1.1.2. RBI directs CIs and CICs to implement the framework for delayed updation/ rectification of credit information

RBI has notified the framework for delayed updation/rectification of credit information by Credit Institutions (“CI”) and Credit Information Companies (“CIC”). As per the framework, the CICs shall pay the complainants compensation of INR 100 (Indian Rupees One Hundred Only) per day for delayed updation/rectification of credit information if their complaints are not resolved within 30 (thirty) calendar days of being informed by a complainant or a CI. The compensation framework will be enforced six months after this circular's date. CICs and CIs are instructed to establish the required systems and procedures to apply the compensation framework within this duration. RBI

1.1.3. RBI allows investors to subscribe to floating rate savings bonds

RBI, through its retail direct scheme, has allowed individual investors to open a retail direct gilt account with RBI through its online portal. The scheme simplifies investments in government securities in both primary and secondary markets. Earlier, retail investors were allowed to invest in central government treasury bills, securities, state government securities, and sovereign gold bonds through the retail direct portal only. RBI

1.1.4. RBI invites comments on the draft Master Direction on risk management in outsourcing of financial services

RBI, on October 26, 2023, issued the Draft Master Direction on Managing Risks and the Code of Conduct in Outsourcing of Financial Services (“Draft Directions”) and placed the same for public comments. RBI prepared the Draft Directions in order to facilitate REs to have all current instructions on the outsourcing of financial services in one place. RBI

1.1.5. Monetary Penalties

RBI imposes monetary penalties on the following financial institutions:

Name of the financial institution

Penalty Imposed


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

Contravention of directions issued by RBI on ‘Reserve Bank of India (Know Your Customer) Direction, 2016’ (“KYC Directions).

INR 1,50,000 (Indian Rupees One Lakh Fifty Thousand Only)

Contravention of/non-compliance with directions issued by RBI on ‘Membership of CIC’, ‘Exposure Norms and Statutory/Other Restrictions - (Urban) Co-operative Banks (“UCBs”)’, ‘KYC Directions’ and for contravention of the provisions of section 26-A of the Banking Regulation Act, 1949 (“BR Act”) read with directions issued by RBI on ‘The Depositor Education and Awareness Fund Scheme, 2014 - Section 26A of BR Act - Operational Guidelines’.

INR 10,000 (Indian Rupees Ten Thousand Only)

Contravention of/non-adherence with directions issued by RBI on ‘Customer Protection - Limiting Liability of Customers of Cooperative Banks in Unauthorised Electronic Banking Transactions’, ‘Basic Cyber Security Framework for Primary UCBs’, and ‘Comprehensive Cyber Security Framework for Primary UCBs’.

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

Contravention of/non-adherence with directions issued by RBI on Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’ and ‘KYC Direction’.

INR 13,30,000 (Indian Rupees Thirteen Lakh Thirty Thousand Only)

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

INR 2,50,00,000 (Indian Rupees Two Crore Fifty Lakh 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’.

1.2. Bangladesh

1.2.1. Bangladesh Bank restructures monetary policy committee amid rising inflation

The Bangladesh Bank (“BB”) has taken various initiatives to reduce inflation in the country, and to improve the formation and execution of monetary policy, BB has restructured its existing monetary policy committee. The restructured committee will now include three economists from outside the BB, in addition to the existing members of the committee, to bring fresh perspectives and expertise to control the persistently high inflation in the country. Somoy News

1.3. Pakistan

1.3.1. Foreign reserves of the State Bank of Pakistan took a major hit

Foreign reserves of the State Bank of Pakistan (“Pakistan Bank”) decreased by USD 220 million (United States Dollar Two Hundred Twenty Million Only) and stood at USD 7.5 billion (United States Dollar Seven Billion Five Hundred Million Only). The Pakistan Bank’s reserves have faced strain because of debt repayments, increased import expenditures following eased restrictions, and a shortage of new inflows. Business Recorder

2. Trends

2.1. Hinduja Group aims to acquire Reliance Capital

Hinduja Group (“HG”) is making substantial investments in the banking, financial services, and insurance (BFSI) sector with the objective of achieving value creation of USD 35-40 billion (United States Dollar Thirty-Five to Forty Billion Only) within the next five to seven years. HG is now focussing on new tech, digital and fintech sectors as part of its new phase of growth. HG is confident about the acquisition of debt-laden Reliance Capital by the end of November this year. Through this acquisition, HG can enter into sectors such as health insurance, life insurance and general insurance. LiveMint

2.2. Mufin Group receives RBI approval to launch MufinPay prepaid wallet in India

Mufin Group has obtained regulatory clearance from RBI to introduce its Prepaid Payment Instrument (“PPI”)-licensed prepaid wallets branded as ‘MufinPay.’ This license enables MufinPay to provide a wide array of financial services, including PPI Wallet, Prepaid Gift Cards, unified payments interface (UPI), Fast tag, and various value-added services. In addition, the company is preparing to unveil the innovative MufinPay ‘Super App,’ designed to simplify financial transactions and enhance the overall user experience. BFSI

2.3. KPMG and Vianai Systems collaborate on innovative conversational AI finance solution

The partnership between KPMG and Vianai Systems aims to combine their respective expertise to introduce an innovative conversational Artificial Intelligence (“AI”) finance solution. This offering is tailored for enterprises aiming to revolutionise their finance operations. The joint offering will leverage Vianai's hila enterprise fine-tuning and optimisation capabilities with enterprise systems of record targeted specifically at finance professionals. Financial Express

3. Sector Overview

4. Business Updates

4.1. MobiKwik’s Zaakpay receives RBI approval for operating as a payment aggregator

Zaakpay, Mobikwik's payment gateway division, has received in-principal approval from RBI to function as a payments aggregator. This approval allows Zaakpay to on-board new merchants onto its platform for online payment processing. Meanwhile, four major payment aggregators—Razorpay, PayU, Cashfree, and Paytm—have obtained preliminary approval and are currently barred from onboarding new merchants. LiveMint

4.2. RBI approves the acquisition of Sonata Finance by Kotak Mahindra Bank

RBI has given its approval to Kotak Mahindra Bank (“Kotak”) for the acquisition of Sonata Finance at a cost of INR 537 crore (Indian Rupees Five Hundred Thirty-Seven Crore Only). The bank had announced its intention to acquire the entire 100 per cent (One Hundred per cent) stake in Sonata Finance Private Limited, a Non-Banking Financial Company (NBFC), back in February. The RBI approved the acquisition on October 19. Once the transaction is finalised, Sonata will operate as a fully owned subsidiary of the bank. The Economic Times

4.3. Paytm CEO Mr Sharma launches fund for AI and EV startups

Vijay Shekhar Sharma, the founder and chief executive officer of Paytm, has launched a category II Alternative Investment Fund (AIF) named VSS Investments Fund, with a total size of INR 20 crore (Indian Rupee Twenty Crore Only) with a green shoe option of INR 10 crore (Indian Rupee Ten Crore Only). The new fund will invest in AI and electric vehicles (EV) related startups that have been incubated in India and are especially focused on serving Indian consumers and businesses. Business Today

4.4. Bajaj Finserv launches open-ended debt scheme

Bajaj Finserv launched its fixed-income investment product Bajaj Finserv Banking and PSU Fund. It is an open-ended debt scheme which invests in debt instruments of banks, public sector undertakings (PSUs), public financial institutions and municipal bonds with relatively high interest rate risk and moderate credit risk. The fund intends to give investors the opportunity to invest in fixed income while ensuring that their investment portfolios have a high level of credit quality and enjoy the benefits of professional fund management. Financial Express


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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