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AKP Banking & Finance Digest- October 9, 2023

Updated: Oct 10, 2023

1. Regulatory Updates


1.1. India


1.1.1. RBI appoints Shri Muneesh Kapur as Executive Director

The Reserve Bank of India (“RBI”) has designated Shri Muneesh Kapur as the Executive Director (“ED”) starting from October 03, 2023. Before his appointment as ED, he held the position of adviser-in-charge for the monetary policy department and served as the secretary to the monetary policy committee. As ED, he will oversee the Department of Economic and Policy Research. RBI


1.1.2. RBI onboards 30 banks for obtaining data under UDGAM

On August 17, 2023, RBI launched a centralised web portal called Unclaimed Deposits- Gateway to Access Information (UDGAM) to assist the public in easily locating their unclaimed deposits across multiple banks in one place. Initially, the portal provided search functionality for seven banks, with plans to gradually add more banks by October 15, 2023. As of September 28, 2023, the search feature has been extended to cover 30 (thirty) banks on the portal, encompassing approximately 90 per cent (ninety per cent) of unclaimed deposits in the Depositor Education and Awareness (DEA) Fund. This development aims to make it more convenient for the public to access information about their unclaimed deposits. RBI


RBI, under Section 56, read with Section 22 of the Banking Regulation Act (“BR Act”), has cancelled the license of Nagar Urban Co-operative Bank Ltd., Ahmednagar, Maharashtra, on the ground of inadequate capital and earning prospects as per Sections 11(1) and 22(3)(d) of the BR Act, non-compliance with requirements under Section 22(3)(a), 22(3) (b), 22(3)(c), 22(3) (d) and 22(3)(e) of BR Act, prejudicial conduct affecting interest of the depositors and the public, including inability to pay to the present depositors in full.


1.1.4. Monetary Penalties


RBI imposes monetary penalties on the following financial institutions:

Name of the financial institution

Penalty Imposed

Ground

INR 2,00,000 (Indian Rupees Two Lakh)

Contravention of/ non-adherence with directions issued by RBI on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (“UCBs”)’ and ‘Frauds in UCBs: Changes in Monitoring and Reporting mechanism’.

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

Contravention of/ non-adherence with directions issued by RBI on ‘Exposure Norms and Statutory/Other Restrictions - UCBs’.

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

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’, and ‘Frauds in UCBs: Changes in Monitoring and Reporting mechanism’.

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

Contravention of/ non-adherence with directions issued by RBI on ‘Housing Finance’.

INR 6,00,000 (Indian Rupees Six 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 UCBs’ and Interest Rate on Deposits directions 2016.

INR 6,50,000 (Indian Rupees Six Lakh Fifty Thousand 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; ‘Loans and advances to directors etc. – directors as surety/guarantors – clarification’ and on ‘Placement of Deposits with Other Banks by Primary UCBs’.

INR 3,50,000 (Indian Rupees Three Lakh Fifty Thousand only)

Contravention of/ non-adherence with RBI’s directions on ‘Donations to Trusts and Institutions where Directors, their relatives hold position or are interested’ and ‘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’.

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

Non-adherence with RBI’s direction on Placement of Deposits with Other Banks by Primary UCBs and Co-operative Banks - Interest Rate on Deposits.

1.2. Bangladesh


1.2.1. Bangladesh Bank raises repo rate to improve inflation crisis

The monetary policy committee of Bangladesh Bank (“BB”) has increased the repo rate by 75 (Seventy- Five) basis points to 7.25 per cent (seven point two five per cent). The move will raise the treasury bill rates, which will further push lending rates up and is anticipated to improve the inflation crisis. F2F


1.2.2. Bangladesh Bank establishes a committee to regulate e-commerce

BB has set up an implementation committee to enforce its escrow policy, which aims to regulate e-commerce platforms in the country. This committee comprises representatives from various stakeholders and was established following a meeting between BB, the Federation of Bangladesh Chamber of Commerce and Industry (FBCCI), and the E-Commerce Association of Bangladesh (ECAB). The main objective of this move is to improve the efficiency and security of e-commerce activities in Bangladesh. Apparel Resources


1.3. Sri Lanka


1.3.1. Sri Lanka cuts interest rates again to revive economic growth

Sri Lanka has reduced its benchmark interest rate for the third time in 2023 to stimulate economic growth and control real borrowing costs. The Central Bank of Sri Lanka (CBSL) has lowered the standing lending facility rate by 100 (one hundred) basis points to 11 per cent (eleven per cent). This decision was made to stabilise inflation at around 5 per cent (five per cent) in the medium term, facilitating economic growth. The rate cut is expected to bring down market interest rates, particularly lending rates, in the near future. This is aimed at aiding the economy, which has been grappling with its most severe financial crisis in seven decades. CBSL


2. Trends


2.1. SBI introduces a ‘mobile handheld device’ for enhanced financial inclusion services

The State Bank of India (“SBI”) has introduced a ‘mobile handheld device’ to improve accessibility and convenience for its customers and promote financial inclusion. This device enables customers to perform various banking services like cash withdrawals, cash deposits, fund transfers, balance inquiries, and mini statements. SBI emphasises that this device gives greater flexibility to Customer Service Point (“CSP”) agents, allowing them to serve customers wherever they are. This initiative will be particularly beneficial for customers facing difficulties in reaching CSP outlets due to health issues, senior citizens, and persons with disabilities. Business Standard


2.2. NPCI International to partner with Al Etihad Payments for cross-border transactions

NPCI International Payments Ltd, the international division of India's National Payment Corporation of India (“NPCI”), is set to sign an agreement with Al Etihad Payments in Abu Dhabi on Thursday. This memorandum of understanding (MoU) will focus on creating a domestic card scheme in the UAE using India's RuPay debit and credit card technology. Additionally, NPCI International is in discussions to expand its Unified Payments Interface (“UPI”) services to the United States, European nations, and West Asian regions. The Economic Times


3. Sector Overview



4. Business Updates


4.1. RBI gives its green light to Slice and NESFB merger

In a significant development in the Indian fintech landscape, fintech credit and payment startup Slice plans to merge with the North East Small Finance Bank (NESFB) after receiving a no-objection certificate (NOC) for the merger from RBI. The said merger now awaits requisite shareholders' consent and other regulatory authorities' approval. LiveMint

4.2. Bajaj Finance plans capital raise through QIP and preferential shares

Bajaj Finance, a prominent non-banking financial company (NBFC), has received approval from its board to secure INR 10,000 crore (Indian Rupees Ten Thousand Crore only) in capital through qualified institutions placement (QIP) and preferential share issuance. This marks the largest capital-raising effort by the company, primarily involved in retail finance. Of the total, INR 1,200 crore (Indian Rupees Twelve Hundred Crore only) will come from the preferential allocation of shares to its parent company, Bajaj Finserv. Following the conversion of preferential warrants into equity, Bajaj Finserv's ownership stake in Bajaj Finance will increase from the current 52.45 per cent (fifty-two point four five per cent) to 52.57 per cent (fifty-two point five-seven per cent). Business Standard


4.3. IndusInd Bank introduces personalised financial super-app 'INDIE'

IndusInd Bank has launched a highly personalised financial super-app called 'INDIE.' This mobile banking application is designed to cater to digitally savvy customers seeking an exceptional digital banking experience. INDIE represents a significant move in advancing the bank's digital strategy 2.0, aiming to provide a smooth and intelligent banking experience that meets the changing demands of modern consumers. Beyond being a mere application, INDIE serves as a financial partner, assisting customers in managing their financial journey with convenience, intelligence, and security. Live Mint


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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