1. Regulatory Updates
1.1. India
1.1.1. RBI lifts restrictions on Edelweiss Entities
The Reserve Bank of India (“RBI”) imposed business restrictions on ECL Finance Ltd and Edelweiss Asset Reconstruction Company Ltd under the Reserve Bank of India Act, 1934, and SARFAESI Act, 2002. ECL Finance was directed to cease structured transactions in wholesale exposures, while Edelweiss Asset Reconstruction had to halt acquiring financial assets. After addressing RBI's concerns and implementing corrective measures, RBI has lifted these restrictions immediately. RBI
1.1.2. RBI cancels registration of four NBFCs
RBI, under section 45-IA (6) of the Reserve Bank of India Act, 1934, has cancelled the Certificates of Registration (CoR) for four companies. These include Marwah Finance Pvt Ltd, PVP Capital Limited, Rain Bow Finance India Ltd, and Ram Alloy Castings Private Limited. As a result, these companies are no longer permitted to conduct business as Non-Banking Financial Institutions (“NBFC”). The cancellations occurred between November 11 and November 26, 2024. RBI
1.1.3. RBI report highlights state finances
RBI released the "State Finances: A Study of Budgets of 2024-25" report, focusing on fiscal reforms by States. The report assesses the finances of State governments for 2024-25, with key highlights including a consolidated Gross Fiscal Deficit (GFD) within 3.2 per cent (three point two per cent) of Gross Domestic Product (GDP) and an increase in capital expenditure. Despite declining outstanding liabilities, states face challenges due to high debt and rising subsidies. The report recommends adopting a risk-based fiscal framework for better financial management. RBI
1.1.4. RBI board reviews economic outlook
The 612th (six hundred and twelveth) meeting of the Central Board of the Reserve Bank of India, chaired by Governor Shri Sanjay Malhotra, was held in Guwahati. The Board appreciated Shri Shaktikanta Das for his service as Governor. Discussions included the global and domestic economic outlook, departmental activities, and the draft Report on Trend and Progress of Banking in India, 2023-24. Deputy Governors and other key board members participated, alongside Shri Nagaraju Maddirala from the Department of Financial Services. RBI
1.1.5. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
Name of the Financial Institution | Penalty Imposed | Reasons |
INR 15,00,000/- (Indian Rupees Fifteen Lakh only) | Non-compliance with the directions issued by RBI on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters - UCBs’. | |
INR 5,96,000/- (Indian Rupees Five Lakh Ninety Six Thousand only) | Non-compliance with the directions issued by RBI on ‘Priority Sector Lending (PSL) - Targets and Classification’ and specific directions issued by RBI on making contribution to the Micro and Small Enterprises (MSE) Refinance Fund due to shortfall in achievement of PSL. | |
INR 1,00,000/- (Indian Rupees One Lakh only) | Non-compliance with the certain directions issued by RBI on ‘Interest Rate on Deposits’ and ‘Know Your Customer (KYC)’. | |
INR 1,00,000/- (Indian Rupees One Lakh only) | Non-compliance with specific directions issued by RBI under ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’. | |
INR 15,00,000/- (Indian Rupees Fifteen Lakh only) | Non-compliance with the directions issued by RBI on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters - UCBs’. | |
INR 1,10,000/- (Indian Rupees One Lakh Ten Thousand only) | Non-compliance with certain directions issued by RBI on ‘Priority Sector Lending (PSL) - Targets and classification’, and specific directions issued by RBI on making contribution to the Micro and Small Enterprises (MSE) Refinance Fund due to shortfall in achievement of PSL. | |
INR 4,50,000/- (Indian Rupees Four Lakh Fifty Thousand only) | Non-compliance with certain direction issued by RBI on ‘Priority Sector Lending (PSL) - Targets and Classification’, and specific direction issued by RBI on making contribution to the Micro and Small Enterprises (MSE) Refinance Fund due to shortfall in achievement of PSL. | |
INR 1,00,000/- (Indian Rupees One Lakh only) | Non-compliance with certain directions issued by RBI on ‘Priority Sector Lending (PSL) - Targets and Classification’ and specific direction issued by RBI on making contribution to the Micro and Small Enterprises (MSE) Refinance Fund due to shortfall in achievement of PSL. | |
INR 1,00,000/- (Indian Rupees One Lakh only) | Non-compliance with the directions issued by RBI on ‘Priority Sector Lending (PSL) - Targets and Classification’ and specific direction issued by RBI on making contribution to the Micro and Small Enterprises (MSE) Refinance Fund due to shortfall in achievement of PSL. | |
INR 20,00,000/- (Indian Rupees Twenty Lakh only) | Non-compliance with the directions issued by RBI on Reserve Bank of India (Know Your Customer (KYC)) Direction, 2016. | |
INR 27,30,000/- (Indian Rupees Twenty-Seven Lakh and Thirty Thousand only) | Non-compliance with certain provisions of ‘Reserve Bank of India (Interest Rate on Deposits) Directions, 2016’. |
1.2. Sri Lanka
1.2.1. Submit Unique Identification Numbers before 31 December 2024
The Central Bank of Sri Lanka urges depositors to provide their Unique Identification Numbers to banks and finance companies as required by the Banking (Special Provisions) Act, No. 17 of 2023. Failure to do so may result in delays or loss of compensation under the Deposit Insurance Scheme. Identification requirements vary for individuals, companies, and other entities. Central Bank of Sri Lanka
1.3. Bangladesh
1.3.1. BB to establish compliance department
Bangladesh Bank (“BB”) plans to form a compliance department to enforce regulations in financial institutions following large-scale loan irregularities and regulatory failures. The initiative aims to prevent financial malpractices and improve oversight. BB has already injected BDT 225 billion (Bangladeshi Taka Two Hundred and Twenty-Five Billion only) into struggling banks amid liquidity shortages caused by panic withdrawals and mismanagement. The Financial Express
2. Trends
2.1. InCred Plans INR 5,000 crore IPO
InCred Financial Services, a Mumbai-based NBFC, is preparing for an Initial Public Offering (“IPO”) worth INR 4,000–5,000 crore (Indian Rupees Four Thousand Crore to Five Thousand Crore only) by Diwali 2025. The company plans to file its draft red herring prospectus by March next year. Specialising in consumer and small business loans, InCred recently raised INR 500 crore (Indian Rupees Five Hundred Crore only) in a Series D funding round, showcasing its strong growth trajectory and market readiness for a public listing. Inc42
3. Sector Overview
3.1. India leads in tech startup growth
India’s tech startups secured USD 11.3 billion (United States Dollar Eleven Billion and Three Hundred Million only) in 2024, a 6 per cent (six per cent) increase from 2023, surpassing China and Germany in funding. Top-performing sectors included gig economy, retail, and enterprise applications, with gig economy funding surging 414 per cent (four hundred and fourteen per cent) to USD 2.2 billion (United States Dollar Two Billion and Two Hundred Million only). Zee Business
4. Business Updates
4.1. Curie Money raises USD 1.2 million for growth
Fintech startup Curie Money has raised USD 1.2 million (United States Dollar One Million and Two Hundred Thousand only) in seed funding led by India Quotient. The funds will enhance its mutual fund-backed banking app, scale technology, and expand into Micro, Small, and Medium Enterprises (MSME)-focused solutions. The app, partnered with Yes Bank and ICICI Prudential, offers up to 7.3 per cent (seven point three per cent) returns on savings through liquid funds, aiming to redefine personal finance in India. The Economic Times
4.2. FINQY launches ‘Test My Card’
FINQY, an Indian fintech company, has introduced “Test My Card”, a platform offering Artificial Intelligence (AI) - driven personalised credit card recommendations. The service evaluates users' financial profiles to suggest cards aligned with their spending habits, income, and credit scores. It simplifies credit card selection, upgrades, and comparisons, enabling users to optimise rewards and perks. FINQY aims to empower consumers with smarter financial decisions and streamlined application processes. SME Street
4.3. Shriram Finance secures record ECB funding
Shriram Finance, India's second-largest NBFC, is finalising a record USD 1.27 billion (United States Dollar One Billion Two Hundred and Seventy Million only) multi-tranche external commercial borrowing (“ECB”) deal, the largest in the NBFC sector. The loan, sourced from major global lenders like HSBC, MUFG, and SMBC, has maturities of three to five years and offers competitive rates. This funding diversifies Shriram's sources amidst tighter RBI regulations and supports its lending business, including Micro, Small and Medium Enterprises (MSME) expansion. The Economic Times
4.4. India's Fintech Funding Surges 66 per cent
Shriram Finance, India's second-largest NBFC, is finalising a record USD 1.27 billion (United States Dollar One Billion Two Hundred and Seventy Million only) multi-tranche external commercial borrowing (“ECB”) deal, the largest in the NBFC sector. The loan, sourced from major global lenders like HSBC, MUFG, and SMBC, has maturities of three to five years and offers competitive rates. This funding diversifies Shriram's sources amidst tighter RBI regulations and supports its lending business, including Micro, Small and Medium Enterprises (MSME) expansion. Banking Frontier
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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