1. Regulatory Updates
1.1. India
1.1.1. RBI invites applications for recognition of SROs for NBFCs
Reserve Bank of India (“RBI”) has issued a press release inviting applications for the recognition of Self-Regulatory Organisations (“SROs”) for Non-Banking Financial Companies (“NBFCs”). These SROs will primarily oversee NBFCs in the categories of Investment and Credit Companies (NBFC-ICCs), Housing Finance Companies (HFCs), and Factors (NBFC-Factors), though members from other NBFC categories may also be included. The applicants must meet membership composition requirements and achieve a minimum net worth of INR 2 crore within one year of being recognised as an SRO by the RBI, or before commencing operations. RBI will recognise a maximum of two SROs for the NBFC sector. RBI
1.1.2. RBI releases amendments to priority sector lending norms
RBI has amended its priority sector guidelines to push banks to offer small loans in economically disadvantaged districts with low average loan amounts. The revised rules dissuade lending in districts where the average loan size is high. Beginning in FY25, greater emphasis (125%) will be placed on new priority sector loans in districts where loan availability is low (below INR 9,000 per person). RBI
1.1.3. RBI Governor highlights NBFC resilience at Global Financial Conference
Shri Shaktikanta Das, Governor of the RBI, inaugurated the Second Global Conference on Financial Resilience organised by the College of Supervisors (CoS) in Mumbai. In his address, he emphasised the imperative of maintaining a resilient and future-ready financial system. Governor Das highlighted the significant strides made by India's financial sector, including banks and NBFCs, in bolstering their capital adequacy and reducing non-performing assets. He underscored the pivotal role of robust governance, sustainable business models, and technological integration in enhancing sectoral resilience. RBI
1.2. Vietnam
1.2.1. Vietnam advances security measures for non-cash payment transactions
In Ho Chi Minh City, the Vietnam Banking Association hosted a conference during the "Cashless Day 2024" event to enhance security and safety in non-cash payment transactions. Deputy Governor Pham Tien Dzung emphasised the importance of balancing customer experience with protecting user rights. The event highlighted significant achievements in cashless payments, with a notable increase in transactions and the adoption of biometric authentication for high-value transactions. The State Bank of Vietnam
1.3. Philippines
1.3.1. BSP issues beneficial ownership due diligence rules
Bangko Sentral ng Pilipinas (“BSP”) has released guidelines on beneficial ownership (“BO”) due diligence to enhance the country's anti-money laundering (AML), terrorist financing (TF), and proliferation financing (PF) risk management protocols. As per BSP regulations, banks must gather BO information as a standard AML measure. The BSP requires banks and other financial institutions to perform comprehensive due diligence on beneficial ownership. This involves understanding the nature of clients' businesses and ownership structures to prevent the misuse of legal entities for illegal activities. Bangko Sentral Ng Pilipinas
2. Trends
2.1. India and Cambodia explore UPI collaboration and investment opportunities
In their inaugural physical meeting of the India-Cambodia Joint Working Group on Trade & Investment (JWGTI), held in Delhi, India and Cambodia discussed enhancing collaboration on the Unified Payments Interface (“UPI”), investment opportunities, and tourism. The discussions included exploring cross-border payments via UPI, leveraging existing partnerships in tourism since 2015, and expanding cooperation in traditional medicine, e-governance, and pharmaceutical sectors. Money Control
2.2. ONDC expands into financial services, integrating consumer-facing apps for seamless credit disbursals
The Open Network for Digital Commerce (“ONDC”), backed by the government, is poised to revolutionise financial services by integrating consumer-facing apps like Tata Neu and Paisabazaar. This initiative aims to streamline credit disbursals through a decentralised network, facilitating quick loan approvals and leveraging account aggregator frameworks for efficient customer underwriting. ONDC's expansion into financial offerings signals a transformative step towards enhancing e-commerce competitiveness and market inclusivity in India's digital landscape. Medianama
3. Sector Overview
3.1. Fintech lenders achieve 35% growth in loan volume in FY 23-24 as per FACE Report
The latest report by the Fintech Association for Consumer Empowerment (“FACE”), a self-regulatory industry body of fintech lenders in India, reveals significant growth in the digital lending sector, with member companies disbursing 10.19 crore loans totalling INR 146,517 Crore in FY 23-24. This marks a 35% increase in loan volume and a 49% increase in disbursement value year-over-year. The report underscores the sector's adherence to regulatory standards and its pivotal role in promoting financial inclusion and resilience through innovative and customer-centric approaches. FACE
3.2. FIDC urges finance minister to relax norms for NBFCs
The Finance Industry Development Council (“FIDC”), a representative body of NBFCs, urged the finance minister to relax certain norms for NBFCs. The relaxation sought pertains to the Securitisation And Reconstruction Of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), the dual registration requirement under NBFC factoring regulations, the requirement to deduct TDS for non-individual borrowers, and the allocation of funds to the Small Industries Development Bank of India (SIDBI) by the government which can refinance NBFCs. Money Control
3.3. India's non-banking financial sector grows by 10%, outpaces global decline
As per a recent report by the State Bank of India (SBI), India's NBFC sector has recorded a notable 10% growth, contrasting with a global decline of 3%. The sector, comprising entities focused on lending and financing activities without full banking licenses, ranks third globally after the United States and the United Kingdom. The report attributes India's robust performance to improved asset quality, strong macroeconomic fundamentals, and proactive regulatory measures by the RBI. Government initiatives promoting financial inclusion and digital banking have further bolstered the sector, ensuring resilience and fostering innovation amidst economic challenges. Hindustan Times
3.4. Alternative payments dominate APAC e-commerce, transforming consumer payment landscape
Alternative payment methods such as mobile and digital wallets are rapidly becoming the preferred choice for e-commerce transactions across Asia-Pacific (APAC), surpassing traditional methods like cash and bank transfers. Led by China and India, these solutions are gaining popularity due to increased smartphone penetration, convenience in electronic transactions, and widespread acceptance by merchants. The trend underscores a significant shift in consumer payment behaviours, driving the region towards a cashless economy with implications for legal frameworks governing financial transactions. Global Data
4. Business Updates
4.1. IPPB partners with Ria Money Transfer to extend remittance services across rural India
India Post Payments Bank (“IPPB”) has forged a collaboration with Ria Money Transfer to facilitate international inward remittances across rural India. This partnership aims to provide convenient and secure doorstep financial services to rural communities, leveraging IPPB's extensive postal network and Ria's global expertise. The initiative seeks to enhance financial inclusion by offering accessible banking solutions that meet the specific needs of rural populations, thereby supporting their long-term economic growth and well-being. The Statesman
4.2. SabPaisa secures RBI approval as Payment Aggregator
Delhi NCR-based fintech startup SabPaisa (SRS Live Technologies Private Limited) has received the final approval from RBI to operate as a payment aggregator. Founded in 2016, SabPaisa aims to enhance its service offerings to a broader spectrum of merchants following the regulatory milestone. The approval allows SabPaisa to expand its hybrid payment gateway platform and other digital payment solutions, positioning itself for accelerated growth in the evolving fintech landscape. Money Control
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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