1. Regulatory Updates
1.1. India
1.1.1. RBI Governor Meets UPI Stakeholders to Enhance Digital Payment Solutions
The Reserve Bank of India (“RBI”) Governor Shri Shaktikanta Das convened a meeting on Wednesday with key stakeholders of the Unified Payments Interface (“UPI”) ecosystem to deliberate on strategies for advancing digital payment services. The meeting focused on scaling up the UPI infrastructure and addressing challenges faced by fintech players. The central bank also encouraged the exchange of innovative ideas to integrate more users into the digital payments landscape. Following the discussions, the RBI stated that it would review the suggestions provided during the meeting and take appropriate action in due course. RBI
1.1.2. RBI allows AD Banks to open interest-bearing accounts for non-residents to post/collect margins for derivative contracts
RBI has notified Foreign Exchange Management (Deposit) (Fourth Amendment) Regulations, 2024 (“Amendment Regulation”) through its notification dated May 06, 2024. The Amendment Regulation has amended Regulation 7 of the Foreign Exchange Management (Deposit) Regulations, 2016. Before the Amendment Regulation, Authorised Dealer Banks were only allowed to facilitate foreign portfolio investors and foreign venture capital investors registered with Securites and Exchange Board of India (SEBI) to open and maintain non-interest-bearing foreign currency accounts. As per Amendment Regulation, now every nonresident is allowed to open and maintain interest-bearing accounts in Indian Rupees and/or foreign currency. These accounts can be used for posting and collecting margins in India for permitted derivative contracts as per the Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020. RBI
1.1.3. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
Name of the Financial Institution | Penalty Imposed | Reasons |
INR 1,50,000/- (Indian Rupees One Lakh Fifty Thousand only) | Contravention of /Non-adherence to the directions issued by RBI on ‘Strengthening of Prudential Norms – Provisioning Asset Classification and Exposure Limit’ and ‘Regional Rural Banks – Income Recognition, Asset Classification and Provisioning Norms - Non-Performing Assets (NPAs)’ | |
INR 50,000/- (Indian Rupees Fifty Thousand only) | Contravention of /Non-adherence to the directions issued by the National Bank for Agriculture and Rural Development (NABARD) on ‘Frauds - Guidelines for Classification, Reporting and Monitoring’ | |
INR 1,50,000/- (Indian Rupees One Lakh Fifty Thousand only) | Contravention of /Non-adherence with certain provisions of the ‘Reserve Bank of India Know Your Customer (KYC)) Direction, 2016’ issued by RBI. | |
INR 3,10,000/- (Indian Rupees Three Lakhs Ten Thousand only) | Contravention of /Non-adherence with certain provisions of the ‘Reserve Bank of India Know Your Customer (KYC)) Direction, 2016’ issued by RBI. |
1.1.4. 15 entities surrender their CoR to RBI
Following entities have surrendered their certificate of registration:
Name of the Entity | Grounds for Surrender |
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 | |
Ceasing to be a legal entity due to amalgamation/ merger/dissolution/ voluntary strike-off, etc | |
Ceasing to be a legal entity due to amalgamation/ merger/dissolution/ voluntary strike-off, etc | |
Ceasing to be a legal entity due to amalgamation/ merger/dissolution/ voluntary strike-off, etc | |
Ceasing to be a legal entity due to amalgamation/ merger/dissolution/ voluntary strike-off, etc | |
Ceasing to be a legal entity due to amalgamation/ merger/dissolution/ voluntary strike-off, etc | |
Ceasing to be a legal entity due to amalgamation/ merger/dissolution/ voluntary strike-off, etc | |
Ceasing to be a legal entity due to amalgamation/ merger/dissolution/ voluntary strike-off, etc | |
Ceasing to be a legal entity due to amalgamation/ merger/dissolution/ voluntary strike-off, etc | |
Ceasing to be a legal entity due to amalgamation/ merger/dissolution/ voluntary strike-off, etc |
1.2. Bangladesh
1.2.1 Bangladesh Bank relinquishes control over the Smart lending rate mechanism Bangladesh Bank has announced the cessation of its regulation over the Smart lending rate mechanism, transferring the responsibility to individual banks. In a circular issued on Wednesday, the central bank outlined that banks will now have autonomy in determining their lending rates based on market demand and supply dynamics. This move towards a market-based interest rate system follows the abolishment of the existing reference rate SMART, as stated in a resolution issued after the third meeting of the Monetary Policy Committee. This shift is anticipated to benefit top-rated banks, potentially leading to lower costs of funds compared to weaker banks. Dhaka Tribune
1.2.2 Private sector credit growth in Bangladesh rises in March
In March, Bangladesh's private sector credit growth surged compared to the previous month, primarily driven by heightened business activities during Ramadan. Data from Bangladesh Bank revealed a growth rate of 10.49 percent (ten point four nine percent) in March, up from 9.96 percent (nine point nine six percent) in February and 9.95 percent (nine point nine five percent) in January 2024. This increase marked the highest growth rate since May 2023, when it peaked at 11.1 percent (eleven point one percent). Business activities typically escalate during Ramadan, prompting businesses to seek loans from banks to meet rising demands and capitalise on the festive season. Dhaka Tribune
1.3. Philippines
1.3.1. Thunes and Pomelo join forces for innovative remittance solutions
Thunes, a global money movement leader, has partnered with Pomelo, a credit-powered remittance company and card issuer. Their collaboration integrates Thunes' digital wallet tech with Pomelo's credit line approach, simplifying and lowering costs for US to Philippines transfers. Pomelo offers credit lines for remittances, helping recipients build credit in the US. Through this partnership, Pomelo cardholders can instantly transfer funds to GCash digital wallets, managed by Thunes, with plans to expand to markets like Mexico and India. Fintech Global
2. Trends
2.1. Ebanx partners with Yes Bank to facilitate cross-border merchant payments in India
Brazilian payments giant Ebanx has teamed up with Yes Bank to establish a cross-border payment infrastructure in India, enabling global brands to reach Indian consumers. Through Ebanx's system, Indian customers can make purchases using local currency and payment methods such as RuPay cards and UPI. Ebanx, which collaborates with approximately 300 (three hundred) brands, specialises in payment processing across multiple countries in Latin America and Africa. India marks Ebanx's debut market in Asia, following its expansion into Africa in September 2022 and the announcement of its India plans in 2023. After integrating with Yes Bank's systems over recent months, Ebanx has launched its payment platform for Indian consumers. Among its clientele, Ebanx handles transactions for prominent global merchants like Spotify and Airbnb. Economic Times
3. Sector Overview
3.2. Strong growth in bank lending to businesses in March 2024: CareEdge
4. Business Updates
4.1. Setu launches Sesame, India's first LLM for BFSI sector
Setu, under Pine Labs ownership, introduced Sesame, India's inaugural Large Language Model (“LLM”) tailored for the banking and financial sector, in partnership with SarvamAI. This model, trained on pertinent local data, aims to enhance various Banking, Financial Services, and Insurance (“BFSI”) functions like credit assessment, fraud detection, and financial advice. Sesame is anticipated to aid Setu in offering new solutions for BFSI consumers and broadening its product range while improving accuracy in financial insights. Setu's cofounder, Nikhil Kumar, emphasised the significance of Artificial Intelligence (“AI”), particularly LLMs, in driving innovation and compliance. The trend of AI adoption in BFSI is evident, with startups like InsurStaq.ai, Alltius, and Gnani.ai catering to the sector's needs alongside internal process optimisation across the industry. Inc42
4.2. Lendingkart raises USD 10 million from BlueOrchard for MSME lending
Fintech firm Lendingkart secured USD 10 million (United States Dollar Ten Million only) through external commercial borrowing from BlueOrchard, a global impact investment manager affiliated with the Schroders Group. The funding is designated for further lending activities targeting Micro, Small, and Medium Enterprises (“MSMEs”). Lendingkart, specialising in MSME finance, aims to bolster small businesses, generate employment, spur economic growth, and promote entrepreneurship, thereby aiding in socio-economic advancement. Economic Times
4.3. Groww completes domicile shift from the US to India
Groww, a fintech unicorn, has finalised its reverse flip, relocating its base from the US to India. The transition involved merging Groww Inc, its US-based holding company, with its Indian parent entity, Billionbrains Garage Ventures, with approval from the National Company Law Tribunal received in April last year. As a result, Groww now operates solely under Billionbrains Garage, headquartered in Bengaluru. Sources within the startup cited the ease of capital raising as the reason for initially establishing the holding entity in the US. Following this reversal, Groww joins PhonePe as one of the major startups to shift domicile to India, with others like Zepto, RazorPay, and Pine Labs also contemplating similar moves. Inc42
4.4. RBI lifts restrictions on Bank of Baroda's mobile banking app
RBI has lifted the restrictions previously placed on Bank of Baroda (“BoB”) in October last year. This allows the public sector lender to once again enrol customers on its mobile banking app, Bob World. BoB is now able to resume onboarding new customers to the BoB World application, reaffirming its commitment to adhering to regulatory guidelines. The RBI had initially prohibited BoB from onboarding new customers to its BoB World mobile app, citing specific supervisory concerns related to customer onboarding procedures under section 35A of the Banking Regulation Act. Livemint
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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