1. Regulatory Updates
1.1. India
1.1.1. RBI releases update on status of withdrawal of INR 2000 denomination banknotes
As of August 31, 2023, the total value of INR 2000 (Indian Rupees two thousand) banknotes received by banks back from circulation is INR 3.32 lakh crore (Indian Rupees Three point three two lakh crore), and the value of INR 2000 (Indian Rupees two thousand) banknotes in circulation stood at INR 0.24 lakh crore (Indian Rupees zero point two four lakh crore). As per the data provided by banks, 93 per cent (ninety-three per cent) of the total INR 2000 (Indian Rupees two thousand) banknotes in circulation have been returned. People are requested to utilise the remaining period until September 30, 2023, to deposit and/or exchange the INR 2000 (Indian Rupees two thousand) banknotes held with them. The Reserve Bank of India
1.2. Monetary Penalties
[No monetary penalties by the Reserve Bank of India (“RBI”) this week]
1.3. Bangladesh
1.3.1. Mutual Trust Bank gets recognised as ‘Best Innovative Bank in Bangladesh’
In the second Bangladesh Fintech Awards held in Bangladesh, Mutual Trust Bank (“MTB”) has been recognised as the ‘Best Innovative Bank in Bangladesh’ under the category of ‘Fintech Innovation of the Year Banks’. MTB is known to provide innovative banking solutions for its customers and maintain top-notch corporate governance. The Business Standard
1.4. Sri Lanka
1.4.1. Commercial Bank of Ceylon introduces green home loans to promote sustainable living
The Commercial Bank of Ceylon has introduced a new initiative within its green lending portfolio to support its commitment towards the environment. They are offering green home loans, with amounts of up to SLR 50 million (Sri Lankan Rupee fifty million only), for the purchase of homes that have received green building certificates from the Green Building Council of Sri Lanka (GBCSL) or for constructing houses that will obtain such certification. Additionally, loans of up to SLR 5 million (Sri Lankan Rupee five million only) are available for buying solar power systems, solar net metering systems, or any eco-friendly project that leads to Green certification. The Commercial Bank is recognised as Sri Lanka’s first 100 per cent (one hundred per cent) carbon-neutral bank. Commercial Bank
1.5. Nepal
1.5.1. Nepal Rastra Bank and IFC partner to boost fintech ecosystem
Nepal Rastra Bank (“NRB”) and the International Finance Corporation (IFC) have formalised an agreement aimed at boosting Nepal’s fintech ecosystem. This partnership, part of the Nepal digital financial services project, will work closely with NRB and the fintech industry to enhance electronic payments and promote innovation in digital financial services over the next three years. Nepal’s fintech sector is still emerging, with only 70 (seventy) registered firms as of February 2022. The initiative aligns with Nepal’s development goals, particularly focusing on addressing developmental gaps like financial inclusion. The Kathmandu Post
2. Trends
2.1. Kotak Mahindra Bank awaits regulatory approval for the Sonata Finance acquisition
Kotak Mahindra Bank is anticipating to secure regulatory approval for its acquisition of Sonata Finance, a micro-lending company based in Lucknow, anytime in the financial year 2024. The bank, which is the fourth-largest private sector bank in India, completed the purchase of Sonata Finance on February 10, 2023, in an all-cash transaction valued at INR 531 crore (Indian Rupees five hundred thirty-one crore only). It is anticipated that the regulatory approval process will take approximately one year. Once approved, Kotak Mahindra Bank intends to utilise Sonata Finance’s network to expand its range of products and services for its customers. MoneyControl
2.2. Piramal Enterprises to shift from wholesale book 1.0 to wholesale book 2.0
Piramal Enterprises has outlined an ambitious plan to double its loan portfolio by FY28, with a major focus on retail loans, which will make up around 70 per cent (seventy per cent) of the total. To achieve this growth, the company intends to reduce the size of its wholesale loan portfolio, lending to mid-sized corporates and eventually exiting its older wholesale loans. They aim to have a loan portfolio composition of two-thirds retail and one-third wholesale. The company refers to their existing wholesale loans as ‘Wholesale 1.0,’ which was valued at INR 43,000 crore (Indian Rupees forty-three thousand crore only) in March 2022 but has decreased to 26,000 crore (Indian Rupees twenty-six thousand crore only) as of June 2023. Simultaneously, they are creating a new wholesale loan portfolio called ‘Wholesale 2.0.’ The Economic Times
3. Sector Overview
3.1. Banks’ exposure to NBFCs raises concerns, RBI emphasizing on oversight
3.2. UPI records over 1,000 crore monthly transactions in August 2023
3.3. Improved profitability expected for NBFC-MFIs, says ICRA
4. Business Updates
4.1. PhonePe launches Share.Market for stock broking and investments
PhonePe, a fintech company owned by Walmart and valued at over USD 10 billion (United States Dollar ten billion only), has expanded its services into the stock broking sector through its subsidiary, PhonePe Wealth Broking. They’ve introduced a platform called ‘Share.Market’, which offers various financial products, including stocks for intraday and delivery, mutual funds, exchange-traded funds (ETFs), and WealthBaskets. Initially, Share.Market has launched with limited features on Google Play Store and Apple App Store, with plans to introduce more features over the next two years. Inc 42
4.2. Axis Bank launches ‘Infinity Savings Account’
Axis Bank, one of India’s leading private sector banks, has introduced a unique savings account called the ‘Infinity Savings Account.’ This innovative account is tailored for customers who frequently use subscription-based services. The account offers several exclusive benefits, including no requirement for maintaining an Average Monthly Balance (AMB), complimentary debit cards, and the waiver of all domestic charges in exchange for a small monthly fee of INR 150 (Indian Rupees One hundred fifty only) or an annual fee of INR 1,650 (Indian Rupees One thousand six hundred fifty only). This banking product is designed to provide customers with a hassle-free and transparent banking experience, removing all domestic charges. LiveMint
4.3. Muthoot Fincorp launches comprehensive financial platform ‘Muthoot FinCorp ONE’
Muthoot Fincorp Limited has introduced Muthoot FinCorp ONE, a digital platform designed to offer a wide range of financial services, including lending, investments, protection, and payments, all accessible through a mobile app. This platform aims to cater to the diverse financial needs of customers across India, delivering a comprehensive suite of financial solutions with unparalleled convenience and accessibility. Muthoot FinCorp ONE provides various financial services such as Micro, small and medium-sized enterprises (“MSMEs”) and gold loans, available either from home or at Muthoot Fincorp Limited branches. The app also facilitates utility and loan payments for various purposes, and its forex services include multi-currency cards, cash transactions, and all-time international transfers. BFSI
4.4. Public sector banks in India collaborates with Veefin for cloud-based MSME financing
Public sector banks (“PSB”) have partnered with Veefin Solutions Ltd., a technology company, to manage supply chain financing for MSMEs using a cloud-based platform. This initiative is facilitated through an entity called PSB Alliance, which provides various services for twelve PSBs. The aim is to address the significant credit needs of MSMEs, which are estimated to be INR 20-25 trillion (Indian Rupees twenty to twenty-five trillion), by leveraging Veefin’s cloud-based platform. The platform will also enhance communication among lenders. The Economic Times
4.5. Bajaj Auto’s subsidiary receives RBI approval for NBFC operations
Bajaj Auto’s subsidiary, Bajaj Auto Consumer Finance, has obtained the certificate of registration from RBI to commence operations as a non-banking finance company (“NBFC”) without engaging in the acceptance of public deposits. In 2021, Bajaj Auto announced the establishment of a wholly-owned finance subsidiary named ‘Bajaj Auto Consumer Finance.’ 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.
