1. Regulatory Updates
1.1. India
1.1.1. RBI unveils draft regulations covering export and import transactions
Reserve Bank of India (“RBI”) has issued the draft Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2024, effective upon publication in the Official Gazette. These regulations replace the 2015 version and outline procedures for exporters, including mandatory submission of a specified form to declare export values. Additionally, guidelines cover the receipt and realisation of export proceeds within specified timelines, with provisions for extensions under valid circumstances. RBI
1.1.2. India to create a cross-border retail payment platform with ASEAN countries
RBI has partnered with the Association of Southeast Asian Nations (ASEAN) countries in a pioneering effort called Project Nexus, facilitated by the Bank for International Settlements (BIS) Innovation Hub. This initiative aims to connect the Fast Payment Systems (“FPSs”) of Malaysia, Philippines, Singapore, Thailand, and India, enabling instantaneous cross-border retail payments. By linking domestic FPSs, Project Nexus seeks to enhance efficiency, speed, and cost-effectiveness in international transactions. RBI
1.1.3. Nine NBFCs surrender their Certificate of Registration to RBI
Nine Non-Banking Financial Companies (“NBFCs”) have surrendered their Certificate of Registration (CoR) granted to them by RBI, in the exercise of powers conferred on it under Section 45-IA (6) of the Reserve Bank of India Act, 1934, has therefore cancelled its CoR. The reasons for surrendering their NBFC Certificate are: (a) Exit from Non-Banking Financial Institution (NBFI) business; (b) Meeting the criteria prescribed for unregistered Core Investment Companies (CIC) that do not require registration; and (c) NBFC ceasing to be a legal entity due to amalgamation/ merger/dissolution/ voluntary strike-off, etc. RBI
1.1.4. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
| Name of the Financial Institution | Penalty Imposed | Reasons |
| Punjab National Bank | INR 1,31,80,000/- (Rupees One Crore Thirty-One Lakh Eighty Thousand only) | Contravention of/non-adherence with directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’, and ‘Reserve Bank of India (Know Your Customer (KYC) Direction, 2016’. |
| The Bank Employees’ Co-operative Bank Ltd., West Bengal | INR 1,00,000/- (Indian Rupees One Lakh only) | Contravention of/non-adherence with directions issued by RBI on ‘Know Your Customer (KYC)’. |
| National Co-operative Bank Ltd., Mumbai, Maharashtra | INR 2,00,000/- (Indian Rupees Two Lakh only) | Contravention of/non-adherence with directions issued by RBI on ‘Know Your Customer (KYC)’. |
| Rohika Central Co-operative Bank Limited, Madhubani, Bihar | INR 1,50,000/- (Indian Rupees One Lakh Fifty Thousand only) | Contravention of/non-adherence with directions issued by RBI on ‘Know Your Customer (KYC)’. |
| Gujarat Rajya Karmachari Co-operative Bank Ltd., Ahmedabad, Gujarat | INR 7,50,000/- (Indian Rupees Seven Lakh and Fifty Thousand only) | Contravention of/ non-adherence with directions issued by RBI on ‘Financial Statements – Presentation and Disclosures’, ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’, ‘Co-operative Banks – Interest Rate on Deposits’, and contravention of certain provisions of Banking Regulation Act, 1949. |
1.2. Sri Lanka
1.2.1. Sri Lanka has approved the bill to allow entry of Starlink internet service
The Committee on Public Finance has approved the Sri Lanka Telecommunications (Amendment) Bill with amendments aimed at ensuring consumers benefit from advanced telecommunication technology, marking a step closer to the launch of Starlink satellite internet service in Sri Lanka. State Minister Kanaka Herath stated that the bill, once enacted, will regulate satellite-based internet services in the country. The legislation will also establish a competitive system for the allocation of telecommunication frequencies. Parliament will compile the necessary regulations, facilitating the introduction of new technology to the telecommunications sector and ensuring proper regulation of participating institutions. DailyMirror
1.3. Vietnam
1.3.1. Vietnam enhances online banking security measures to protect customers
The State Bank of Vietnam (“SBV”) is intensifying efforts to safeguard bank customers amidst increasing digital banking transactions. At a workshop in Hanoi, SBV Deputy Governor Phạm Tiến Dũng highlighted the industry’s strides in digital transformation, noting high adoption rates of payment accounts and digital transactions. Despite these advancements, concerns over cybersecurity threats like cyber-attacks and fraud have grown. Vietnam News
1.3.2. Vietnam tightens rules on credit institution ownership amid manipulation concerns
The revised Law on Credit Institutions, effective from July 1, 2024, in Vietnam, aims to tighten regulations on cross-ownership and manipulation within credit institutions. Key amendments include reducing ownership limits for institutional shareholders from 15% to 10%, and for individuals and related parties from 20% to 15%. Vietnam Net
2. Trends
2.1. ONDC looking to integrate banks and fintechs for last-mile credit services
Open Network for Digital Commerce (“ONDC”) is gearing up to integrate banks and fintech platforms, following initial pilot programs for credit disbursal. Partnering with Tata Group’s superapp Tata Neu and Paisabazaar, ONDC aims to facilitate seamless credit services through collaborations with HDFC Bank, IDFC First Bank, Karnataka Bank, and fintech firms like Fibe. Regulatory checks and test transactions have been completed, with plans to onboard more credit providers soon. Economic Times
2.2. NPCI International partners with Network International to expand UPI QR payments in UAE
NPCI International Payments Limited (NIPL) has collaborated with Network International to introduce Unified Payments Interface (“UPI”) QR code payments across the Network’s extensive merchant network in the United Arab Emirates (“UAE”). This partnership aims to facilitate seamless and secure transactions for Indian tourists and Non-Resident Indians (NRIs) visiting the UAE, leveraging the Network’s over two lakh point-of-sale (POS) terminals. NPCI
3. Sector Overview
3.1. RBI Governor addresses banking sector challenges and priorities in Mumbai summit
The Governor of RBI conducted meetings with senior executives from both public and select private sector banks in Mumbai on July 3, 2024. These sessions aimed to strengthen regulatory oversight and discuss key banking sector issues. The Governor highlighted improvements in asset quality, capital adequacy, and profitability while stressing the need for enhanced governance, risk management, and cybersecurity measures. Discussions covered topics such as credit-deposit gaps, liquidity risk management, digital fraud prevention, and support for Micro, Small and Medium Enterprises (MSMEs). RBI
3.2. Government plans major accessibility upgrades for its websites, apps, and services
The Ministry of Electronics and Information Technology (MeitY) is spearheading an initiative to enhance accessibility across government websites, digital applications, and services. This project aims to streamline user interfaces, improve page loading times, and make platforms more accessible for individuals with disabilities. In the initial phase, upgrades will focus on all IT ministry websites and applications, with broader goals of enhancing the global visibility of Indian government apps and services. Business Standard
3.3. New accounting standards for insurance and banking may be brought soon
The Ministry of Corporate Affairs (“MCA”) is preparing to introduce new accounting standards for the insurance and banking sector. As per Manoj Govil, secretary at MCA, new standards for the insurance sector will be implemented soon, while discussions are ongoing with the RBI for the banking sector. Additionally, recommendations from the National Financial Reporting Authority (NFRA) and the Institute of Chartered Accountants of India (ICAI) are being considered to formulate new accounting standards for Limited Liability Partnerships (LLPs). He also mentioned that the ministry plans to review regulations under the companies and LLP laws and aims to streamline the process for the voluntary closure of companies. Business Standard
4. Business Updates
4.1. Zomato withdraws NBFC application, shifts focus away from lending
Zomato has decided to abandon its plans to venture into the lending sector, withdrawing the application for the NBFC license from RBI. The company’s subsidiary, Zomato Financial Services, cited no intention to pursue lending in the future. This decision follows earlier discussions with multiple NBFCs regarding working capital loans for partner restaurants. Meanwhile, Zomato Payment Private Limited (ZPPL) has voluntarily surrendered its authorisation as an online payment aggregator. Inc42
4.2. State Bank of India enhances digital offerings with UPI Tap-and-Pay and more
State Bank of India (“SBI”) marked its 69th Foundation Day by launching a series of digital initiatives aimed at improving customer service and operational efficiency. Highlights include the introduction of UPI tap-and-pay on the Bharat Interface for Money (BHIM) SBI PAY app, enhanced YONO Business and Corporate Internet Banking for small businesses, and automated loan status notifications for home loan applicants. Business Line
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.
