India – AKP Banking & Finance Digest- September 02, 2024.
1. Regulatory Updates
1.1. India
1.1.1. RBI recognises FACE as SRO in the fintech sector
Reserve Bank of India (“RBI”) has officially recognised the Fintech Association for Consumer Empowerment (“FACE”) as a Self-Regulatory Organisation in the FinTech Sector (“SRO-FT”) under its newly established framework. This decision follows a review of three applications for SRO-FT recognition. One application has been returned for resubmission after addressing specific requirements, while the third application remains under review. FACE will now take on the role of setting industry standards and ensuring compliance within the fintech sector. RBI
1.1.2. RBI Governor launches ‘BBPS for Business’ and ‘UPI Circle’
At the Global Fintech Festival 2024, the RBI Governor introduced two transformative digital payment solutions developed by the National Payments Corporation of India (“NPCI”). The first initiative, Bharat BillPay (“BBPS”) for Business, aims to enhance business-to-business (B2B) transactions by providing a unified platform for seamless invoice payments and collections, catering to various business needs through features like automated reminders and comprehensive dashboards. The second initiative for Unified Payments Interface (“UPI”) is UPI Circle, which allows users to delegate payment responsibilities to trusted secondary users, with options for partial or full delegation and specific spending limits. RBI
1.1.3. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
| Name of the Financial Institution | Penalty Imposed | Reasons |
| Valsad Mahila Nagarik Sahakari Bank Ltd., Dist. Valsad, Gujarat | INR 1,25,000/- (Indian Rupees One Lakh Twenty-Five Thousand only) | Contravention of/non-adherence with certain directions issued by RBI on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’, ‘Membership of Credit Information Companies (CICs) by Co-operative Banks’, ‘Know Your Customer (KYC) norms’ and ‘Maintenance of Deposit Accounts – Primary (Urban) Co-operative Banks’. |
| Manipur State Co-operative Bank Ltd., Manipur | INR 2,00,000/- (Indian Rupees Two Lakh only) | Contravention of/non-adherence with provisions of the Banking Regulation Act, 1949 and Credit Information Companies (Regulation) Act, 2005. |
| Urban Co-operative Bank Ltd., Cuttack | INR 1,50,000/- (Indian Rupees One Lakh Fifty Thousand only) | Contravention of/non-adherence with certain directions issued by RBI on ‘Know Your Customer (KYC) norms’ and ‘Exposure norms and Statutory / Other Restrictions – UCBs’. |
| U. P. Postal Primary Co-operative Bank Ltd., Lucknow, Uttar Pradesh | INR 3,00,000/- (Indian Rupees Three Lakh only) | Contravention of/non-adherence with certain directions issued by RBI under the Supervisory Action Framework (SAF). |
| Uttarkashi Zila Sahkari Bank Ltd., Uttarkashi, Uttarakhand | INR 2,00,000/- (Indian Rupees Two Lakh only) | Contravention of/non-adherence with certain provisions of the Banking Regulation Act, 1949. |
| Mahoba Urban Co-operative Bank Ltd., Mahoba, Uttar Pradesh | INR 8,00,000/- (Indian Rupees Eight Lakh only) | Contravention of/non-adherence with provisions of the Banking Regulation Act, 1949 and certain directions issued by RBI on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’ and ‘Exposure Norms and Statutory / Other Restrictions – UCBs’. |
| Cent Bank Home Finance Limited | INR 2,10,000/- (Indian Rupees Two Lakh Ten Thousand only) | Contravention of/non-adherence with certain provisions of ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’. |
| UCO Bank | INR 2,68,30,000/- (Indian Rupees Two Crore Sixty Eight Lakh And Thirty Thousand only) | Non-compliance with certain directions issued by RBI under ‘Interest Rate on Advances’, ‘Opening of Current Accounts by Banks – Need for Discipline’, ‘Interest Rate on Deposits’ and ‘Frauds classification and reporting by commercial banks and select FIs’. |
1.2. Bangladesh
1.2.1. Bangladesh launches major banking reforms to address embezzlement
Bangladesh is embarking on major banking reforms to tackle widespread embezzlement and corruption within its financial sector. The government, in collaboration with BB, is focusing on recovering embezzled funds. A new banking commission will investigate implicated banks and develop a comprehensive action plan, aiming for compliance with international standards within six months. Dhaka Tribune
1.3. Vietnam
1.3.1. New policy encourages green banking in Vietnam
The State Bank of Vietnam (SBV) has introduced Decision No. 1663/QD-NHNN to promote green banking and credit across all financial institutions. This policy mandates that both commercial and non-bank credit institutions, such as finance companies and credit funds, participate in green financing initiatives. The decision aims to streamline access to capital for green projects and standardise environmental and social risk management practices. Vietnam Plus
2. Trends
2.1. Paytm plans to reapply for Payment Aggregator licence
Paytm has secured approval from the Indian government to invest INR 50 crore (Indian Rupees Fifty Crores only) in its payments arm, Paytm Payment Services Limited (PPSL). With this approval, Paytm plans to reapply for a Payment Aggregator (PA) licence from the RBI, after its initial application was rejected in 2022. Deccan Herald
2.2. ONDC set to launch insurance and mutual fund products, expands financial services
The Open Network for Digital Commerce (“ONDC”) is gearing up to introduce insurance and mutual fund products within the next two months. ONDC CEO T. Koshy confirmed that mutual fund offerings will be live next month, and motor insurance is expected to follow shortly. Additionally, ONDC plans to roll out credit card services in collaboration with Mastercard, though the exact timeline is still pending. Inc 42
3. Sector Overview
3.1. Digital payments industry set to double to INR 593 Lakh crore by FY29, UPI dominates with 91 per cent share
India’s digital payments industry is set to double to INR 593 lakh crore (Indian Rupees Five Hundred Ninety-Three Trillion Rupees only) by FY29, with UPI expected to account for 91 per cent (ninety-one per cent) of retail transactions. Credit card usage has surged, surpassing 100 (one hundred) million cards, while debit card transactions have declined. Business Line
3.2. RBI unveils Unified Lending Interface (ULI) for seamless credit access
RBI is set to launch the Unified Lending Interface (“ULI”) nationwide, aiming to revolutionise India’s lending landscape in a manner similar to how the UPI transformed the payments ecosystem. This new platform will enable lenders to have consent-based digital access to customers’ financial and non-financial data, including land records, to provide seamless credit, particularly to farmers and micro, small, and medium enterprises (MSMEs). The ULI will reduce the time required for credit appraisal by consolidating data from various sources, enhancing efficiency and accessibility in credit distribution. RBI
3.3. ‘Finternet’ is the future of global finance, says Nandan Nilekani
Nandan Nilekani, non-executive chairman of Infosys, has highlighted that startups built on India’s digital public infrastructure (DPI) are valued at over USD 100 billion (United States Dollar One Hundred Billion only). Speaking at the Global Fintech Festival 2024, Nilekani explained that UPI was designed to provide a foundation for innovative solutions by homegrown entrepreneurs. He introduced the concept of “Finternet,” a unified platform for all types of assets, aiming to streamline and democratise financial management. Business Standard
4. Business Updates
4.1. HDB Financial Services becomes first NBFC to launch NPCI’s e-KYC Setu System
HDB Financial Services has become the first Non-Banking Financial Company (“NBFC”) to launch the NPCI’s e-KYC Setu system, enhancing the efficiency and security of its customer onboarding processes. The system is expected to streamline KYC (Know Your Customer) procedures by integrating digital verification with government databases, reducing time and effort while ensuring compliance with regulatory standards. APAC News Network
4.2. Jio Platforms launches ‘Jio Brain’ for enterprises, announces AI Vyapar for fintech and banking
Mukesh Ambani unveiled Jio Brain, an advanced AI platform set to transform enterprise operations with generative AI. For the fintech and banking sectors, Jio also introduced AI Vyapar, an AI tool tailored for merchants and small businesses to streamline financial processes. This initiative is part of Jio’s broader strategy to integrate AI into business workflows, enhancing efficiency and data-driven decision-making in the financial sector. Economic Times
4.3. Amazon Pay UPI surges past 100 million users
Amazon Pay UPI has surpassed 100 (one hundred) million users in India, driven by strong adoption in states like Maharashtra, Uttar Pradesh, and Karnataka, and growing use in tier II and III cities. The platform, launched in 2019, offers various financial services including bill payments, insurance, and investments. Inc42
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.
