Weekly Round-up | Updates
1. Regulatory Updates
1.1. India
1.1.1. Reserve Bank of India (RBI) releases notification on remittances to International Financial Services Centres (IFSCs) under the Liberalised Remittances Scheme (LRS)
Presently, remittances to IFSCs under LRS can be made only for making investments in securities in terms of A.P. (DIR Series) Circular No. 11 dated February 16, 2021. In view of the gazette notification issued by the Central Government, it is directed that Authorised Persons may facilitate remittances by resident individuals under the purpose of ‘Studies Abroad’ as mentioned in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000 for payment of fees to foreign universities or foreign institutions in IFSCs for pursuing courses mentioned in the gazette said notification. RBI
1.1.2. RBI releases details of portfolios of Deputy Governors through a recent press release
Consequent to demitting of office by Shri M.K. Jain, Deputy Governor, the following will be the portfolios of the Deputy Governors with effect from June 22, 2023. RBI
| Name | Departments |
| Dr M.D. Patra | 1.Co-ordination2.Corporate Strategy and Budget Department3.Department of Economic and Policy Research4.Department of Statistics and Information Management5.Deposit Insurance and Credit Guarantee Corporation6.Financial Markets Operations Department7.Financial Markets Regulation Department8.Financial Stability Department9.International Department10.Monetary Policy DepartmentSecretary’s Department |
| Shri M. Rajeshwar Rao | 1.Consumer Education and Protection Department2. Department of Regulation3. Department of Supervision4. Department of Communication5. Enforcement Department6.Financial Inclusion and Development Department7. Inspection Department8. Legal Department9. Risk Monitoring Department |
| Shri T. Rabi Sankar | 1. Central Security Cell2.Department of Currency Management3. Department of External Investments & Operations4.Department of Government and Bank Accounts5.Department of Information Technology6. Department of Payment and Settlement Systems7. Fintech Department8. Foreign Exchange Department9. Human Resource Management Department10. Internal Debt Management Department11.Premises Department 12.Rajbhasha Department13. Right to Information (RIA) Division |
1.1.3. Mumbai Interbank Forward Outright Rate (MIFOR) to cease to be a Significant Benchmark
In light of the cessation of the publication/non-representativeness of US Dollar London Interbank Offered Rate (USD LIBOR) settings after June 30, 2023, Financial Benchmarks India Pvt. Ltd. (FBIL) has been accorded approval to cease the publication of the MIFOR after June 30, 2023, in terms of provisions of the Financial Benchmark Administrators (Reserve bank) Directions, 2019. Accordingly, the MIFOR administered by FBIL shall cease to be a ‘significant benchmark’ after June 30, 2023. RBI
1.2. Monetary Penalties
1.2.1. RBI imposed monetary penalties on several financial institutions
| Name of the entity | Penalty Imposed | Reason |
| Manappuram Finance Limited, Thrissur | INR 20 Lakh (Indian Rupees Twenty Lakh Only) | Non- compliance with specific provisions of the Non-Banking Financial Company – Systematically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 |
| The Urban Co-operative Bank Limited | INR 6 lakh (Indian Rupees Six Lakh only) | Contravention and non- adherence of the directions issued by RBI on Know Your Customer (“KYC”) and Maintenance of Deposit Accounts – Primary (Urban) Co-operative Banks. Upon inspection it was revealed that the Bank failed to ensure appropriate customer due diligence and to adhere to instructions pertaining to customer identification and issue of cheque books. |
| Andhra Pradesh Mahesh Co-operative Bank Limited, Hyderabad | INR 65 lakh (Indian Rupees Sixty-Five Lakhs only) | Non-compliance of the directions issued by RBI on Basic Cyber Security Framework for Primary (Urban) Co-operative Banks, Comprehensive Cyber Security Framework for Primary (Urban) Co-operative Banks – A Graded Approach and Internet Banking Facility for Customers of Co-operative Banks. |
| Bank of Maharashtra | INR 1.45 Crore (Indian Rupees One Crore and Forty-Five Lakhs Only) | Non-compliance with certain directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’ and Advisory on ‘Man in the Middle (MiTM) Attacks in ATMs’ (the Advisory). |
| Axis Bank Ltd. | INR 30 Lakhs (Indian Rupees Thirty Lakhs Only) | Non-compliance with certain provisions of the RBI directions on ‘Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Credit Card Accounts’. |
| Jammu and Kashmir Bank Limited | INR 2.5 Crore (Indian Rupees Two Crore Fifty Lakhs Only) | Non-compliance with directions issued by RBI on ‘Creation of a Central Repository of Large Common Exposures-Across Banks’, read with ‘Central Repository of Information on Large Credits (CRILC) – Revision in Reporting’, ‘Loans and Advances – Statutory and other Restrictions’ and ‘Time-bound implementation and strengthening of SWIFT-related operational controls’. |
1.3. Bangladesh
1.3.1. Bangladesh Bank notifies on the maintenance of Foreign Currency (FC) accounts for foreign investment in Bangladesh
To facilitate transactional needs in foreign exchange, it has been decided that Authorized Dealers (ADs) may retain foreign currency sent by foreign investors to invest in Bangladesh. In this context, ADs may open FC accounts in the names of local companies which will issue shares in compliance with regulatory instructions. On completion of the registration/commencement of the business, new FC accounts in the names of the companies may be opened by transferring the fund held in a temporary FC account. Chapter 9 of the Guidelines for Foreign Exchange Transactions (GFET)-2018 entails detailed instructions for the same. Bangladesh Bank
2. Trends
2.1. Private equity major TPG sells stake in Shriram Finance; Piramal likely to follow
Private equity major TPG has sold its stakes in Shriram Finance Ltd., through block deals in a transaction worth nearly INR 1,400 crores (Indian Rupees One Thousand Four Hundred Crores only). It is to be noted that Shriram Finance has a market capitalization of INR 54,653 crore (Indian Rupees Fifty-Four Thousand Six Hundred and Fifty- Three Crores only). The reports have further stated that apart from TPG, the Piramal group is also expected to sell its 8.3% (eight-point three per cent) stake in the company in the near future. Economic Times
2.2. RBI’s new FLDG guidelines propel FinTech innovation and financial inclusion
The release of the First Loss Default Guarantee (FLDG) guidelines marks a significant milestone for India’s FinTechs. It is the first time that the RBI has approved the FLDG program, which enables credit-risk sharing arrangements between FinTechs and regulated lenders like banks and NBFCs. In the past decade, India’s FinTech sector has evolved from niche players to integral solution providers and now stands at the brink of unprecedented growth in technological advancements and financial inclusion. Financial Express
2.3. Philippines signs MoU with India to strengthen FinTech Cooperation
Philippines and India have signed a Memorandum of Understanding (MoU) to establish a joint working group on fintech. The Philippines’ Department of Finance and India’s Department of Economic Affairs will co-chair the group. The Aim of the joint working group is to enhance collaboration between the two countries in the field of fintech. It will facilitate discussions on sharing best practices, improving policies and regulations and promoting the development of fintech solutions for business and finance. Fintech Futures
3. Sector Overview
3.2. Byju’s crisis plays up digital lenders’ asset quality problem
3.3. i2i Funding emphasizes technology’s transformative power in the lending landscape
3.4. NBFCs expand MSME portfolios
4. Business Updates
4.1. Private equity major TPG sells stake in Shriram Finance; Piramal likely to follow
Private equity major TPG has sold its stake in Sriram Finance Ltd., through block deals in a transaction worth nearly INR 1,400 crores (Indian Rupees One Thousand Four Hundred Crores Only). It is to be noted that Shriram Finance has a market capitalization of INR 54,653 crore (Indian Rupees Fifty-Four Thousand Six Hundred and Fifty-Three Crores Only). The reports have further stated that apart from TPG, the Piramal group is also expected to sell its 8.3% (eight-point three per cent) stake in the near future. The Economic Times
4.2. Citi TTS has partnered up with UK-based banking and payments software firm Pismo to strengthen demand deposit account solutions
Citi Treasury and Trade Solutions (TTS) has partnered up with Pismo a UK-based banking and payments software firm to revamp its current Demand Deposit Account (DDA) structure. Citi TTS services multinational corporations, financial institutions and public sector organisations globally, with banking licenses in over 90 (Ninety) countries and integrated technology platforms. Pismo’s cloud-based care solutions will be initially implemented by Citi in the US market. Fintech Futures
4.3. Okoora launches integrated payments, banking and risk management platform powered by AI
Okoora is a Swiss-Israeli fintech startup with a team of around 70 (Seventy) people based in Israel, Switzerland, Germany and India. They have launched Automatic Business Currency Management (ABCM) platform which provides real-time insights into currency markets, streamlines currency management and offers AI-driven risk mitigation. Fintech Futures
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.
