1. Regulatory Updates
1.1. India
1.1.1. RBI urges banks to ensure nominations for deposit accounts, lockers & custody articles
The Reserve Bank of India (“RBI”) has urged banks to ensure nomination for all deposit accounts, lockers, and custody articles to ease claim settlements for families. The Customer Service Committee (CSC) must review and report progress quarterly from March 31, 2025. Staff should be trained in handling nominations and claims and publicity through various sources of media is required to achieve full coverage. RBI
1.1.2. RBI releases annual report of Ombudsman Scheme, 2023-24
RBI’s Annual Report of the Ombudsman Scheme for FY 2023-24 revealed a significant 32.81 per cent (thirty-two point eight one per cent) increase in complaints, totalling 934,355 (nine lakhs thirty-four thousand three hundred fifty-five). Complaints about loans and advances rose 42.70 per cent (forty-two point seven zero per cent) to 85,281 (eighty-five thousand two hundred eighty-one), while mobile/electronic banking complaints grew 32.61 per cent (thirty-two point six one per cent) to 57,242 (fifty-seven thousand two hundred forty-two). The scheme resolved 95.10 per cent (ninety-five point one zero per cent) of complaints, emphasising the need for better banking practices. RBI highlights consumer education and further steps to enhance service standards. RBI
1.1.3. RBI releases guidelines on settlement of due of borrowers by ARC’s
RBI has revised guidelines for (“ARCs”), effective from January 20, 2025. Key changes include Board-approved settlement policies, Independent Advisory Committee (“IAC”) assessments for settlements over INR 1 crore (Indian Rupee One Crore only), and mandatory quarterly reporting. Settlements with frauds and wilful defaulters must follow IAC guidelines. Lump sum payments are preferred, and value variations in securities must be documented. RBI
1.1.4. RBI cancels CoR of X10 Financial Services Limited for irregular practices
RBI has revoked the Certificate of Registration (“CoR”) of X10 Financial Services Limited under Section 45-IA (6) of the RBI Act, 1934. This action was taken due to violations of RBI guidelines on outsourcing financial services in digital lending operations. The company outsourced critical functions such as credit appraisal, interest rate determination, and Know Your Customer (“KYC”) verification to multiple service providers without adequate due diligence. Consequently, X10 Financial Services Limited is no longer authorised to conduct Non-Banking Financial Institution (NBFI) activities as defined under the RBI Act, 1934. RBI
1.1.5. RBI forms a standing external advisory committee for universal and Small Finance Banks
RBI has announced the members of the Standing External Advisory Committee (“SEAC”) for evaluating applications for Universal Banks and Small Finance Banks. The committee is chaired by Shri M. K. Jain and includes eminent experts like Ms. Revathy Iyer, Smt. Parvathy V. Sundaram, Shri Hemant G. Contractor, and Shri N. S. Kannan. The SEAC’s tenure will be for three years. RBI
1.1.6. RBI cancels certificates of registration of 10 NBFCs on supervisory ground
RBI, exercising its authority under Section 45-IA (6) of the RBI Act, 1934, has cancelled the Certificates of Registration (CoR) of 10 NBFCs, including East India Leasing Company Ltd, Kakrania Trading Private (Pvt) Ltd, and others, effective January 9, 2025. Consequently, these companies are prohibited from conducting NBFC business as defined under Section 45-I(a) of the Act. RBI
1.1.8. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
| Name of the Financial Institution | Penalty Imposed | Reasons |
| RBI imposes monetary penalty on Dombivli Nagari Sahakari Bank Limited | INR 8,30,000/- (Indian Rupee Eight Lakh Thirty Thousand only) | Contravention of/non-compliance with certain directions issued by RBI on Maintenance of Deposit Accounts – Primary (Urban) Co-operative Banks. |
| Reserve Bank of India imposes monetary penalty on Jammu and Kashmir Bank Limited | INR 3,31,80,000/- (Indian Rupee Three Crore Thirty-One Lakh Eighty Thousand only) | Contravention of/non-compliance with certain directions issued by RBI on ‘Financial Inclusion – Access to Banking Services – Basic Savings Bank Deposit Account (BSBDA)’, ‘KYC’, and ‘Loans and Advances – Statutory and Other Restrictions’. |
| Reserve Bank of India imposes monetary penalty on Bank of India | INR 1,00,00,000/- (India Rupee One Crore only) | Contravention of/non-compliance with provisions of Section 26A of the Banking Regulation Act, 1949 (BR Act) read with the ‘Depositor Education and Awareness Fund Scheme, 2014’ |
| RBI imposes monetary penalty on Datson Exports Ltd., West Bengal | INR 1,00,000/- (India Rupees One Lakh only) | Contravention of/non-compliance with certain directions issued by RBI on ‘Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs’ |
1.2. Bangladesh
1.2.1. NBR releases notifications for re-fixing VAT rate
The National Board of Revenue (“NBR”) reduced Value Added Tax (“VAT”), supplementary duty, and excise duty rates for various goods and services, including medicines, mobile and Internet Service Providers (ISP) services, and restaurants. Rates for some services dropped from 15 per cent (fifteen per cent) to 10 per cent (ten per cent). Major tax exemptions were provided on imports, e-books, metro rail, and Hajj tickets. Jago News 24
1.3. Philippines
1.3.1. BSP introduced new guidelines to boost merchant payment systems
The Bangko Sentral ng Pilipinas (“BSP”) introduced updated rules for Operators of Payment Systems (“OPS”) to apply electronically for Merchant Acquisition Licences (MAL). The three-step process includes eligibility assessment, evaluation, and licence issuance. Smaller OPS need PHP 5 million (Philippine Pesos Five Million only) in the capital, while larger ones need PHP 10 million (Philippine Pesos Ten Million only). Fintech Philippines
2. Trends
2.1. Zepto to raise IPO size from USD 800 million to USD 1 billion
Zepto to raise Initial Public Offering (“IPO”) worth USD 800 million (United States Dollar Eight Hundred Million only) – USD 1 billion (United States Dollar One Billion only), targeting USD 5.5 billion (United States Five Billion and Five Hundred Million only) gross sales by Q4 FY 26 and positive Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA). It operates a business-to-business (B2B) model and will relocate from Singapore to India before the IPO. Inc 42
2.2. Bharti Airtel to offer Bajaj Finance’s loan products
Bharti Airtel will offer Bajaj Finance’s financial products through its app and physical stores, reaching Airtel’s 375 (three hundred seventy-five) million customers. Currently, two products are available, with plans to expand to four by March and nearly 10 (ten) within 2025. Reuters
3. Sector Overview
3.1. RBI flags concerns as lending outpaces deposits
Bank lending has outpaced deposit growth as of January 10, 2025, with an 11.5 per cent (eleven point five per cent) increase in lending year-on-year compared to a 10.8 per cent (ten point eight per cent) rise in deposits. RBI raised concerns over the high Credit-to-Deposit Ratio (CDR) of 80.40 per cent (eighty point four per cent), attributing the slowdown to higher risk weights on Non-Banking Finance Companies (“NBFCs”) and consumer credit. Rating firm Investment Information and Credit Rating Agency (ICRA) has revised its credit growth estimate downward to 10.5 per cent (ten point five per cent) – 11 per cent (eleven per cent) for FY 25. Banks like the State Bank of India, Bank of India, and Industrial Development Bank of India have raised deposit rates in response to resource pressures. Economic Times
3.2. UPI-enabled credit cards experience a 20 per cent monthly growth rate, with users averaging 40 transactions
According to Kiwi, Unified Payment Interface (“UPI”) enabled credit card users to average 40 (forty) transactions monthly, eight times more than traditional credit card users, with a 20 per cent (twenty per cent) monthly growth rate. The average monthly spending per user in 2024 was INR 40,000 thousand (Indian Rupee Forty Thousand only), but the average transaction size was INR 1,125 thousand (Indian Rupee One Thousand One Hundred Twenty-Five only). In 2024, 50 per cent (fifty per cent) of new credit cards issued were virtual. RuPay credit card transactions on UPI doubled in the first seven months of FY25, with 750 million (seven hundred fifty million) transactions worth INR 63,825.80 crore (Indian Rupee Sixty-Three Thousand Eight Hundred Twenty-Five Crore and Eighty Lakh only). Business Standard
3.3. iSPIRT launches PSLAI to support small businesses
Indian Software Products Industry Round Table (iSPIRT) established the Priority Sector Lenders Association of India (“PSLAI”) with UGRO Capital and India Infoline Finance Limited (IIFL). PSLAI focuses on Priority Sector Lending (“PSL”) for Small and Medium Enterprises (SMEs) and Micro, Small and Medium Enterprises (“MSMEs”). Priyashmita Guha will lead it. Current RBI rules require 40 per cent (forty per cent) of adjusted net bank credit to be allocated to PSL. The MSME sector faces an INR 103 trillion (Indian Rupee One Hundred Three Trillion only) credit gap in FY 2024. Yourstory
3.4. IOB receives strong interest for INR 638 crore bad loan sale from ARCs
Indian Overseas Bank (“IOB”) has received around 10 interests from ARCs for buying INR 638 crore (Indian Rupee Six Hundred Thirty-Eight Crore only) of bad loans, including unsecured education loans and MSME loans. IOB’s earlier sale of INR 11,500 crore (Indian Rupee Eleven Thousand Five Hundred Crore only) of corporate bad loans. Reserve prices are set for the loans, with e-auctions scheduled for January 30 and 31. The ARCs are interested due to their ability to offer Security Receipts (“SRs”) to buy Non-Performing Assets (NPAs). The bank expects part of the payment in cash and the rest in SRs. The Economic Times
3.5 Odisha and Singapore’s GFTN Sign deal to create Bhubaneswar fintech hub
The Government of Odisha and Singapore’s Global Finance & Technology Network (“GFTN”) have signed an agreement to create a fintech hub in Bhubaneswar. This hub aims to support India’s “Insurance for All” by 2047, develop Insurance Tech (Insurtech) solutions, provide advanced training, and facilitate company collaborations. It will also use the global sandbox platform APIX for innovation, pilot Environmental, Social, and Governance (“ESG”) disclosure for MSMEs, and integrate finance, ESG, and insurance to strengthen Odisha’s digital economy. Fintechnews
4. Business Updates
4.1. Yes Bank launches frictionless finance accelerator to grow fintech innovations
Yes Bank has launched a frictionless finance accelerator programme. It aims to tackle challenges, scale innovations, and improve financial inclusion. It offers comprehensive support, technology focus, and regulatory guidance. Entrepreneur India
4.2. Netradyne, a logistics AI startup becomes the first unicorn of the year 2025
Netradyne became India’s first unicorn of 2025. The unicorn has also raised USD 90 million (United States Dollar Ninety Million only) in Series D, valued at USD 1.34 billion (United States Dollar One Billion Three Hundred Forty Million only). Founded in 2015, it provides Artificial Intelligence (“AI”)-powered fleet safety solutions, monitoring 700 million (seven hundred million) miles monthly and it is aiming to reduce accidents and expand globally, 2024 revenue was USD 210 million (United States Dollar Two Hundred Ten Million only) with 50 per cent (fifty per cent) growth expected. INC 42
4.3. Delhi HC appoints former SC judge A K Sikri to mediate On4Off Trading vs NPCI patent dispute
Delhi High Court has appointed former Supreme Court judge A K Sikri to mediate a dispute between On4Off Trading and National Payments Corporation of India (“NPCI”) over the alleged use of On4Off’s patented technology for UPI payments via credit cards. On4Off seeks to restrain NPCI and others and obtain compensatory damages. The patented process allows transactions from credit cards via UPI Quick Response (QR) codes. The Economics Times
4.4 DCB Bank advances digital lending with Northern Arc’s nPOS Platform
Northern Arc Capital has signed a Memorandum of Understanding (MoU) with Development Credit Bank (“DCB”) Bank Ltd. to boost DCB Bank’s digital lending using the Northern Arc’s Proprietary Operating System (“nPOS”) platform. This Application Programming Interface (API) is an enabled platform and will enhance loan processes and support various loan types. The collaboration aims to drive growth and improve customer experiences, with senior executives from both companies expressing their enthusiasm for the partnership. The Print
4.5 Kotak Mahindra Bank acquires Standard Chartered India’s personal loan portfolio for INR 3,330 crore
Kotak Mahindra Bank has completed the acquisition of Standard Chartered India’s personal loan book for INR 3,330 crore (Indian Rupee Three Thousand Three Hundred Thirty Crore only), following necessary regulatory approvals. This acquisition aligns with Kotak’s strategy to grow retail assets, expand market share, and target the ‘Salaried Affluent’ segment. Standard Chartered will focus on wealth and investment banking in India post-divestment. The competitive personal loan market led the RBI to ask banks to hold more capital for personal credit due to default risks. The Economic Times
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.
