Weekly Round-up | Updates
1. Regulatory Updates
1.1. India
1.1.1. RBI releases data on sectoral deployment of bank credit for June 2023
As per data released by the Reserve Bank of India (“RBI”), on sectoral deployment of bank credit from 40 (Forty) select scheduled commercial banks for June 2023 registered a growth rate of 16.3 per cent (Sixteen point Three per cent) in comparison to 15 per cent (Fifteen per cent) recorded last year. This accounts for about 93 per cent (Ninety-three per cent) of the total non-food credit deployed by all scheduled commercial banks. The credit growth to service sectors increased to 26.7 per cent (Twenty-Six point Seven per cent) in June 2023 from 12.8 per cent (Twelve point Eight per cent) in June 2022, while the personal loans sector witnessed a growth of 20.9 per cent (Twenty point Nine per cent) in June 2023 as compared to 18.1 per cent (Eighteen point One per cent) in June 2022. RBI
1.1.2. RBI declares the lending and deposit rates of Scheduled Commercial Banks for July 2023
The reference rates set by RBI for lending and depositing activities of Scheduled Commercial Banks have been released for July 2023. On the lending side, for June, the weighted average lending rate (WALR), the rate charged for all outstanding loans, is 9.82 per cent (Nine point Eight Two per cent), and for fresh rupee loans, the rate is 9.2 per cent (Nine point Two per cent), respectively. Whereas, on the deposit side, the weighted average domestic term deposit rate (WADTDR) on fresh rupee term deposits is 6.34 per cent (Six point Three-Four per cent), and outstanding rupee term deposits are 6.47 per cent (Six point Four-Seven per cent). These rates do not apply to rural banks and small finance banks. RBI
1.1.3. RBI gives the nod for the amalgamation of two cooperative Banks
RBI approves the scheme of amalgamation of the Navanirman Co-operative Urban Bank Ltd., Hyderabad, Telangana, with Rajadhani Co-operative Urban Bank Ltd., Hyderabad, Telangana. As per the sanctioned scheme, the branch of Navanirman Co-operative Urban Bank Ltd., Hyderabad (Telangana), will operate as a branch of Rajadhani Co-op. Urban Bank Ltd., Hyderabad (Telangana), effective August 03, 2023. RBI
1.1.4. RBI releases survey on foreign liabilities and assets of Mutual Fund Companies for 2022-2023
RBI has rolled out the survey report on 43 (Forty-Three) Indian Mutual Fund companies (“IMF”) and their Asset Management Companies (“AMC”) having/acquiring foreign assets or liabilities during 2022-23 and/ or in the previous years. Inter alia, the data revealed that more than 81 per cent (Eighty-one per cent) of the overseas equity investment of IMF lies in the United States of America and Luxembourg. Furthermore, Japan and the United Kingdom held over two-thirds of the foreign direct investment among Indian AMCs. As per the figures, the foreign liabilities of AMCs have decreased to USD 3.4 Billion (United States Dollar Three Billion Four Hundred Million only) in March 2023 from USD 5.7 Billion (United States Dollar Five Billion Seven Hundred Million only) a year ago. RBI
1.2. Sri Lanka
1.2.1. The Central Bank of Sri Lanka releases clarifications on designated foreign currency
The Central Bank of Sri Lanka (“CBSL”) has clarified that the primary aim of designating foreign currencies as ‘designated foreign currencies’ is to enhance trade and investment ties between two nations, to lower transaction expenses linked to dual currency conversion, and to support formal banking channels for trade transactions. The Sri Lankan Rupee (LKR) will continue to be the legal tender for domestic payments. Approving the INR as a designated foreign currency would bring multiple benefits to Sri Lanka, such as facilitating smooth banking transactions involving the INR, particularly for small-scale traders, promoting the use of banking channels for trade instead of informal methods, and decreasing the extra costs tied to dual conversion of INR into USD and then into LKR, and vice versa. CBSL
1.2.2. Gross official reserve of Sri Lanka increases to USD 3.7 Billion
As per CBSL’s external sector performance report, the export earnings for Sri Lanka remained above USD 1 billion (United States Dollar One Billion only) for the second consecutive month in June 2023. Moreover, there has been a constant improvement in workers’ remittances and earnings from tourism as compared to the corresponding previous year. As per the data, the gross official reserve elevated to USD 3.7 Billion (United States Dollar Three Billion Seven Hundred Million only) compared to USD 3.5 Billion (United States Dollar Three Billion Five Hundred Million only) in May 2023. CBSL
1.3. Pakistan
1.3.1. Federal Minister of Finance and Revenue announces launch of sovereign wealth fund
Aiming to boost growth in the mining, agriculture, and information technology sector, the Finance Minister, Senator Mohammad Ishaq Dar, has proposed draft legislation for forming a Sovereign Wealth Fund. Under the scheme, multiple sub-funds covering areas such as agriculture, green revolution, and minerals will be created to cater to various investment preferences. A Special Investment Facilitation Committee has also been formed to support the investors. The Express Tribune
2. Trends
2.1. StrideOne in talks to acquire LetsVenture
StrideOne, a Non-Banking Financial Company (“NBFC”) established by the founders of venture debt firm Stride Ventures, is reportedly in advanced discussions to develop LetsVenture, an investment platform known for its startup portfolio, that includes companies like Scripbox and Blu Smart Mobility. StrideOne’s focus is on providing tailored financial services to micro, small, and medium enterprises (MSMEs) as well as supply chain partners of startups. Moneycontrol
2.2. FincFriends raises funds to scale operations and expand product offerings
FincFriends, the captive NBFC of the online personal loan app RupeeRedee, has secured USD 3.5 Million (United States Dollar Three Million Five Hundred Thousand only) in equity funding from existing shareholders, including Digital Finance International. This investment increases FincFriends’ total equity funding to USD 11.6 Million (United States Dollar Eleven Million Six Hundred Thousand only), including a previous round in September 2022. Additionally, shareholders plan to invest an extra USD 10 million (United States Dollar Ten Million only) by the end of the current fiscal year. FincFriends aims to disburse loans amounting to INR 1,000 crores (Indian Rupees One Thousand Crores only) in the fiscal year 2023-2024. Established in 2018, RupeeRedee and FincFriends provide consumers with immediate short-term digital personal loans. Financial Express
2.3. Mufin Green Finance raises funds worth USD 1 Million from Shell Foundation
Mufin Green Finance (MFC) receives funding worth USD 1 Million (United States Dollar One Million only) from Shell Foundation, a United Kingdom-based registered charity. This funding will be used to create the First Loan Default Guarantee (FLDG), which will be used to provide commercial capital for financing Electric Vehicles for low-income transporters in India. The scheme will also involve established financial institutions such as the Indian Renewable Energy Development Agency and the State Bank of India. The Economic Times
3. Sector Overview
3.3. Infrastructure Sectors hit a 5 (Five)-month high of 8.2% (Eighteen-point Two per cent) in June.
4. Business Updates
4.1. RBI permits setting up special rupee vostro accounts for 34 Russian Banks
RBI has permitted 34 (Thirty-Four) Russian banks to open a special rupee vostro account in 14 (Fourteen) Indian commercial lenders as of July 02, 2023. This move by RBI has been made to improve exports to Russia, enable payments through national currencies and strengthen its presence in the International North-South Transport Corridor and the Eastern Maritime (Chennai-Vladivostok) Corridor. India’s trade with Russia has been adversely impacted due to sanctions imposed by Western countries on major Russian banks, problems in logistics, and issues relating to insurance and reinsurance coverage. Business Standard.
4.2. Piramal Enterprises added to F&O ban list
The National Stock Exchange (NSE) included a new stock, Piramal Enterprises (NS: PIRA), a leading NBFC, in its Futures and Options (“F&O”) ban list due to the stock’s market position exceeding 95 per cent (Ninety-Five per cent) of the limit. Indiabulls Housing Finance (NS: INBF), also on the list, has retained its ban status from the previous session. Both stocks will remain on the ban list until their positions decrease below 80 per cent (Eighty per cent). During this ban, traders cannot initiate new F&O positions for these stocks, but existing positions can be closed. Investing
4.3. Prosus to sell part of PayU to Rapyd
Netherlands-based investment firm Prosus has announced that its fintech subsidiary, PayU, will sell a portion of its business to Israel’s Rapyd for a cash deal totalling USD 610 Million (United States Dollar Six Hundred Ten Million only). This strategic move aims to shift PayU’s focus towards the Indian market. As part of the agreement, Rapyd, a fintech-as-a-service provider, will acquire PayU’s Global Payments Organisation (“GPO”). The GPO operates in over 30 (Thirty) countries across Asia, Latin America, Europe, and Africa, constituting about one-third of PayU’s total revenue. This transaction will enable PayU to concentrate on the significant payments and fintech prospects in India, where it holds a leading position as a payments provider, serving a vast network of merchants and credit customers. The Hindu
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.
