1. Regulatory Updates
1.1. India
1.1.1. RBI-DPI index surpasses 465 in September 2024, indicating strong payment growth
The Reserve Bank of India (“RBI”) has released the Digital Payments Index (“RBI-DPI”) for September 2024, reflecting continued growth in digital transactions. The index now stands at 465.33 (four hundred sixty-five point three- three), up from 445.5 (four hundred forty-five point five) in March 2024. This rise underscores improvements in payment infrastructure and transaction volumes nationwide. Introduced in January 2021 with a March 2018 base, the RBI-DPI measures the extent of digital payment adoption. The trend highlights India’s accelerating shift towards a cashless economy. RBI
1.1.2. Offline payment product by Exto India Technologies approved by RBI’s Regulatory Sandbox
Exto India Technologies Private Pvt. Ltd. was selected for the test phase under the ‘On Tap’ application facility for the Retail Payments theme of the Regulatory Sandbox (“RS”). The entity tested an offline digital payment solution integrating Distributed Ledger Technology (DLT) with private biometric authorisation, enabling secure offline transactions. Partnering with Transcorp International Ltd. Common Services Centre, and YPay Card, the product has been deemed acceptable under the RS and may be considered for adoption by Regulated Entities (REs), subject to compliance. RBI
1.1.3. RBI revises guidelines on private placement of NCDs by HFCs
RBI has revised the private placement guidelines for Non-Convertible Debentures (“NCDs”) with a maturity exceeding one year issued by Housing Finance Companies (“HFCs”). Effective January 29, 2025, the guidelines under Chapter XI of the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 stand repealed. The Scale-Based Regulation (SBR) framework for Non-Banking Financial Companies (“NBFCs”) will now apply mutatis mutandis to HFCs. The revised framework applies to all fresh NCD issuances. RBI
1.1.4. RBI to inject liquidity via USD/INR swap auction
RBI will conduct a USD (United States Dollar)/ INR (Indian Rupees) Buy/ Sell swap auction of USD 5 billion (United States Dollars Five Billion only) on January 31, 2025, with a six-month tenor. The spot date is February 04, 2025, and the far-leg date is August 4, 2025. Market participants must place bids based on the premium they are willing to pay, quoted in paisa terms up to two decimal places. The auction follows a multiple-price format, with successful bids accepted at their quoted premium. RBI
1.1.8. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
| Name of the Financial Institution | Penalty Imposed | Reasons |
| Canara Bank | INR 1,63,60,000/- (Indian Rupees One Crore Sixty-Three Lakh Sixty Thousand only) | Contravention of/non-compliance with directions issued by RBI on ‘Priority Sector Lending – Targets and Classification,’ ‘Interest Rate on Deposits’, and ‘Financial Inclusion – Access to Banking Services – Basic Savings Bank Deposit Account.’ |
| Bank of India | INR 1,00,00,000/- (Indian 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’ |
| Jammu and Kashmir Bank Limited | INR 3,31,80,000/- (Indian Rupees 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 – BSBDA’, ‘Know Your Customer (“KYC”)’ and ‘Loans and Advances – Statutory and Other Restrictions’. |
| Datson Exports Ltd., West Bengal | INR 1,00,000/- (Indian 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. BB issues offshore banking guidelines
Bangladesh Bank (“BB”) has issued new guidelines for offshore banking, mandating scheduled commercial banks to obtain an Offshore Banking Unit (“OBU”) license. OBUs can only operate in freely convertible currencies and must notify BB departments within seven days of commencing operations. This move aims to regulate offshore transactions and ensure compliance with Bangladesh Bank Order, 1972. CBS
1.3. Philippines
1.3.1. Philippines Monetary Board approves USD 3.21 billion in public sector foreign borrowings
The Monetary Board approved six public sector foreign borrowings worth USD 3.21 billion (United States Dollar Three Billion Two Hundred Ten Million only) from October to December 2024, 3.35 per cent (three point three one five cent) lower than the same period last year. In 2024, 21 (twenty-one) borrowings totalling USD 13.68 billion (United States Dollar Thirteen Billion Six Hundred Eighty Thousand only) were approved, including bond issuances, Bangkok Sentral Ng Pilipinas
2. Trends
2.1. India to develop foundational AI model
The Ministry of Electronics and Information Technology (MeitY) is set to invite proposals for developing an Indian foundational Artificial Intelligence (“AI”) model. Additional Secretary Abhishek Singh emphasised the need for indigenous AI, citing the misalignment of foreign models with Indian languages and contexts. This follows the Centre’s BharatGen initiative, aimed at building a multimodal Large Language Model (LLM). Inc42
2.2. Pine Labs to file draft IPO papers by mid-February
Fintech firm Pine Labs is set to file its draft Initial Public Offering (“IPO”) documents by mid-February, aiming for a public listing by August. Following the completion of its reverse flip to India, the company seeks to capitalise on domestic market opportunities. The IPO is expected to be a mix of fresh issues and offers for sale. Money Control
3. Sector Overview
3.1. Government launches mutual credit guarantee scheme for MSMEs
The government has approved the Mutual Credit Guarantee Scheme for Micro Small Medium Enterprises (“MSMEs”) (MCGS-MSME) to provide credit guarantee coverage to lending institutions for loans up to INR 100 crore (Indian Rupees One Hundred Crore only) for the procurement of equipment and machinery by eligible MSMEs. The scheme offers 60 per cent (sixty per cent) guarantee coverage by the National Credit Guarantee Trustee Company Limited and aims to facilitate collateral-free loans for MSME expansion. The Indian Express
3.2. Bizloan secures INR 35 crore in Series A round to advance MSME financing
Bizloan, a Bengaluru-based lending tech startup, raised INR 35 crore (Indian Rupees Thirty-Five Crore only) in a Series A funding round led by the Michael & Susan Dell Foundation and BLinC Invest. The funds will be used to expand in underserved markets, enhance loan products, and strengthen technology infrastructure. Techinasia
3.3. RBI increases compliance for P2P lending platforms with the lending questionnaire
RBI has increased scrutiny of peer-to-peer (“P2P”) lending platforms by issuing an 18 (eighteen)-point questionnaire to eight fintech companies in the P2P space, following revised guidelines in August 2024. The questionnaire covers compliance with updated P2P norms, fund flow within firms, advertising practices, and cross-selling. RBI aims to assess compliance and has noted instances of non-disclosure and non-compliance. Business Standard
3.4. Finance partners with GeM to launch enhanced GeM Sahay Platform
121 Finance, an RBI-registered NBFC-Factor, partnered with Government-e Marketplace (“GeM”), Perfios, and Tata Consultancy Services to launch the enhanced GeM Sahay platform. This collaboration aims to improve digital lending for MSMEs by providing real-time transaction-based finance. The OCEN framework and GeM Sahay have facilitated 50 (fifty) lakh orders, promoting financial inclusion and MSME growth. The Tribune
3.5 NPCI restricts special characters in UPI transaction IDs from February 1
The National Payments Corporation of India (“NPCI”) has mandated that Unified Payments Interface (“UPI”) transaction IDs must be alphanumeric, prohibiting special characters from February 1, 2025. Transactions on non-compliant apps will be declined by the central system. This directive aims to standardise transaction ID generation and enhance system efficiency. UPI operators must ensure compliance, or their apps will face restrictions. Users should verify if their UPI app adheres to NPCI guidelines to avoid transaction failures. The Economic Times
4. Business Updates
4.1. Zepto shifts domicile to India ahead of IPO
Zepto has completed its reverse flip from Singapore to India, relocating its parent entity, Kiranakart Pte Ltd, under Indian jurisdiction in preparation for its IPO. The National Company Law Tribunal (NCLT) approved the merger between Kiranakart Pte Ltd and Kiranakart Technologies Ltd, streamlining Zepto’s access to domestic capital markets. In FY24, Angel One
4.2. Cred becomes the first fintech to offer E-Rupee access
Cred has become the first fintech platform to enable transactions using India’s Central Bank Digital Currency (“CBDC”). The RBI launched the e-rupee pilot in December 2022, initially allowing only banks to participate. Other fintech giants like Google Pay, PhonePe, and Amazon Pay are also seeking to join the CBDC ecosystem. The Hindu
4.3. UPI dominates digital payments, captures 83 per cent share in 2024
UPI accounted for 83 per cent (eighty-three per cent) of India’s total digital payments in 2024, up from 34 per cent (thirty-four per cent) in 2019, as per the Reserve RBI payment system report. India recorded 208.5 (two hundred eight point five) billion digital payment transactions in 2024. Business Standard
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.
