1. Regulatory Updates
1.1. India
1.1.1. CAFRAL releases India Finance Report, 2023
The Reserve Bank of India (“RBI”) set up the Centre for Advanced Financial Research and Learning (“CAFRAL”), a not-for-profit organisation, in the year 2011, to promote research and learning in the banking and finance sector. CAFRAL published its first report titled ‘India Finance Report 2023‘(“IFR 2023”) with the theme ‘Connecting the Last Mile’. IFR 2023 provides an in-depth assessment of Non-Banking Financial Companies (“NBFCs”) in India. RBI
1.1.2. RBI releases new Master Direction on Information Technology Governance, Risk, Controls and Assurance Practices
RBI has released a Master Direction on Information Technology Governance, Risk, Controls and Assurance Practices (“MD”), which shall come into effect from April 01, 2024, and shall be applicable to Regulated Entities (“REs”). As per MD, REs are required to establish a robust Information Technology (“IT”) governance framework with focus areas such as strategic alignment, risk management, resource management, performance management, and business continuity/disaster recovery management. The MD mandates that REs establish a board-level IT Strategy Committee (ITSC) to ensure the implementation of an effective IT strategic planning process. In case the third-party arrangements in the IT/cyber security ecosystem fall outside the applicability of the RBI (Outsourcing of Information Technology Services) Directions, 2023, REs are required to establish a suitable vendor risk assessment process. This process should include controls that are proportionate with assessed risk and materiality. RBI
1.1.3. RBI allows investments by non-residents in sovereign green bonds through FAR
RBI vide press release on the ‘Issuance Calendar for Marketable Dated Securities for October 2023 – March 2024’ dated September 26, 2023, announced the Sovereign Green Bonds issuance schedule for the fiscal year 2023-24. In line with the Fully Accessible Route (“FAR”) introduced by RBI on March 30, 2020, which opened specific categories of Central Government securities to non-resident investors without restrictions, the specified securities eligible for FAR were outlined in previous circulars. In a recent decision, all Sovereign Green Bonds issued in the fiscal year 2023-24 have been additionally designated as ‘specified securities’ under the FAR, extending accessibility to non-resident as well as domestic investors. RBI
1.1.4. Four NBFCs and two HFCs surrender their Certificate of Registration to RBI
The following NBFCs and Housing Finance Companies (HFCs) surrendered their Certificate of Registration (“CoR”) to RBI.
| Name of the Entity | Grounds for Surrender |
| Ford Credit India Private Limited | Exit from Non-Banking Financial Institution (“NBFI”) business. |
| Acoustic Commercial Pvt. Ltd. | Exit from NBFI business. |
| VSG Trade Pvt Ltd | Not meeting the criteria prescribed for an unregistered Core Investment Company. |
| Centrum Microcredit Limited | Cease to be a legal entity owing to amalgamation/merger/dissolution/voluntary strike-off. |
| National Trust Housing Finance Limited | Exit from Housing Finance Institution business. |
| Housing Development Finance Corporation Limited | Cease to be a legal entity owing to amalgamation/merger/dissolution/voluntary strike-off. |
1.1.5. RBI cancels licences of two NBFCs
RBI, under Section 45-IA (6) of the Reserve Bank of India Act, 1934, has cancelled the CoR of the below-mentioned NBFCs.
| Name of NBFC | Cancellation order date |
| Todays Holdings Private Limited | October 10, 2023 |
| Integrated Finance Company Limited | October 19, 2023 |
1.1.6. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
| Name of the financial institution | Penalty Imposed | Reason |
| Early Salary Services Private Limited, Pune, Maharashtra | INR 3,20,000 (Indian Rupees Three Lakh Twenty Thousand Only) | Contravention of/non-adherence with certain provisions of the direction issued by RBI on ‘Non-Banking Financial Company – Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016’. |
| Limbasi Urban Co-operative Bank Ltd., Dist. Kheda, Gujarat | INR 25,000 (IndianRupees Twenty-Five Thousand Only) | Contravention of/non-adherence with directions issued by RBI on ‘Loans and advances to directors, relatives and firms/concerns in which they are Interested’ read with the directions issued by RBI on ‘Loans and Advances to Directors etc. – Directors as surety/guarantors – Clarification’. |
| Malpur Nagarik Sahakari Bank Limited, Malpur, Dist. Aravalli, Gujarat | INR 3,50,000 (Indian Rupees Three Lakh Fifty Thousand Only) | Contravention of/non-adherence with ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (“UCB”)’ |
| Shree Lodra Nagarik Sahakari Bank Limited, Lodra, Dist. Gandhinagar, Gujarat | INR 4,00,000 (Indian Rupees Four Lakh Only) | Contravention of/non-adherence with directions issued by RBI on ‘Loans and advances to directors, relatives and firms/concerns in which they are interested’ and ‘Placement of Deposits with Other Banks by Primary UCBs’. |
| Jolarpet Co-operative Urban Bank Limited, Dist. Vellore, Tamil Nadu | INR 50,000 (Indian Rupees Fifty Thousand Only) | Contravention of/non-adherence with directions issued by RBI on ‘Board of Directors – UCBs’ read with ‘Loans and advances to directors, their relatives, and firms/concerns in which they are interested’. |
1.2. Bangladesh
1.2.1. Bangladesh Bank releases new refinancing schemes for small vendors
Bangladesh Bank (“BB”) has released two refinancing schemes under which small vendors will be eligible to get credit guarantee facilities. BB’s Small and Medium Enterprise (SME) department launched refinancing schemes totalling Taka 4,400 crore (Bangladeshi Taka Four Thousand Four Hundred Crore Only) for agricultural-product processing and small enterprises run by women. The first scheme worth Taka 3,000 crore (Bangladeshi Taka Three Thousand Only) was launched in June 2023 and second scheme worth 1,400 crore (Bangladeshi Taka One Thousand Four Hundred Only) was launched in October 2023. It is also mentioned by BB, that the borrowers can enjoy one scheme only. Dhaka Tribune
1.2.2. Bangladesh’s reserves fall to USD 19.5 billion
Bangladesh’s foreign exchange reserves have declined to USD 19.5 billion (United States Dollar Nineteen Billion Five Hundred Million Only) after the BB settled import bills through the Asian Clearing Union (ACU), an arrangement for handling payments for intra-regional transactions among eight countries, including India. The foreign exchange reserves based on the International Monetary Fund’s (IMF) Balance of Payment Manual 6 (six) as of November 01, 2023, was USD 20.6 billion (United States Dollar Twenty Billion Six Hundred Million Only). The gradual decline in the country’s foreign exchange reserve is attributed to lower inflows from exports, remittances, trade, and short-term credits compared to the outflows required to meet international payment obligations, including import bills. The Daily Star
1.3. Sri Lanka
1.3.1. World Bank provides assistance for the stabilisation of Sri Lankan financial market
The World Bank has approved an assistance of worth USD 150 million (United States Dollar One Hundred Fifty Million Only) for the stabilisation of Sri Lankan financial market. The main objective is to strengthen the deposit insurance scheme which will eventually boost the confidence of small depositors such as women and people living in rural areas in Sri Lanka’s financial system. BQ Prime
2. Trends
2.1. State Bank of India targets to disburse corporate loans worth INR 1.4 trillion in the next two to three quarters
State Bank of India (SBI) is expecting to disburse corporate loans worth INR 1.4 trillion (Indian Rupees One Trillion Four Hundred Billion Only) in the next two to three quarters. The bank has witnessed a surge in demand for working capital and term loans for corporates recently with an year-on-year growth of 7 per cent as on September 2023. Financial Express
2.2. Malaysia working towards accepting India’s UPI system and Rupay payment services
Malaysia is working towards accepting the Unified Payment Interface (UPI) system and RuPay payment services of India. Additionally, both countries are planning to implement trade settlements in domestic currencies to promote and boost business in local currency. These collaborations took place during the bilateral joint commission meeting held after a gap of 12 (twelve) years. Hindustan Times
2.3. RBI grants In-Principle approval to PayGlocal to function as payment aggregator
PayGlocal, a technology-led platform that enables cross-border payments, has secured in-principle approval from RBI for a payment aggregator license. The next phase involves additional checks and clearances from RBI, which, once completed, will allow it to onboard merchants onto its platform. PayGlocal enables merchants to accept payments in local currencies from customers outside India. Inc 42
3. Sector Overview
3.1. India’s medium-term potential growth rate increases by 70 bps: Fitch
3.2. Scheduled commercial banks deployed INR 21.69 Lakh Crore to MSME in September 2023: RBI
3.3. Indian Banks on the way to be ‘Digital Champions’: Deloitte
4. Business Updates
4.1. Radiant Cash acquires majority shareholding in Aceware Fintech Services Private Limited
Radiant Cash Management Services Limited (“RCMS”) has acquired a majority stake in Aceware Fintech Services Private Limited (“Acemoney”) as the board of directors of RCMS has approved the signing of the definitive agreement. Acemoney is a fintech company based out of Chennai which provides digital banking solution services specifically designed for co-operative banks, retail outlets and co-operative societies in rural areas. Radiant Cash is acquiring around 57 per cent (fifty-seven per cent) stake in an all-cash deal worth INR 11.2 Crore (Indian Rupees Eleven Crore Twenty Lakh Only) in Acemoney. Times of India
4.2. YES Bank enters into partnership with Cloud Ace India
YES Bank (“YB”) has signed an MOU with Accelerated Computing Enterprise Pvt. Ltd., (“Cloud Ace“), a leading cloud solutions provider. The primary objective is to enhance customer convenience and security through the integration of cloud technology and to extend specialised support to startups through ‘YES Connect’. YES Connect is an innovative platform, functioning as a one-stop solution for both existing and potential YB customers. This platform empowers users to access banking services while also discovering a diverse range of solutions offered by the bank and its partners. The collaboration leverages Cloud Ace’s expertise in cloud infrastructure, coupled with YB’s financial acumen, with the aim of helping businesses streamline their processes, reduce costs, and achieve efficient growth. The Economic Times
4.3. Axis Bank signs agreement with Institute of Rural Management Anand to strengthen financial inclusion and literacy in India
Axis Bank has signed a five-year-long agreement with the Institute of Rural Management Anand (“IRMA”) to establish the Axis Bank Chair to strengthen financial inclusion and literacy in India. The Axis Bank Chair shall have a joint advisory committee which shall comprise representatives from Axis Bank as well as IRMA. The role of the Chair will involve conducting field-based research, enhancing financial literacy and financial inclusion, guiding policy advocacy and strengthening industry-academia relations. Investing.com
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.
