1. Regulatory Updates
1.1. India
1.1.1 RBI approves amalgamation of Rajapur Sahakari Bank with Malad Sahakari Bank
The Reserve Bank of India (“RBI”) has approved the Rajapur Sahakari Bank Ltd., Mumbai’s voluntary amalgamation with the Malad Sahakari Bank Ltd., Mumbai. The decision, sanctioned under Sub-Section (4) of Section 44A read with Section 56 of the Banking Regulation Act, 1949, allows the two cooperative banks to merge their operations. This move aims to streamline banking services and strengthen the financial position of both institutions. The amalgamation will come into effect on September 23, 2024. From this date, all The Rajapur Sahakari Bank branches will be rebranded and will operate as part of The Malad Sahakari Bank’s network. This merger is expected to provide greater operational efficiency and improve customer service by expanding the reach of The Malad Sahakari Bank while ensuring the stability of the banking sector in Mumbai. RBI
1.1.2. Amendments to designated list under WMD Act
The Ministry of Finance has announced amendments to the designated list under section 12A of the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 (“WMD Act”). Regulated Entities (“REs”) are mandated to comply with the updated procedures for implementation, as outlined in the Master Direction on Know Your Customer. REs must verify the ‘UNSCR 1718 Sanctions List’ daily and adhere to any modifications to ensure compliance with international sanctions related to non-proliferation. RBI
1.1.3. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
| Name of the Financial Institution | Penalty Imposed | Reasons |
| Lucknow University Primary Co-operative Bank Ltd., Lucknow, Uttar Pradesh | INR 3,00,000/- (Indian Rupees Three Lakh only) | Contravention of/non-adherence with directions issued by RBI on ‘Investments by Primary (Urban) Co-operative Banks’. |
| The Urban Co-operative Bank Limited, Anantnag | INR 5,00,000/- (Indian Rupees Three Lakh Fifty Thousand only) | Contravention of/non-adherence with directions issued by RBI on ‘Investments by Primary (Urban) Co-operative Banks’. |
| Dr. Babasaheb Ambedkar Sahakari Bank Limited, Nashik, Maharashtra | INR 50,000/- (Indian Rupees Fifty 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’. |
1.2. Philippines
1.2.1. Higher balance of payments surplus expected for 2024-2025
The latest projections indicate an improved balance of payments (“BOP”) outlook for 2024 and 2025, driven by sustained financial inflows and global economic stability. Positive factors include resilient domestic demand, lower inflation, and stronger world trade linked to products such as electric vehicles and high-end semiconductors. Financial inflows, particularly portfolio investments, have surged, offsetting a wider current account deficit. Despite some risks, including geopolitical tensions and trade concerns, the BOP surplus is expected to increase, supported by continued growth in foreign direct investments (FDIs) and foreign portfolio investments (FPIs). Bangko Sentral ng Pilipinas
1.2.2. BSP lowers reserve requirement ratios to support financial system efficiency
The Bangko Sentral ng Pilipinas (“BSP”) will reduce reserve requirement ratios (“RRRs”) starting October 25, 2024, by 250 (two hundred fifty) basis points (“bps”) for universal, commercial banks, and non-bank financial institutions, 200 (two hundred) bps for digital banks, and 100 (one hundred) bps for thrift and rural banks. This move brings RRRs for universal and commercial banks to 7 per cent (seven per cent), digital banks to 4 per cent (four per cent), thrift banks to 1 per cent (one per cent), and rural banks to 0 per cent (zero per cent). The reduction aims to reduce financial distortions, lower costs, and promote better pricing for services. The BSP plans to review the need for further reductions as inflation remains stable. Bangko Sentral ng Pilipinas
1.3. Bangladesh
1.3.1. BB forms task force to reform troubled banking sector
The Bangladesh Bank (“BB”) has formed a new management board to oversee the future strategy and operations of mobile financial services provider Nagad. KAS Murshid, former Director General of the Bangladesh Institute of Development Research (BIDS), has been appointed board chairman. Other members include experts from BRAC University, the Policy Research Institute, and the Bangladesh Postal Department. The board’s formation follows the central bank’s decision to appoint an administrator for Nagad in August, ensuring effective strategic management in compliance with the Payment and Settlement System Act of 2024. The Business Standard
2. Trends
2.1. M2P fintech seeks USD 80 million funding from Helios
Chennai-based M2P Fintech is in talks with Helios Investment Partners to raise USD 80 million (United States Dollar Eighty Million only) in a new funding round, with USD 50 million (United States Dollar Fifty Million only) in primary infusion and USD 30 million (United States Dollar Thirty Million only) in secondary infusion. This round is expected to bring M2P’s valuation close to USD 800 million (United States Dollar Eight Hundred Million only), edging the company toward unicorn status. Founded in 2014, M2P offers fintech Application Programming Interface (API) solutions to companies like CRED and Razorpay Inc42
2.2. NPCI considers raising UPI market share cap beyond 40 per cent
The National Payments Corporation of India (“NPCI”) is considering raising the market share cap for Unified Payment Interface (“UPI”) apps from 30 per cent (thirty per cent) to over 40 per cent (forty per cent) to address concerns about the dominance of major players like Google Pay and PhonePe. This move comes as the NPCI introduces a 1.1 per cent (one point one per cent) interchange fee for merchant payments, potentially impacting payment aggregator infrastructure. Business Standard
3. Sector Overview
3.1. Finance Minister urges banks to capitalise on digital growth opportunities
Finance Minister Nirmala Sitharaman emphasised the importance of UPI in transforming India’s banking sector during her address at the Bank of Maharashtra’s 90th Foundation Day. She urged banks to harness the digital footprints created by UPI, which currently accounts for 45 per cent (forty-five per cent) of global real-time payments, to enhance their business prospects. Inc42
3.2. NBFCs outperform Banks with 21 per cent growth in deposits for FY24
Non-Banking Financial Companies (“NBFCs”) attracted a 21 per cent (twenty-one per cent) increase in deposits in Fiscal Year (“FY”) 2024, surpassing banks’ 13.5 per cent (thirteen point five per cent) growth. NBFCs like Bajaj Finance and Shriram Finance offer competitive interest rates, often 150 (one hundred and fifty) basis points higher than banks, drawing savers seeking better returns. Bajaj Finance’s deposits surged 35 per cent (thirty-five per cent) year-over-year (“YoY”) to INR 60,151 crore (Indian Rupees Sixty Thousand One Hundred Fifty-One only). In comparison, Shriram Finance saw a 23 per cent (twenty-three per cent) rise to INR 44,444 crore (Indian Rupees Fourty Four Thousand Four Hundred Forty-Four only). Despite this success, the RBI has limited the number of deposit-taking NBFCs due to regulatory concerns, reducing the figure from 34 (thirty-four) to 25 (twenty-five) in FY24. The Economic Times
4. Business Updates
4.1. Navi surpasses Amazon Pay to become sixth largest UPI player
Fintech unicorn Navi, co-founded by Sachin Bansal, has overtaken Amazon Pay to become India’s sixthlargest player on UPI with customer-initiated transactions surging to 88.7 (eighty-eight point seven) million in August 2024. This represents a significant increase from 68.4 (sixty-eight point four) million in July. Walmart-owned PhonePe leads the UPI market with 7.2 (seven point two) billion transactions, followed by Google Pay with 5.5 (five point five) billion transactions. Money Control
4.2. MobiKwik’s Zaakpay partners with Meta
MobiKwik’s payment gateway Zaakpay has teamed up with Meta to offer in-app payments on WhatsApp. The feature allows users to make payments directly in chats, supporting various payment modes like UPI, credit cards, and wallets. This partnership aims to help MSME reach broader customer bases, especially in Tier II and III cities. The integration enhances user convenience and business efficiency by combining secure transactions with WhatsApp’s large user network The Economic TimesTop of Form
4.3. RBI approves Aditya Birla Capital’s Merger with Aditya Birla Finance
Aditya Birla Capital has received ‘no objection’ from the RBI for its proposed merger with Aditya Birla Finance, its wholly-owned subsidiary. The merger, aimed at creating a large unified NBFC, was approved by Aditya Birla Capital’s board of directors on March 11. The scheme is still subject to various statutory and regulatory approvals, including clearance from the National Company Law Tribunal (NCLT) and relevant stakeholders. Money Control
4.4. Aye Finance Secures USD 30 Million in Series G Funding
Aye Finance, an NBFC focused on MSME lending, has raised USD 30 million (United States Dollar Thirty Million only) in a Series G round led by Singapore’s ABC Impact. This follows a USD 37 million (United States Dollar Thirty-Seven Million only) Series F round earlier this year, bringing the company’s total fundraising to USD 164 million (United States Dollar One Hundred Sixty-Four only) since 2014. The fresh capital will support Aye Finance’s expansion across its 478 (four hundred seventy-eight) branches, enhancing its ability to provide micro-enterprise working capital loans. ABC Impact’s investment highlights Aye Finance’s use of technology and operational performance in serving the micro-lending segment. 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.
