AKP Banking & Finance Digest- April 08, 2024 – Commodities/Derivatives/Stock Exchanges

1. Regulatory Updates

1.1. India

1.1.1. RBI Transition to electronic insurance, IRDAI
mandates digital policies from April 01, 2024

Starting April 01, 2024, it’s mandatory for insurance
policies to be held in electronic form, similar to how shares are
held in a demat account. The Insurance Regulatory and Development
Authority of India (“IRDAI”) issued regulations on March
20, 2024, requiring insurers to have a board-approved policy for
electronic insurance issuance. Regardless of how the proposal is
received, insurers must issue policies electronically, subject to
IRDAI’s exemptions. E-insurance involves obtaining policies
digitally, stored in an e-Insurance Account (eIA), which can manage
various types of insurance policies. Four insurance
repositories—CAMS Insurance Repository, Karvy, NSDL Database
Management (NDML), and Central Insurance Repository of
India—facilitate the opening of e-Insurance accounts.
Currently, there are no specific guidelines from IRDAI regarding
the conversion of existing policies into digital format. The Economic Times

1.1.2. RBI defers exchange-traded currency derivatives
norms

The Reserve Bank of India (“RBI”), through its
notification dated April 04 2024, has deferred the implementation
of its new rules on exchange-traded rupee derivatives
(“Proposed Currency Derivatives Rules”) to May 03, 2024.
RBI, through its circular dated January 05, 2024, introduced
Proposed Currency Derivative Rules, which, along with many other
changes, mandated rupee-denominated currency contracts traded
through the National Stock Exchange of India (NSE) and the Bombay
Stock Exchange (BSE) to have underlying exposure. Currently, the
regulatory framework for participation in exchange-traded currency
derivatives (“ETCD”) involving the rupee is governed by
the provisions of the Foreign Exchange Management Act (FEMA) and
RBI Master Direction – Risk Management and Inter-Bank
Dealings dated July 05, 2016 (“Currency Derivative
Rules”). Currency Derivate Rules allow participants with a
valid underlying contracted exposure to enter into ETCDs involving
the rupee up to a limit of USD 100 million (United States Dollar
One Hundred Million Only) without having to produce documentary
evidence of the underlying exposure. RBI

1.1.3. RBI cancels licences of four NBFCs

RBI, under Section 45-IA (6) of the Reserve Bank of India Act,
1934, has cancelled the Certificate of Registration
(“CoR”) of the below-mentioned NBFCs.

1.1.4. Five NBFCs surrender their CoR to RBI

The following Non-Banking Financial Companies
(“NBFCs”) have surrendered their CoR to RBI.

1.1.5. Monetary Penalties

RBI imposes monetary penalties on the following financial
institutions:

1.2. Bangladesh

1.2.1. MTB partners with IDEX Biometrics to introduce
biometric payment cards in Bangladesh

Mutual Trust Bank (“MTB”), a private commercial bank
based in Dhaka, Bangladesh, has partnered with Norway’s IDEX
Biometrics to introduce biometric payment cards. By integrating
IDEX Pay solution’s fingerprint sensors into its physical
cards, MTB aims to enhance security by requiring cardholders to
verify their identity physically for transactions. This move aligns
with the trend among financial institutions worldwide, such as
NatWest in the UK, Crédit Agricole in France, and Rocker in
Sweden, who have adopted similar measures with IDEX Biometrics
technology. Fintech Futures

1.3. Sri Lanka

1.2.1. Ministry of Finance withdraws microfinance bill
for revision

The Ministry of Finance has decided to withdraw the Microfinance
and Credit Regulatory Authority Bill. The ministry aims to redraft
the bill in consultation with stakeholders to ensure it promotes a
favourable environment for both microfinance and Small and Medium
Enterprises (SMEs). The Committee on Public Finance (COPF)
identified concerns regarding the bill’s potential to hinder
microfinance activities in Sri Lanka. Acknowledging these concerns,
the Ministry of Finance recognised the need for redrafting to
better align with its objectives. Newswire

2. Trends

2.1. RBI’s action plan against illegal lending
apps

RBI is considering the establishment of a public register to
identify authorised lending apps and curb the increase of illegal
lending platforms in India. This initiative aims to address the
alarming trend of suicides linked to predatory practices employed
by digital lenders. The central bank plans to create the Digital
India Trust Agency (“DIGITA”) to oversee the credibility
of domestic lending entities. Apps lacking a ‘verified’
signature from DIGITA would be classified as unauthorised, inviting
stringent actions from authorities. Previously, the RBI directed
Google to enforce stricter norms, resulting in the removal of 2,500
(two thousand five hundred) fraudulent apps. Inc 42

2.2. Paytm navigates regulatory hurdles, resumes lending
operations

One 97 Communications’ Paytm has resumed its lending
activities in collaboration with its existing non-bank lending
partners, SMFG India Credit and Shriram Finance, after a hiatus of
about two months. Paytm is exploring a potential partnership with
Muthoot Finance for personal and merchant loans. Despite operating
separately from Paytm Payments Bank Limited (“PPBL”),
approximately 10-15 percent (ten to fifteen percent) of Paytm
merchants had set up autopay mandates through their PPBL accounts.
Since the restrictions on PPBL, Paytm has been transferring its
settlement accounts to other banks, with over 85 percent
(eighty-five percent) of transfers reportedly completed. Business Today

2.3. RBI to expand UPI payment options and plans CBDC
distribution through non-bank operators

RBI has proposed to allow the utilisation of third-party Unified
Payments Interface (“UPI”) applications for conducting
UPI payments from Prepaid Payment Instruments (“PPI”)
wallets. This move aims to enhance customer convenience and
encourage the uptake of digital payments, particularly for small
transactions. Currently, UPI payments from PPIs are limited to the
issuer’s web or mobile app, but the inclusion of third-party
UPI apps will offer users greater flexibility and simplify the
payment process. This measure is expected to expedite the expansion
of digital payments within the economy. Additionally, the RBI
Governor revealed plans to distribute Central Bank Digital Currency
(“CBDC”) through non-bank payment system operators,
aiming to broaden access to CBDC-Retail among a wider range of
users. RBI

3. Sector Overview

3.1. UPI transactions increased increase by 11 percent
in March: NPCI

3.2. FinTech funding experiences a 66 percent
year-over-year decrease: Tracxn

4. Business Updates

4.1. PhonePe users can now make payments through UPI in
Singapore

After the United Arab Emirates (UAE), PhonePe users can now make
payments through UPI in Singapore. This advancement permits
customers to promptly conduct cross-border transactions between
India and Singapore using their current Indian bank accounts. The
development occurred as PhonePe entered into a two-year Memorandum
of Understanding (MoU) with the Singapore Tourism Board (STB). Inc 42

4.2. CoinSwitch founders launch stock investing platform
‘Lemonn’

PeepalCo, the parent company of CoinSwitch, has introduced
Lemonn, a new stock investment platform targeted at Indian users.
Lemonn makes stock investing easy for Indians by waiving brokerage
fees for the first three months and offering a selection of stocks
from various industries. While currently focused on stocks, Lemonn
plans to expand its offerings to include mutual funds, futures and
options, and initial public offering (IPO) investments in the
future. MoneyControl

4.3. NBFC Namdev Finvest bags USD 19 million to deepen
presence in rural India

NBFC Namdev Finvest (“Namdev”) has raised USD 20
million (United States Dollar Twenty Million only) in pre-series-C
funding, with an investment round led by Maj Invest Financial
Inclusion Fund III. Namdev provides financial solutions to
underserved populations in rural areas and operates in seven
northwestern Indian states and is planning to expand to Bihar,
Chhattisgarh, and Uttarakhand this year. BW Business

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