BFSI and Capital Market
CA Rohit Patoria, CA Manoj Alimchandani,
CA Vijay Mullaji
1. Govt to hold meet to combat cyber frauds in financial sector
The government is taking steps to combat cyber fraud in the financial sector by blocking IMEI and imposing withdrawal limits on suspicious accounts. Representatives from RBI, TRAI, NPCI, and the Ministry of Information Technology discussed the need to address ‘inert’ and ‘mule’ bank accounts, which are often used in fraudulent activities.
This meeting assumes significance as it comes at a time when cybercrime, powered by Artificial Intelligence (AI), is taking root around the world with huge implications for the Indian financial sector.
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2. Small finance banks wants RBI to clear doubt about micro loan risk weightage
Microfinance loans constitute a majority share of SFBs’ loan portfolio, barring barring a few exceptions like AU and Equitas. The confusion arose because the regulator categorically exempted microfinance and self-help group loans from the requirement of higher capital allocation for non-banking finance companies (NBFCs) while it remained silent about the status of microfinance loan for banks including SFBs.
3. RBI’s new risk-weight rules likely to spur co-lending by banks, NBFCs
Co-lending deals between non-banking financial companies (NBFCs) and banks are likely to rise after the Reserve Bank of India’s (RBI’s) decision to increase the risk weight on consumer credit . Smaller NBFCs may increasingly opt for co-lending as capital markets could become costlier for them.
4. NFRA has retrospective jurisdiction, says National Company Law Appellate Tribunal
The National Company Law Appellate Tribunal (NCLAT) has ruled that the National that the National Financial Reporting Authority (NFRA) has superior authority over the Institute of Chartered Accountants of India (ICAI) on disciplinary matters. NFRA has retrospective jurisdiction and can initiate proceedings against errant chartered accountants prior to its formation.
The NCLAT held four auditors of DHFL guilty of multiple violations and barred them from practice for a year. The NCLAT also stated that NFRA has more powers and authority for professional misconduct compared to ICAI.
While rejecting an appeal by the auditors of scam-tainted DHFL, NCLAT also held that NFRA has “retrospective jurisdiction” in initiating proceedings against errant chartered accountants for a period prior to its formation.
5. SEBI plans to introduce same day trade settlement by March 2024
SEBI’s plans hinge on the success of the newly introduced Application supported by the locked amount (ASBA) for secondary market transactions. Earlier, concerns were raised by certain foreign portfolio investors on the shortening of the settlement cycles citing forex-related worries.
SEBI aims to introduce same-day settlement of trades on stock exchanges by March 2024 and eventually have real time settlement. Already, the watchdog reduced the settlement timelines to as short as one day.
6. BSE introduces new guidelines for SMEs seeking to move to main board
The Bombay Stock Exchange (BSE) has introduced new guidelines for small and medium enterprises (SMEs) seeking to move to the main board from the SMEs platform. As per the latest guidelines, an applicant firm will be required to have a net worth of at least ₹15 crore for the preceding two financial years to migrate to the main board. Besides, the guidelines stipulate that the applicant firm should have been listed on the SME platform for a minimum of three years. Also, they should have 250 public shareholders before shifting to the main board.
The other parameters for SMEs seeking to migrate to the main board under the new rules are--they should have a positive operating profit for at least any two out of three financial years and have a positive profit after tax (PAT) in the immediate financial year of making the migration application to the bourse.
7. RBI, Bank of England sign MoU on information exchange
The Reserve Bank of India (RBI) and Bank of England have signed a Memorandum of Understanding (MoU) on cooperation and exchange of information related to Clearing Corporation of India Ltd (CCIL).
The MoU establishes a framework for the BoE to place reliance on RBI’s regulatory and supervisory activities while safeguarding UK financial stability.
The MoU also demonstrates the importance of cross-border cooperation to facilitate international clearing activities and the BoE’s commitment to deference to other regulators’ regimes.
Further, this MoU confirms the interests of both the authorities in enhancing cooperation in line with their respective laws and regulations.
8. Centre bans e-commerce firms from using ‘dark patterns’ for sales
The government has banned the use of ‘dark patterns’ by e-commerce and online platforms. These deceptive practices manipulate customers into purchasing products they didn’t intend to or lure them into buying more expensive items. Offenders can face fines and penal action from the Central Consumer Protection Authority.
The authority has defined ‘dark patterns’ as deceptive design patterns that mislead or trick users. The guidelines apply to all platforms offering goods or services.
Under the Consumer Protection Act, offenders can face fines and penal action from the Central Consumer Protection Authority (CCPA) and can also be tried in the consumer commissions.
9. Sebi tweaks rules, asks AIFs to dematerialise units
AIFs may appoint a custodian who is an associate of manager or sponsor of the AIF, subject to conditions similar to those prescribed under Sebi (Mutual Funds) Regulations, 1996 for permitting related party of sponsor of a mutual fund to to act as its custodian.
10. Credit card spends surge on festival spending to record high of ₹1.8 lakh crore
After dipping slightly in September, Credit Card spending surged over 25 per cent in October on the back of festival season-led spending to a record high of ₹1.78 lakh crore, according to data by the Reserve Bank of India (RBI).
While the surge in credit card transactions in October was undoubtedly influenced by the onset of the festive season and heightened consumer activity, there are indications that the industry may experience a moderation in loan grow. This follows the Reserve Bank of India’s recent directive, urging commercial banks and non-banking financial companies to increase the risk weight for unsecured lending. This move aims to address concerns raised by regulators regarding certain segments of unsecured lending products.
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11. NPCI eyes high-value transactions on UPI through RuPay credit cards
The National Payments Corporation of India (NPCI) is set to broaden the scope of its Unified Payments Interface (UPI) by encouraging larger-ticket merchant payments through RuPay credit cards. Traditionally, UPI has been popular for everyday transactions such as splitting bills, local vendor payments, taxi rides, and retail purchases. However, high-value transactions like hotel bookings, airline tickets, and substantial e-commerce purchases have primarily been conducted using credit cards. With RuPay credit cards now integrated into UPI, NPCI is eyeing a share of these transactions.
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12. CFO shortage looms as demand soars amid IPO revival
The shortage of CFO talent comes in the wake of a dearth of accountants across the globe including the Indian economy.
There is a scarcity of Chief Finance Officers with demand for finance leaders skyrocketing, said executive recruitment firms and industry experts.
Demand for CFOs has soared as firms increasingly scout for strategic finance leaders with expectations that they will navigate businesses amid high demands of growth, uncertain macro environment, and tighter regulatory framework.
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