BFSI - NewNerve

Decoding the RBI Circular: Opens Doors for SFBs to Become Universal Banks

29Apr

By Ankit1 Comment

Banking, BFSI, Finance, Goverment Notice/Circulars

Decoding the RBI Circular: Opens Doors for SFBs to Become Universal Banks

In a recent circular issued by the Reserve Bank of India (RBI), significant changes have been introduced that pave the way for Small Finance Banks (SFBs) to apply for Universal Bank status. This move aims to enhance financial inclusion and broaden the banking landscape in India. The circular outlines the eligibility criteria and requirements for SFBs aspiring to become Universal Banks. This article provides a summary of the circular and its key provisions. Eligibility Criteria: To be eligible for consideration, SFBs must meet the following requirements: Operational Experience: The SFB should have successfully operated for at least five years, demonstrating their ability to function effectively in the banking sector. Listing on Stock Exchange: The SFB must be listed ...

SFBs and the Road to Universal banking: Challenges, Considerations, and Future Outlook

29Apr

By AnkitNo Comments

BFSI, Banking, Goverment Notice/Circulars

SFBs and the Road to Universal banking: Challenges, Considerations, and Future Outlook

The Reserve Bank of India's (RBI) recent guidelines for small finance banks (SFBs) to convert into universal banks have brought clarity to the process, but the path to universal banking remains challenging for these institutions. While the new rules offer a roadmap, it is unlikely that any SFB will apply for a license in the immediate future. Current Scenario: Eligibility: Only AU Small Finance Bank currently meets all the criteria for conversion. However, its ongoing merger with Fincare SFB will take 9-12 months to complete. Other SFBs: The remaining SFBs face hurdles in meeting the RBI's asset-quality criteria and will need at least a year or two to qualify. Diversification: Diversifying loan portfolios remains a major challenge, particularly for SFBs with high exposure to mi...

AU Small Finance Bank for Universal Bank License? : RBI Circular Sparks Discussions

28Apr

By Ankit2 Comments

Banking, BFSI, Goverment Notice/Circulars, NBFC, Payments

AU Small Finance Bank for Universal Bank License? : RBI Circular Sparks Discussions

In a recent development, the Reserve Bank of India (RBI) issued a circular that has set the stage for AU Small Finance Bank (AU SFB) to deliberate on its potential eligibility and feasibility for a universal bank license. This move has generated significant interest and speculation within the banking industry. The circular has caught the attention of stakeholders, investors, and market participants, as it holds the potential to reshape the landscape of banking in India. In this article, we will explore the implications of the RBI circular and its potential impact on AU SFB. Let’s understand AU Small Finance Bank AU Small Finance Bank, a Jaipur-based financial institution, began operations as an NBFC-MFI (Non-Banking Financial Company - Microfinance Institution) in 1996. Over ...

Talkcharge Ordered to Cease PPI Operations and Refund Balances: RBI’s Strict Directive

28Apr

By Ankit1 Comment

BFSI, Cyber Crime, Fintech, Goverment Notice/Circulars, Payments, Startups

Talkcharge Ordered to Cease PPI Operations and Refund Balances: RBI’s Strict Directive

The Reserve Bank of India (RBI) has recently taken decisive action against fintech firm Talkcharge Technologies. In an order dated April 2, 2024, the central bank directed Talkcharge to halt the issuance and operation of its Prepaid Payment Instruments (PPIs), commonly known as wallets. The reason behind this stern directive? Talkcharge was found to be issuing wallets without proper authorization. Regulatory Intervention The RBI’s move came after it observed that Talkcharg was flouting regulatory guidelines by offering wallets to customers without obtaining the necessary permissions. As a result, the central bank has instructed the Gurugram-based firm to refund the balances held in these wallets to customers by May 17, 2024. This deadline serves as a clear mandate for Talkcha...

27Apr

By AnkitNo Comments

BFSI, Banking, Blog, Digital Lending, Lending

How BNPL Companies make Money?

BNPL companies (Buy Now Pay Later) employ various strategies to generate revenue. Let’s explore how BNPL Companies make money: Merchant Fees: BNPL providers charge e-commerce platforms and retailers a fee for integrating their BNPL services. This fee ensures that the BNPL option is available during checkout on these platforms. Interest and Fees on Late Payments: If consumers fail to repay within the stipulated period, BNPL companies charge interest or late fees. These penalties contribute to their revenue. Credit Risk Management: BNPL firms assess credit risk and set credit limits for users. They earn by managing this risk effectively and ensuring timely repayments. Partnerships with Financial Institutions: Some BNPL providers collaborate with banks or financial institution...

Buy Now Pay Later (BNPL) in India: A Growing Trend, 2024

27Apr

By AnkitNo Comments

Lending, BFSI, Blog, Digital Lending

Buy Now Pay Later (BNPL) in India: A Growing Trend, 2024

The pandemic has accelerated the adoption of digital payments in India. Online payment transactions more than doubled in 2021 compared to 2020, crossing a billion in number. Buy Now Pay later (BNPL), which allows consumers to purchase items upfront and pay for them later within a stipulated period, has become increasingly popular. Let’s delve into the details: What is BNPL (Buy Now Pay later)? BNPLs (Buy now Pay Later) are small-ticket loans that empower consumers to buy products online and offline without immediate payment. They can either pay in a lump sum or opt for the no-cost EMI route. The underlying principle is to enhance consumer spending power through readily available credit. How Does BNPL Work? Purchase and Selection: After making a purchase, customers choose BNPL as th...

Buy Now Pay Later (BNPL): A Historical Perspective

27Apr

By Ankit2 Comments

BFSI, Digital Lending, Goverment Notice/Circulars, Lending

Buy Now Pay Later (BNPL): A Historical Perspective

The concept of BNPL, which we commonly associate with modern financial arrangements, has surprisingly deep historical roots. Dr. Sathyan David, former Chief General Manager of the Reserve Bank of India (RBI), drew parallels between ancient lending practices and today’s BNPL arrangements during the ETBFSI NBFC Connect’24 Summit in Chennai. Let’s explore this intriguing connection. Ancient Lending Practices Guptas and Mauryas: Dr. David highlighted that BNPL-type practices have existed since the period of the Guptas and Mauryas. During those ancient times, lending to small borrowers at high interest rates was already a common practice. The Guptas and Mauryas engaged in such lending activities, demonstrating that financial transactions involving deferred payments were not new...

Transparency in Digital Lending: RBI’s New Draft Guidelines for Loan Aggregators

27Apr

By Ankit1 Comment

BFSI, Digital Lending, Goverment Notice/Circulars, Lending, Regtech

Transparency in Digital Lending: RBI’s New Draft Guidelines for Loan Aggregators

The Reserve Bank of India (RBI) has recently unveiled a draft circular that outlines a framework for loan product aggregation by lending service providers (LSPs). The primary objective of this initiative is to enhance transparency for borrowers in the credit intermediation process. Let’s delve into the details of this significant development. Background and Challenges In the digital lending space, LSPs play a crucial role by offering aggregation services for loan products. These LSPs, or even regulated entities (REs) acting as LSPs, establish outsourcing arrangements with multiple lenders. Their digital lending apps/platforms (DLAs) match borrowers to suitable lenders. However, a critical challenge arises: borrowers often lack upfront information about the potential lender. I...

Decoding RBI’s Draft Guidelines on Digital Lending- 26th April 2024

26Apr

By AnkitNo Comments

BFSI, Blog, Digital Lending, Goverment Notice/Circulars, Lending, Review

Decoding RBI’s Draft Guidelines on Digital Lending- 26th April 2024

The Reserve Bank of India (RBI) has issued draft guidelines to ensure transparency in the aggregation of loan products from multiple lenders. This move is aimed at enhancing customer centricity and ensuring complete transparency for borrowers in the credit intermediation process. Key Highlights of the Draft Guidelines: Aggregation Services: Many Lending Service Providers (LSPs) offer aggregation services for loan products. An LSP or a Regulated Entity (RE) acting as an LSP may have outsourcing arrangements with several lenders. The Digital Lending App/Platform (DLA) of the LSP/RE matches the borrower to one of the lenders. In cases where an LSP has arrangements with multiple lenders, the identity of the potential lender may not be known upfront to the borrower. Prior Information t...

India’s Journey from Crisis to Confidence: Decoding the Shaktikanta Das’s Vision

26Apr

By Ankit1 Comment

BFSI, Banking, Blog, Digital Lending, Finance, Fintech, Goverment Notice/Circulars, NBFC, Payments, Review, Technology

India’s Journey from Crisis to Confidence: Decoding the Shaktikanta Das’s Vision

In a recent speech, Reserve Bank of India Governor Shaktikanta Das outlined India's remarkable journey from crisis to confidence. Drawing on historical events and economic data, Das paints a picture of a nation that has overcome numerous challenges to emerge as a global economic powerhouse. Overcoming the 1991 Crisis Das begins by acknowledging the various crises India has faced in recent decades, including the 1991 balance of payments crisis, the 2008 global financial crisis, and the ongoing COVID-19 pandemic. He emphasizes the crucial role played by the RBI in steering the economy through these turbulent times. The 1991 balance of payments crisis was a defining moment for India. With dwindling foreign exchange reserves and a ballooning fiscal deficit, the country faced the threa...