SoftBank exits Paytm at a loss of $150 million

Japan's Softbank Vision Fund sold its stake in fintech giant Paytm during the June quarter, incurring a loss of approximately $150 million, according to PTI. Softbank had invested about $1.5 billion in One 97 Communications, Paytm's parent company, through multiple tranches in 2017.

The Japanese investor exited Paytm with a 10-12% loss in the first quarter of fiscal year 2024-25 (FY25).

 

Prior to Paytm's IPO in 2021, Softbank held an 18.5% stake in the Vijay Shekhar Sharma-led company via SVF Holdings (Cayman) Ltd and SVF Panther (Cayman) Ltd – both of which held 17.3% and 1.2% stake respectively. 

The investment firm was continuously bringing down its stake in the Noida-based payments major. From 12.88% in March 2023, SoftBank’s stake came down to 1.4% in March 2024. 

Softbank, which bought Paytm shares at an average price of approximately Rs 800 each, had earlier disclosed its plan to exit Paytm in about two years after the IPO. 

In addition, Warren Buffet's Berkshire Hathaway Inc also sold its Paytm shares at a loss. Berkshire had bought a 2.6% stake in Paytm for about Rs 2,179 crore. The shares were later sold at Rs 1,370.63 crore.

Shares of Paytm are under stress since RBI announced ban on Paytm Payments Bank operations.

Kreditbee in talks to raise a pre-IPO round

Premji Invest-backed fintech Kreditbee is reportedly in talks with a private credit fund to raise funds in order to raise its valuation before its Initial Public Offering (IPO).

In March, the company raised above $200 million from its existing investors, including Advent International, Mitsubishi UFJ Financial Group (MUFG) Bank, Premji Invest, Motilal Oswal Alternates, NewQuest Capital Partners, and Mirae Asset Ventures. 

The fintech NBFC – which has raised $400 million till date – is valued at over $700 million. 

“The company aims at only one private round before the IPO and would look out for correct market conditions before going public within one and half years from now,” said Madhusudan Ekambaram, co-founder and CEO, Kreditbee told ETBFSI.

Peak XV leads Series B round in Singapore-based fintech

Singapore-based fintech Partior has raised $60 million in a Series B round led by Peak XV Partners (formerly Sequoia Capital India). 

Jump Trading and Valar Capital also joined the round. 

Backed by the likes of JP Morgan, DBS, Temasek and Standard Chartered, Partior aims at establishing unified interbank payment systems for immediate clearing and settlement using its blockchain network which can interoperate with real time local currency payment and RTGS systems globally, facilitating direct and indirect settlement.

The Blockchain-based clearing and settlement network – which currently is operational with USD, Singapore dollar, and Euro – aims to utilize the funding to expand its international network and integrate more currencies. 

The company also plans to develop new facilities such as intraday FX swaps, cross-currency repos and programmable enterprise liquidity management. 

The fintech claims that its network is used by leading banks in financial markets across cities such as London, New York, Singapore, Frankfurt, and Hong Kong.

Invesco marks down valuation of Pine Labs

US-based investor Invesco, in its latest shareholder report filed with US Securities and Exchange Commission (SEC), revealed that it has reduced the fair value of Pine Labs to $3.5 billion. 

As of April 30, Invesco valued Pine Labs at $3.5 billion. This is a decrease from its valuation of $3.8 billion on January 31, and $4.8 billion on December 31, 2023.

The Noida-based payments firm last raised about $150 million from Alpha Wave in 2022 at $5 billion valuation. Invesco owns 2.8% in Pine Labs. Whereas, Baron Funds owns 1.3% and Peak XV Partners remains largest stakeholder in the company with 20.6% stake, according toTracxn.

Pine Labs – which is in the process of moving its domicile to India from Singapore – even planned an Initial Public Offering (IPO) overseas last year. However, it postponed its IPO plans due to volatile market conditions. 

Invesco has also marginally reduced its fair valuation for Swiggy as of April 30, compared to a quarter ago. As of January 31, the investor valued the food delivery app at $12.7 billion, which was 18% higher than its 2022 valuation. 

Indians can now make UPI payments in Qatar

NPCI International Payments Ltd has partnered with QNB, a Qatar-based financial institution, to launch QR code-based Unified Payments Interface (UPI) payments across the country. 

This will benefit Indian travelers visiting and transiting through the country as they will be able to make UPI payments through QNB merchant network. 

“Indian visitors can now make UPI payments across retail stores, tourist attractions, leisure sites, duty free shops and hotels,” the company said in its statement.. 

“Enabling UPI acceptance in Qatar will benefit Indian tourists by simplifying transactions and merchants in Qatar will gain access to a large customer base,” said Anubhav Sharma, deputy chief - partnerships and business development, NPCI International. 

Earlier this month NPCI also partnered with Dubai-based Network International to enable acceptance of QR code based UPI payments for its merchants in the UAE.

Paytm agrees to waive joining bonus recovery after Labour Ministry intervention

On Wednesday, the Ministry of Labour and Employment announced that its regional office had addressed the complaint regarding the reported layoffs at Paytm.

The management representative of Paytm attended a meeting with the regional labour commissioner and consented to waive the recovery of the joining bonus and to provide the notice period payment to the affected employee, several media reports quoted the company saying.

The employee accepted the exit offer made by Paytm in the presence of the regional labour commissioner (central), Bengaluru,” Paytm said.

The regional labour commissioner of Bengaluru issued a notice to Paytm’s parent entity One97 Communication after some employees filed a complaint accusing the company of violating labour laws and forcing terminations without pay.

The company's management was asked to present their case with all the documents associated with it.

RBI allows Indian residents to open foreign currency accounts in Gift City

The Reserve Bank of India (RBI) has made it easier for Indian residents to send money abroad through International Financial Services Centres (IFSCs) under the Liberalised Remittance Scheme (LRS). Now, residents can open foreign currency accounts in Gujarat International Finance Tec-City (GIFT City).

RBI has allowed authorized persons to help with remittances for accessing financial services or products within IFSCs under the International Financial Services Centres Authority Act, 2019.

Additionally, the central bank has permitted all current or capital account transactions in foreign jurisdictions (excluding IFSCs) through Foreign Currency Accounts (FCAs) held in IFSCs.

For these purposes, Indian residents can open FCAs in IFSCs, according to RBI.

Currently, LRS remittances to IFSCs are only allowed for investing in securities in IFSCs (excluding those issued by Indian entities outside IFSCs) and paying fees to foreign universities or institutions in IFSCs for specific courses.

This step by RBI enables Indian residents to open fixed deposits in foreign currencies such as dollars in bank accounts in GIFT City. It aims to give residents more flexibility in managing foreign exchange transactions and making remittances easier.

Tapan Ray, MD and Group CEO of GIFT City, commented that this decision aligns GIFT IFSC with global financial centers, making it easier for Indian investors to use the platform for a wider range of overseas investments and expenses.

No new data breach, Angel One clarifies

A data breach has compromised the personal information of approximately 7.9 million customers of Mumbai-based stock broking firm. 

The exposed data includes names, addresses, contact numbers, and bank account details, which were posted on a website by the hacker, an ET report said.

The hacker also claimed to have access to customers' stock holdings and their profit and loss statements, suggesting that only a portion of the data has been released so far, the report added.

ET quoted an Angel One spokesperson saying, “We want to confirm that Angel One's customer data is secure, and there has been no new data leak incident. The current issue pertains to an incident that occurred in April 2023, which was promptly reported to the relevant authorities. We assure you that this incident has no impact on client securities, funds, or credentials, and all client accounts remain secure.”

Last year in April, Angel One in a stock exchange filing stated that the company had suffered a data breach. “We are in the process of verifying the veracity of such claims, which suggest that certain client profile data (like name, email, mobile number); and client holding data may have been accessed in an unauthorised manner,” the firm had said in a BSE filing then.

Angel One, which has about 6.5 million active traders on its platform, posted a total operational revenue of Rs 1,357 crore and a net profit of Rs 339 crore during FY24.

OfBusiness’ FY24 revenue jumps 26% to Rs 19,296 crore

B2B marketplace and fintech firm OfBusiness has reported a 25.8% increase in revenue for the fiscal year ending March 2024. The company's profit soared by 30%, surpassing the Rs 600 crore mark.

The company's revenue rose to Rs 19,296 crore in FY24, up from Rs 15,343 crore in FY23, Entrackr reported.

The purchase of industrial goods and raw materials, like construction materials, chemicals, and produce, was the biggest expense for OfBusiness, making up 88.5% of their total costs in FY24. These expenses rose by 21% to Rs 16,543 crore in FY24.

OfBusiness has raised around $650 million, including a $325 million Series G round in December 2021, which valued the company at $5 billion. According to TheKredible, Alpha Wave is the largest external stakeholder with 19.16%, followed by Creation Investment and Matrix Partners.

OfBusiness competes with Zetwerk, Infra.market, and Moglix. 

CASHe enters insurance broking segment with Cencart acquisition

Aeries Financial Technologies, parent entity of fintech lending app CASHe, has acquired Hyderabad-based Centcart Insurance Broking Services Pvt Ltd.

The acquisition enables CASHe to sell insurance plans across life and general insurance categories (such as health and vehicle insurance) from all insurance companies in India, the company said in its statement. Centcart Broking Insurance has an IRDAI approved insurance broking license.

CASHe will provide services like policy recommendations, claims assistance, and customized risk management solutions. It will also offer instant quotes and online purchasing, enhancing personalized customer experiences.

"This acquisition expands CASHe's presence in lending, wealth management, and insurance, reinforcing its commitment to comprehensive financial services and strengthening its market position in India's evolving Fintech landscape," the company said.

Additionally, it aims to provide personalized insurance recommendations to its users on the CASHe and Sqrrl platforms.

The company said it will train its team to effectively promote and sell insurance policies.

CASHe founder chairman V. Raman Kumar said, "The new broking license also enables CASHe to provide personalized product recommendations to its over 50 million users on its platform and offers a diverse portfolio of insurance products to users across India."

In 2024, India's insurance broking industry is projected to grow robustly, with a CAGR of around 25%, driven by increased insurance penetration and rising demand in one of the world's fastest-growing economies.

Paytm gets govt panel approval to infuse $6 million in payment aggregator arm

Paytm has received an approval from a government panel to infuse $6 million (Rs 50 crore) in one of its key subsidiaries.

If a Reuters report is to be believed then the panel overseeing investments linked to China has cleared the investment by Paytm in its payments arm, Paytm Payments Services.

While the approval is yet to be vetted by finance minister Nirmala Sitharaman, once that happens the company will be able to seek a payment aggregator licence from the Reserve Bank of India.

It has been more than a year now, Paytm’s payments aggregator business – which accounted for a quarter of the company’s consolidated revenue in the financial year ended March 2023 – has been barred from onboarding new merchants.

The government panel had previously withheld approval because of worries about Chinese ecommerce and fintech giant Ant Group’s 9.88% stake in Paytm.

About 50% urban Indians prefer digital payments for offline purchases, Amazon report

About 90% consumers in urban India prefer digital payments for online purchases. Even for the offline purchases 50% favour cashless payments, according to the recent report on ‘How Urban India Pays’ by Amazon and Kearney.

The study, which surveyed over 6,000 consumers and 1,000 merchants across 120 cities, highlights that for online purchases, Unified Payments Interface (UPI) is leading digital payment growth, with 53% of consumers preferring it. 

This is followed by digital wallets and cards (credit, debit, and prepaid), which are favored by 30% of consumers.

The report shows that affluent consumers (earning over Rs 20 lakh annually) lead with the highest digital payment usage, making about 80% of their transactions digitally. Meanwhile, the aspiring segment (earning less than Rs 500,000 annually) uses digital payments for 67% of their transactions.

Millennials (aged 25–43) and Gen X (aged 44–59) are at the forefront of adopting various digital payment methods. Boomers (aged 60 and above) rely more on cards and digital wallets compared to younger age groups.

The Reserve Bank of India (RBI) data indicates that the value of digital transactions in India grew at a rapid 49% CAGR between FY19 and FY24. Over the past five years, the value of retail digital payments has surged dramatically, rising from Rs 41.5 trillion in FY19 to Rs 298.8 trillion in FY24.

Paytm management summoned by Labour commissioner over layoffs

The Regional Labour Commissioner in Bengaluru has issued notice to One97 Communication, the parent company of Paytm, regarding allegations of forced employee terminations.

This action follows numerous complaints filed by employees with the Ministry of Labour and Employment, accusing the company of legal violations and terminating employees without compensation, Moneycontrol reported.

Representatives from the Paytm management and complainants have been requested to appear at the department’s office along with all relevant records, according to the report.

The affected employees, who were compelled to "voluntarily resign" without prior notice or any severance package, submitted their complaints through the ministry's Samadhan portal and other public grievance channels, providing relevant emails and documents to request the reinstatement of their positions.

Ever since the RBI put a ban on Paytm Payments Bank, the Vijay Shekhar Sharma-led firm has been under massive restructuring.

Wealth-tech platform Dezerv raises $32 million in Series B led by Premji Invest

Wealth-tech startup Dezerv has raised $32 million (Rs 265 crore) in a Series B round led by Premji Invest.

Dezerv's board has approved a special resolution to issue 41,761 Series B CCPS at a price of Rs 63,455 each, aiming to raise Rs 265 crore or $32 million, Entrackr reported citing regulatory filings.

Other than Premji Invest putting in Rs 169 crore, the existing shareholders including Elevation Capital and Matrix Partners also invested Rs 35 crore each; whereas Accel India has invested Rs 26 crore in the funding round.

The company is expected to use these funds to support growth and strengthen its financial position.

After the Series B round, Premji Invest holds 9.84% in Dezerv, while Elevation Capital, Matrix, and Accel possess 15.28%, 15.28%, and 11.46% of the company, respectively.

To date, Dezerv has raised approximately $60 million, which includes a $7 million seed round co-led by Elevation and Matrix in September 2021.

Flipkart partners with BillDesk to expand bill payment offerings

Flipkart has announced the addition of five new recharge and bill payment categories to its app, including Fastag, DTH recharges, landline, broadband, and mobile postpaid bill payments. 

The e-commerce major has partnered with India's top payments aggregator firm BillDesk to facilitate the integration of these new services with Bharat Bill Payments System (BBPS). 

"As digital payments continue to rise, customers are increasingly opting for electronic bill payments. This move establishes Flipkart as a one-stop destination for customers' shopping and digital payment needs, offering a secure and seamless experience," said Gaurav Arora, vice president, payments and SuperCoins, Flipkart.

BillDesk co-founder Ajay Kaushal added, "This strategic expansion provides Flipkart customers with seamless bill payments, timely notifications, and the ability to check amounts due across their preferred billers, leveraging BBPS capabilities."

In the fiscal year 2024, BBPS processed around 1.3 billion transactions across India, with projections estimating this number to exceed 3 billion by 2026. With more than 20 bill categories and over 21,000 active billers in the BBPS ecosystem, electronic bill payments now account for over 70% of the total transactions. 

RBI revokes NBFC licence of Star Finserv, Polytex India

The Reserve Bank of India has cancelled the certificate of registration (CoR) of two non-banking financial services companies due to irregular lending practices. 

The central bank has revoked the licence of Progcap-linked NBFC Star Finserv India Ltd and Polytex India Ltd.

According to the RBI notification, Star Fiserv violated the RBI guidelines on code of conduct in outsourcing of financial services in its digital lending operations by outsourcing its core decision-making functions such as credit appraisal, loan sanctioning as well as KYC verification process to the service provider.

“The company has violated RBI guidelines on data confidentiality and security of customer information by providing complete access to customer data to the service provider.”

In addition, the regulator also highlighted that Star Fiserv did not follow RBI guidelines on Fair Practices Code by not providing the copy of loan agreement and sanction letter in vernacular language to its customers.

Hyderabad-based Star Finserv India’s loan service provider was 'Progcap' (owned and operated by Desiderata Impact Ventures Pvt Ltd). According to Tracxn, the SME lending company Progcap – which also has its own NBFC – has raised $111 million in total funding. 

On the other hand, Polytex, according to the RBI, has violated code of conduct guidelines in outsourcing of financial services by outsourcing its core decision-making functions related to client sourcing, Know Your Customer (KYC) verification, credit appraisal, loan disbursal, loan recovery, follow up with borrowers and attending and resolving complaints from borrowers.

“While outsourcing the activities related to lending, Polytex earned a fixed fee from its service provider, whereas the service provider earned the interest charged on the borrower on these loans and in some cases at exorbitant rates in violation of Fair Practice Code (FPC) Guidelines issued by RBI,” the notification added.

Polytex’s service provider was ‘Z2P’ (owned and operated by Zaitech Technologies Pvt Ltd). Z2P, a micro-lending startup, was acquired by Paymate in 2018.

"The entity Zaitech Technologies Pvt Ltd (which owned Z2P) ceased to exist after the merger with Paymate. And, Zaitech ceased its activities before the merger as  per the terms of merger, which was completed in July 2020, since PayMate acquired the company purely for its technology stack. Until then, the company operated independently," a Paymate executive told The Head and Tale.

Delhi HC Orders Meta, WhatsApp, NPCI, to block accounts misusing Razorpay's identity

The Delhi High Court has instructed social media platforms such as Meta (Facebook), Telegram, and WhatsApp to remove accounts that are misusing the digital payments platform Razorpay’s trademark to engage in fraudulent activities.

The Court has also ordered the National Payments Corporation of India (NPCI) to disable UPI IDs involved in such activities. 

Banks have also been asked to freeze the operations of the bank accounts used by fraudsters. 

The Bengaluru-based payments company secured a John Doe order from the Delhi High Court to prohibit the unauthorized usage of its trademark. 

A John Doe order is a type of pre-infringement injunction designed to protect an entity’s intellectual property rights. It allows the rights holder to take legal action against an unidentified infringer, whose identity is not known at the time the suit is filed.

The company moved to court filing a lawsuit against unknown individuals mentioning that several unknown people are using its name and trademark to indulge in fraudulent schemes, including scams. The lawsuit claimed that these people have been involved in mis-representing themselves as recruiters from the company, offering part time jobs against money deposits and false promises. 

RING appoints Kiran Singh as its chief compliance officer

Fintech lending app RING (formerly known as Kissht) has appointed Kiran Singh as its new chief compliance officer. 

The company aims to strengthen its commitment to regulatory excellence and governance as it continues to expand and innovate in the fintech space.

Singh will be taking charge of building the company’s compliance culture. “She will play a major role in making sure that RING adheres to the highest regulatory standards and statutory compliance,” RING said in its statement.

Kiran Singh, a certified risk and compliance professional (IARCP-USA), comes with over two decades of  experience in compliance and governance in the financial sector. She has earlier worked with companies such as, ICICI, Vodafone, HSBC, Reliance, Aditya Birla Capital, Kotak Mahindra Bank, and Lendingkart. 

“Kiran's appointment at RING comes at a critical growth phase, when it’s penetrating deeper into the country,” RING founder Krishnan Vishwanathan said.

Healthcare fintech Care.fi raises $2.6 million in debt funding

Healthcare-focused fintech startup Care.fi has raised $2 million in debt capital from Trifecta Capital and an additional $0.6 million from UC Inclusive Credit.

The funds will be used towards scaling its loan book size, expansion, business improvement, and bolstering the team, the company said.

Founded in 2021 by Sidak Singh and Vikrant Agarwal, Care.fi offers financing solutions to hospitals, doctors, and allied suppliers. 

The company – which also owns an NBFC licence – claims that it works with more than 50  hospitals and assisted over 2,000 patients with their claims. With its disbursals growing by 4x in the last financial year, Care.fi claims $48 million in total cumulative disbursals.

“From our market insights and understanding of patient pain points, we've found that streamlining operations, particularly insurance processing when patients are keen to complete payments and leave, is crucial,” Singh said. 

Care.fi competes with the the likes of CarePay, SaveIn among others.

India's fintech funding declines 60% between Jan-June this year

India's fintech sector received a total funding of $795 million, a decline of 11% and 59% compared to $896.7 million raised in H2, 2023 and $1.93 billion in H1, 2023 respectively. 

This decline reflects global trends influenced by the ongoing funding winter and geopolitical uncertainties, according to a Tracxn report.

Despite experiencing a substantial downturn in 2024, India ranked third globally in terms of fintech investments, after the US and UK.

The report, titled 'Geo Annual India FinTech Report H1 2024', late-stage funding in the first six months of the year 2024 stood at $551 million -- a 26% increase from $436 million in H2, 2023. However, the funding saw a 63% dip compared to $1.5 billion in H1, 2023. 

Early-stage rounds recorded $179 million, which is 55% and 50% decline from $401 million in H2, 2023 and $361 million in H1 2023 respectively. Whereas, close to $65 million was invested in seed-stage funding rounds -- a 7.4% rise from $60.5 million in H2 2023 but a 43% dip from $114 million in H1 2023.

Some top performing fintech segments that secured maximum funding include, alternative lending ($646 million), regtech ($118 million), and banking-tech ($115 million). 

Peak XV Partners, Y Combinator, and LetsVenture were the all-time top investors in the space, according to the Tracxn report.

In this, Venture Catalysts, Y Combinator, and BeeNext emerged as top seed stage investors; Peak XV Partners, Sorin, and Quona were prominent investors in early-stage investments; and Epiq Capital Advisors, UC-RNT Fund, and Amara Partners led late-stage investors in 2024.

In H1, Perfios emerged as the only unicorn. In terms of mergers and acquisitions, this space saw only six acquisitions, a 66% decline compared to 18 in H1 2023. Some of the major M&A deals were PureSoftware being acquired by Happiest Minds for $94.5 million; and 360 One acquiring ET Money for $44 million.

Two funding rounds of over $100 million were recorded in H1 2024, compared to just one in H2 2023 -- one was Avanse’s $120 million Series C and Credit Saison’s $144 million Series D round.

Additionally, five companies went public in the first half of 2024.

Bengaluru emerged as the leader in total fintech funding raised in 2024, followed by Mumbai and Pune.

CoinDCX buys UAE-based crypto platform BitOasis

Ten months after picking a stake in BitOasis, Indian cryptocurrency platform CoinDCX has acquired the UAE-based cryptocurrency trading platform.

The deal value is not disclosed.

BitOasis, which was set up in 2016 by Ola Doudin, has raised over $40 million in total funding from investors such as CoinDCX, Wamda Capital, Jump Capital, Pantera Capital, and Global Founders Capital till date.

The acquisition is expected to strengthen CoinDCX’s presence across the Middle East and North Africa (MENA) region.

The BitOasis platform, available in 15 countries across the region, has processed over $6 billion in trading volume till date.

“Our expansion strategy begins with the MENA region, capitalizing on its mature market and the population’s keen interest in crypto investment,” CoinDCX co-founder Sumit Gupta said in a statement.

“BitOasis was the first platform to register with the UAE Financial Intelligence Unit in 2021. Its licenses in Bahrain and the UAE reflect its commitment to operating within established regulatory frameworks,” he added.

Founded in 2018, CoinDCX claims a base of 15 million users. The company, which is backed by the likes of Coinbase Ventures, Polychain Capital, Bain Capital among others, says it facilitates quarterly trading volumes exceeding $840 million in a spot in 2024.

CoinDCX also plans to look at other regions with growing crypto activity.

NPCI partners Network International to enable UPI payments in UAE

NPCI International Payments Ltd has partnered with UAE-headquartered digital payments company Network International to enable the acceptance of QR code-based Unified payments Interface (UPI) payments for its merchants in UAE.

Now, non-resident Indians (NRIs) and Indian tourists can make UPI transactions via Network International's PoS (point-of-sale) terminals across UAE.

According to the company, Network International – which offers digital payments in the Middle East and Africa – will allow Indian tourists and NRIs with Indian bank accounts to use UPI for transactions across Network’s PoS terminals in the UAE.

Currently, Network has more than 200,000 PoS terminals across 60,000 merchants in hospitality, retail, transport and supermarket segments.

NPCI, in its statement, said UPI acceptance will be “rolled out progressively, covering a wide range of establishments from retail stores and dining outlets, as well as tourist and leisure attractions including Dubai Mall and Mall of the Emirates.”

NPCI International CEO Ritesh Shukla expects this partnership deepening UPI’s presence in the UAE. “By growing UPI payment acceptance across merchants in the UAE, we are not only providing Indian travelers with a seamless and familiar payment experience, but also promoting the use of innovative digital payment solutions internationally.”

“We are delighted to partner with NPCI International Payments Limited to strengthen the payments ecosystem for Indians visiting or working in the UAE. We are confident that this partnership will drive a robust digital payments ecosystem in the country that will increase cashless transactions,” added Nandan Mer, group CEO, Network International.

Earlier in March, India’s largest UPI payments app PhonePe said its users traveling to UAE can make UPI payments at Mashreq's NEOPAY terminals. The collaboration was facilitated through Mashreq's partnership with NIPL.

The number of Indian tourists visiting the Gulf Cooperation Council (GCC) countries is expected to rise to 9.8 million in 2024, with the UAE anticipating 5.29 million arrivals from India. This growth is fueled by both business and leisure travel.

RBI asks banks to intensify efforts against mule accounts

Reserve Bank of India (RBI) governor Shaktikanta Das urged the banks to increase their efforts against mule accounts.

While addressing a meeting with heads of public and private sector banks, Das also asked the banks to intensify its measures for customer awareness and educational initiatives, in order to curb digital frauds.

Mule accounts are bank accounts used by offenders, often through unwitting individuals (money mules), to transfer illicit funds and obscure their origins. These accounts facilitate money laundering, fraud, and other financial crimes.

The governor also emphasized on the need for the banks to ensure cybersecurity controls and effective management of third-party risks.

During the meeting, Das noted the consistent improvements in banks asset quality, loan provisioning, capital adequacy, and profitability.

Additional topics of discussion included the ongoing disparity between credit and deposit growth, trends in unsecured retail lending, and liquidity risk management.

The bankers also talked about the use of the rupee for cross-border transactions and credit flows to small businesses.

In its previous meeting with banks in February this year, the RBI urged them to remain vigilant about potential risk build-ups. The central bank also emphasized concerns regarding business model viability, significant growth in personal loans, compliance with co-lending guidelines, and bank exposure to the NBFC sector, among other issues.

Paytm Payments Bank, auditor clash over viability

Paytm Payments Bank is reportedly in a dispute with its auditor JC Bhalla & Co over certification of its accounts for the financial year 2024. According to the Economic Times report, the auditor has raised concerns about the bank's viability due to the Reserve Bank of India’s restrictions, which have almost halted its operations.

These concerns are about whether the company can continue operating.

The Vijay Shekhar Sharma-owned payments bank has “strongly” objected to the auditor's suggested qualifications. If the ET report is to be believed then the company’s argument is that the strength of the Paytm brand will support a recovery plan and that new capital will be invested to aid this.

Paytm is worried that these qualifications might slow down its efforts to obtain a payment aggregator license for Paytm Payments Services Ltd.

“In order to get the auditors to approve the financial statements, the company is trying to persuade them to accept a statement from management saying the business will be profitable in the future or could also bring in legal opinion to that effect,” the report added.

Paytm parent company One97 Communications’ senior management is also seeking the RBI’s intervention; however, the central bank is unlikely to intervene, the report said.

In January this year, Paytm Payments Bank was barred by the RBI from taking new deposits starting March 15 due to not following know-your-customer (KYC) rules. The payments bank has been almost non-functional since then.

US-based firms pick PB Fintech stakes from early investors 

Global investment manager Capital Group, asset management companies T Rowe Price, Fidelity and Vanguard have bought shares in PB Fintech, a parent company of insurance marketplace Policybazaar and loan marketplace Paisabazaar. 

“Capital Group via its various investment vehicles now owns a 10% stake in Gurugram-based fintech firm,” the Economic Times report said. The recent exchange of shares has happened via multiple bulk deals. 

Apart from global investors, domestic institutional players and insurance companies have also increased their stake in PB Fintech. According to the report, life insurance firms like SBI Life, Max Life Insurance and Bajaj Life have cumulatively invested Rs 2,900 crore in PB Fintech. 

Ever since it went public in 2021, PB Fintech saw its several early stage investors exit the firm either fully or partly. 

Earlier this year, Softbank, one of the largest investors in Policybazaar, also exited the firm completely. The Japanese investor – which had invested around $200 million in the company – earned approximately $650 million in returns. 

In addition, PB Fintech founders Yashish Dahiya and Alok Bansal also offloaded some shares earlier this year. According to the ET report, in May, Dahiya sold 10.8 million shares worth Rs 1,298 crore, while Bansal sold 5.8 million shares worth Rs 768 crore. 

PB Fintech, which also owns an account aggregator licence and has also applied for a payment aggregator licence, reported an operating revenue of Rs 3437 crore during the financial year ending March 31, 2024. In FY24, the company posted a net profit of Rs 64 crore as compared to a loss of Rs 488 crore reported in FY23.

Zerodha may end zero brokerage due to Sebi circular, says Nithin Kamath

Discount broking firm Zerodha may start charging a brokerage fee for equity deliveries, which is currently free, and also increase brokerage for F&O (futures and options) trades. This comes after Sebi mandating uniform charges by market infrastructure institutions like stock exchange.

On July 1, the capital markets regulator, in its circular, said that charges levied by market infrastructure institutions such as stock exchanges, clearing corporations and depositories should be uniform and not based on volumes.

Zerodha founder Nithin Kamath, on the micro-blogging platform X, wrote, “SEBI issued a new circular mandating all market infrastructure institutions, like stock exchanges, to be "true to the label" in how they levy charges." 

"This circular has a significant impact on brokers, traders, and investors. Stock exchanges charge transaction fees based on the overall turnover contributed by brokers. The difference between what the brokers charge the customer and what the exchange charges the broker at the end of the month is a rebate, which goes to brokers. Such rebates are common across the major markets in the world.”

He further continued that these rebates account for about 10% of Zerodha’s revenues and anywhere between 10-50% of other brokers across the industry. “With the new circular, this revenue stream goes away.”

Kamath said that the company is still trying to ascertain the “second-order effects of the circular.”

“With the new circular, we will, in all likelihood, have to let go of the zero brokerage structure and/or increase brokerage for F&O trades. Brokers across the industry will also have to tweak their pricing,” Kamath said, while adding that Zerodha was one of the “last remaining brokers that offered free equity delivery trades.”

There have been strong market reactions post SEBI circular. Share prices of the brokerage stocks like Angel One were down by 10%, and those of 5Paisa Capital, SMC Global Securities and Motilal Oswal plunged 2-5% on July 2.Centre planning new accounting standards for banking, insurance sectors

The ministry of corporate affairs (MCA) is in the process of developing  new accounting standards for the insurance and banking sectors, several media reports said.

“We will bring the new accounting standards for the insurance sector shortly. For the banking sector, the ministry is in discussions with the Reserve Bank of India,” MCA secretary Manoj Govil said, while speaking at an ICAI (The Institute of Chartered Accountants of India) event. 

The new standards modeled on IFRS 17 will replace Ind AS 104 currently in usage, which would align Indian norms with international practices. This would provide clearer understanding of risk exposure to global investors and additionally attract foreign direct investments, Economic Times reported. 

In addition to this, the ministry said it is also getting recommendations from NFRA (National Financial Reporting Authority) and ICAI to draft new accounting standards for Limited Liability Partnerships (LLPs). 

The MCA is closely working with ICAI on creating large domestic CA firms out of India, Financial Express quoted Govil as saying. “We are working together to bring in an environment where "Indian accounting and auditing firms emerge as global leaders."