Cautious Approach to be taken by NBFCs while outsourcing activities ancillary to financial services

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By Mayank Agarwal & Anita Baid, ( finserv@vinodkothari.com)

The Reserve Bank of India (RBI), on the 9th of November, 2017 released a notification bringing out the Directions on Managing Risks and Code of Conduct in Outsourcing of Financial Services by Non-Banking Financial Companies (NBFCs).[1] (“Directions”) These Directions are a much awaited outcome of the draft guidelines[2] which had been issued long back, in the year 2015. The Directions come in the wake of ever-increasing need to outsource ancillary activities such as applications processing (loan origination, credit card), document processing, marketing and research, supervision of loans, data processing and back office related activities in order to provide the customers best possible services associated with the core business of the company. The Directions have been issued to ensure that there exists no possibility of discrepancy or fallibility that could affect the customer as well as the NBFC in an adverse manner.

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LEI becomes mandatory for Large Corporate Borrowers

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By Mayank Agarwal (finserv@vinodkothari.com)

Overview

The global financial crisis of 2007-08 underlined the importance of maintaining a common global database that facilitates identification of parties to a financial transaction. Ambiguity of the dealing parties and a shortage of information led to a breakdown in the financial ecospace, contributing to the downfall of established stalwarts such as Lehmann brothers as well. In light of such crisis, establishing a universal identity of all entites engaged in a financial transaction was seen as imperative. This led to the establishment of Global Legal Entity Identifier Foundation (GLEIF) in the year 2014, the Central Operating Unit for registration for a Legal Entity Identifier. Read more →

Mandatory linking of Aadhaar and PAN under PMLA

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By Anita Baid, (finserv@vinodkothari.com)

PML Second Amendment Rules

The Ministry of Finance on 1st June, 2017 vide notification No. G.S.R. 538(E) issued the [1]Prevention of Money-Laundering (Maintenance of Records) Second Amendment Rules, 2017 (hereinafter referred to as “Second Amendment Rules”) mandating all account holders of the reporting entities i.e., banks and financial institutions to link Aadhaar number issued by the Unique Identification Authority of India and Permanent Account Number (PAN) or Form No. 60 as defined in Income-tax Rules, 1962. The timelines for the same were as below- Read more →

Regulations on Prepaid Payment Instruments -Comparing the Master Circular and Master Directions

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By Anita Baid, (finserv@vinodkothari.com)

With an enlarged view of the Government to make India go cashless and straddle towards the concept of digitalisation, many companies, specifically NBFCs are seeking approval from the Reserve Bank of India (RBI) to set up business in Prepaid Payment Instruments (PPI). Before getting into the present regulatory framework of such PPIs, one needs to understand the concept of such instruments. PPIs are a form of digital electronic instruments. PPI issuers open an account for its account holders known as PPI holders and with the help of such account, withdrawal/ deposit is made for some pre-ascertained payments or receipt. A certain amount is deposited into such PPI Account from the holder’s Bank A/c and using the balance deposited in the PPI Account, payments are made and/or even cash is received. The introduction of such mechanism enables a person to go cashless. Such PPI instruments can be of three types: Read more →

RBI’s P2P Regulations: A step forward or backward?

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The Reserve Bank of India issued a Master Directions – Non Banking Financial Company – Peer to Peer Lending Platform (Reserve Bank) Directions, 2017 (hereinafter referred to as “Directions”) on 4th October, 2017[1], which is an extensive statement outlining in detail the various rules and regulations that all existing and prospective entities carrying on or intending to carry on the business of Peer-to-Peer (P2P) lending (hereby known as NBFC-P2P) will have to comply with. These Directions shall come in force with immediate effect and shall apply to all NBFC-P2Ps, i.e. with effect from the date of issuance of the Master Directions, mentioned above. Read more →

Bitcoins in trouble?

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Vallari Dubey

finserv@vinodkothari.com

 

Bitcoin as a virtual currency has seen its ups and downs, and quite recently, a surge in the graph of the currency, tells us an interesting story. Amidst the growth of crypto-currency market worldwide, much has been said about plenty of risk that bitcoin brings with itself. Read more →

APPLICATION UNDER SARFAESI- A Liberal Approach by the Supreme Court

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By Richa Saraf, (legal@vinodkothari.com) Read more →

P2P lending comes under the ambit of RBI

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By Mayank Agarwal & Anita Baid (finserv@vinodkothari.com)

 

Peer to Peer lending (P2P Lending) is a virtual marketplace which connects borrowers and lenders online by providing quick funds to borrowers and high returns to lenders. The borrower can raise fund by borrowing from a single lender or a group of lenders. The accelerated growth in P2P Lending platforms was recognized for the first time by the Reserve Bank of India (RBI) in its First Bi-monthly Monetary Policy Statement, 2016-17[1]. Read more →