CURRENT AFFAIRS: BANKING & FINANCE
Cashfree Payments Pilots Cross Border Payments
- Months after receiving the Payment Aggregator Cross Border (PA-CB) licence, Cashfree Payments has launched a pilot program enabling overseas customers to transact with key Indian merchants using UPI and RuPay options, typically restricted to domestic use.
Key Partnerships with Major Indian Brands
Cashfree has partnered with several well-known Indian brands, including:
- Swiggy (foodtech)
- Zepto (quick commerce)
- Nature’s Basket (premium grocery)
- Nykaa (beauty and fashion)
- Bookmyshow (online ticketing)
- Redbus (travel reservations)
- Vedantu (edtech)
These partnerships aim to expand the availability of cross-border payments for UPI and RuPay users.
CEO’s Perspective on Cross-Border Transactions
- Akash Sinha, CEO of Cashfree, highlighted the convenience offered to SaaS customers handling payments of $10,000–$20,000 and above, where credit card fees may not be cost-effective.
- With Cashfree’s solution, merchants receive an account that simplifies the process, allowing money to be seamlessly collected from overseas customers.
Company Background and Recent Achievements
- Founded in 2015 by Akash Sinha and Reeju Datta, Cashfree Payments provides a full-stack digital payments solution and recently received the Prepaid Payment Instrument (PPI) licence from the Reserve Bank of India (RBI).
- This license supports purchases and fund transfers with a preloaded value.
Financial Overview (FY24)
In the financial year 2023-24 (FY24):
- Net Loss: Increased by 2.17% to INR 136 Cr from INR 133.1 Cr in FY23.
- Operating Revenue: Grew by 4.19% to INR 639.3 Cr from INR 613.6 Cr in FY23.
IRDAI Chairman Calls For 100% FDI In Insurance
- Debasish Panda, Chairman of the Insurance Regulatory and Development Authority of India (IRDAI), recently proposed allowing 100% foreign direct investment (FDI) in the insurance sector to accelerate the goal of achieving ‘insurance for all’ by 2027.
Key Highlights from Panda’s Address
- Need for Capital:
- Panda emphasized that insurance is a capital-intensive industry, which requires substantial financial input to grow.
- Achieving broader insurance penetration will necessitate more players and significant capital influx.
- Current FDI Cap:
- Presently, the FDI limit stands at 74% for general, life, and health insurance sectors.
- Panda highlighted that opening up 100% FDI would allow foreign companies to invest directly without requiring an Indian partner, which could boost competition and innovation.
- Potential Benefits of Full FDI:
- Opening up to 100% FDI could increase the number of market players, drive competition, and ultimately enhance insurance accessibility across the country.
- This move could also supplement domestic investments, preventing the crowding out of local capital.
Supporting India’s Long-term Vision
- Panda linked the expansion of the insurance sector to India’s larger vision of a ‘Viksit Bharat’ by 2047 (a fully developed India), indicating that universal insurance will play a pivotal role in social and economic growth.
Role of Bima Sugam Digital Platform
- The Bima Sugam digital platform, an initiative by IRDAI, aims to be a comprehensive public infrastructure to simplify policy access and management for policyholders.
- Panda noted that Bima Sugam would be instrumental in transforming the insurance sector, making policies more accessible, user-friendly, and transparent for all citizens.
RBI imposes penalty on South Indian Bank
- The Reserve Bank of India (RBI) has imposed a penalty of Rs 59.20 lakh on South Indian Bank due to non-compliance with directives on interest rate on deposits and customer service standards.
Reasons for the Penalty
- Non-Compliance in Customer Notification:
- South Indian Bank failed to notify certain customers via SMS, e-mail, or letter regarding penal charges levied for non-maintenance of minimum/average minimum balance.
- Improper Lien Marking:
- The bank placed liens against specific Non-Resident External (NRE) savings accounts, which was found to be against RBI’s regulatory norms.
Supervisory Inspection and Findings
- A statutory inspection was conducted by the RBI, based on the bank’s financial status as of March 31, 2023.
- Following the inspection, RBI issued a notice based on supervisory findings indicating non-compliance.
- After considering South Indian Bank’s responses and oral submissions, the RBI concluded that the bank had indeed violated regulatory directives, justifying the monetary penalty.
