Tag: KYC

Bank of Maharashtra launches digital lending platform for home, car loans, BFSI News, ET BFSI

Banking & Finance

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State-owned Bank of Maharashtra on Friday said it has launched a digital lending platform for its home and car loan customers. The platform will enable prospective retail loan seekers to get loans digitally through a paperless process at the convenience of their place and time of choice, the bank said in a release.

The platform is capable of validating KYC, CIBIL and financials of the applicant and provide in-principle approval in hassle free manner, it said.

“The primary objective is to provide exceptional customer experience, and upscale lending through digitization,” Bank of Maharashtra Managing Director and CEO A S Rajeev said.

The bank has currently waived processing fee on housing and car loans for its customers to benefit them in the ongoing festive seasons.

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ETMONEY crosses MF sales of Rs 500cr in a month, BFSI News, ET BFSI

Personal Finance

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India’s fastest growing fintech and investments platform ETMONEY has crossed the milestone of Rs 500 crore of mutual fund sales in a month. The overall investments tracked and managed on the ETMONEY platform has grown to over Rs 20,000 crore with investors from over 1,400 cities across India.

ETMONEY has accomplished this growth on the back its customer-centric approach and multiple industry-first initiatives. ETMONEY was the first in the country to offer completely paperless video KYC for mutual fund investments and launched the country’s first Aadhaar-based SIP payment feature. The recent addition of a report card for every mutual fund scheme in India has been of immense help for investors.

On achieving this milestone, ETMONEY founder & CEO Mukesh Kalra said, “This is a major achievement for ETMONEY. Crossing the benchmark figure of Rs 500 crore of gross mutual fund sales in a month is a testament to ETMONEY’s commitment to simplifying personal finance for the masses. And with over 40% of our inflows coming via monthly SIPs and more investors joining the platform every month, we are well on track to cross Rs 10,000 crore of gross sales in FY22.”

“Along with that, we are also super excited about our new range of products and services lined up to solve the next set of challenges in the evolving fintech space” he added.

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No a/c freeze till Dec for want of KYC, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: The RBI on Monday reiterated that until December 2021, banks cannot freeze accounts if the customer has not done a periodic KYC (know your customer) update. The central bank said this while cautioning the public not to fall prey to fraudulent messages seeking bank details for KYC updation purposes.

The RBI said it has been receiving complaints/reports about customers falling prey to frauds being perpetrated in the name of KYC updation. The RBI asked the public not to share key information like account details or passwords with unidentified persons or agencies under threat of account freeze. Many customers have avoided visiting branches during the pandemic, which has provided fraudsters an opportunity to use KYC as a reason to engage with customers.“The usual modus operandi in such cases include receipt of unsolicited communication, such as, calls, SMSs, emails urging him/her to share certain personal details, account / login details/ card information, PIN, OTP, etc or install some unauthorised/ unverified application for KYC updation using a link provided in the communication,” it said.

The RBI also said that it has made the process of KYC updation much simpler. The directions on simplified process comes in the wake of banks asking customers to fill multiple sheets of all-in-one document merely to get a periodic proof of address and identity. The central bank on Monday said that NBFCs and payment system operators seeking to obtain Aadhaar e-KYC authentication licence can submit the application with the RBI.

In May 2019, the finance ministry had come out with a detailed procedure for processing of applications (under the PML Act) for use of Aadhaar authentication services by entities other than banking companies.

“Accordingly, non-banking finance companies (NBFCs), payment system providers and payment system participants desirous of obtaining Aadhaar Authentication license — KYC User Agency (KUA) ;icense or sub-KUA license (to perform authentication through a KUA), issued by the UIDAI, may submit their application to this department for onward submission to UIDAI,” the RBI said in a circular. The RBI has also provided the format of the application.



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RBI imposes ₹25 lakh penalty on Axis Bank

Banking & Finance

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The Reserve Bank of India on Wednesday imposed a monetary penalty of ₹25 lakh on private sector lender Axis Bank.

The penalty has been imposed for contravention of non-compliance with certain provisions of directions issued by RBI contained in the Reserve Bank of India – (Know Your Customer (KYC)) Direction, 2016, the RBI said.

RBI conducted scrutiny during February 2020 and March 2020 in a customer account maintained with Axis Bank. It was observed that the bank had failed to comply with the KYC directions and had failed to monitor/carry out on-going due diligence in the account to ensure that the transactions were consistent with its knowledge about the customer, customer’s business and risk profile.

“In furtherance to the same, a notice was issued to the bank advising it to show cause why penalty should not be imposed on it for contravention of the said directions,” the RBI said.

After considering Axis Bank’s reply to the notice and oral submissions made during the personal hearing, RBI concluded that the charge of contravention of / non-compliance with the directions were substantiated and warranted imposition of monetary penalty, it further said.

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HDFC Bank divests over 2 per cent stake in CDSL for Rs 223 crore, BFSI News, ET BFSI

Banking & Finance

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HDFC Bank has divested more than 2 per cent stake in Central Depository Services (India) Ltd (CDSL) in tranches during June-August this year, garnering nearly Rs 223 crore from the sale, according to a regulatory filing. HDFC Bank sold 23,11,000 equity shares of face value of Rs 10 each fully paid up held by the bank in CDSL through the secondary market route on the NSE, the private bank said in the regulatory filing.

The divestment of 2.21 per cent stake in Central Depository Services (India) Ltd took place over a period from June 22 to August 24, 2021.

The bank sold 20,36,000 shares (1.95 per cent) of CDSL at an average price of Rs 937.46 per piece on June 22. On August 23, it sold 2,13,481 shares at Rs 1,168.94 apiece and on August 24, it sold 61,519 shares for Rs 1,119.31 apiece.

The shares were sold for a cash consideration of Rs 222.71 crore, HDFC Bank said.

CDSL provides depository services to market participants. It has three operating services: depository, data entry and record keeping of KYC documents of capital market investors, and repository.

Repository provides policyholders and warehouse receipt holders the facility to keep insurance policies and warehouse receipts in electronic form, as well as to undertake changes, modifications and revisions in it.



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Sebi probed 94 new cases for flouting securities law in FY21, BFSI News, ET BFSI

Personal Finance

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New Delhi: As many as 94 fresh cases pertaining to flouting of securities norms were taken up for investigation by Sebi in 2020-21, marking a decline of 42 per cent from the preceding financial year, as per the regulator’s latest annual report. The cases were related to alleged violation of securities law including market manipulation and price rigging.

“During 2020-21, 94 new cases were taken up for investigation and 140 cases completed in comparison to 161 new cases taken up and 170 cases completed in 2019-20,” the report noted.

Sebi said 43.6 per cent of the total cases taken up for investigation during 2020-21 were related to market manipulation and price rigging.

Besides, insider trading and takeover violations accounted for 31 per cent and over 3 per cent of the total cases, respectively. Over 21 per cent were related to other violations of securities laws.

The Securities and Exchange Board of India (Sebi) initiates investigation based on reference received from sources such as its integrated surveillance department, other operational departments and external government agencies.

“The purpose of the investigation is to gather evidence and to identify persons/ entities behind irregularities and violations so that appropriate and suitable regulatory action can be taken, wherever required,” the regulator noted in its annual report for 2020-21.

The steps involved during investigation process include an analysis of market data like order and trade log, transaction statements and exchange report.

Among others, Sebi also analysed bank records like account statements and KYC details, information about a firm, call data records and information obtained from market intermediaries during the investigation process.

After completion of an investigation, the watchdog said, penal action was initiated wherever violations of securities laws and obligations relating to securities market were observed.

During 2020-21, the regulator initiated enforcement action in 225 cases, while it disposed of 125 cases. At the end of March 2021, 476 cases were pending for action.



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Bitcoin in bank account? How banks can partner crypto firms, BFSI News, ET BFSI

Personal Finance

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Can’t beat them, join them.

After stonewalling cryptocurrencies and firms, banks are now coming around to the cryptocurrencies.

Indian bankers, which are not ready to touch crypto even with a barge pole following the regulator’s reluctance over cryptos, can parse the American Bankers’ Association’s (ABA) report on how lenders can partner from the new-age currency.

The ABA report

The American Bankers’ Association (ABA) has issued a new report that suggests banks consider partnerships with crypto firms based on the increased profitability of the sector and client interest. The ABA further suggests crypto use cases for banks with revenue models and regulatory issues for each use case.

“Cryptocurrency markets are rapidly evolving, and there is currently a diverse and complex ecosystem of companies offering access to digital asset products. The digital and programmable nature of these products means they can be used to facilitate many kinds of financial activities that increasingly mirror the products and services offered by traditional financial institutions, ” it said.

The use case for banks

n payments the blockchain-powered payment networks have the potential to allow for faster and more efficient payments, especially in cross-border transactions.

In lending blockchain technology can allow for cheaper, more secure, and more efficient lending processes while in settlements, distributed ledgers can provide cheaper and faster transactions between financial institutions.

Custody/Wallets provides independent/secure storage for users to hold and invest in crypto assets, while KYC/AML helps banks track the flow of funds and identify the parties involved in digital asset transactions

Digital identity distributed ledgers can provide the necessary record of information needed for authentication and verification purposes while given the proposed reporting structure for crypto transactions, the distributed ledger transactions can be easily found and reported in an efficient and timely manner.

Banks can offer business banking services to crypto companies such as corporate accounts, USD/fiat custodial accounts.

The customer can lend his or her crypto for interest and a bank could earn a fee or percentage of the crypto earned.

Banks could also charge fees for these services similar to a debit or credit card transaction and can provide crypto lending to borrowers for a fee.

Banks can look into revenue models that include charging transaction fees, listing charges for adding crypto to a platform, and deposit fees.

They can look at revenue from collecting the spread on transactions for crypto assets that are classified as securities.

The asset management use case for banks would enable a fee for service on a crypto portfolio.

In India, this will need the regulatory haze to fade first.



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RBI tightens rules for payment companies outsourcing core activities, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank of India has formalised the framework for payment companies outsourcing payment and settlement related activities to third party operators. The central bank’s fresh guidelines come at a time when India’s tech ecosystem has seen several high-profile cyber attacks such as those at Juspay, Upstox and Mobikwik over last year targeting customers’ payments data.

As per the new rules, licensed non-bank Payment System Operators (PSOs), cannot outsource core management functions, including internal audits, and compliance with KYC norms to third-party service providers.

As defined by the central bank, core management functions include management of payment system operations such as netting and settlement, transaction management including reconciliation, reporting and item processing, managing customer data, risk management, information technology and information security management etc.

The central bank also added that the board of payment companies must “carefully evaluate” the need for outsourcing responsibilities.

“The PSO shall carefully evaluate the need for outsourcing its critical processes and activities, as well as selection of service provider(s) based on comprehensive risk assessment,” the central bank said. “The critical processes are those, which if disrupted, shall have the potential to significantly impact the business operations, reputation, profitability and / or customer service.”

The new rules also state that the liability of third-party losses would fall on the relevant board members and senior management of licensed payment operators. “Outsourcing of any activity by the PSO shall not reduce its obligations, and those of its board and senior management, who are ultimately responsible for the outsourced activity,” the central bank said.

The RBI had first announced the plan during the monetary policy announcement on 5 February 2021 with a view to enable effective management of attendant risks in outsourcing of payment and settlement activities.

“The resilience of the digital payment ecosystem to operational risks needs to be constantly upgraded,” RBI Governor Shaktikanta Das had said during his February MPC address.

“A potential area of operational risk is associated with outsourcing by payment system operators and participants of authorised payments systems,” he added. “To manage the attendant risks in outsourcing and ensure that code of conduct adhered to while outsourcing payment and settlement related service, RBI shall issue guidelines on outsourcing of such services by these entities,” RBI Governor has said.

In addition, the central bank has also asked non-bank PSOs to have clear contractual specifications on responsibilities being outsourced as well as conduct its own due diligence on technology and legal compliances when working with relevant third-party companies.



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India’s financial sector banks on IDRBT for security, BFSI News, ET BFSI

Banking & Finance

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With emerging technologies changing the way we bank, cyber security has emerged as a key area of concern. Prof D Janakiram, director of Hyderabad-based Institute for Development and Research in Banking Technology (IDRBT) this year, speaks to Swati Rathor about the threats facing our banking systems and the work IDRBT is doing to beef up their security.

How can banks strengthen security infrastructure?

Banks have to be ahead of the hacker so, we are trying to create a change in the mindset of people managing these entities. For instance, many banks are innovating on AI/ML products by getting data from social media, where it is easy to manipulate data that leads to models being fed with wrong data. Hence, the whole system can be compromised. So, data integrity as well as security becomes a very critical part of the AI/ML system and that is an active research we are pursuing. The second thing we are trying to look at is how to reduce the impact of cyberattacks. For instance, if the digital transactions are on mobile platforms, one can use geo-fencing to reduce the chances of such attacks. Apart from this, cyber drills that we conduct regularly help banks spot vulnerabilities in their systems. We also have a threat intelligence platform that gathers information across banks and multiple sources and shares it with banks.

Which technologies will impact the financial inclusion mandate in future?

Technologies like 5G are likely to provide many opportunities as they will boost the number of internet users. When you add somebody to the financial system, that person would expect more facilities such as access to credit. Now, if you want to make credit accessible, one of the key things is the profile of the person, which means we collect data. Here the usage of the AI/ML models to be able to provide both, risk models as well as prediction models, will become necessary.

What new research areas is IDRBT focusing on?

We are focusing on next-generation digital financial infrastructure. The pandemic has made it imperative that we should have a next-generation video KYC platform. Currently there are many pain points for customers as every bank and financial services entity is trying to do its own video KYC. So, we are looking at a new platform, where, if the customer does a video KYC once, it will be available for other entities to verify. We would like to make this platform a part of the India Stack so that there is a quality enhancement in terms of the digital identity platforms.

But what about new age skills in the banking sector?

IDRBT is focusing on creating a cyber security skilled workforce because it is an extremely critical need. Besides, in the financial sector, skills pertaining to AI/ML and Cloud are also very important and we are working on that along with skilling on the 5G front.



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