The Reserve Bank of India and the Ministry of Electronics and Information Technology recently established a new regulatory framework for setting limits on and payments of merchant discount rates and encouraging digital payments. Rates will now be determined based not only on the basis of transaction value, but also on turnover. However, in its effort to curb transaction costs for merchants, the government risks imposing significant charges on other system participants.
The Reserve Bank of India (RBI) recently issued a press release stating that given the rapid changes to the payments solutions space, it was in the process of reviewing the regulatory framework governing pre-paid payment instruments. The RBI also stated that it will grant no new licences for the issue of pre-paid payment instruments until the end of February 2017. This temporary suspension will not apply to applications made by new small finance banks and payment banks.
The Reserve Bank of India recently issued guidelines for the at-will licensing of universal banks in the private sector which, for the first time, will allow applicants to apply for a banking licence at will. The at-will regime will lead to increased transparency, better innovation and more realistic valuations, and is a significant step towards a healthier licensing regime for new private banks.
The Supreme Court recently clarified that all bank employees (including those employed by private sector banks) will be treated as public servants for the purposes of anti-corruption law. This ruling has significant implications, as all employees, officers and key managerial personnel of banking companies (ie, private and public sector banks and branches of foreign banks) will now come under the purview of the Prevention of Corruption Act.
The Reserve Bank of India recently directed several banks to start insolvency resolution proceedings against a list of identified companies, including Jaypee Infratech Limited, a leading real estate development company. The case has highlighted the need for the Insolvency and Bankruptcy Code 2016 to recognise a wider class of creditors that can initiate an insolvency proceeding and participate meaningfully in such process. It has also emphasised the important role that financial creditors play.