Happy Monday, everyone!
MTLegal Team is bringing you a weekly update on everything that happened in the fintech space over the past week.
Our goal with these updates is to inform you about any new developments, trends, regulations, or notable events in the fintech sector.
This will help fintech companies plan, protect, and preserve their businesses based on market changes and regulatory updates.
Here’s last week’s update:
A) Fintech Developments and Innovations
1) FTX Secures Court Approval to Begin Repaying Billions to Customers
Bankruptcy Wind-Down Plan: FTX has received approval from the U.S. Bankruptcy Court to initiate the repayment of up to $16.5 billion in assets recovered from its collapse, marking a significant step toward compensating its customers. The bankruptcy plan, described as a model case for Chapter 11 proceedings, was approved after several settlements were reached with creditors, customers, U.S. government agencies, and international liquidators.
Customer Repayment Priority: Under the plan, FTX will prioritize repaying 98% of its customers, particularly those holding $50,000 or less, within 60 days after the plan’s effective date. Shareholders may also see up to $230 million from funds seized during the legal proceedings, a rare outcome for bankruptcy cases.
Asset Recovery: FTX’s recovery efforts, which included selling investments in tech companies like the AI startup Anthropic, have played a crucial role in securing funds. CEO John Ray praised the team’s relentless efforts in rebuilding FTX’s financial records to recover billions globally, enabling the company to repay customers ahead of regulatory claims.
2) The Lasting Impact of Ratan Tata on India’s Startup Ecosystem
Visionary Investments: Ratan Tata’s contribution to India’s startup landscape remains unparalleled. Over the past decade, he has invested in over 40 startups, including notable names like Ola, Lenskart, and Paytm. His strategic foresight and guidance helped these companies scale from startups into market leaders.
Mentorship and Legacy: Beyond financial investments, Tata played a crucial mentorship role, offering invaluable insights to founders. His involvement was often seen as a stamp of credibility, driving both the growth of individual ventures and shaping India’s overall startup ecosystem. Tata’s passing at the age of 86 leaves a significant void in the Indian business world, but his influence continues to resonate through the thriving startup ecosystem he helped foster.
3) ZenStatement Secures $1.6 Million in Seed Funding for Finance Automation
Funding for Growth: Finance automation startup ZenStatement raised $1.62 million in seed funding, led by 3One4 Capital and Boldcap VC. The funds will be used to expand product offerings and strengthen sales and marketing efforts in India and internationally.
AI-Powered Solutions: Founded in 2023, ZenStatement offers an AI-driven platform that helps businesses manage cash flows, automate financial processes, and gain actionable insights through natural language queries. The platform already handles around 10 million transactions per month for top-tier clients, including unicorns and leading companies in the fintech and e-commerce sectors.
B) Economic Highlights (India)
1) RuPay Card Launches in Maldives to Enhance Financial Cooperation
Strengthening Digital Ties: India has launched its RuPay card in the Maldives, aiming to boost financial cooperation between the two nations. This initiative is part of a broader push to facilitate easier payments for Indian tourists and Maldivians traveling to India.
Bilateral Cooperation: In addition to financial collaboration, both countries announced plans to enhance digital public infrastructure, including sharing expertise in digital governance and financial services. The nations also agreed to improve air and maritime connectivity, signaling stronger economic and tourism ties.
2) Appreciate Pioneers Mutual Fund Investments on ONDC Network
ONDC Network Expansion: Appreciate, a SEBI-registered fintech, became the first company to facilitate mutual fund transactions on the Open Network for Digital Commerce (ONDC). The platform allowed for a low-ticket mutual fund investment of just ₹100, aiming to democratize investment access across India.
Financial Inclusion: By integrating mutual funds into its platform, Appreciate aligns with ONDC’s mission of financial inclusion, making wealth creation accessible to underserved regions. ONDC’s portfolio expansion into financial products follows the success of its digital lending services, with plans for insurance offerings in the near future.
3) India Pledges Increased Fintech Support to Bhutan
Strengthening Fintech Connectivity: During bilateral talks, Indian Finance Minister Nirmala Sitharaman reaffirmed India’s commitment to enhancing fintech connectivity with Bhutan, particularly through the adoption of UPI and RuPay cards. Bhutan has seen a growing acceptance of these Indian fintech solutions, and India aims to deepen its financial cooperation with the neighboring nation.
Bhutanese Collaboration: India’s fintech assistance to Bhutan reflects the strong economic ties between the two countries. This support is expected to bolster Bhutan’s digital payment ecosystem, further facilitating economic growth and development in the region.
C) Noteworthy Developments in Business
1) MENA Fintech Association Partners with MENA Fintech Festival for Strategic Collaboration
Partnership for Growth: The MENA Fintech Association (MFTA), a leading non-profit dedicated to driving fintech innovation across the Middle East and North Africa, has announced a key strategic partnership with the MENA Fintech Festival (MFTF). This collaboration aims to shape the future of financial services across the region.
Industry Influence: Set to be the Strategic Industry Partner for the festival, which will take place from December 3-5, 2024, in Qatar, MFTA will use its vast network and expertise to curate high-impact discussions with industry leaders, regulators, and fintech innovators.
Platform for Innovation: The partnership will also create opportunities for fintech startups and SMEs to present groundbreaking ideas, products, and solutions, ultimately driving further fintech growth and collaboration across the MENA region.
D) Regulatory News (RBI)
1) RBI Open to Revisiting Microfinance Guidelines Based on Industry Feedback
Reevaluating Guidelines: Reserve Bank of India (RBI) Deputy Governor M. Rajeshwar Rao announced that the central bank is considering feedback on its microfinance institution (MFI) guidelines. Adjustments may be made to ensure that microlending policies are practical and balanced.
Risk Pricing Emphasis: Rao stressed that lenders must properly assess price risk and improve underwriting standards. The RBI is open to revisiting these guidelines based on input from various financial entities, including those seeking to raise income thresholds for microloans from ₹3 lakh to ₹5 lakh, given the growing needs of borrowers.
2) RBI Pushes for Digital Payment Accessibility for Persons with Disabilities
Inclusive Payment Systems: In a move toward greater inclusivity, the RBI has directed banks and payment service providers (PSPs) to enhance the accessibility of digital payment systems for Persons with Disabilities (PwDs). The directive aligns with the Ministry of Finance’s accessibility standards for banking.
Action Plan Required: PSPs are required to submit a detailed plan within a month, outlining modifications needed to make systems like POS machines more accessible, while ensuring security remains uncompromised. A designated Nodal Officer will be appointed for further queries.
3) RBI Imposes Fine on Mansing Co-operative Bank for Regulatory Lapses
Monetary Penalty for Non-Compliance: The RBI has imposed a ₹1 lakh penalty on Mansing Co-operative Bank, Maharashtra, for failing to classify certain loan accounts as non-performing assets (NPAs) in line with regulatory norms. The penalty is part of the RBI’s efforts to enforce stricter compliance within the cooperative banking sector.
Compliance Issues: The bank’s failure to follow income recognition and asset classification standards triggered the penalty. However, the RBI emphasized that the action is based solely on regulatory deficiencies and does not affect customer transactions.
4) Sonbhadra Nagar Sahkari Bank Penalized for Regulatory Violations
Penalty for Failure to Transfer Unclaimed Deposits: Sonbhadra Nagar Sahkari Bank in Uttar Pradesh has been fined ₹2.50 lakh by the RBI for failing to transfer unclaimed deposits to the Depositor Education and Awareness Fund within the stipulated timeframe.
RBI’s Continued Oversight: This action is part of the central bank’s ongoing efforts to ensure banks adhere to regulations concerning deposit management and reporting. The penalty highlights the importance of regulatory compliance within cooperative banking institutions.
5) RBI Governor Das Issues Strong Warning to NBFCs on Compliance
Call for a “Compliance First” Culture: RBI Governor Shaktikanta Das sent a clear message to non-banking financial companies (NBFCs), emphasizing the need for a compliance-driven culture over aggressive growth strategies. Das cautioned that prioritizing business targets over prudent risk management could lead to financial instability.
Growth Risks: He warned that some NBFCs are chasing high returns at the expense of sound risk management, particularly in unsecured loan segments like microfinance and consumption loans. Das underscored the need for these entities to reassess their growth strategies to ensure long-term sustainability and financial stability.
We hope you found this update insightful.
MTLegal Team is here to support everyone in the fintech sector—whether it’s for licensing, registration, or contractual needs.
We’ve got your back.
Contact us today, and let’s protect the business you’re building!
