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SEBI’s MUTUAL FUND EXPENSE RATIO CONSULTATION PAPER

BACKGROUND

On May 18, 2023, the Securities and Exchange Board of India [“SEBI”] had placed a consultation paper related to the total expense ratio charged by Asset Management Companies [“AMC”] to unitholders of mutual funds. June 8, 2023 was set as the deadline for submission of public comments. The due date, however, was extended to June 8, 2023.

The proposal is aimed at curbing distributor practices such as unnecessary switching of schemes and pushing new fund offerings for higher commissions. SEBI in its consultation paper proposed to introduce performance fees for funds. It proposed two approaches, but also suggested testing the models under the Regulatory Sandbox.Continue Reading FIG Paper (No. 21 – Series 1): SEBI’s Mutual Fund Expense Ratio Consultation Paper: Impact Analysis

FIG Paper

Background:

A Working Group on Digital Lending (“RBI WG”), constituted by the Reserve Bank of India (“RBI”), had published its Report in November 2021. It had made recommendations on (i) the legal and regulatory framework for digital lending; (ii) technology; and (iii) financial consumer protection, implementable over the near-term (up to one year) and medium-term (beyond one year).Continue Reading FIG Paper (No. 16 – Series 1) – Impact Analysis of RBI’s Recommendations of the Working Group on Digital Lending – Implementation

Payment System Operators New M&A Implications

Background:

On July 4, 2022, the Reserve Bank of India (“RBI”) clarified to all banks and non-bank payment system operators (“PSOs”) that its prior approval would be required for any (a) takeover/ acquisition of control, which may or may not result in change of management; and (b) sale/ transfer of payment activity to an entity not authorised for undertaking similar activity (“Circular”).Continue Reading FIG Paper (No. 15 – Series 1) – Payment System Operators (PSOs) – New M&A Implications

RBI guidance on loading of PPIs through credit lines

On June 20, 2022, the Reserve Bank of India (RBI) clarified to authorised non-bank prepaid payment instrument (PPI) issuers that PPIs may not be loaded from credit lines, and any such practice should be stopped immediately.Continue Reading FIG Paper (No. 13) – RBI guidance on loading of PPIs through credit lines

FIG Papers

The recent Master Directions issued by the Reserve Bank of India (RBI) on Credit cards and Debit cards – Issuance and Conduct Directions, 2022, dated April 21, 2022, is a consolidation of existing guidelines on the subject, except that it has brought about greater clarity by providing definitions on what is a credit card, credit limit and other related terminologies. In addition, it has spelt out more explicitly the scope of co-branding arrangements and the roles of card issuers and co-branding partners.Continue Reading FIG Papers (No. 12: Series-1) RBI Master Directions on Credit and Debit Cards

Role of IFSC in the Indian SPAC Dream

In part 2 of this series of blogs (Key Features IFSC Lisiting Regulations in Relation to Listing of SPACs), we touched upon the newly-introduced framework for the issuance and listing of special purpose acquisition companies (“SPACs”) at the International Financial Services Centres (“IFSC”) under the International Financial Services Centres Authority (Issuance and Listing of Securities) Regulations, 2021 (“IFSC Listing Regulations”). In this part of the blog we are going to look at the IFSC Listing Regulations with a critical eye to detect the gaps that continue to exist despite the framework being put in place and identify areas that can be improved upon to leverage the unique status of entities in IFSC.Continue Reading Role of IFSC in the Indian SPAC Dream: An Overview – Part 3

Metaverse

The metaverse and its use-cases

There are many ways to describe the ‘metaverse’: a post-reality universe that allows several users to participate in a shared virtual environment, an immersive 3-D extension of the internet itself, or even as the next frontier of the digital economy. In due course, the metaverse may align itself with its initial usage, as described in Neal Stephenson’s 1992 sci-fi novel Snow Crash, as a vast digital environment where users could interact with each other. While the Metaverse may escape the contours of a universally accepted definition (for some time at least), it will, by present trends, continue to capture popular culture, imagination and increasingly, various aspects of life. As early as 2005, the metaverse had begun to be considered as something more than simply being centered around MMORPGs (or massively multiplayer online role-playing games). Today, the Indian market already bears witness to the proliferation of augmented reality, virtual reality, and elements of the ‘metaverse’ across several B2B, B2C and C2C applications. Indian tech firms and start-ups have been quick to respond.Continue Reading FIG Papers (No. 11: Series-1) Into the Metaverse: Legal and regulatory considerations in India

Fintech Department

In recent years, in line with global trends, India’s growth has been fuelled by technology and platform economy, with physical moving towards digital and ‘phygital’.Continue Reading FIG Paper (No. 10: Series -1) RBI’s New FinTech Department: Industry Implications & Future

Fintech

The end of 2021 and the beginning of 2022 has come bearing gifts for the financial technology (“Fintech”) sector particularly for the lending space. The Reserve Bank of India (“RBI”) had amended the Credit Information Companies Regulations, 2006 (“Regulations”) on November 10, 2021 vide the Credit Information Companies (Amendment) Regulations, 2021  (“Amendment”)[1] – the first amendment since 2017 – expanding the scope of entities falling within the definition of ‘specified users’ under Regulation 3 to include “an entity engaged in the processing of information, for the support or benefit of credit institutions, and satisfying the criteria laid down by the Reserve Bank from time to time.”Continue Reading FIG Paper (No. 9) – RBI Press Release on ‘Specified Users’ – New Year Relief for Fintech Companies

IFSC Banking Units – offshore branches with onshore dispute resolution

The Gujarat International Financial Tec-City (“GIFT”) in Gandhinagar, Gujarat, is India’s first operational greenfield smart city, housing a domestic tariff zone and an International Financial Services Centre (“IFSC”) in a Multi-service Special Economic Zone (“SEZ”). As part of developing India’s very own and first IFSC, both Indian and foreign banks are permitted to establish and operate IFSC Banking Units (“IBU”) from GIFT IFSC, upon obtaining the requisite licenses and permissions. The IBUs have the advantage or the ability to transact in freely convertible foreign currencies in the offshore markets, while being situated within the territorial borders of India. From 2015 to early 2020, the Reserve bank of India issued notifications and regulations related to the IFSC framework. Thereafter, on April 27, 2020, the International Financial Services Centres Authority Act, 2020, was notified, pursuant to which the International Financial Services Centres Authority (“IFSCA”) was established on October 1, 2020, as the unified regulator with wide powers to develop and regulate financial products, financial services, and financial institutions in IFSCs, including IBUs.Continue Reading IFSC Banking Units – offshore branches with onshore dispute resolution?