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FIG Paper (No. 33 – Series 2): Compulsory Registration of Off-shore Virtual Digital Asset Service Providers with FIU-IND?

Recently, the Financial Intelligence Unit – India (“FIU-Ind”) has issued show-cause notices to several offshore Virtual Digital Asset Service Providers (“VDASP”) for non-compliance with  provisions of the Prevention of Money Laundering Act, 2002 (“PMLA”) and for non-registration with the FIU-Ind, post amendment to PMLA on march 07, 2023, while catering to the Indian customers and operating in the Indian market.Continue Reading FIG Paper (No. 33 – Series 2): Compulsory Registration of Off-shore Virtual Digital Asset Service Providers with FIU-IND?

FIG Paper (No. 32) - Outsourcing of Financial Services: Harmonising the Law and Looking Ahead

Background

The Reserve Bank of India (“RBI”) issued the draft Master Direction – Reserve Bank of India (Managing Risks and Code of Conduct in Outsourcing of Financial Services) Directions, 2023 (“Draft MD”), on October 26, 2023. With the COVID-19 pandemic and the digitisation of financial services globally, financial institutions started becoming increasingly dependent on their service partners and agents to reduce costs and avail expertise not available internally.Continue Reading FIG Paper (No. 32 – Series 1): Outsourcing of Financial Services: Harmonising the Law and Looking Ahead

Stock Broker is a Financial Service Provider – The NCLAT ruling may offer respite

While the Insolvency and Bankruptcy Code, 2016 (“IBC”) provides for insolvency resolution and liquidation of ‘corporate persons’, it excludes ‘financial service provider’ (“FSP(s)”) from the said provision. The Central Government, pursuant to its powers under Section 227 of IBC, had notified Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 (“FSP Rules”) for resolving specified non-banking financial companies (“Specified NBFCs”) registered with the Reserve Bank of India.[1]Continue Reading Stock Broker is a Financial Service Provider – The NCLAT ruling may offer respite

FIG Paper (No. 24 – Series 1): New Data Law – Financial Services Implications

(Indian) Digital Personal Data Protection Act, 2023 (“DPDP Act”) received Presidential assent on August 11, 2023, and is awaiting notification by the Indian Government, which is expected soon. This FIG Paper examines: (i) the existing data protection/ privacy framework for the Indian financial services space; (ii) overlays DPDP Act considerations; and (iii) preferred approach to “gap” analysis, basis global learnings.Continue Reading FIG Paper (No. 24 – Series 1): New Data Law – Financial Services Implications

Financial institutions have invested heavily into artificial intelligence (“AI”) and machine learning (“ML”) techniques globally, and in India, over the past decade. There are estimates that AI technologies could potentially contribute towards US$ 1 trillion in additional value for the global banking sector, and a World Economic Forum survey indicated that seventy seven per cent of all respondents (151 fintechs and financial institutions from thirty three countries) anticipated AI to possess a high or a very high overall importance in their businesses in the near future. Tangible use-cases in the financial sector have resultantly sprung, benefitting both customers and investors through robo advisors, portfolio optimisation, and algorithmic trading bots. Financial institutions on their part have benefitted greatly through chat bots handling consumer interactions and grievances, identity verification (including video KYC), predictive analytics to mitigate and minimise frauds, etc.Continue Reading FIG Paper (No. 19 – Series 1)- AI/ ML, ChatGPT: Legal and regulatory considerations for financial service use-cases

The last few years have seen an unprecedented rise in digital payment transactions via Payment Aggregators (“PA”), Payment Gateways (“PG”), and Unified Payments Interface (“UPI”), via third-party application providers (TPAPs), with PAs undergoing licensing by the Reserve Bank of India (“RBI”), under the March 17, 2020, RBI PA/PG Guidelines. Retail payments historically would flow via NEFT/ RTGS/ IMPS, etc. However, UPI has now become the preferred payment mode for online payments, constituting a significant volume of small ticket retail payments in India, which is mostly via PAs. The payment architecture, which was earlier ‘card network’ driven via entities licensed under the Payment and Settlement Systems Act, 2007 (as a ‘payment system operator’), is increasingly moving towards PA/PGs, including for digital asset exchanges, online shopping, check-out financing and digital lending (where significant changes have been implemented by the RBI recently, including via the September 2022 Digital Lending Guidelines).Continue Reading FIG Paper (No. 18 – Series 1)- Technology/ Financial Services – Recent Law Enforcement Trends

Insurance Laws

Introduction

The Government of India, through the Department of Financial Services (Ministry of Finance) (“DFS”), is proposing extensive amendments to the Insurance Act, 1938 (the “Act”), with a view to enhance insurance penetration, improve efficiency, and enable product innovation and diversification[1]. The DFS published an office memorandum dated November 29, 2022 (“DFS Memorandum”), setting out the proposed amendments to the Act and commencing a process of public consultation on the proposed amendments until December 15, 2022. The Insurance Laws (Amendment) Bill, 2022 (the “Amendment Bill”), is seen to be catering to the long-standing demands of the industry and seeks to improve some of the fundamental tenets of the Act.Continue Reading The Insurance Laws (Amendment) Bill, 2022 – Charting a new course

Ship Leasing in IFSC

India has a vast coastline and easy access to shipping routes, yet India contributes only 1% in global trade.[1] Many major shipowners and operators have chosen key international maritime centres such as Singapore, Hong Kong, and Dubai as their base for operations.

To create a stimulating ecosystem that can help Indian entities compete with global marine hubs by accelerating and boosting their presence internationally, IFSCA has constituted a Committee on Development of Avenues for Ship Acquisition, Financing and Leasing Activities (“SAFAL Committee”) to obtain a complete overview and assessment of the existing legal and regulatory regime in IFSC in India for ship acquisition, financing and leasing.Continue Reading Ship Leasing in IFSC – A New Regime

FIG Paper

Pursuant to the Report of the Reserve Bank of India (“RBI”) Working Group on Digital Lending, issued on November 18, 2021, and the RBI Press Release on ‘Recommendations of the Working Group on Digital Lending – Implementation’, dated August 10, 2022 (“August Press Release”), the RBI released the Guidelines on Digital Lending on September 2, 2022 (“Guidelines”). Our Alert examines the key changes introduced and industry implications.Continue Reading FIG Paper (No. 17 – Series 2) – New Digital Lending Guidelines – Industry Implications

Evolving Insurance Landscape in IFSC

The Gujarat International Financial Tec-City (“GIFT City”) 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 entities are permitted to establish and operate IFSC Insurance Offices (“IIO”) from GIFT City, upon obtaining the requisite approvals. The IIOs have the advantage or the ability to transact in freely convertible foreign currencies in offshore markets, while being situated within the territorial borders of India. From 2015 to early 2020, the Insurance Regulatory and Development Authority of India (“IRDAI”) issued guidelines for IIOs (“IRDAI IIO Guidelines”). Thereafter, pursuant to the International Financial Services Centres Authority Act, 2019, the International Financial Services Centres Authority (“IFSCA”) was empowered 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 IIOs.Continue Reading Evolving Insurance Landscape in IFSC