India’s Leading BFSI and FinTech Companies 2022

15 Key Trends • Shift towards digital payments: The Indian banking sector witnessed a sea of changes in the past two years, from traditional banking methods to digital payment modes, a step towards transforming India into a digitally empowered country. India’s digital payment system recorded healthy expansion in 2021-22. This can be gauged from almost 40% y-o-y rise in the RBI’s Digital Payment Index to 304.06 during September 2021. • Radical shift towards digital transformation: The COVID-19 pandemic accelerated the digital transformation of Indian banking sector. Indian Banks have revisited their digital transformation strategy to enhance use of digital technologies like cloud, robotics process automation, blockchain and data analytics to attract customers, empower employees and optimize operations. In this regard, Open Credit Enablement Network, which provides a new credit model and protocol infrastructure will integrate the relationship between lenders and marketplaces by allowing lenders to provide financial assistance on real-time basis. • Spread of contact-less banking even in Tier 2 & Tier 3 cities: The pandemic and the required social distancing norms have given rise to contact-less banking and transactions. Apart from eliminating the need for physical bank visits, the digital-only-banks have offered cost-effective management, cross-border remittances and quick bill payments. Recognizing this emerging trend, the Union Budget for 2022-23 proposed to set up 75 Digital Banks in 75 districts. This initiative is expected to provide significant boost to the banking services at various locations. Key Policy Measures Policy Measures Implications Formation of National Asset Reconstruction Company Ltd (NARCL) and India Debt Resolution Company Ltd (IDRCL) While NARCL will acquire and aggregate the bad loan accounts from SCBs, IDRCL will handle the resolution process under an exclusive arrangement. This is expected to quicken bad loan resolution and also help better value realization. It will also help free up banks’ resources for more important core operations like credit. Targeted Long-Term Repo Operations This provided immediate liquidity to alleviate sector-specific stress Deferment of the implementation of the last tranche of capital conservation buffer and net stable funding ratio. Considering the potential stress due to the pandemic, it ensures that the bank maintains a stable funding profile. Restrictions on dividend payout by SCBs This was aimed to conserve the capital adequacy in the view of ongoing pandemic situation Consolidation of Public Sector Banks and revision in the Prompt Corrective Action (PCA) Framework This allowed for optimum utilization of capital, large-size lending and risk-taking. The new framework will reduce exposure of banks under PCA framework as it restricts such banks from credit expansion to borrowers below certain rating grades. The Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021 The bill seeks to provide depositors time-bound access to their insured deposit amount, in case they are restricted from accessing their bank deposits. This will mainly protect interest of small depositors. Union Budget 2022-23 proposals: Proposal to carry out necessary amendments in the Insolvency & Bankruptcy Code (IBC) Introduction of Digital Rupee The proposal to carry out amendment in IBCwill enhance the efficacy of the resolution process and facilitate cross border insolvency resolution. Introduction of digital currency will reduce interbank settlement risk. Dun & Bradstreet