Data breach in BHIM App?
An Israeli cyber security website, vpnMentor, notified the Indian authorities of a data leak of approximately 7 million users of the BHIM Payment Application (due to a website breach). As per the report, a website developed by CSC e-Governance Services in partnership with the Indian government, was being used in a campaign to sign up users and business merchants to the BHIM App. Consequently, a breach in this website has resulted in breach of data of more than 7 million users of the BHIM app It was also reported that the data that was leaked included personal information such as Aadhaar card details, residence proof and bank records along with a complete profile of individuals.
However, the National Payment Corporation of India ("NPCI"), in a press release dated June 01, 2020, clarified and stated that there has been no data compromise on the BHIM App. Further, the NPCI also confirmed through this press release that it follows high level of security and an integrated approach to protect its infrastructure and continues to provide a robust payments ecosystem and people should not fall prey to such speculations.
Paytm Money adds NPS to platform
Paytm Money announced the launch of National Pension Scheme ("NPS") on its mobile application after it received approval from the Pension Fund Regulatory and Development Authority.
Paytm will be offering this NPS to the users of its app, with a choice to either invest in a tax saver scheme or a zero lock-in period scheme.
The NPS is a pension scheme introduced by the Government of India to help Indians create a retirement corpus. Under this, one can make systematic contributions that would provide market-linked returns and a regular income post retirement.
NPCI's eSign makes a comeback
NPCI by way of circular dated May 26, 2020 clarified that they have received confirmation from the competent authority that Aadhaar authentication for e-sign services is permitted under the Aadhaar (Targeted Delivery of Financial and Other. Subsidies, Benefits and Services) Act, 2016. Accordingly, NPCI decided to re-launch the eSign E-Mandate starting June 1, 2020.
eSign electronic signature is an initiative for allowing easy and secure execution of electronic documents by validating the person executing using Aadhaar eKYC services. With this, any Aadhaar card holder may digitally sign an electronic document without having to obtain a physical digital signature dongle.
RBI announces creation of Payment Infrastructure Development Fund
On June 5, 2020, the RBI has announced creation of a Payments Infrastructure Development Fund in order to encourage acquirers to deploy points of sale ("POS") infrastructure in tier-3 to tier-6 centres and north eastern states. The RBI will make an initial contribution of INR 250 crores to the aforesaid fund and remaining contribution will be from the card issuing banks and card networks operating in the country. The RBI will contribute further to the fund, if necessary. The fund will be governed through an advisory council and managed and administered by RBI.
RBI allows electronic cards for overdraft account customers
RBI by way of notification dated April 23, 2020, has permitted the banks to issue electronic cards to natural persons who are holders of overdraft accounts. RBI has specified that these cards may be allowed to be used for domestic transactions only and that the banks will ensure that the usage of these cards are restricted to online and non-cash transaction only.
The banks have been directed to frame a policy approved by their board in relation to issuance of electronic cards encompassing appropriate risk management, periodic review procedures, grievance redressal mechanism, etc.
Touch me not? RBI relaxes requirement of additional authentication factor for small value transactions
RBI has informed Visa, Mastercard and NPCI to allow tap- and go functionality for transactions to make it contact free. This is to ensure that there is minimum contact while transacting to reduce risk of Covid-19 infection.
Tap-and-go card payments for purchases above INR 2,000 will require two-factor authentication and customers will be required to enter PIN to process such transactions.
Crypto ban rekindled?
The Supreme Court earlier this year had set aside the RBI's curb on bank to provide services to entities dealing in virtual currencies. The Supreme Court did not delve into whether virtual currencies should be banned or not, but had merely set aside the RBI's circular on the grounds of proportionality.
A cabinet note seeking a ban on use of virtual currency through a law has been moved for inter-ministerial consultation. The note which seeks to ban virtual currencies such as bitcoins, will subsequently be sent to the parliament.
Several players operating in this space have maintained a stance that an outright ban is not the best way forward and the Government should try and regulate the virtual currency than completely banning it.
Whether the inter-ministerial note translates into a law is something which is not clear at this stage.
Increasing Payment Fraud Alert- RBI
Recognizing that payment frauds may decelerate the growth of digital economy in India, RBI addressed a letter to the management of authorized payment system operators and participants of payment systems, highlighting the heightened payment fraud risk. RBI observed that all payment system operators and participants continue and reinforce their efforts to spread awareness about digital safety. RBI advised the said operators and participants to run a targeted multi-lingual campaigns by way of SMS, advertisements in print and visual media to educate the users of the risks involved.
Investment in Fintech Sector
India has overtaken China in attracting investment in the fintech sector.
Slice, a company which builds financial products for youngsters, has raised INR 46 crores from the investment and consulting arm of Gunosy Inc, which is a Japan based technology services company.
Aye Finance Private Limited saw an infusion from Investors such as CapitalG, LGT, Lightsone, Falcon Edge, A91 Partners and MAJ Invest.
Lending continued to be a preferred sub-sector as start-ups such as Lentra AI (lending platform) and Jai Kisan (an agri-lending start up) raised funds.
Wealth management was another focus area for investors. Fixed-income marketplace GoldenPi, which focused on providing fixed income investment option such as bonds and debentures raised INR 3.5 crores from Rainmatter Capital.
Cube Wealth which is a digital wealth management company for busy professionals raised INR 3.7 crores from Beenext and Asuka Holding.
Insure-tech also saw some traction. GramCover Insurance Brokers raised capital (undisclosed sum) in its pre-Series A from investors such as EMVC, a US based fund and Omidyar Netwok.
Housing-focused financial technology firm HomeCapital received an investment from Varanium Capital.
Certain start-ups also saw investment of bigger ticket size. Innoviti which operates a payment focused financial technology company raised Series C fund (undisclosed amount) from investors such as Dutch Development bank FMO and Bessemer Venture Partners.
BankBazaar which is backed by Amazon raised INR 45 crores in the Series D round of funding. WSV, a joint venture fund of Walden International and Korean Company SKTA came in as new investor.
Khatabook raised a significant sum in a round led by B Capital.
LendingKart also secured a significant investment of INR 319 crores in its Series D round of funding.
The Fintech sector also saw an acquisition with Infibeam Avenues Ltd (parent of payment gateway company CCAvenue) acquired a Bengaluru based credit card issuing firm- Cardpay Technologies Pvt Ltd. The acquisition was closed at an initial consideration of INR 45 lakhs.
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