MC Tech3 | RBI imposes curbs on Visa; HCLTech's missive to employees; and more

One big thing: Supreme Court strikes down electoral bonds scheme as 'unconstitutional'?

Incoming: Soon, AI bots to call beneficiaries to seek feedback on govt's flagship schemes

In today’s newsletter:?

• RBI imposes curbs on Visa
• Report to office or else: HCLTech
• Indian crypto trades plunge 21%

RBI imposes curbs on Visa

Fintech firms, beware! Give your data systems and compliance machinery a hard look. The RBI has its eye on you, including global giants.

Driving the news: The Reserve Bank of India (RBI) has ordered international card network Visa to halt its business payment solution for corporate credit cards.

• As per the regulator,?Visa was routing some commercial payments through third-party payments intermediaries, an arrangement not qualified under the law.

Visa had set up an arrangement in which intermediaries would accept card payments from corporations for their commercial transactions and subsequently transfer the funds to non-card-accepting recipients through digital payment routes.?

RBI’s concerns:?

• The intermediary pooled a significant amount of funds into an account that is not designated under the law.?
• Transactions processed did not comply with the originator and beneficiary information requirements stipulated under the master direction on KYC issued by the RBI.

The latest directive has industry experts divided. Some term it as a knee-jerk reaction, while others are hopeful for a green signal for Visa.

More fintechs on RBI radar: The regulator has no intention of overlooking KYC lapses by fintech firms.

After the Paytm debacle, four other payment firms are under RBI’s radar for lapses in know-your-customer (KYC) processes.

• While the names of the firms remain undisclosed, it includes a leading payments aggregator and wallet service provider.
• Fintechs operating in the unsecured loan marketplace and serving as intermediaries between customers and lenders are currently under investigation.?

Apart from KYC lapses, mule accounts are another key aspect that the RBI is investigating.

The timing:?The regulator’s action coincides with an ongoing Financial Action Task Force (FATF) audit of the overall preparedness of India’s financial institutions to deal with money laundering and terrorism financing.??

• A country needs to be on the green list of FATF to avoid any global financial sanctions and attract foreign investment.?

Meanwhile…?

Paytm has assured that withdrawals of depositors' money are being smoothly handled and are in compliance with regulatory requirements.?

Why is this important?

This is crucial as Paytm Payments Bank Limited (PPBL) is mandated to invest daily deposit balances in government securities and commercial bank balances, ensuring the safety of these deposits.

More from our Paytm coverage?

• Paytm in clarification to bourses: ED has asked for documents 'over time'
• Paytm pains far from over, but Sandeep Tandon of Quant MF sees digital banking new reality

This is a short version of the MCTech3 newsletter. Sign up here?to get the full edition in your inbox every evening on weekdays.?