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Information on Indian companies
RBI Circular – Discontinuation of Reports and Returns Under FEMA

The Reserve Bank of India (“RBI”) on November 13, 2020, issued a circular regarding the discontinuation of certain Reports & Returns under the Foreign Exchange Management Act, 1999. This initiative has been taken on account of ease of doing business and to reduce the cost of compliance for concerned entities. A total of 17 reports and returns have been discontinued with immediate effect.

The said Reports and Returns are as follows:

  1. A category-wise transaction where the amount exceeds $5000 per transaction.
  2. Category-wise, transaction-wise statement where the amount exceeds $25,000 per transaction.
  3. Statement of Purchase transactions of $10,000 and above (including transactions of their franchisees).
  4. Extension of Liaison Offices (LOs).
  5. Extension of Project Offices (POs).
  6. FII/FPI daily: Daily inflow/outflow of the foreign fund on account of investment by FPIs.
  7. FII/FPI Return (Monthly): Data relating to actual inflow/outflow of remittances on account of investments by Foreign Institutional Investors (FIIs) in the Indian Capital market.
  8. FVCI reporting: Inflows/outflows of remittances on account of investments by Foreign Venture Capital Investor (FVCIs) and Market value of Investments made by FVCIs.
  9. Reporting of Inflow/Outflow details in respect of Mutual Fund by Asset Management Companies.
  10. Market value of FII Investment in India on fortnightly basis.
  11. Market value of FII Investment in India on Monthly basis.
  12. FII holdings as a percentage of floating stock.
  13. Form DRR for Issue/transfer of sponsored/unsponsored Depository Receipts (DRs) -only Hardcopy filing is being discontinued.
  14. ADR/GDR Movement Report – two-way fungibility.
  15. Repatriation of Sales proceeds of underlying shares represented by FCCBs/GDRs/ADRs.
  16. GDR/ADR underlying shares issued, redeposited, and released monthly reporting.
  17. Monitoring of disinvestments by Overseas Corporate Bodies.

To read the full RBI circular, please click on the link

The Probe Newsletter November 2020

Universe of Registered Companies

  • Till Oct-20, there are 21,89,385 companies incorporated out of which 12,80,520 companies are active.
  • As of Oct-20, 70,809 companies were active in Telangana state.
  • 42.6% of total active companies were registered after CY2015.
  • The chart does not include LLPs.

Company Classification

  • Currently, there are 60,574 public ltd companies in India.
  • As of Oct-20, there are 32,857 OPCs in India.
  • There are 11,010 foreign companies in India.

Probe New Company and LLP Incorporations Index

  • The Probe New Company and LLP Incorporations (PNCLI) Index was constructed using Dec-00 as the base year.
  • In Oct-20, index value stood at 548 with 1,36,938 companies and 35,638 LLP incorporated in the last 12 months.
  • 82,100 LLPs were incorporated in the last 6 months.

New Company Incorporations

  • During the month of Oct-20, there are 16,707 company registration out of which 16,323 were private and 384 were public.
  • 3,739 companies were incorporated under the manufacturing business in the month.
  • In Oct-20, 795 companies incorporated in RoC Chennai.

Company Incorporations – State-wise data

  • During the month of Oct-20, Karnataka stood at the 4th position with 1,262 companies registered in the state.
  • In the month of Oct-20, 536 companies registered in the education business.
  • 13,323 companies were incorporated with the paid up capital of up to Rs 1 lac.

LLP Incorporations State-wise data

  • In Oct-20, there are 4,895 LLPs registration in India.
  • There are 215 LLP registration in the state of Tamil Nadu in Oct-20.
  • During the month of Oct-20, 466 LLP registered in Gujarat state which constituted 9.5% of total LLP registered in the month.

Nationwide Spread

  • Uttar Pradesh stood at the 4th position with 88,634 active companies which accounted 6.9% of total active companies.
  • As of Oct-20, 41,064 active companies incorporat ed in the Rajasthan state out of which 20,752 companies are registered in Jaipur.
  • Till Oct-20, there are 8,764 active companies in the Assam state.

Statewide Spread – Maharashtra

  • Till Oct-20, there are 2,49,304 active companies in the state.
  • In Maharashtra capital – Mumbai there are 1,31,984 active companies which constituted 52.9 % of total companies in the state.
  • There are 1,848 listed companies in Maharashtra.

Paid Up Capital

  • As of Nov-20, there are 1,79,779 active
    companies between Rs 1 – 5 lac.
  • Delhi has 1,15,609 active companies with paid up capital of up to Rs 1 lac.
  • Currently, there are 22,561 companies with more than Rs 10 cr paid up capital.

Directorship Overview

  • Presently, there are 22,12,988 active directors in India.
  • As of Oct 20, there are 61,351 active foreign directors.
  • In Gujarat there are 1,44,765 active director which constituted 6.5% of total active director.
RBI circular on Co-Lending by Banks and NBFCs to Priority Sector

The Reserve Bank of India (“RBI”) on 05th September 2020 issued a circular directed to all Scheduled Banks and Non-Banking Financing Companies regarding joint contribution of credit by both the lenders. This is in continuation of the RBI circular issued on September 21, 2018 on co-origination of loans by Banks and NBFCs.

The 2018 scheme has now been revised to provide improved flow of credit to the unserved and undeserved sector of the economy so as to make the funds available to them at a lower cost, by availing benefits from both the lending channels.

The Scheme has permitted banks to co-lend with all registered NBFCs including the Housing Finance Companies where banks have been advised to take their share of the individual loans on a back-to-back basis in their books. However, NBFCs have been advised to retain a minimum of 20% share of the individual loans on their books.

Both the lenders have been advised to formulate policies in the regard and make the same available on their websites. Based on the board approved policies, a Master Agreement shall be entered into between the parties which shall outline all the details of such an arrangement between the two partner institutions including the terms and conditions, partner selection criteria, areas of operation etc. It shall also contain full disclosure of the arrangement between the two parties and shall clearly specify the manner of appropriation between the co-lenders, contain necessary clauses on representation and warranties etc.

Some Key Pointers:

  • Banks shall not be allowed to enter into co-lending arrangement with an NBFC belonging to the promoter Group.
  • This new co-lending model shall not be applicable to foreign banks, including Wholly Owned Subsidiaries, with less than 20 branches.
  • The NBFCs shall be the single point of interface for the customers.
  • Customer’s explicit consent to be taken after full disclosure, under this co-lending model.
  • The co-lending banks and NBFCs shall maintain each individual borrower’s account for their respective exposures.

To read the full RBI circular, please click on the link.

To read the 2018 RBI circular, please click on the link.



The Reserve Bank of India (“RBI”) on October 07, 2020 issued a circular directed to all Co-operative Banks wherein the RBI has provided some relief to the Micro Small and Medium Enterprises by extending Interest Subvention Scheme on loans extended by co-operative banks.

It has been specifically outlined that decision has been taken to include Co-operative Banks as eligible lending institutions effective March 03, 2020. The Scheme provides an interest relief of 2% p.a. (two percent per annum) to eligible MSMEs on their outstanding fresh or incremental term loan or working capital during the period of its validity, which is limited to all term loans or working capital to the extent of Rs.100 lakhs. That is to say that any amount beyond Rs.100 lakhs shall not be covered under this Scheme.

The loan amounts to be eligible for this relief, should not have been declared as a Non-Performing Asset. No interest subvention shall be admissible for any period during which the account remains NPA.

The Interest Subvention Scheme for MSMEs, 2018 that was issue by the RBI on November 02, 2018 has been modified by the Government as below:

  • The validity of the Scheme has been extended till March 31, 2021.
  • Fresh or incremental term loan or working capital limit extended by co-operative banks with effect from March 03,2020 shall be eligible for coverage under the Scheme.
  • Acceptance of claims in multiple lots for a given half-year by eligible institutions shall be permitted.
  • Requirement of Udyog Aadhaar Number (UAN) may be dispensed with for units eligible for GST. However, units that are not required to obtain GST may either submit Income Tax PAN or their loan account must be categorized as MSME by the concerned bank.
  • Trading activities have also been allowed to be covered under the scheme without UAN.

It has been specified that Small Industries Development Bank of India (SIDBI) shall be the single national level nodal implementation agency for this Scheme. Nodal office of eligible lending institutions shall submit half-yearly claims to SIDBI as per guidelines laid down in that regard.

Co-operative Banks have been advised to take necessary and appropriate actions for the successful implementation of the Scheme.

To read the full detail, please find link to the RBI Circular.

Understanding Neo Banking In India – 2

We keep hearing about Neo Banks these days. Here is a small write on what they do and their current landscape.

Neo Bank is a new type of digital bank that exists without any branches. They are primarily fintech firms providing digital and mobile-first financial solutions services to modern tech-savvy customers. These include payments and money transfers as well as lending through online platforms and apps. Neo banks are reinventing the practices and processes associated with traditional banking.

This new-age banking emerged about 5 years ago, namely in the UK through FinTech players such as Monzo and Atom Bank.

Neo Banking in India

Neo Banking in India is of 2 types – consumer facing and business facing. The Neobanking journey in India started out with Open in 2016 for small businesses to go digital. Now, even YouTubers and freelancers are registering on its platform as businesses. On the consumer side, Bengaluru-based Niyo started operations in the same year, but targeting blue-collar workers, taking the B2B2C route. Some Neo banks in India are in the beta stage or just about to launch operations.

Difference between Digital Bank vs Neo Banks

Digital banking usually refers to a bigger player in the banking industry providing financial services in a traditional way. Neo banks are 100% digital and do not relate to any traditional banking names, big or small.

Banks which entered Digital Banking:-

  1. Yono by SBI
    YONO (You Only Need One) is State Bank of India’s digital banking platform which was launched in November 2017.  Apart from banking services, the platform also provides lifestyle services like cab booking and online shopping.
    The country’s largest lender is looking to acquire a customer base of up to 250 million using this platform in the next two years
  2. ICICIStack by ICICI Bank
    ICICI Bank launched ICICIStack digital service ahead of the coronavirus outbreak in the country. ICICIStack is another digital platform allowing users to open saving accounts, instant PPF, and a list of about 500 services covering all the banking requirements. The ICICIStack is available on the internet banking platform or mobile phone app.
  3. 811 by Kotak
    The product was launched in March 2017 and is named after the day demonetisation was announced in India – November 8, 2016. It is a zero-maintenance bank account, along with a virtual card and one can also earn a 6 per cent interest per annum on their savings. Within two years of the launch, the bank claims to have doubled its customer base to 16 million users.

Fintechs vs Neo Banks

There are apps like Google Pay, Paytm and Phone Pe in India which provide payment and investment solutions. “Some solutions that Neo-banks address could be similar to the current offerings of other fintechs. But they are also addressing problems in banking that others fintechs don’t. Also, with better insights on the funds of customer, they are in a position of offer better solutions”. For example, if the customer has ₹10,000 lying in the account for some weeks, the AI can suggest that the money be kept in a liquid fund or a sweep-in fixed deposit that can earn better returns. This can be done in a few clicks. In the case of other apps offering solutions, the customer needs to be proactive to do this.

In other words, Neo Bank is a traditional bank with the better features to offer. They provide customisable services to the customer, better customer service, money management etc.

Advantages of Neobank:-

  1. Easy account creation
  2. Seamless international payments
  3. Customer friendly interface
  4. Value added services like bookkeeping, financial management etc

Challenges faced by the Neobank:-

  1. Targeting customer segments
  2. Arriving at best market-fit product for the customer segment
  3. Partnership with traditional bank
  4. Technology challenges – core banking systems used by most banks do not meet some of the expectations for modern digital services

Are Neo Banks in India secure?

When somebody opens Neo bank a/c they have a traditional bank a/c in the backend. Neo-banks are mandated to follow the same set of regulatory requirements such as data localisation norms or 2-factor authentication for card-based transactions. Additionally, Neo-banks are among the first to adopt more advanced transaction security enhancing models such as MCC block, single-use virtual cards, and token online transactions.

Regulatory norms for Neobank: –

In India, RBI is still not granting Banking licenses to virtual banks. Currently, Neo Banks are outsourcing their banking responsibilities to those with licencesiecreating strategic partnerships with traditional banks.

Focus Business Segment for Neo Banks in India: –

Neo Banks main focus are especially young generation who are digitally savvy consumers and who don’t want to deal with traditional banks due to lack of flexibility. This generation wants to compare online loans, submit their application with a few clicks, and receive approval in a matter of minutes. And this is exactly what neo-banks offer them: speed, friendly customer support, and relevant services. Neo-banks are all about convenience and respect for the customer’s time. Some of the players are available in both B2B and B2C segments.  In terms of customer base Niyo – one of the leading Neo bank has ~ 1 Million customers and B2B leading player Open has ~ 0.4 Million customers. Below are the details of some B2B and B2C players.

B2B companies Product feature offering

Retail companies Product Feature Offering

Funding Details of Indian Neo Banks: –

During the period of Q1’20, India fintech companies has raised $421 M. New-born Neo Bank – Jupiter which is founded by Citrus pay co-founder raised $ 2 M on Apr-20. Below are the more details of Neo Banks funding: –

Neo Banks and their Banking Partners

Transaction / New Entrants in Indian Neo Banking Industry: –

  1. Niyo acquired Goalwise
    Niyo has acquired mutual fund investment startup Goalwise for an undisclosed sum in a cash-and-stock deal on July 2020
  2. Singapore fintech company Atlantis enters India
    Atlantis, a Singapore-headquartered fintech company has announced the launch of Neo-Bank for Gen Z and millennial
  3. Cashaa plans to enter India
    London-based crypto-friendly banking platform Cashaa plans to enter India, US, and Africa
  4. Sokin enters India with Razorpay partnership
    Sokin – London based company has entered into partnership with RazorpayX, to provide its clients with a fully operational business banking service including current accounts which can be seamlessly integrated with Sokin’s simple app, or online-based platform, which allows multiple international transfers with no hidden costs, all for a fixed monthly fee

Covid-19 impact in Neo Banking: –

COVID-19 has given birth to fears pertaining to the contamination of coins and notes with this transmissible virus. Consumers are also worried about the possibility of banking professionals being infected with the contagion and thereby, becoming vectors of this disease in the process. Thus, the need to embrace digital transactions has become more urgent and pertinent than it was four years ago. Neobanking is one solution to facilitate this shift.

There is a long lasting impact of pandemic in digital mode of payment The pandemic has changed how people think about their choice of payment options. According to a recent study from Forrester Research, retailers reported a 69% increase in contactless transactions since January.

According to a yStats report released in June, nearly 50% of global shoppers were using digital payments more than before the pandemic, and the majority plan to continue doing so after the virus is contained. In future, many of fintech companies may also enter Neo Banking.

Neo-Banking Future Prospects: –

Credit to GDP Ratio in India is 50% where as it is north of 100% for developed countries. Credit reach definitely needs to improve in India. More bank licenses is surely one way but a thought on giving a systematic push towards digital channels of fulfilling the credit need of the country may go a long way. Moreover, the recent Covid situation has underscored the imperative of quickly scaling banking and credit services to consumers and small businesses.

According to a report published by Allied Market Research, the global neo bank market is growing at a CAGR of 50.6% during the period 2017-2020. Thus, e can confidently say that they are here to stay and grow the pie of the borrowing customers.