The Reserve Bank of India (RBI) has rejected Bajaj Finserv’s application to enter the Philippine market for lending business. Indeed, the Philippines is increasingly being targeted by the Financial Action Task Force and has been designated as a FATF graylist country.
According to sources familiar with the development, Bajaj Group has offered to start lending operations in the Philippines and it has sought regulatory approval. However, because the Philippines is a country with “enhanced surveillance”, the regulator did not support this proposal.
The Financial Action Task Force (FATF) is the global watchdog on money laundering and terrorist financing. It is an intergovernmental agency that develops policies to combat the transfer of funds for terrorist activities.
The decision not to allow an Indian entity to operate in a graylisted country comes at a time when the FATF review of India is scheduled for later this year.
An email sent to Bajaj Finserv received no response until it was time to post.
India, which has been a member of FATF since 2010, has not yet been assessed under the fourth round of mutual assessment. Due to the Covid-19 pandemic and the pause in the FATF review process, India’s mutual review process has been postponed to 2023. An on-site visit could be scheduled for November this year, with a plenary discussion possibly taking place in June 2024.
Bajaj Finserv is the holding company for all financial services activities of the Bajaj Group. The seven entities under Bajaj Finserv are:
Bajaj Finance, Bajaj Allianz General Insurance, Bajaj Allianz Life Insurance, Bajaj Finserv Direct, Bajaj Finserv Health, Bajaj Housing Finance and Bajaj Financial Securities.
Bajaj Finserv (BFS) also has two other wholly owned subsidiaries – BFS Asset Management, which recently received regulatory approval for its mutual fund business, and BFS Ventures ( BFSV), is in the process of establishing a ‘business’.
Bajaj Finance, the group’s flagship lender, is a non-banking finance company with the strategy and structure of a bank. Bajaj Finserv is a debt-free company and its surplus funds (excluding group investments) stood at Rs 1,820 as of December 31, 2022, compared with Rs of Rs 1,150 as of March 31, 2022.