RBI rejects Bajaj Fin's plan for Philippines operations over FATF concerns

The Reserve Bank of India (RBI) has turned down an application from Bajaj Finserv to enter the Philippines market for lending activities. This is because the Philippines has been increasingly coming under the lens of the Financial Action Task Force, and has already been designated as an FATF grey list country.

According to sources familiar with the development, the Bajaj group had proposed to start lending operations in the Philippines, for which it had sought regulatory approval. However, the Philippines being a country under ‘increased monitoring’, the regulator was not in favour of the proposal.

The Financial Action Task Force (FATF) is a global money laundering and terror financing watchdog. It is an intergovernmental body that develops policies to combat funneling of money to terrorist activities.

The decision of not allowing an Indian entity to operate in a grey list country comes at a time when the FATF review for India is due later this year.

An email sent to Bajaj Finserv did not elicit any response till the time of going to the press.

India, which has been a member of the FATF since 2010, has not yet been assessed in the fourth round of mutual evaluations. Due to the Covid-19 pandemic and the pause in the FATF's assessment process, the mutual evaluation of India has been postponed to 2023. The possible onsite visit is scheduled in November this year, with the plenary discussion likely in June 2024.

Bajaj Finserv is the holding company of all the 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 fully-owned subsidiaries – BFS Asset Management Company which has recently received regulatory approval for mutual fund business, and BFS Ventures (BFSV), which is in the process of setting up the business.

Bajaj Finance, the flagship company of the group which is into lending, is a non-banking financial 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 crore as on December 31, 2022, up from Rs 1,150 crore as of March 31, 2022.