What is the exact nature or business model of a Neo Bank is a question in the minds of many stakeholders.<\/p>\n\n\n\n
A Neo-bank is an online service provided by Fintech firms by partnering with traditional banks.<\/p>\n\n\n\n
Let us try and understand whether a Neo-bank will fall under the E-Commerce Sector of NDI Rules.<\/p>\n\n\n\n
What is E-commerce?<\/u><\/strong><\/p>\n\n\n\n Let us first understand what is E-Commerce in terms of Foreign Exchange Management (Non-Debt Instrument) Rules, 2019 (\u201cFDI Rules\u201d)<\/p>\n\n\n\n \u201cE-commerce\u201d<\/strong> means buying and selling of goods and services including digital products over digital & electronic network<\/p>\n\n\n\n Here, the essential element is providing a platform over a digital or electronic network.<\/p>\n\n\n\n How does a Neo-Bank Function?<\/u><\/strong><\/p>\n\n\n\n Banking services or any other services which require a license are regulated by the Reserve Bank of India.<\/p>\n\n\n\n However, neo-bank is a service or provides such a service that does not fall under Banking service or any other licensed service and therefore is not regulated by the Reserve Bank of India.<\/p>\n\n\n\n These neo-banks only have online existence unlike the traditional banks. It provides an online platform to its customers. Since these banks are customer-centric, they focus on giving the customers a feel of banking services through their online presence. It is a digital layer of service that is provided by a Fintech firm.<\/p>\n\n\n\n These are bundled services due to which they are more convenient to use and are preferred by the millennial crowd and working professionals over traditional banks.<\/p>\n\n\n\n Why E-Commerce?<\/u><\/strong><\/p>\n\n\n\n A Fintech Entity may be a software company or an E-commerce entity.<\/p>\n\n\n\n If the entity develops software and sells it to its customers for their use that this would not trigger E-Commerce.<\/p>\n\n\n\n But if a software company creates software and provides it to any other entity as a platform for facilitating the sale of the latter\u2019s products and services, then such service provided by the software company will attract compliance of conditions of the E-Commerce Sector. <\/p>\n\n\n\n From the functioning of a Neo-Bank, we understand that a Neo Bank is just a platform that partners with licensed banks to provide banking services.<\/p>\n\n\n\n As stated above, the essential element of e-commerce is providing a digital or electronic platform to other businesses for the sale of their products or services. Similarly, a Neo-bank also provides a platform to two parties:<\/p>\n\n\n\n Hence, such an entity will fall under the E-Commerce sector and will have to comply with the conditions laid down in the said sector.<\/p>\n\n\n\n Now the next question that arises is whether a Neo-Bank will also fall under the Financial Service Sector as it indirectly provides banking services. Let\u2019s explore this in our next write-up.<\/p>\n","protected":false},"excerpt":{"rendered":" What is the exact nature or business model of a Neo Bank is a question in the minds of many stakeholders. A Neo-bank is an online service provided by Fintech firms by partnering with traditional banks. Let us try and understand whether a Neo-bank will fall under the E-Commerce Sector of NDI Rules. What is […]<\/p>\n","protected":false},"author":1,"featured_media":4708,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26,8],"tags":[],"class_list":["post-1276","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-knowledge-hub","category-newsletter"],"_links":{"self":[{"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/posts\/1276","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/comments?post=1276"}],"version-history":[{"count":1,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/posts\/1276\/revisions"}],"predecessor-version":[{"id":4709,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/posts\/1276\/revisions\/4709"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/media\/4708"}],"wp:attachment":[{"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/media?parent=1276"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/categories?post=1276"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bempl.in\/demo\/mmjc\/wp-json\/wp\/v2\/tags?post=1276"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}