AKP Banking & Finance Digest December 01, 2025

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1. Regulatory Updates

1.1.  India

Reserve Bank of India (RBI)

1.1.1.    RBI revises bank account details for FEMA compounding payments

Reserve Bank of India (“RBI”) has amended its Master Directions on compounding of contraventions under the Foreign Exchange Management Act (FEMA), 1999 to change the bank account to which applicants must remit the compounding application fee and the “sum for which a contravention is compounded” through National Electronic Fund Transfer (NEFT) or Real Time Gross Settlement (RTGS). Annexure I of the April 2025 Master Directions has been updated to reflect the new account particulars.

1.1.2.    RBI issues Consolidated 244 Master Directions

The Reserve Bank of India has undertaken a comprehensive reorganisation of regulatory instructions issued by its Department of Regulation, consolidating and issuing 244 Master Directions. These instructions have been issued separately for 11 types of regulated entities including – Commercial Banks, Small Finance Banks, Payments Banks, Local Area Banks, Regional Rural Banks, Urban Co-operative Banks, Rural Co-operative Banks, All India Financial Institutions, Non-Banking Financial Companies, Asset Reconstruction Companies and Credit Information Companies. Further, a list of 9445 circulars has been repealed/withdrawn following the issue of these consolidated Master Directions.

1.1.3.    RBI issues Reserve Bank of India (Digital Banking Channels Authorisation) Directions, 2025

The Reserve Bank of India has issued the Reserve Bank of India (Commercial Banks – Digital Banking Channels Authorisation) Directions, 2025, laying down a comprehensive framework for authorising and regulating internet, mobile and other digital banking channels for commercial banks, effective January 1, 2026. The Directions define key concepts such as digital, view-only and transactional banking facilities, prescribe prudential, technological, and customer conduct requirements (including eligibility criteria, GAICA certification, cybersecurity, fraud risk management and DPDP compliance), and consolidate and repeal earlier circulars so that all approvals and operations in digital banking are now aligned to this unified regime.

Securities and Exchange Board of India (SEBI)

1.1.4.     SEBI reclassifies Real Estate Investment Trusts (REITs) as equity related instruments for facilitating enhanced participation by Mutual Funds and Specialized Investment Funds (SIFs)

SEBI has reclassified Real Estate Investment Trusts (REITs) as equity-related instruments for investments by Mutual Funds and Specialized Investment Funds with effect from January 1, 2026, while InvITs will continue to be treated as hybrid instruments. Existing REIT exposures of debt schemes and SIF strategies as on December 31, 2025 will be grandfathered, with AMCs required to update scheme documents via addenda (without it being a fundamental attribute change), align scrip classification through AMFI, and note that REITs can be included in equity indices only from July 1, 2026 onwards.

1.1.5.   SEBI issues Securities and Exchange Board of India (Informal Guidance) Scheme, 2025

SEBI has introduced the Securities and Exchange Board of India (Informal Guidance) Scheme, 2025, effective December 1, 2025, replacing the 2003 version to streamline no-action and interpretive letters for intermediaries, listed companies, prospective acquirers, stock exchanges, depositories and pooled investment managers seeking clarity on regulatory compliance without formal adjudication. Applications, filed electronically with a INR 50,000 (Indian Rupees Fifty Thousand only) fee, must detail facts, provisions and transaction specifics, with responses due within 60 days (excluding clarifications), subject to exclusions for hypothetical, sub-judice or ongoing enforcement cases, while ensuring confidentiality options and non-binding status.

1.1.6.     SEBI issues Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012

The SEBI has issued the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, originally notified on May 21, 2012, govern privately pooled investment vehicles in India (excluding mutual funds and collective schemes) structured as trusts, companies, LLPs or body corporates, with key definitions for accredited investors (e.g., individuals with INR 2 Crore (Indian Rupees Two Crore only) income or INR 7.5 Crore (Indian Rupees Seven Crore Fifty Lakh only) worth), accredited investors-only funds, co-investments, debt funds, hedge funds and infrastructure funds, alongside exclusions for family/ESOP trusts and holding companies. Subsequent amendments introduce concepts like change in control, dissolution periods, corporate debt market development funds and updated eligibility/application forms for sponsors/managers, establishing a comprehensive registration and operational framework for AIF Categories I-III.

1.1.7.     SEBI proposes BSDA valuation and process changes to aid small investors

Securities and Exchange Board of India (“SEBI”) has issued a draft circular for public comments proposing refinements to the Basic Services Demat Account (“BSDA”) framework, including excluding Zero Coupon Zero Principal (ZCZP) bonds and treating delisted securities at par with suspended securities so that neither is counted towards BSDA eligibility, while valuing illiquid but still listed securities at their last closing price. The draft further provides that these valuation criteria will not apply to promotor individuals, requires Depository Participants (DPs) to reassess Beneficial Owners (“BOs”) for BSDA eligibility on a uniform quarterly basis instead of at each billing cycle, and allows BOs to opt out of BSDA and retain regular demat accounts not only through their registered e-mail address but also via other authenticated and verifiable channels. SEBI has invited public comments on the proposals through its online consultation form up to December 15, 2025.

1.1.8.     SEBI standardises timelines for issuers’ disclosures to debenture trustees

SEBI has prescribed uniform timelines for issuers of listed debt securities to submit key reports and certificates to Debenture Trustees (“DTs”), to support continuous due diligence and periodic monitoring obligations under the Debenture Trustees Regulations and the Master Circular. Issuers must now send the security cover certificate in the prescribed Annex-VA format on a quarterly basis within 60 (sixty) days of each quarter-end, except for the last quarter when the deadline is 75 (seventy-five) days; furnish half-yearly statements on the value of pledged securities, Debt Service Reserve Account or other security, along with the net worth certificate of any personal guarantor, within 60 (sixty) days of each half-year; provide annual financial information or valuation of corporate guarantors within 60 (sixty) days of each financial year-end; and obtain and share valuation and title search reports for movable or immovable charged assets once in every 3 (three) years within 60 (sixty) days of the financial year-end. These requirements apply from the quarter ending December 31, 2025, and are intended to enhance the timeliness and quality of information available to DTs, thereby strengthening investor protection in the non-convertible securities market.

1.1.9.     SEBI clarifies Recovery Expense Fund utilisation for debenture trustees

SEBI has amended Chapter IV of its Master Circular for Debenture Trustees to spell out how the Recovery Expense Fund (“REF”) created by issuers for listed debt securities in default may be used and reimbursed. The revised provisions allow DTs and the Lead DT to draw from the REF without prior debenture-holder approval for specified enforcement and legal activities, including obtaining consents and conducting voting and meetings of debenture holders, filing court applications, paying legal and asset-recovery fees and appointing legal consultants, while any other use of the fund will require prior consent of holders and intimation to the Designated Stock Exchange (“DSE”). The circular further prescribes that the DSE must release verified expenses from the REF to the DT or Lead DT within 5 (five) working days on the basis of an independent auditor’s certificate, defines the Lead DT as either the DT chosen by other DTs or the DT representing more than 50 (fifty) per cent of the outstanding value of debt securities, and requires DTs to maintain proper accounts and provide annual updates to debenture holders on REF utilisation, with all other aspects of the REF framework in the Master Circular remaining unchanged.

1.1.10.  SEBI tightens framework for debenture trustees’ non-SEBI activities

SEBI has issued a circular specifying that DTs may undertake activities outside SEBI’s regulatory purview only on an arm’s length basis through one or more Separate Business Units (“SBUs”) that are ring-fenced by a “Chinese Wall”, with separate staff, records, grievance redressal mechanisms and clearly segregated advertising and web pages. DTs must disclose on their websites the list of non-SEBI-regulated activities and prominently state that SEBI’s investor protection mechanisms do not apply to grievances arising from such business, name any other Financial Sector Regulator (FSR) where applicable, and ensure compliance with that regulator’s framework on policy, risk management, inspections and dispute handling.

1.1.11.  SEBI notifies the Securities and Exchange Board of India (Investment Advisers) (Second Amendment) Regulations, 2025

SEBI has notified the Securities and Exchange Board of India (Investment Advisers) (Second Amendment) Regulations, 2025, which come into force on publication in the Official Gazette and refine both eligibility and registration requirements for Investment Advisers (“IAs”). The amendment extends the educational and certification conditions in regulation 7 so that not only individual IAs and principal officers of non-individual IAs but also persons associated with investment advice and relevant partners in partnership firms must hold either a recognised graduate degree or Chartered Financial Analyst (“CFA”) charter together with a National Institute of Securities Markets (“NISM”) certificate, or specified NISM post-graduate programmes, and must obtain fresh NISM certification before the existing one expires or within 3 (three) years of registration.

1.1.12.  SEBI consults on simplifying process for duplicate security certificates

SEBI has released a consultation paper proposing to ease and standardise the procedure for investors seeking duplicate security certificates by raising the threshold for “simplified documentation” from INR 5,00,000 (Indian Rupees Five Lakhs only) to INR 10,00,000 (Indian Rupees Ten Lakhs only), so that smaller claims no longer require a First Information Report, police complaint or newspaper advertisement. The draft circular, to amend paragraph 22 of the Master Circular for Registrars to an Issue and Share Transfer Agents, would replace separate affidavit and indemnity bond requirements with a single Affidavit-cum-Indemnity on one non-judicial stamp paper (with stamp duty payable as per the investor’s State of residence), clarify that listed companies, not investors, must issue the loss-of-securities newspaper advertisement for higher-value cases, and make the simplified format applicable to ongoing duplicate requests, thereby reducing costs, paperwork and inconsistency across companies while ensuring all reissued securities are dematerialised. Public comments on the proposals and the annexed standard Affidavit-cum-Indemnity format have been invited through SEBI’s online comments portal or by e-mail up to December 16, 2025.

International Financial Services Centres Authority (IFSCA)

1.1.13.  IFSCA mandates standard risk disclaimer at login for IFSC global access clients

International Financial Services Centres Authority (“IFSCA”) has directed all Global Access Providers and Introducing Brokers in the International Financial Services Centre (“IFSC”) to display a standard “Important Notice” on key risks and disclaimers every time a client logs in, in order to comply with clause 39 (thirty-nine) of its circular on the Regulatory Framework for Global Access in the IFSC. The prescribed text in Annexure I requires investors to acknowledge that foreign trades and investments are subject to market, interest rate, currency, custody, liquidity, settlement, technology, cyber, product suitability, regulatory, legal, taxation, remittance, social and political risks, to confirm that they have understood the disclosures given under clause 38 (thirty-eight), and to accept these terms by clicking “I Agree” before proceeding. Global Access Providers and Introducing Brokers must implement these login disclosures by December 31, 2025.

1.1.14.  IFSCA issues Consultation Paper on draft Guidelines on Cyber Security and Cyber Resilience for MIIs

IFSCA has released a consultation paper on draft Guidelines on Cyber Security and Cyber Resilience for Market Infrastructure Institutions (“MIIs”) in the IFSC, proposing a strengthened, risk-based framework for stock exchanges, clearing corporations, depositories and other systemically important infrastructures operating in the IFSC. The draft requires each MII to adopt a Board-approved cyber security and resilience policy built around “identify, protect, detect, respond and recover” processes; maintain detailed inventories of assets and network architecture; enforce strict access controls and privileged access management; harden systems; enhance network, data, cloud and physical security; manage insider and third-party risks; and conduct regular vulnerability assessments, penetration testing, patching and cyber crisis and recovery planning, including business continuity drills. It further proposes that MIIs run a dedicated, round-the-clock Cyber Security Operation Centre, undergo annual cyber audits by Computer Emergency Response Team-India (CERT-In) empanelled information security auditors, obtain ISO 27001 certification within 2 (two) years of the guidelines being issued, and submit periodic incident and compliance reports to IFSCA, with stakeholders invited to e-mail comments in the prescribed format by December 16, 2025.

Miscellaneous

National Payments Corporation of India (NPCI)

1.1.15.  NPCI enables delegated UPI payments within monthly spending limits

NPCI BHIM Services Limited (NBSL), a wholly owned subsidiary of National Payments Corporation of India (NPCI), has launched the “UPI Circle Full Delegation” feature on the BHIM Payments App, allowing a primary user to authorise trusted contacts to make Unified Payments Interface (“UPI”) payments directly from the primary user’s bank account within a configurable monthly cap of INR 15,000 (Indian Rupees Fifteen Thousand only) and a validity period of up to 5 (five) years. The delegated user can complete payments autonomously while the primary user retains full control through preset limits and real-time visibility of transactions, supporting common use cases such as enabling senior citizens, young adults, household staff and digitally inexperienced dependants to manage day-to-day expenses without needing their own bank-linked UPI credentials. The feature is available on the latest BHIM Payments App version 4.0.10, alongside enhancements such as Split Expenses, Family Mode, Spend Analytics, multilingual support and a refreshed user experience, reinforcing BHIM’s positioning as an inclusive, trust-based digital payments platform.

Monetary Penalties

1.1.16.  RBI imposes penalties on six banks for regulatory non-compliance

RBI has imposed monetary penalties on the following institutions:

Sr. No.	Name of Bank	Amount of Penalty	Grounds for Penalty
1.	The Fatehpur District Co-operative Bank Limited, Uttar Pradesh	INR 2,00,000 (Indian Rupees Two Lakh only)	Non-compliance with certain directions issued by RBI on ‘Know Your Customer (KYC)’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of Banking Regulation Act, 1949.
2.	The District Co-operative Central Bank Limited, Kakinada, Andhra Pradesh	INR 1,00,000 (Indian Rupees One Lakh only)	Contravention of provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
3.	The District Co-operative Central Bank Limited, Kurnool, Andhra Pradesh	INR 1,50,000 (Indian Rupees One Lakh Fifty Thousand only)	Contravention of provisions of Sections 20 read with Section 56 of the Banking Regulation Act, 1949 and non-compliance with certain directions issued by RBI on ‘Know Your Customer (KYC)’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
4.	Tumkur Grain Merchants Co-operative Bank Limited, Karnataka	INR 1,00,000 (Indian Rupees One Lakh only)	Non-compliance with specific directions issued by RBI under ‘Supervisory Action Framework (SAF)’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
5.	HDFC Bank Limited	INR 91.00 Lakh (Indian Rupees Ninety-One Lakh only)	For contravention of provisions of section 19 (1)(a) read with section 6(1) of the Banking Regulation Act, 1949 (BR Act) and non-compliance with certain directions issued by RBI on ‘Interest Rate on Advances’, ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’ and ‘Know Your Customer (KYC)’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of section 47A(1)(c) read with section 46(4)(i) of the BR Act.
6.	Mannakrishna Investments Private Limited	INR 3.10 Lakh (Rupees Three Lakh Ten Thousand only)	For non-compliance with certain provisions of the ‘Master Direction – Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023’ issued by RBI, relating to ‘Governance Issues’. This penalty has been imposed in exercise of powers conferred on RBI under clause (b) of sub-section (1) of Section 58G read with clause (aa) of sub-section (5) of Section 58B of the Reserve Bank of India Act, 1934.

2.             Key Asian Markets - Philippines and Sri Lanka

2.1.         Philippines

2.2.1.     BSP Forecasts Low November 2025 Inflation

The Bangko Sentral ng Pilipinas (BSP) projects Philippines inflation for November 2025 to range between 1.1 per cent (one point one per cent) and 1.9 per cent (one point nine per cent), remaining below the 2-4 per cent (two-four per cent) target amid upward pressures from inclement weather driving rice, fish, and fruit prices higher, plus elevated electricity, oil costs, and peso depreciation. These are partially offset by declining meat and vegetable prices, with BSP maintaining a data-dependent monetary policy watch on domestic and global factors.

2.3.         Sri Lanka

2.3.1.     Sri Lanka Central Bank Maintains Policy Rate, Inflation to Ease by Mid-2026

The Central Bank of Sri Lanka has kept the Overnight Policy Rate unchanged at seven point seven five per cent (7.75%) in November 2025, maintaining its stance to steer inflation towards the target of five per cent (5%). Headline inflation accelerated for the third consecutive month in October but is expected to rise more gradually and approach the target by the second half of 2026, supported by modest core inflation amid strengthening demand. Credit to the private sector has expanded strongly so far in 2025, driven by a low interest rate environment and pent-up demand, with imports rising but balanced by robust tourism and remittance inflows. Gross official reserves remain stable above six billion US dollars (USD 6 billion), supported by foreign exchange purchases and expected multilateral inflows. The Central Bank will continue monitoring evolving economic conditions and is ready to adjust policies to stabilise inflation while supporting economic growth.

3.             Trends

3.1.         NPCI Bharat BillPay Targets Half of India's Households via Digital and Assisted Channels

NPCI Bharat BillPay Ltd (NBBL), led by MD & CEO Noopur Chaturvedi, aims to expand Bharat Connect and bill payment platforms to cover approximately 135 million (one hundred thirty-five million) households—half of India’s 350 million (three hundred fifty million) households—from the current seventy to eighty million (70-80 million), processing around 260 million (two hundred sixty million) transactions through digital and assisted channels. Assisted payments via kirana stores, agents, or postmen enable cash-to-digital conversion for tier-3+ customers uncomfortable with online platforms, particularly for MFI and electricity bills, reducing the need for physical travel while counting as digital transactions. NBBL targets one billion (1 billion) transactions across platforms including Banking Connect and B2B initiatives, remaining profitable to self-fund expansions in Digital Public Infrastructure (DPI) and new APIs without external funding.

4.             Sector Overview

4.1.         India's Forex Reserves Decline by USD 4.47 Billion to USD 688.10 Billion

India’s foreign exchange reserves declined by USD 4.47 Billion (United States Dollar Four Billion Four Hundred Seventy Million only) to USD 688.10 Billion (United States Dollar Six Hundred Eighty-Eight Billion One Hundred Million only) for the week ending 21 November 2025, after a previous rise of USD 5.543 Billion (United States Dollar Five Billion Five Hundred Forty-Three Million Only). Gold reserves fell by USD 2.67 Billion (United States Dollar Two Billion Six Hundred Seventy Million only) to USD 104.18 Billion (United States Dollar One Hundred Four Billion One Hundred Eighty Million only), while foreign currency assets dropped by USD 169 Million (United States Dollar One Hundred Sixty-Nine Million only) to USD 560.60 Billion (United States Dollar Five Hundred Sixty Billion Six Hundred Million only).

4.2.         Non-Life Insurance Sector Growth Accelerates with Key Players Leading Recovery

India’s non-life insurance sector recorded a 10 per cent (ten per cent) Gross Written Premium (GWP) growth in the second quarter of financial year 2026, driven by commercial lines and mid-teen expansion in retail health, positioning Bajaj Allianz General, ICICI Lombard, Star Health, and Niva Bupa for improved profitability through the second half of FY26 and into FY27.

5.             Business Updates

5.1.  Bandhan Bank initiates INR 6,931-Crore NPA sale targeting high-stress segments

Bandhan Bank has approved the sale of stressed assets worth INR 6,931 Crore (Indian Rupees Six Thousand Nine Hundred Thirty-One Crore only) from its Emerging Entrepreneurs Business (EEB) and Aspiring Business Group (ABG) portfolios, which represent the largest contributors to the bank’s gross non-performing assets (“NPAs”). The sale comprises two pools: INR 3,212 Crore (Indian Rupees Three Thousand Two Hundred Twelve Crore only) of NPAs overdue by 180+ (one hundred eighty) days to be sold through a Swiss Challenge process, and INR 3,719 Crore (Indian Rupees Three Thousand Seven Hundred Nineteen Crore only) of written-off loans to be transferred via auction, following RBI’s Transfer of Loan Exposures regulations.

5.2.         PayU India posts 20 per cent revenue growth in the first half of the financial year 26 on payments and credit momentum

PayU India reported a 20 per cent (twenty per cent) year-on-year revenue increase to USD 397 Million (United States Dollar Three Hundred Ninety-Seven Million only) in the first half of financial year 2026, driven by growth in its core payments and credit divisions. The company also reached adjusted EBITDA breakeven during this period, with its payments business experiencing a 17 per cent (seventeen per cent) growth in Total Payment Volume to USD 64 Billion (United States Dollar Sixty-Four Billion only) and its credit business disbursing 38 per cent (thirty-eight per cent) more in loans year-on-year, totalling USD 638 Million (United States Dollar Six Hundred Thirty-Eight Million only).

5.3.         Paytm Payment Services gets full online payment authorisation from RBI

Paytm Payment Services has secured an online Payment Aggregator license from the RBI. This approval strengthens Paytm’s position as an online merchant payment processor.

5.4.         Ujjivan Small Finance Bank strengthens presence in Bengal

Ujjivan Small Finance Bank has announced the opening of branches in West Bengal. The micro-banking-led branches will offer group loans and individual loans, expanding the bank's outreach. Ujjivan Small Finance Bank is also strengthening its digital services through Ujjivan EZY, Hello Ujjivan, video banking and UPI, IMPS, NEFT and TRGS facilities.

Disclaimer

The note is prepared for knowledge dissemination and does not constitute legal, financial or commercial advice. AK & Partners or its associates are not responsible for any action taken based on its contents.

For further queries or details, you may contact:

Mr Anuroop Omkar

Partner, AK & Partners

info@akandpartners.in