AKP Banking & Finance Digest September 22, 2025

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1. Regulatory Updates

1.1. India

Reserve Bank of India (RBI)

1.1.1. RBI issues comprehensive Master Direction for Payment Aggregators

The Reserve Bank of India (“RBI”) issued a consolidated Master Direction for Payment Aggregator (“PA”) businesses across online, physical and cross-border modes, effective immediately; non-bank PAs must seek authorisation by December 31, 2025 or wind up by February 28, 2026, maintain a minimum net worth of INR 15,00,00,000 (Indian Rupees Fifteen Crores only) at application and INR 25,00,00,000 (Indian Rupees Twenty-Five Crores only) by the end of 3 (three) financial years, operate segregated escrow arrangements for domestic and cross-border flows, comply with Know Your Customer (KYC) requirements, register with Financial Intelligence Unit-India (FIU-IND), and observe a per-transaction cap of INR 25,00,000 (Indian Rupees Twenty-Five Lakhs only) for cross-border collections, with enhanced security, audit and customer protection obligations set out by the RBI.

1.1.2. RBI sets up Regulatory Review Cell and external Advisory Group to strengthen periodic overhaul of regulations

RBI announced a Regulatory Review Cell (RRC) in the Department of Regulation, effective October 1, 2025, to ensure every regulation is internally reviewed once in 5 (five) to 7 (seven) years; concurrently, an independent Advisory Group on Regulation (AGR) of external experts, chaired by Rana Ashutosh Kumar Singh of State Bank of India (SBI) with provision to co-opt more—will channel industry feedback into these reviews, with an initial tenure of 3 (three) years, extendable by 2 (two) years subject to review.

Securities and Exchange Board of India (SEBI)

1.1.3. SEBI standardises TLH code to streamline nominee-to-heir transmissions and avoid tax misclassification

The Securities and Exchange Board of India (“SEBI”) issued a circular to ease transmission of securities from a nominee to the legal heir by prescribing a uniform reporting reason code “TLH” (Transmission to Legal Heirs) for registrars to an issue and share transfer agents, listed issuers, depositories, and depository participants when intimating the Central Board of Direct Taxes (CBDT), enabling correct application of the Income-tax Act, 1961; SEBI clarified that existing procedural requirements for transmission continue under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Master Circular for Registrars to an Issue and Share Transfer Agents, with the new code aimed at eliminating inadvertent capital-gains tax treatment for nominees acting as trustees.

1.1.4. SEBI tightens Social Stock Exchange disclosure regime

SEBI issued a Circular consolidating the Social Stock Exchange (“SSE”) framework and aligning it with recent amendments to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, prescribing that Not for Profit Organisations (“NPOs”) eligible for SSE registration must be registered in India as specified trusts, societies, or Section 8 companies with a certificate valid for at least 12 (twelve) months; NPOs must make annual general and governance disclosures within 60 (sixty) days of financial year-end, and additional general, governance, and financial disclosures by October 31 or by the income-tax return due date, whichever is later; all social enterprises raising funds on SSE must file a duly assessed Annual Impact Report (“AIR”) by the same deadline, with self-reported AIRs permitted for unlisted NPOs but covering significant activities and at least 67 (sixty-seven) per cent of prior-year programme expenditure; AIRs must be assessed by Social Impact Assessors and disclosed alongside the AIR, while exchanges and depositories must implement systems and rule changes immediately.

1.1.5. SEBI extends Algo-Platform Settlement Scheme

SEBI extended the “Settlement Scheme for Association with certain Algo Platforms, 2025” until October 16, 2025, beyond the original June 16–September 16, 2025 window; the scheme lets eligible stock brokers associated with specified algo platforms and facing pending proceedings before an adjudicating officer, the Securities Appellate Tribunal (SAT) or courts settle by paying a fixed settlement amount of INR 1,00,000 (Indian Rupees One Lakh only) plus a non-refundable application registration fee of INR 29,500 (Indian Rupees Twenty-Nine Thousand Five Hundred only), with a composite settlement order to be issued after closure and non-participants continuing under securities laws, per the Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018.

1.1.6. SEBI seeks comments on draft rules for AIF unit value reporting to depositories

SEBI opened public consultation on a draft circular proposing guidelines for reporting the value of units of Alternative Investment Funds (“AIFs”) to depositories, with a dedicated e-comments module listing proposals on “reporting of NAV of AIF units to depositories”; stakeholders are invited to review the draft and submit views through SEBI’s public comments portal.

International Financial Services Centres Authority (IFSCA)

1.1.7. IFSCA issues FAQs on Inter-operable Regulatory Sandbox for single window testing across regulators

The International Financial Services Centres Authority (“IFSCA”) published FAQs on the Inter-operable Regulatory Sandbox (“IoRS”), a single-window route to live-test “hybrid” financial products that span the remits of RBI, SEBI, Insurance Regulatory and Development Authority of India (“IRDAI”), Pension Fund Regulatory and Development Authority (PFRDA), and IFSCA. The FAQs define roles for a Principal Regulator (“PR”) and Associate Regulator(s) (“AR”) based on the product’s dominant feature and any regulatory relaxations sought, with the PR coordinating testing and case-by-case relaxations with ARs. Eligible applicants include financial institutions, FinTech and RegTech firms, and start-ups; applications are accepted on an on-tap basis with no application fee, via a single form emailed to iors@rbi.org.in and foreign FinTechs are eligible with IFSCA acting as PR. Post-testing, entities must seek authorisations from the relevant regulators before market launch, and successful exits will be notified via press release.

1.1.8. IFSCA clarifies IFSC listing route for convertible debt

The IFSCA clarified that the procedure, manner, and conditions prescribed for listing debt securities under the International Financial Services Centres Authority (Listing) Regulations, 2024 apply mutatis mutandis to convertible debt securities such as foreign currency convertible bonds (FCCBs) until conversion, for listing on recognised stock exchanges in International Financial Services Centres (IFSCs); issuers must prominently disclose in the offer document or information memorandum the listing status of equity shares to be issued upon conversion, and the circular, issued under sections 12 and 13 of the International Financial Services Centres Authority Act, 2019 and regulation 130(3) of the Listing Regulations, takes immediate effect for all existing and proposed issuances, with recognised stock exchanges directed to ensure compliance.

1.1.9. IFSCA releases consultation on draft FinTech Sandbox Framework

IFSCA released a draft “IFSCA FinTech Sandbox Framework” that unifies testing via the IFSCA FinTech Regulatory Sandbox (FRS), the IFSCA FinTech Innovation Sandbox (FIS), and the IoRS, with an Overseas Regulatory Referral/FinTech Bridge, and invited public comments by October 10, 2025; eligibility covers domestic companies, limited liability partnerships, start-ups registered with the Department for Promotion of Industry and Internal Trade (DPIIT), regulated entities, and approved academics, as well as foreign applicants from jurisdictions not on the Financial Action Task Force (FATF) call-for-action list, with a two-stage application through the Single Window IT System (SWIT); testing runs for up to 12 (twelve) months extendable by 6 (six) months under boundary conditions, with mandatory user risk disclosures and consent, interim Key Performance Indicator reporting, and record-keeping for 7 (seven) years, while IoRS exit requires subsequent authorisations before market launch.

1.1.10.  IFSCA notifies Payment Regulatory Board framework for IFSC payment systems

The IFSCA notified the International Financial Services Centres Authority (Payment Regulatory Board) Regulations, 2025, establishing the Payment Regulatory Board’s constitution, eligibility and tenure of nominated members, code of conduct, meeting quorum and voting, delegation of powers, creation of committees, confidentiality, and allowances; the regulations take effect from the date of publication, and supersede earlier inconsistent provisions.

Insurance Regulatory and Development Authority of India (IRDAI)

1.1.11.  IRDAI launches Bima Sugam India Federation website

IRDAI announced that Chairperson Ajay Seth launched the Bima Sugam India Federation (BSIF) website in Hyderabad, signalling the first visible step toward a Digital Public Infrastructure for insurance aligned with “Insurance for All by 2047 (two thousand and forty-seven)”; the note states a phased rollout focused on security, compliance, and scalability, with the marketplace to progressively go live for real transactions as insurers and ecosystem partners complete integrations, aiming to empower policyholders, deepen penetration, and enhance transparency across the value chain.

1.1.12.  IRDAI also issues FAQs on Inter-operable Regulatory Sandbox

IRDAI has published “Inter-operable Regulatory Sandbox FAQs” to clarify the scope and process for sandbox testing across regulators, covering eligibility of insurers and intermediaries, application and coordination mechanics, customer-protection safeguards during tests, data and reporting requirements, and exit or migration post-testing; stakeholders are directed to refer to the FAQs for operational guidance.

Miscellaneous

Ministry of Corporate Affairs (MCA)

1.1.13.  MCA seeks public input on Indian MDP firms by September 22, 2025

The Ministry of Corporate Affairs (“MCA”) invited public comments on a proposal to facilitate establishment of Indian Multi-Disciplinary Partnership (MDP) firms aimed at building globally competitive domestic professional-services players; a Background Note and questionnaire identify barriers such as advertising and marketing restrictions, limits on multidisciplinary partnerships, fragmented licensing, procurement and empanelment hurdles, and weak global collaboration, and seek suggestions for amendments to relevant laws, rules, and regulations; stakeholders must review the materials on the MCA website’s “Data & Reports” and “e-Consultation” sections and submit responses by September 22, 2025, including via email to so-pimca@gov.in.

1.1.14.  MCA adds IVR route to resolve DIR-3 KYC OTP Problems

MCA announced that some stakeholders, including foreign directors, are encountering One-Time Password (OTP) issues while filing Form DIR-3 Know Your Customer (“KYC”) and DIR-3 KYC Web; to mitigate this, the Ministry has introduced a new Interactive Voice Response (IVR) flow to facilitate OTP generation, and advised users still facing problems to raise a ticket with the MCA Helpdesk and follow the emailed instructions.

Monetary Penalties

1.1.15.  RBI imposes penalties on ten 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.	Bharat Co-operative Bank (Mumbai) Limited	INR 3,75,000 (Indian Rupees Three Lakh Seventy-Five Thousand only)	Non-compliance with certain directions issued by RBI on ‘Reporting of Unusual Cyber Security Incidents’. 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.
2.	The Ahmedabad Mercantile Co-operative Bank Limited, Ahmedabad	INR 23,000 (Indian Rupees Twenty-Three Thousand only)	Non-compliance with certain directions issued by RBI on ‘Membership of Credit Information Companies by Co-operative Banks’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 25(1)(iii) read with Section 23(4) of the Credit Information Companies (Regulation) Act, 2005.
3.	Yavatmal District Central Co-operative Bank Ltd., Maharashtra	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) and Section 46(4)(i) read with Section 56 of the Banking Regulation Act, 1949.
4.	Chandrapur District Central Co-operative Bank Ltd., Chandrapur, Maharashtra	INR 4,50,000 (Indian Rupees Four Lakh Fifty Thousand only)	Contravention of provisions of Section 26A read with Section 56 of the Banking Regulation Act, 1949 (BR Act) 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.
5.	The Jalgaon District Central Co-operative Bank Ltd., Maharashtra	INR 3,50,000 (Indian Rupees Three Lakh Fifty Thousand only)	Contravention of provisions of Section 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 Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949.

2. Key Asian Markets - Philippines and Vietnam and Indonesia

2.1. Philippines

2.2.1. July remittances rise 3 per cent to USD 3.18 billion, personal flows at USD 3.53 Billion

The Bangko Sentral ng Pilipinas (“BSP”) said cash remittances coursed through banks reached USD 3.18 billion (United States Dollars Three Billion One Hundred Eighty Million only) in July 2025, up 3.0 per cent (three point zero per cent) year-on-year from USD 3.08 billion (United States Dollars Three Billion Eighty Million only). Of this, land-based Overseas Filipinos (OFs) sent USD 2.59 billion (United States Dollars Two Billion Five Hundred Ninety Million only) and sea-based OFs sent USD 585 million (United States Dollars Five Hundred Eighty-Five Million only). Cumulative January–July cash remittances rose to USD 19.93 billion (United States Dollars Nineteen Billion Nine Hundred Thirty Million only), up 3.1 per cent (three point one per cent), while personal remittances in July were USD 3.53 billion (United States Dollars Three Billion Five Hundred Thirty Million only); the cash inflow was a 7 (seven)-month high.

2.2.2. BSP caps large cash withdrawals; tighter due diligence mandated

The BSP announced rules requiring enhanced due diligence for over-the-counter cash withdrawals above PHP 500,000 (Philippine Pesos Five Hundred Thousand only) in a single day, with such transactions to be traceable via cheques, digital transfers, direct credits, or similar channels; banks may apply stricter limits based on risk, and the measure aims to curb money laundering and strengthen financial-system integrity.

2.3. Indonesia

2.3.1. Bank Indonesia cuts policy rate to 4.75 per cent to support growth

Bank Indonesia (“BI”) reduced the BI-Rate by 25 (twenty-five) basis points to 4.75 per cent (four point seven five per cent) and adjusted the Deposit Facility and Lending Facility rates to 3.75 per cent (three point seven five per cent) and 5.50 per cent (five point five zero per cent), respectively, citing the need to bolster demand while keeping inflation within the 2.5 per cent (two point five per cent) ±1 per cent (one per cent) target and maintaining rupiah stability; the Board of Governors signalled room for further easing if conditions permit.

2.3.2. Indonesia’s External Debt Eases in July 2025; Debt-to-GDP at 30 per cent

BI reported that Indonesia’s external debt declined in July 2025 as annual growth moderated to 4.1 per cent (four point one per cent) from 6.3 per cent (six point three per cent), driven by slower public-sector borrowing and broad United States dollar appreciation; government external debt growth eased to 9.0 per cent (nine point zero per cent), while private external debt remained in mild contraction at 0.3 per cent (zero point three per cent) year-on-year (yoy); debt remains predominantly long-term, with 99.9 per cent (ninety-nine point nine per cent) of government obligations in long maturities, and the ratio of external debt to GDP (Gross Domestic Product) fell to 30.0 per cent (thirty point zero per cent) from 30.5 per cent (thirty point five per cent), with long-term debt comprising 85.5 per cent (eighty-five point five per cent) of the total.

3. Trends

3.1. SEBI flags wider institutional access to commodity derivatives

SEBI said it will engage with the Government to potentially allow banks, insurers and pension funds to trade non-agricultural commodity derivatives, and is examining Foreign Portfolio Investors (FPIs) access to non-cash-settled contracts, signalling a possible broadening of market participation.

3.2. ESAF SFB board to consider Tier-I capital raise

ESAF Small Finance Bank (SFB) disclosed a September 20, 2025, board meeting to consider raising Tier-I capital via equity or other eligible modes, indicating preparatory capital-buffer actions.

3.3. Canara HSBC life insurance gains SEBI nod for IPO

Canara HSBC Life Insurance received an observation letter from SEBI, keeping alive plans to tap public markets and adding to the financial-services pipeline.

3.4. Rate-cut odds for October split between bankers and brokers

Senior bankers guided for no cut in the October policy while some houses projected 25 (twenty-five) basis-point reductions by December, keeping the near-term rate path uncertain.

3.5. RBI likely to retain 4 per cent inflation target in framework review

RBI is expected to recommend keeping the 4 per cent (four per cent) headline inflation target with the 2–6 per cent (two to six per cent) band in the upcoming review, suggesting continuity rather than a shift toward core-inflation targeting.

4. Sector Overview

4.1. Bond-fund flows wobble on higher yields

Mutual funds recorded outflows from corporate-bond categories in August as yields rose; Combined redemptions of INR 18.7 Crore (Indian Rupees One Thousand Eight Hundred and Seventy Crore only), with managers flagging profit-taking and spread widening.

4.2. Currency stays volatile near record lows

The Rupee hovered around 88.30–88.32 (eighty-eight point three zero to eighty-eight point three two) per U.S. Dollar, close to last week’s all-time low, as broader Asia foreign exchange softened on a stronger dollar and higher U.S. yields.

4.3. Wholesale inflation turns mildly positive

The Department for Promotion of Industry and Internal Trade said Wholesale Price Index (“WPI”) inflation was 0.52 per cent (zero point five two per cent) year-on-year in August; the WPI Food Index moved to 0.21 per cent (zero point two one per cent) and month-on-month WPI rose 0.52 per cent (zero point five two per cent).

5. Business Updates

5.1. SEBI clears Pine Labs IPO

The Securities and Exchange Board of India (SEBI) approved Pine Labs’ Initial Public Offering (“IPO”), with reports indicating a potential raise of up to USD 1,000,000,000 (United States Dollars One Billion only).

5.2. GROWW FILES UPDATED IPO DRAFT WITH SEBI

Billionbrains Garage Ventures Limited (parent of Groww) filed an Updated Draft Red Herring Prospectus (UDRHP) with the Securities and Exchange Board of India (SEBI) for an IPO of about INR 7,000,00,00,000 (Indian Rupees Seven Thousand Crore only), comprising a fresh issue and an offer for sale.

5.3. CBI files chargesheets in yes bank case

India’s Central Bureau of Investigation filed chargesheets naming Anil Ambani and the former Yes Bank Chief Executive Officer in an alleged loan-linked fraud case, marking a material enforcement development for the banking sector.

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

Founding Partner, AK & Partners

info@akandpartners.in