Banking & Finance Digest April 06, 2026

We are delighted to share this week's AKP Banking & Finance Weekly Digest. Please feel free to write to us with your feedback at info@akandpartners.in.

1.               Regulatory Updates

1.1.           India

Reserve Bank of India (RBI)

1.1.1.      RBI defers implementation of the Amendment Directions on Capital Market Exposures to July 1, 2026, for Commercial Banks & Small Finance Banks

Reserve Bank of India (“RBI”) has deferred the implementation of its Amendment Directions on Capital Market Exposures from April 1, 2026, to July 1, 2026, following representations from banks, capital market intermediaries and industry associations on operational and interpretational issues. The revised changes primarily clarify the framework for acquisition finance, including its extension to mergers and amalgamations, its availability only for acquisition of control over a non-financial target company, conditions for on lending through subsidiaries, refinance parameters and guarantee requirements. The RBI has also clarified that the cap of INR 1,00,00,000 (Indian Rupees One Crore only) per individual for loans against eligible securities and the cap of INR 25,00,000 (Indian Rupees Twenty-Five Lakhs only) per individual for subscription to shares under initial public offerings, follow-on public offerings or employee stock option schemes will apply at the banking system level, while also revising certain norms for bank financing to capital market intermediaries.

1.1.2.      RBI alerts regulated entities to fresh addition under UN sanctions list

RBI has informed banks and other regulated entities that 1 (one) individual has been added to the United Nations Security Council sanctions list concerning the Islamic State of Iraq and the Levant (ISIL (Da’esh)) and Al-Qaida, pursuant to a press release dated March 30, 2026. Through its circular dated April 1, 2026, the RBI has directed regulated entities to take appropriate action under the Reserve Bank of India – Know Your Customer, Directions, 2025 and the Unlawful Activities (Prevention) Act, 1967, and to strictly follow the procedure prescribed under the relevant Unlawful Activities (Prevention) Order, 2021, as amended, including in relation to sanctions compliance and any de-listing requests.

1.1.3.      RBI tightens INR derivatives framework for Authorised Dealers

RBI has, with immediate effect, directed Authorised Dealers to stop offering non-deliverable derivative contracts involving the Indian Rupee (INR) to both resident and non-resident users, while permitting deliverable foreign exchange derivative contracts for hedging only where the user does not hold offsetting non-deliverable positions. The RBI has also barred the rebooking of any INR foreign exchange derivative contract, whether deliverable or non-deliverable, if cancelled after April 1, 2026, and has prohibited Authorised Dealers from undertaking any foreign exchange derivative contract involving INR with their related parties, as defined under the applicable accounting standards. These revised instructions have been issued under the Foreign Exchange Management Act, 1999 and will remain in force until further review.

1.1.4.      RBI issues Master Direction on Incentives for Currency Distribution and Exchange and Penalties

RBI has issued a consolidated Master Direction on incentives for currency distribution and exchange, and on penalties and penal provisions for bank branches and Currency Chests (“CCs”) for deficiencies in customer service and reporting of transactions or balances. Effective from the date it is placed on the RBI website, the Master Direction brings together and updates the existing framework under the Clean Note Policy, including incentives such as reimbursement of up to INR 50,00,000 (Indian Rupees Fifty Lakhs only) for eligible capital expenditure on CCs in the North-Eastern region and certain inaccessible or hilly areas, 50 per cent (fifty per cent) reimbursement of eligible revenue expenditure for the first 5 (five) years, and service-based incentives for exchange of soiled notes, adjudication of mutilated notes and distribution of coins. It also prescribes penalties for deficiencies such as refusal to exchange notes or coins, counterfeit notes dispensed through automated teller machines or over the counter, cash-outs at automated teller machines for more than 10 (ten) hours in a month, and operational lapses or agreement breaches by CCs, alongside penal interest and flat penalties for delayed or wrong reporting of CC transactions. The Direction also withdraws earlier circulars and Master Directions on these subjects and provides operational guidance and illustrations to support implementation.

1.1.5.      RBI issues Reporting under Foreign Exchange Management Act, 1999 – Returns pertaining to Foreign Exchange Management (Guarantees) Regulations, 2026

RBI has, with effect from April 1, 2026, prescribed the reporting framework for guarantees under the Foreign Exchange Management (Guarantees) Regulations, 2026, requiring persons obligated to report a guarantee to submit Form GRN Issue for issuance, Form GRN Modification for changes in guarantee terms, and Form GRN Invocation for invocation, to the authorised dealer bank. The authorised dealer bank must then file the relevant quarterly returns with the RBI within 30 (thirty) calendar days from the end of the relevant quarter through the Centralised Information Management System and must assign a unique Guarantee Transaction Number for each guarantee reported through Form GRN Issue before submission to the RBI. The circular also clarifies that, for delayed reporting, the late submission fee for Form GRN Invocation will be based on the liability created towards the surety upon invocation, while the amount involved will be treated as nil for delayed reporting of Form GRN Issue and Form GRN Modification because those returns do not capture flows.

1.1.6.      RBI issues Reserve Bank of India (Trade Relief Measures) Directions, 2026

RBI has clarified that the earlier relaxation extending the time period for realisation and repatriation of the full export value of goods, software and services exported from India from 9 (nine) months to 15 (fifteen) months will continue to remain in force, subject to the conditions already prescribed. In addition, citing continuing logistical disruptions arising from the West Asia crisis, the RBI has extended the enhanced period for realisation of both pre-shipment and post-shipment export credit to 450 (four hundred and fifty) days for all disbursals made till June 30, 2026, and has issued the Reserve Bank of India (Trade Relief Measures) Directions, 2026 accordingly.

Securities and Exchange Board of India (SEBI)

1.1.7.      SEBI issues update on implementation of Section 51A of UAPA, 1967 following UNSC 1267 (1999) sanctions list change

Securities and Exchange Board (“SEBI”) of India has issued an update on the implementation of Section 51A of the Unlawful Activities (Prevention) Act, 1967 (“UAPA”) in light of a recent notification by the United Nations Security Council Committee (“UNSC”) established under Resolutions 1267 (1999), 1989 (2011) and 2253 (2015) concerning ISIL (Da’esh), Al‑Qaida and associated entities. The update recalls clause 54 of the Securities and Exchange Board of India Master Circular on Anti‑Money Laundering and Combating the Financing of Terrorism, and notes the UNSC notification SC/16325 dated 30 March 2026 regarding the change to entry QDi.439 (Hamidah Nabagala), while directing stock exchanges, depositories, KYC Registration Agencies and registered intermediaries to ensure they do not maintain accounts of persons appearing in such UNSC lists and to process any de-listing requests via the Ministry of Home Affairs and Ministry of External Affairs or the UNSC Ombudsperson mechanism.

International Financial Services Centres Authority (IFSCA)

1.1.8.      IFSCA specifies Mandatory Certification Course for Capital Market Intermediaries

IFSCA has issued a circular specifying a mandatory certification course for Key Managerial Personnel (KMPs) and employees of Capital Market Intermediaries (CMIs) under the IFSCA (Capital Market Intermediaries) Regulations, 2025. The circular designates the course titled “Regulatory Framework for Capital Market Intermediaries in IFSC” offered by the Institute of Company Secretaries of India and requires CMIs to ensure that all KMPs and employees engaged in core business activities successfully complete the certification on or before September 30, 2026. It further places responsibility on CMIs and persons in control to ensure timely compliance, while encouraging employees engaged in non-operational or support services to undertake the certification voluntarily to enhance professional competence. The circular is issued under Sections 12 and 13 of the IFSCA Act, 2019 read with relevant provisions of the CMI Regulations and comes into force with immediate effect, with the objective of strengthening regulatory preparedness and operational standards within the IFSC.

1.1.9.      IFSCA specifies Certification Course for Fund Management Entities in IFSC

IFSCA has issued a circular specifying a certification course for Key Managerial Personnel (KMPs) and employees of Fund Management Entities (FMEs) under the IFSCA (Fund Management) Regulations, 2025. The circular designates the course titled “Regulatory Framework for Fund Management in IFSC: AIFs and Retail Schemes” offered by the Institute of Company Secretaries of India and requires FMEs to ensure that all KMPs and employees engaged in core fund management activities successfully complete the certification on or before September 30, 2026. It further mandates that FMEs and persons in control ensure continuous adherence to eligibility criteria for KMPs and timely completion of the certification, while encouraging employees engaged in non-operational or support services and entities within the fund management ecosystem to undertake the course voluntarily. The circular is issued under Sections 12 and 13 of the IFSCA Act, 2019 read with relevant provisions of the FM Regulations and comes into force with immediate effect, with the objective of enhancing professional competence, regulatory preparedness, and operational standards within the IFSC.

1.1.10.   IFSCA amends Circular on Appointment and Change of KMPs by FMEs

IFSCA has issued a circular amending its earlier circular dated February 20, 2025 on the appointment and change of Key Managerial Personnel (KMP) by Fund Management Entities (FMEs). The amendment omits Paragraph 4 of the earlier circular with immediate effect, which had provided that comments of the Authority, if any, would be communicated within seven working days from the date of filing of intimation and were to be considered by the FME while effecting such appointment or change. All other provisions of the original circular remain unchanged.

Ministry of Electronics and Information Technology (MeitY)

1.1.11.   MeitY publishes draft amendments to IT Rules, 2021, invites stakeholder comments

The Ministry of Electronics and Information Technology (“MEITY”) has invited stakeholder comments on draft amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, aimed at strengthening intermediary compliance and enhancing digital media oversight. The proposed amendments introduce clarifications in Rule 3(1)(g) and 3(1)(h) to specify that data retention obligations are without prejudice to requirements under other applicable laws, and insert a new Rule 3(4) mandating intermediaries to comply with Ministry-issued clarifications, advisories, directions, standard operating procedures, and guidelines as part of due diligence obligations under Section 79 of the Information Technology Act, 2000. Amendments to Part III include clarification of applicability of content regulation provisions to intermediaries and non-publisher users hosting news and current affairs content, and expansion of the scope and functioning of the Inter-Departmental Committee under Rule 14 to consider matters beyond complaints, including those referred by the Ministry. The proposed amendments are clarificatory and procedural in nature and seek to improve legal certainty, strengthen enforceability of regulatory directions, and ensure effective oversight of intermediary-hosted content, with comments invited until 14 April 2026.

Monetary Penalties

1.1.12.   RBI imposes penalties on 3 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.	Exclusive Capital Limited	INR 10,30,000 (Indian Rupees Ten Lakh Thirty Thousand only)	For non-compliance with certain directions issued by RBI on 'Leverage Ratio', 'Filing of Supervisory returns' and 'Submission of the balance sheet'. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 58G(1)(b) read with Section 58B(5)(aa) of the Reserve Bank of India Act, 1934.
2.	The Davanagere District Central Co-operative Bank Limited, Karnataka	INR 1,50,000 (Indian Rupees One Lakh Fifty Thousand only)	For contravention of provisions of Section 19 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 BR Act.
3.	Nagar Sahakari Bank Limited, Etawah, Uttar Pradesh	INR 3,00,000 (Indian Rupees Three Lakh only)	For non-compliance with certain directions issued by RBI on ‘Loans and advances to directors, their relatives, and firms / concerns in which they are interested’, ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’, ‘Exposure Norms and Statutory / Other Restrictions – UCBs’ 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 Sections 46(4)(i) and 56 of the Banking Regulation Act.

2.            Key Asian Markets - Philippines and Indonesia

2.1.         Philippines

2.2.1.      Bank lending records 9.5 per cent growth in February

The BSP has reported that loans from universal and commercial banks grew by 9.5 per cent (Nine point Five per cent) year-on-year in February, up from 9.3 per cent (Nine point Three per cent) in January, with seasonally adjusted outstanding loans increasing by 0.8 per cent (Zero point Eight per cent) month-on-month. Outstanding loans to residents rose by 10.1 per cent (Ten point One per cent), while loans to non-residents declined by 13.2 per cent (Thirteen point Two per cent). Lending for business activities expanded by 8.6 per cent (Eight point Six per cent), with growth observed across key sectors including electricity and utilities, real estate, trade, transportation, and waste management, while consumer loans grew at a slower pace of 20.8 per cent (Twenty point Eight per cent) due to moderation in credit card and motor vehicle loans. The update reflects trends in credit expansion monitored by the central bank as part of its monetary policy transmission and financial stability objectives.

2.2.2.      Philippines’ net external liabilities decline in Q3 2025

The BSP has reported that the Philippines’ net external liabilities declined by 9.3 per cent(Nine point Three per cent) in Q3 2025, decreasing from PHP 3.6 trillion (Philippine Pesos Three point Six Trillion only) in Q2 2025 to PHP 3.3 trillion (Philippine Pesos Three point Three Trillion only) in Q3 2025, based on preliminary Balance Sheet Approach data. The decline was driven by higher investments by the central bank and other depository corporations in foreign debt instruments, partly offset by increased government securities and loans owed by the general government to non-residents. The central bank and other depository corporations recorded improved net creditor positions due to changes in financial assets and liabilities, while the general government’s net debtor position expanded owing to higher non-resident holdings of government securities, increased external borrowings, and lower deposits with the central bank. Additionally, 68.9 per cent (Sixty Eight point Nine per cent) of the general government’s obligations were denominated in domestic currency, reducing exposure to exchange rate risks. The update reflects improvements in the country’s external financial position as monitored under the Balance Sheet Approach framework.

2.2.         Indonesia

2.2.1.      Indonesia records higher trade surplus in February 2026

Bank Indonesia has reported that Indonesia’s trade balance recorded a surplus of USD 1.27 billion (United States Dollars One Billion Two Hundred Seventy Million only) in February 2026, increasing from USD 0.95 billion (United States Dollars Nine Hundred Fifty Million only) in January 2026, based on data released by BPS-Statistics Indonesia. The increase in surplus was primarily driven by a non-oil and gas trade surplus of USD 2.19 billion (United States Dollars Two Billion One Hundred Ninety Million only), supported by non-oil and gas exports amounting to USD 21.09 billion (United States Dollars Twenty One Billion Ninety Million only), led by natural resource-based commodities and manufacturing products. Meanwhile, the oil and gas trade deficit narrowed to USD 0.92 billion (United States Dollars Nine Hundred Twenty Million only) due to a decline in imports. The development reflects continued strength in Indonesia’s external sector, with the central bank indicating that the surplus supports external resilience and ongoing policy coordination for sustainable economic growth.

2.2.2.      Indonesia CPI inflation remains within target range in March 2026

Bank Indonesia has reported that Consumer Price Index inflation in March 2026 remained within the target range of 2.5 per cent (Two point Five per cent) ±1 per cent (One per cent), with monthly inflation recorded at 0.41 per cent (Zero point Four One per cent) and annual inflation at 3.48 per cent (Three point Four Eight per cent), lower than 4.76 per cent (Four point Seven Six per cent) in the previous month, based on data released by BPS-Statistics Indonesia. Core inflation remained subdued at 0.13 per cent (Zero point One Three per cent) month-on-month and 2.52 per cent (Two point Five Two per cent) year-on-year, while volatile food inflation moderated to 1.58 per cent (One point Five Eight per cent) month-on-month and 4.24 per cent (Four point Two Four per cent) year-on-year, and administered prices recorded inflation of 0.31 per cent (Zero point Three One per cent) month-on-month and 6.08 per cent (Six point Zero Eight per cent) year-on-year. The inflation trajectory reflects coordinated monetary policy and government measures, with Bank Indonesia expecting inflation to remain within the target corridor in 2026 and 2027.

3.              Trends

3.1.           Piramal Finance eyes acquisitions to drive next growth phase

Piramal Finance, which has crossed INR 1 Lakh Crore (Indian National Rupees One Lakh Crores only) in Assets Under Management (‘AUM’), is actively evaluating acquisition opportunities, particularly in the microfinance and gold loan segments, to drive its next phase of growth. While reports have linked Piramal Finance to potential interest in certain microfinance institutions, management clarified that no transaction is currently close to completion and that any acquisition will be pursued selectively, based on valuation discipline and sector conditions. Over the medium term, the lender aims to increase the share of microfinance and gold loans to around 10 per cent (Ten per cent) of its overall AUM, reducing reliance on home loans and loans against property through portfolio diversification.

3.2.           TVS Venu Group to acquire PGIM India’s asset management business

TVS Venu Group has entered into definitive agreements to acquire 100 per cent (Hundred per cent) of PGIM India Asset Management and PGIM India Trustees from US‑based Prudential Financial, subject to regulatory approvals. The acquisition will give the group ownership of an asset management platform with over INR 30,000 Crore (Indian National Rupees Thirty Thousand Crores only) in Assets Under Management (‘AUM’), marking TVS Venu Group’s entry into the mutual fund and asset management space and expanding its footprint in financial services.

4.               Sector Overview

4.1.           Bank deposits expected to strengthen amid market volatility

Bank deposits are expected to see improved growth as heightened geopolitical tensions and market volatility prompt savers to shift funds toward safer, fixed‑return instruments. The recent US–Israel conflict with Iran triggered a sharp equity sell‑off, with the Sensex falling over 10 per cent (Ten per cent) in March to a two‑year low, marking its worst monthly performance in six years and eroding more than INR 50 Lakh Crore (Indian National Rupees Fifty Lakh Crores only) in market capitalisation. Economists expect this volatility, along with the likelihood of a rate hike, to support deposit mobilisation. As of March 15, bank deposit growth stood at 10.8 per cent (Ten point Eight per cent), while credit growth remained higher at 13.8 per cent (Thirteen point Eight per cent), widening the growth gap to 300 basis points, compared to 70 basis points a year earlier. Analysts note that stronger deposit mobilisation could help ease liquidity pressures and gradually narrow the credit‑deposit imbalance amid moderating credit demand.

4.2.           Bank CASA ratio falls to two‑year low in December quarter

The share of low‑cost Current and Savings Account (‘CASA’) deposits in India’s banking system fell to a two‑year low of 37.9 per cent (Thirty-Seven point Nine per cent) in the December 2025 quarter, from 40.1 per cent (Forty One point One per cent) a year earlier, driven mainly by a decline in savings deposits as customers shifted funds to higher‑return options such as equities, mutual funds and gold. While overall bank deposits grew 10 per cent (Ten per cent) year‑on‑year, the erosion in CASA has increased banks’ cost of funds, forcing greater reliance on term deposits and market borrowings, including record issuances of certificates of deposit. This trend is expected to pressure banks’ net interest margins, although bankers anticipate some recovery in CASA amid rising market volatility.

5.              Business Updates

5.1.           Patni Family Office concludes stake hike in UGRO Capital beyond 5 per cent

In a notable secondary market transaction on April 1, 2026, the Patni Family Office concluded a further stake increase in the MSME-focused NBFC, UGRO Capital. By crossing the 5 per cent (Five percent) threshold, the family office has reinforced its position as a significant long-term institutional investor in the technology-enabled lending space. This move highlights the growing interest of large private family offices in specialised credit platforms that utilize data-driven underwriting for small business lending.

5.2.           Emirates NBD receives RBI approval for majority stake acquisition in RBL Bank

In a landmark transaction concluded on April 2, 2026, Dubai-based Emirates NBD received the final nod from the Reserve Bank of India to become the majority owner of RBL Bank. This marks a pivotal moment in the Indian banking sector, as it is the first time a foreign lender has been permitted to take a controlling interest in a significant local private bank under the updated voluntary merger and acquisition guidelines. The deal is expected to infuse substantial capital into RBL Bank, focusing on expanding its digital retail footprint and cross-border trade finance capabilities.

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