Banking & Finance Digest April 20, 2026

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1.  Regulatory Updates

1.1. India

Reserve Bank of India (RBI)

1.1.1. RBI issues Amendment Directions on NBFC branch authorisation framework

The Reserve Bank of India (“RBI”) has issued the Reserve Bank of India (Non-Banking Financial Companies – Branch Authorisation) Amendment Directions, 2026, following its earlier draft released for stakeholder comments until February 27, 2026. The draft had proposed revisions to the existing framework governing the opening of branches by various categories of NBFCs, including housing finance companies. Pursuant to an examination of stakeholder feedback, the RBI has incorporated suitable modifications and published a statement outlining the responses received. The Amendment Directions also entail consequential updates to the Reserve Bank of India (Non-Banking Financial Companies - Acceptance of Public Deposits) Directions, 2025 and the Reserve Bank of India (Housing Finance Companies) Directions, 2025. The revised framework aims to provide operational flexibility to NBFCs in expanding branch networks while maintaining necessary regulatory oversight and compliance.

1.1.2. RBI cancels licence of National Urban Cooperative Bank Ltd., Pratapgarh

RBI has cancelled the licence of National Urban Cooperative Bank Ltd., Pratapgarh under Section 22 read with Section 56 of the Banking Regulation Act, 1949, with effect from the close of business on the same date. The action has been taken on account of the bank’s inadequate capital and poor earning prospects, non-compliance with statutory requirements, and concerns that its continued operations would be prejudicial to the interests of depositors and the public. Consequently, the bank has been prohibited from carrying on banking business, and the Commissioner and Registrar of Cooperative, Uttar Pradesh has been requested to initiate winding up proceedings and appoint a liquidator. Upon liquidation, depositors will be entitled to receive deposit insurance up to INR 5,00,000 (Indian Rupees Five Lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC), in accordance with the applicable framework.

1.1.3.  RBI invites comments on draft Amendment Directions on NBFC-UL framework

RBI has issued draft Amendment Directions proposing revisions to the methodology for identification of Non-Banking Financial Companies in the Upper Layer (NBFC-UL), along with inclusion of Government-owned NBFCs within the NBFC-UL framework. The draft directions include the Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Second Amendment Directions, 2026 and the Reserve Bank of India (Non-Banking Financial Companies - Concentration Risk Management) Third Amendment Directions, 2026. Stakeholder comments have been invited until May 04, 2026, through the ‘Connect 2 Regulate’ portal or via email. The proposed amendments seek to replace the existing two-pronged methodology under the Scale Based Regulation (SBR) Framework with a simplified asset size-based threshold of INR 1,00,000 crore (Indian Rupees One Lakh Crore only) and above for identification of NBFC-UL. Further, in line with an ownership-neutral regulatory approach, it is proposed to include eligible Government-owned NBFCs within the NBFC-UL category. The draft also proposes permitting NBFC-UL entities to utilise State Government guarantees as a credit risk transfer instrument without any limit, subject to specified conditions.

Insurance Regulatory and Development Authority of India (IRDAI)

1.1.4. IRDAI Notifies Obligatory Cession for FY 2026–27

Insurance Regulatory and Development Authority of India has issued a notification specifying the obligatory cession requirements for the financial year 2026–27 under Section 101A of the Insurance Act, 1938, applicable to Indian reinsurers and other insurers. The notification provides that 4 per cent (Four per cent) of the sum insured on each general insurance policy shall be ceded to the Indian reinsurer, with the entire cession to be placed with GIC Re, except for terrorism premium and nuclear pool cessions which shall be nil. It further sets out conditions including no limit on sum insured for cessions, requirement for timely underwriting information, minimum commission rates across classes such as 5 per cent (Five per cent) for motor TP and oil and energy, 10 per cent (Ten per cent) for group health, 7.50per cent (Seven point Five Zero per cent) for crop insurance, and 15per cent (Fifteen per cent) for other classes, along with profit commission sharing on a 50:50 basis after factoring specified parameters. The notification aims to regulate reinsurance placements and ensure consistency in obligatory cession practices for the specified period.

Miscellaneous

Ministry of Electronics and Information Technology (MeitY)

1.1.5.  MeitY Constitutes AI Governance and Economic Group (AIGEG)

Ministry of Electronics and Information Technology has issued an Office Memorandum constituting the AI Governance and Economic Group (AIGEG) to coordinate and oversee artificial intelligence governance and economic policy. The group is tasked with coordinating policy across ministries and regulators, reviewing mechanisms to ensure firm-level compliance with local laws, overseeing national AI initiatives, promoting responsible innovation, studying emerging risks and regulatory gaps, and developing India’s strategy on AI governance. It will also work with industry to develop a roadmap for AI deployment, classify AI use cases based on readiness, and assess labour market impacts including mitigation strategies and transition planning. The group comprises senior government representatives including the Minister of Electronics and IT as Chairperson, Minister of State as Vice Chairperson, and members such as the Principal Scientific Advisor, Chief Economic Advisor, CEO of NITI Aayog, and Secretaries from key departments, with the objective of ensuring coordinated, responsible, and strategic development of AI in India.

Monetary Penalties

1.1.6.      RBI imposes penalties on one bank 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.	Himachal Pradesh State Co-operative Bank Limited	INR 7,50,000/- (Indian Rupees Seven Lakh Fifty Thousand only)	For violating KYC norms regarding periodic risk categorisation reviews, following a statutory inspection. This penalty is based on deficiencies identified in a 2025 inspection and does not impact the validity of customer transactions.

2. Key Asian Markets - Philippines and Indonesia

2.1. Philippines

2.1.1. BSP Extends Regulatory Relief Measures to Financial Institutions Amid Energy Emergency

BSP has approved regulatory relief measures for BSP-supervised financial institutions through a Monetary Board Resolution in response to the State of National Energy Emergency declared on March 24, 2026. The framework provides for temporary relief measures including grant of loan payment grace periods of up to six months for affected borrowers, deferment of agricultural loan payments for up to one year, and temporary exclusion of such loans from past due and non-performing classifications for up to one year, subject to reporting requirements and bank assessment. The measures also encourage institutions to suspend fees on digital transactions such as InstaPay and PESONet to support consumers and businesses. The framework requires institutions to apply relief prudently and only to borrowers materially affected by the energy emergency. The measures aim to support lending activity, facilitate borrower recovery, and maintain financial stability and consumer protection during the energy crisis.

2.2.2. CBUAE and BSP Sign MoU to Enhance Financial Cooperation and Cross-Border Payments

The Central Bank of the United Arab Emirates and BSP have entered into a memorandum of understanding to strengthen financial cooperation and bilateral trade, with a focus on enhancing cross-border payment systems. The agreement envisages linking instant payment platforms to enable faster and more efficient remittances, with future integration of card switches and messaging systems. It also provides for collaboration in areas such as central bank digital currencies, open finance, digital assets, and Islamic banking, including exchange of expertise for CBDC development. The MoU aims to improve financial connectivity, support overseas remittances, and promote innovation-led economic growth between the UAE and the Philippines.

2.2. Indonesia

2.2.1. Indonesia’s External Debt Remains Maintained in February 2026

Bank Indonesia has reported that Indonesia’s external debt stood at USD 437.9 billion (United States Dollars Four Hundred Thirty Seven Billion Nine Hundred Million only) in February 2026, increasing from USD 434.9 billion (United States Dollars Four Hundred Thirty Four Billion Nine Hundred Million only), and growing by 2.5 per cent (Two point Five per cent) (yoy), driven primarily by the public sector amid foreign capital inflows. Government external debt stood at USD 215.9 billion (United States Dollars Two Hundred Fifteen Billion Nine Hundred Million only), growing by 5.5 per cent (Five point Five per cent) (yoy) and concentrated in key sectors, while private external debt stood at USD 193.7 billion (United States Dollars One Hundred Ninety Three Billion Seven Hundred Million only) and declined by 0.7 per cent (Zero point Seven per cent) (yoy). The external debt structure remained stable, with a debt-to-GDP ratio of 29.8 per cent (Twenty-Nine point Eight per cent) and long-term debt accounting for 84.9 per cent (Eighty-Four point Nine per cent), reflecting prudent management and supporting economic stability.

2.2.2. Indonesia Business Activity Maintained in Q1 2026; Outlook Positive

Bank Indonesia has reported that business activity remained maintained in Q1 2026, reflected by a positive Weighted Net Balance (WNB) of 10.11per cent (Ten point One One per cent), with growth observed across sectors including financial services, agriculture, manufacturing, and trade, supported by seasonal demand during major religious holidays and the harvesting season. Capacity utilisation increased to 73.33per cent (Seventy-Three point Three Three per cent) from 73.15per cent (Seventy-Three point One Five per cent) in Q4 2025, while corporate financial conditions remained sound with improved liquidity, profitability, and credit access. Respondents expect business activity to strengthen further in Q2 2026, with WNB projected at 14.80 per cent (Fourteen point Eight Zero per cent), driven by agriculture, mining, and construction sectors.

3.  Trends

3.1. Piramal Finance’s AUM crosses INR 1 Lakh Crore; eyes acquisitions in microfinance and gold loans

Piramal Finance has crossed INR 1 Lakh Crore (Indian Rupees One Lakh Crores Only) in assets under management ("AUM"), marking a milestone in its shift from a largely wholesale‑focused NBFC in FY21 to a retail‑led franchise with around 85–90 per cent (Eighty to Ninety Per Cent) of AUM now in retail lending. The company is targeting INR 1.5 Lakh Crore (Indian Rupees One Point Five Lakh Crores) AUM by March 2028, driven by expansion in retail‑origination channels and a broader product mix that now includes home loans, loans against property, small‑business loans, digital personal loans, used‑car finance, and plans to enter rural lending and gold loans. MD & CEO Jairam Sridharan has signalled that acquisitions are on the radar, particularly in microfinance, small‑business lending, affordable housing, and gold‑loan segments, though he expects most of the growth to remain organic. The lender also aims to open more branches and deepen its presence in tier‑2 and tier‑3 markets to support this growth trajectory.

4.  Sector Overview

4.1. Banks tighten due‑diligence on dollar forwards to guard against FEMA violations

Indian banks are now asking corporates to submit supporting documents for dollar forward transactions, especially after recent currency volatility and tighter scrutiny around foreign exchange dealing. The move is meant to protect banks from possible FEMA-related fallout and misuse of the forward market by clients with weak or questionable underlying exposures. Banks are taking a more cautious approach than they have in years, including checking a company’s track record, setting client-wise limits, and asking for evidence of actual import or export orders. The report says this is happening even though RBI has not explicitly required banks to collect underlying documents for every forward deal under the current rules.

4.2.  CRISIL expects Indian banks’ gross NPAs to stay range‑bound at 2.0–2.2per cent by March 2027 despite West Asia risks

Rating agency CRISIL projects that Indian banks’ gross non‑performing assets will remain in the 2.0–2.2 Per Cent (Two to Two Point Two Per Cent) band by March 2027, only slightly above the historic‑low of about 2 per cent (Two per cent) seen in March 2026. This stable‑asset‑quality outlook is underpinned by strong corporate balance sheets and policy support for MSMEs, even as geopolitical tensions in West Asia pose downside risks. CRISIL expects corporate‑loan NPAs to stay around 1.2–1.3 per cent (One Point Two to One Point Three Per Cent), retail NPAs to hold at 1.1–1.3 per cent (One Point One To One Point The Per Cent), with housing‑loan NPAs near 1 per cent (One Per Cent), while MSME gross NPAs may rise modestly to about 3.4–3.6 per cent (Three Point Four To Three Point Six Per Cent) this fiscal from 3.2 per cent (Three Point Two Per Cent) last fiscal. The agency notes that the duration and intensity of the West Asia conflict, and the response of government and regulators, will be key watch‑outs for the banking sector through FY27.

5.  Business Updates

5.1. Poonawalla Fincorp raises INR 2,500 Crore via Qualified Institutional Placement

Poonawalla Fincorp Limited successfully raised INR 2,500 crore (Indian Rupees Two Thousand and Five Hundred Crores only) through a Qualified Institutions Placement (“QIP”), issuing 6,74,30,883 (Six Crore Seventy Four Lakh Thirty Thousand Eight Hundred and Eighty Three) equity shares of face value INR 2 (Indian Rupees Two only) each at an issue price of INR 370.75 (Indian Rupees Three Hundred and Seventy point Seven Five only) per share, representing a 5per cent discount to the floor price of INR 390.26 (Indian Rupees Three Hundred and Ninety point Two Six only) per share. The QIP, which opened on April 9, 2026 and closed on April 13, 2026, saw strong participation from domestic mutual funds, domestic insurance companies, and foreign institutional investors. The proceeds are intended to support business growth, expand lending operations, and diversify the company's asset portfolio. Poonawalla Fincorp, a Cyrus Poonawalla Group-promoted ND-SI-NBFC registered with the RBI, reported an AUM of INR 55,017 crore (Indian Rupees Fifty-Five Thousand and Seventeen only) as of December 31, 2025.

5.2. Aditya Birla Housing Finance raises INR 2,750 Crore via Stake Sale to Advent International

Aditya Birla Housing Finance Limited (“ABHFL”) raised INR 2,750 Crore (Indian Rupees Two Thousand Seven Hundred and Fifty Crore too) by selling a 14.29per cent (Fourteen point Two Nine per cent) stake to Indriya Ltd, an entity of global private equity firm Advent International. The board of ABHFL approved the allotment of 12.32 crore (Twelve point Three Two Crore) equity shares at INR 223.12 (Indian Rupees Two Hundred and Twenty-Three and Twelve Paise) apiece to Indriya Ltd by way of a preferential issue on a private placement basis on April 17, 2026. Following the transaction, Aditya Birla Capital, the parent company now holds 85.50 per cent (Eighty-Five point Five Zero) of ABHFL's equity share capital, with ABHFL consequently ceasing to be a wholly owned subsidiary. ABHFL reported revenues of INR 2,655.18 Crore (Indian Rupees Two Thousand Six Hundred and Fifty-Five Crore and Eighteen Lakhs) and a net worth of INR 3,783.06 Crore (Indian Rupees Three Thousand Seven Hundred and Eighty-Three Crore and Six Lakhs) for FY 2024-25.

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