Banking & Finance Digest April 27, 2026

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1. Regulatory Updates

1.1. India

Reserve Bank of India (RBI)

1.1.1. RBI issues consolidated Directions on Digital Payments – E-mandate framework, 2026

The Reserve Bank of India (“RBI”) has issued consolidated Directions on the Digital Payments – E-mandate framework, 2026, bringing together all existing instructions governing electronic mandates for recurring payments into a single, unified framework. The revised Directions incorporate minor modifications based on stakeholder feedback and are aimed at improving regulatory clarity, consistency, and ease of compliance across entities operating in the digital payments ecosystem. The framework applies to banks, payment system operators, and other participants facilitating recurring digital payment mandates, requiring them to align their systems and processes with the updated Directions with immediate effect. The consolidation is intended to streamline regulatory instructions, enhance operational efficiency, and strengthen oversight of recurring payment mechanisms, reflecting the RBI’s continued focus on improving the robustness and standardisation of India’s digital payments infrastructure.

1.1.2. RBI issues draft Master Direction on Prepaid Payment Instruments, 2026

RBI has released the draft Master Direction on Prepaid Payment Instruments (PPIs), 2026, as part of its ongoing efforts to strengthen the regulatory framework governing digital payment instruments. The draft Directions follow a comprehensive review of the existing PPI guidelines and aim to support long-term sectoral growth while enhancing transaction security and consumer protection. Stakeholder comments have been invited from regulated entities and the public until May 22, 2026, through the ‘Connect 2 Regulate’ portal on the RBI’s website. The proposed framework seeks to streamline and consolidate existing instructions, improve operational clarity, and reinforce safeguards across the PPI ecosystem. The initiative reflects the RBI’s broader focus on fostering innovation in digital payments while ensuring robust risk management and regulatory oversight.

1.1.3. RBI approves amalgamation of The Mekhar Urban Co-op Bank Ltd. with Nagpur Nagarik Sahakari Bank Ltd.

RBI has approved the Scheme of Amalgamation of The Mekhar Urban Co-op Bank Ltd., Mekhar with Nagpur Nagarik Sahakari Bank Ltd., Nagpur, in exercise of its powers under Section 44A read with Section 56 of the Banking Regulation Act, 1949. The Scheme has come into effect from April 24, 2026, pursuant to which all branches of The Mekhar Urban Co-op Bank Ltd. will operate as branches of Nagpur Nagarik Sahakari Bank Ltd., Nagpur. The amalgamation is aimed at ensuring continuity of banking services and strengthening the operational and financial position of the merged entity.

1.1.4. RBI cancels licence of Paytm Payments Bank Limited effective April 24, 2026

RBI has cancelled the banking licence of Paytm Payments Bank Limited with effect from the close of business on April 24, 2026, under Section 22(4) of the Banking Regulation Act, 1949, prohibiting it from carrying on banking business and initiating winding-up proceedings before the High Court. The action follows findings that the bank’s affairs were conducted in a manner detrimental to depositor interests, with deficiencies in management, regulatory non-compliance, and failure to meet licensing conditions, alongside earlier supervisory restrictions imposed since 2022, including a ban on onboarding new customers and limitations on deposits and account operations. The RBI has stated that the bank holds sufficient liquidity to fully repay depositors upon winding up, ensuring protection of customer funds while reinforcing regulatory discipline in the banking sector.

1.1.5. RBI approves amalgamation of Mattancherry Mahajanik Co-operative Urban Bank with Peoples’ Urban Co-operative Bank effective April 27, 2026

RBI has approved the voluntary amalgamation of The Mattancherry Mahajanik Co-operative Urban Bank Ltd., Cochin, Kerala with The Peoples’ Urban Co-operative Bank Ltd., Tripunithura, Kerala, under Section 44A read with Section 56 of the Banking Regulation Act, 1949, with effect from April 27, 2026. Pursuant to the sanctioned scheme, all branches of The Mattancherry Mahajanik Co-operative Urban Bank will operate as branches of The Peoples’ Urban Co-operative Bank from the effective date, ensuring continuity of operations and integration of banking services under the transferee entity.

Securities and Exchange Board of India (SEBI)

1.1.6. SEBI issues draft circular on handling of clients’ unpaid securities by TM and CM to enhance ease of doing investment and business

SEBI has released a draft circular for public comments proposing a revised framework for handling clients’ unpaid securities through Client Unpaid Securities Pledgee Accounts (“CUSPA”), intended to replace paragraph 46 of the Master Circular for Stock Brokers dated June 17, 2025, and align with mandatory direct pay‑out of securities to client demat accounts. Key proposals include clarifying that the maximum funding period is up to five trading days from pay‑out (with brokers allowed shorter periods as per disclosed policy), prescribing same‑day or next‑day pledge release timelines on client payment, enabling partial release of pledges based on daily reassessment of maximum pledge value, shortening the auto‑release period where pledges are neither invoked nor released, specifying re‑pledge mechanics where trading members (“TM”) and clearing members (“CM”)  are separate and allowing time‑bound pledge extensions in exceptional scenarios such as lower circuits or trading suspensions, all while prohibiting onward pledging of CUSPA securities to banks or non‑banking financial companies (“NBFCs”).

1.1.7. SEBI permits net settlement of funds for FPI transactions in cash market

SEBI has introduced a framework permitting net settlement of funds for outright transactions executed by FPIs in the cash market, in a move aimed at improving operational efficiency and reducing funding and foreign exchange slippage costs, especially around index rebalancing events. Under the new mechanism, custodians may net only those transactions where an Foreign Portfolio Investor (“FPI”) has either a pure purchase or a pure sale in a security within a settlement cycle (outright transactions), while securities where both buy and sell occur in the same cycle will continue to be settled on a gross basis; securities settlement, as well as Securities Transaction Tax (“STT”) and stamp duty, will continue on a delivery basis, and the revised approach will require system changes by custodians, FPIs and other stakeholders ahead of implementation by December 31, 2026.

International Financial Services Centres Authority (IFSCA)

1.1.8. IFSCA and Korea FSC Sign MoU to Strengthen Financial Cooperation

IFSCA has signed a Memorandum of Understanding with the Financial Services Commission at the Korea-India Financial Cooperation Forum held in New Delhi on April 20, 2026, to enhance regulatory cooperation and support the development of financial services ecosystems in both jurisdictions. The MoU provides for cooperation and mutual assistance through exchange of information, best practices, and expertise, including in the application of emerging technologies and innovations, and establishes a structured platform for dialogue and collaboration between the two regulators. The initiative aims to deepen financial ties, promote innovation, and strengthen engagement between the financial ecosystems of India and Korea.

1.1.9. IFSCA Issues Cybersecurity Guidelines for MIIs in GIFT IFSC

IFSCA has issued Guidelines on Cyber Security and Cyber Resilience for Market Infrastructure Institutions (“MIIs”) in IFSC, establishing a comprehensive and prescriptive cybersecurity framework for stock exchanges, clearing corporations, depositories, and the bullion exchange operating in GIFT IFSC. The guidelines prescribe enhanced obligations recognising the systemic importance of MIIs, including Board-approved cybersecurity policies with a designated CISO reporting to the MD/CEO, mandatory 24x7 Cyber Security Operations Centres, adoption of advanced threat detection systems, and structured incident reporting requiring notification within 6 hours (Six hours), interim reporting within 3 days (Three days), and final analysis within 30 days (Thirty days). They further mandate annual cryptographic risk assessments with transition planning for post-quantum cryptography, risk-based third-party management, and ISO 27001 certification within 2 years (Two years), while aligning with national cybersecurity frameworks.

1.1.10.   IFSCA Registers First Foreign Family Investment Fund in GIFT IFSC

IFSCA has granted registration to the first foreign Family Office (Family Investment Fund) under the IFSCA (Fund Management) Regulations, 2025, marking a key milestone in the development of GIFT IFSC as a global financial hub. The registration enables establishment of family investment fund structures for efficient management and deployment of family wealth across jurisdictions within a regulated framework and reflects IFSCA’s approach towards creating a flexible and globally competitive ecosystem for private wealth. The development is intended to strengthen GIFT IFSC’s position as a preferred destination for international fund management and facilitate diversified investments into India and global markets.

1.1.11.   IFSCA Issues Framework for Rights Issues under Listing Regulations, 2024

IFSCA has issued a circular dated April 22, 2026 prescribing a detailed framework for rights issues by listed entities under the IFSCA (Listing) Regulations, 2024. The framework applies to entities listed solely on recognised stock exchanges in IFSC and sets out eligibility conditions, disclosure requirements, pricing norms, and procedural aspects, including mandatory filing of draft and final letter of offer, determination of record date, and dematerialised credit and trading of rights entitlements. It also prescribes conditions relating to underwriting, monitoring of issue proceeds, minimum subscription, subscription period of at least 7 days (Seven days), allotment timelines within 8 days (Eight days), and structured reporting obligations, while restricting further capital issuance during the offer period. The circular aims to standardise the rights issue process, ensure investor protection, and enhance transparency and efficiency in capital raising within IFSC markets.

1.1.12.   IFSCA Issues Framework for Preferential Issues and QIP in IFSC

IFSCA has issued a circular specifying the framework for preferential issues and qualified institutions placement (“QIP”) under the International Financial Services Centres Authority (Listing) Regulations, 2024. The framework applies to listed entities in the IFSC and sets out eligibility conditions, including restrictions on issuances to persons who have sold shares within 30 (thirty) trading days prior to the relevant date and ineligibility where dues to authorities or stock exchanges remain unpaid. It prescribes requirements relating to shareholder approvals and in-principle stock exchange approvals, and mandates that securities be fully paid-up at allotment, with specific provisions for warrants requiring at least 25 per cent (Twenty-Five per cent) upfront payment. The circular also lays down tenure limits for convertible securities of 18 (eighteen) months for preferential issues and 60 (sixty) months for QIPs, along with detailed disclosure requirements, lock-up conditions of 6 (six) months for promoters, and timelines for allotment. For QIPs, it mandates appointment of investment bankers as lead managers and issuance through placement documents to select investors.

Miscellaneous

Ministry of Electronics and Information Technology (MeitY)

1.1.13. MeitY Releases Draft Amendments to IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 for Consultation

MeitY has released draft       amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 and invited stakeholder comments, with the consultation timeline extended till May 7, 2026. The proposed amendments seek to clarify and expand intermediary due diligence obligations, including continued applicability of data preservation requirements alongside existing laws, and mandatory compliance with advisories, directions, and guidelines issued by the Ministry as part of safe harbour conditions. The draft also prescribes minimum conditions for issuance of such directions, introduces stricter requirements for continuous and visible labelling of synthetically generated content, expands the scope of digital media provisions to cover user-uploaded news and current affairs content, and broadens the mandate of the Inter-Departmental Committee to examine matters referred by the Ministry and issue recommendations.

Monetary Penalties

1.1.14.   RBI imposes penalties on five 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.	Hardoi Jilla Sahkari Bank Ltd.	INR 1,00,000 (Indian Rupees One Lakh only)	For failing to conduct periodic, half-yearly reviews of account risk categorisation as per KYC directions. Based on a NABARD inspection as of March 31, 2025, this regulatory penalty reflects compliance deficiencies rather than a judgment on customer transactions.
2.	Ebix Payment Services Private Limited	INR 80,000 (Indian Rupees Eighty Thousand only)	For failing to comply with the Know Your Customer (KYC) directions, specifically regarding the proper risk categorisation of its customers. Based on a statutory inspection conducted for the period June 2024 to May 2025, the RBI found the charges against the company substantiated, exercising its authority under the Payment and Settlement Systems Act, 2007.
3.	Dr. Babasaheb Ambedkar Nagari Sahakari Bank Ltd., Aurangabad	INR 80,000 (Indian Rupees Eighty Thousand only)	Based on a March 2025 inspection, the bank violated RBI directives regarding exposure norms for advances and exceeded interest rate caps on deposits under the Supervisory Action Framework (SAF). The penalty, issued under the Banking Regulation Act, 1949, focuses on compliance failures and not the validity of customer transactions.
4.	Bandhan Bank Limited	INR 41,80,000 (Indian Rupees Forty-One Lakh and Eighty Thousand only)	For violating the Banking Regulation Act and non-compliance with KYC directions based on a March 2025 inspection. The penalties stemmed from the bank sanctioning director-related loans and failing to perform periodic risk categorisation reviews of certain accounts.
5.	Muthoot Housing Finance Company Limited	INR 80,000 (Indian Rupees Eighty Thousand only)	For failing to disclose risk gradation approaches and interest rate rationales in loan documentation. This penalty, stemming from a 2025 inspection, addresses non-compliance with the Fair Practice Code.

2.  Key Asian Markets - Philippines and Indonesia

2.1.  Philippines

2.1.1.  Philippines Business Confidence Declines Amid Middle East Conflict

BSP has reported a decline in business confidence based on its latest Business Expectations Survey, with the confidence index falling to -24.3 per cent (Minus Twenty Four point Three per cent) in March from 8.2 per cent (Eight point Two per cent) in February, and the quarter-ahead index declining to -17.3 per cent  (Minus Seventeen point Three per cent) from 37.4per cent  (Thirty Seven point Four per cent), reflecting concerns over rising fuel costs and geopolitical tensions. The 12-month outlook remained positive but moderated to 11.7 per cent (Eleven point Seven per cent) from 51.1 per cent (Fifty One point One per cent), while hiring expectations weakened and inflation expectations rose above the 3.0 per cent (Three point Zero per cent) target within the ±1.0 percentage-point tolerance band. The BSP indicated that it continues to monitor the impact of these developments and stands ready to take appropriate monetary policy measures, while also enabling banks to extend support to affected clients.

2.1.2. Philippines Consumer Confidence Improves in Q1 2026, Outlook Moderates

BSP has reported improved consumer confidence in Q1 2026 based on its latest Consumer Expectations Survey, with the confidence index improving to -15.8 per cent (Minus Fifteen point Eight per cent) from -22.2 per cent (Minus Twenty Two point Two per cent) in Q4 2025, reflecting reduced pessimism due to expectations of higher income and stable employment. However, the outlook weakened for Q2 2026 and the year ahead, with the quarter-ahead confidence index declining to 1.8per cent  (One point Eight per cent) from 3.6per cent  (Three point Six per cent), and the year-ahead index moderating to 9.6per cent  (Nine point Six per cent) from 11.8per cent  (Eleven point Eight per cent), driven by concerns over inflation and governance issues. Inflation expectations remained below the 3.0 per cent (Three point Zero per cent) target within the ± 1.0 percentage-point tolerance band, and the BSP indicated that it continues to monitor evolving risks and stands ready to take appropriate monetary policy measures while enabling banks to support affected clients.

2.2.  Indonesia

2.2.1. Indonesia Reports Continued Growth in New Loan Disbursements in Q1 2026

Bank Indonesia has reported that new loan disbursements continued to grow in Q1 2026, with a Weighted Net Balance (WNB) of 38.74per cent (Thirty Eight point Seven Four per cent), albeit at a slower pace compared to Q4 2025, driven primarily by consumption loans. Respondents expect disbursements to increase further in Q2 2026 with a projected WNB of 96.65per cent  (Ninety Six point Six Five per cent), while lending standards tightened in Q1 2026 as reflected by a Lending Standards Index (LSI) of 0.15 (Zero point One Five), particularly in loan maturities and documentation requirements, and are expected to ease in Q2 2026 with an LSI of 2.88 (Two point Eight Eight). Outstanding loans are expected to maintain growth through 2026, supported by a stable economic and monetary outlook and contained credit risk.

2.2.2. Indonesia Reports Acceleration in Broad Money Growth in March 2026

Bank Indonesia has reported that broad money (M2) growth accelerated to 9.7per cent  (Nine point Seven per cent) yoy in March 2026 from 8.7per cent  (Eight point Seven per cent) yoy in February 2026, reaching Rp 10,355.1 trillion (Indonesian Rupiah Ten Thousand Three Hundred Fifty Five point One Trillion only), driven by growth in narrow money (M1) at 14.4per cent  (Fourteen point Four per cent) yoy and quasi-money at 5.2per cent  (Five point Two per cent) yoy. The increase was primarily supported by net claims on the central government, which grew by 39.2per cent  (Thirty Nine point Two per cent) yoy, up from 25.6per cent  (Twenty Five point Six per cent) yoy, and stable disbursed loan growth at 8.9per cent  (Eight point Nine per cent) yoy, indicating strengthening liquidity conditions in the economy.

3. Trends

3.1. Union Bank targets co‑lending scale‑up with fintech partnerships

Union Bank of India has entered into co‑lending partnerships with three to four financial technology companies (“FinTechs”) and is currently focused on system integration, portfolio creation and rigorous testing before scaling up the book meaningfully. The Managing Director and Chief Executive Officer of Union Bank of India has indicated that the bank is adopting a calibrated approach, initially co‑lending with one or two partners, assessing performance and obtaining third‑party validations, with a stated objective of building a co‑lending portfolio of approximately INR 7,000 crore (Indian Rupees Seven Thousand crore only) to INR 8,000 crore (Indian Rupees Eight Thousand crore only) in financial year 2026‑27, in line with the Reserve Bank of India’s Co‑Lending Arrangements Directions, 2025, which require partner lenders to retain a minimum 10 per cent (ten per cent) share of loans, follow uniform non‑performing asset tagging and use escrow accounts for settlements.

4. Sector Overview

4.1. India’s “cash paradox”: simultaneous growth in cash and digital payments

A recent research report by State Bank of India (“SBI”) highlights that India is witnessing a “cash paradox”, with both currency in circulation and Unified Payments Interface (“UPI”)‑based digital payments growing strongly and co‑existing in a hybrid payments equilibrium. The report notes that currency in circulation increased by 11.9 per cent (eleven point nine per cent) in financial year 2025‑26 to an all‑time high of approximately INR 4,160,000 crore (Indian Rupees Forty One Lakh Sixty Thousand crore only), while UPI transaction value rose by 20.6 per cent (twenty point six per cent) to around INR 31,400,000 crore (Indian Rupees Three Lakh Fourteen Thousand trillion only) and volumes expanded by 30 per cent (thirty per cent), with low‑ticket person‑to‑merchant and person‑to‑person payments increasingly digital even as cash remains important for informal, precautionary and high‑denomination holdings, evidenced by a growing gap between per‑capita currency in circulation and automated teller machine withdrawals and a dominant share of INR 500 (Indian Rupees Five Hundred only) notes alongside a rising share of INR 100 (Indian Rupees One Hundred only) notes.

5. Business Updates

5.1. Kotak mandates two‑factor authentication for high‑risk payments

Kotak Mahindra Bank Limited (“Kotak Mahindra Bank”) has introduced mandatory two‑factor authentication (“2FA”) for government, statutory, payment gateway and other merchant payments, effective from April 22, 2026, in order to enhance security of tax and other high‑risk transactions. Under the new process, once a “checker” approves a transaction, customers must authorise it using either a one‑time password (“OTP”) sent automatically to their registered mobile number and e‑mail address or their mobile personal identification number (“MPIN”) on the confirmation screen, with safeguards such as blocking of OTP after three incorrect attempts, assisted unlocking via the customer experience centre and instant MPIN reset through the mobile banking application, and a strong emphasis on keeping contact details updated to ensure a seamless experience.

5.2. Razorpay enables Google Pay for cross‑border card payments

Razorpay Software Private Limited (“Razorpay”) has enabled card‑based international payments through Google Pay for cross‑border transactions, positioning itself as the first Indian payment aggregator to offer a wallet‑led checkout experience for global commerce on its international payment gateway. This integration allows Indian exporters to present overseas customers with a familiar, single‑tap wallet checkout that removes friction points such as manual card data entry, CVV and one‑time password steps, and builds on Razorpay’s existing support for other global wallets like Apple Pay and its Razorpay International Payments stack, which operates under a Payment Aggregator – Cross Border licence from the Reserve Bank of India, thereby combining improved conversion and trust for merchants with full regulatory oversight for both inward and outward cross‑border flows.

5.3. RBI cancels the license for Paytm Payments Bank Limited

The RBI cancelled the banking licence of Paytm Payments Bank Limited on April 24, 2026, under the Banking Regulation Act, 1949, effectively shutting down its banking operations immediately. The RBI cited serious governance and compliance failures, stating that the bank’s management and operations were detrimental to depositors and public interest. It also noted repeated violations of licensing conditions and earlier regulatory restrictions imposed since 2022. The RBI plans to initiate winding-up proceedings in the High Court, though it has confirmed the bank has sufficient liquidity to repay all depositors.

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