Banking & Finance Digest August 17, 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

1.1.1.     RBI cancels registration of four NBFCs following voluntary surrender of CoR

The Reserve Bank of India ("RBI") has cancelled the Certificates of Registration ("CoR") of four Non-Banking Financial Companies ("NBFCs") after they voluntarily surrendered their registrations. Two NBFCs, namely RAGA Tradecon Private Limited and Real Lease and Credit Private Limited (now converted into a Limited Liability Partnership (LLP), exited the Non-Banking Financial Institution (“NBFI”) business, resulting in cancellation of their CoRs. Additionally, the CoRs of Chaitanya India Fin Credit Private Limited and Mirae Asset Sharekhan Financial Services Limited were cancelled after the entities ceased to exist as legal entities due to amalgamation, merger, dissolution or similar corporate restructuring events. RBI cancelled the registrations under Section 45-IA(6) of the Reserve Bank of India Act, 1934.

1.1.2.     RBI cancels CoR of 59 NBFCs

RBI has cancelled the CoR of 59 NBFCs under Section 45-IA(6) of the Reserve Bank of India Act, 1934. The affected entities are located across multiple states, including West Bengal, Maharashtra, Gujarat, Delhi and Telangana, and include companies such as Trincas Consultancy Private Limited, Zing Investments Private Limited, Budhrani Finance Private Limited and Kashmir Finance Private Limited. Following the cancellation of their CoRs, these entities are prohibited from carrying on the business of a NBFI as defined under the Act.

1.1.3.     RBI restores CoR of Goli Finance Limited

RBI has restored the CoR of Goli Finance Limited, a NBFC, following consideration of orders passed by the relevant Appellate Authority/Court. The CoR, bearing registration number B-14.02297, was restored on 31 July 2026. RBI has advised the NBFC to ensure continued compliance with the provisions of the Reserve Bank of India Act, 1934, as well as all applicable regulatory directions, guidelines and reporting requirements issued by RBI from time to time.

1.1.4.     RBI invites public comments on Draft Directions for Interest Rates on Loans and Advances

RBI has released the draft Reserve Bank of India (Interest Rates on Loans and Advances) Directions, 2026 and invited comments from regulated entities ("REs"), stakeholders and the public until 11 September 2026. The proposed framework seeks to harmonise interest rate regulations across all categories of REs, including commercial banks, NBFCs, All India Financial Institutions (AIFIs), Regional Rural Banks (RRBs) and cooperative banks. RBI noted that existing regulations vary across institutions and that divergent practices have been observed in areas such as the Marginal Cost of Funds based Lending Rate (MCLR) framework. The draft directions propose a principles-based approach for determining both fixed-rate and floating-rate loan pricing, aimed at improving monetary policy transmission, credit risk pricing and fair treatment of borrowers. Following public consultation, RBI intends to issue separate final directions for each category of RE

1.1.5.     RBI issues amendment directions on Loan Recovery Practice and Engagement of Recovery Agents

RBI has issued final amendment directions on the conduct of regulated entities ("REs") in the recovery of loans and engagement of recovery agents, effective from 1 January 2027. The amendments prescribe comprehensive standards on borrower treatment during recovery proceedings, conduct requirements for lenders and recovery agents, due diligence, training and code of conduct obligations, and the use of technology-based mechanisms for recovery of dues through financed mobile devices. The directions, applicable across banks, NBFCs, Housing Finance Companies (HFCs) and other REs, seek to promote fair, transparent and responsible recovery practices.

Securities and Exchange Board of India (SEBI)

1.1.6.     SEBI relaxes KYC requirements for NRIs, OCIs and Foreign Nationals

The Securities and Exchange Board of India ("SEBI") has announced relaxations in Know Your Client ("KYC") requirements for individual persons resident outside India, including Non-Resident Indians (“NRIs”), Overseas Citizens of India (“OCIs”) and foreign nationals. The move is aimed at simplifying onboarding and compliance processes for overseas investors while maintaining necessary regulatory safeguards. The revised framework is expected to facilitate easier access to Indian securities markets, reduce procedural challenges and enhance investor convenience, thereby supporting greater participation by overseas individuals in the Indian capital markets.

1.1.7.     SEBI issues Consultation Paper and invited public comments on Review of Settlement Proceedings Regulations

SEBI has issued a consultation paper proposing a review of the SEBI (Settlement Proceedings) Regulations, 2018 and invited public comments on the proposed changes. The review aims to enhance the effectiveness, transparency and efficiency of the settlement mechanism for regulatory violations, while ensuring faster resolution of enforcement proceedings and improved regulatory outcomes. Stakeholders are invited to provide feedback on the proposed amendments, which form part of SEBI’s ongoing efforts to strengthen the enforcement framework and align settlement processes with evolving market practices and regulatory expectations.  

1.1.8.     SEBI issues Consultation Paper on KYC process for Overseas Individuals

SEBI has released a consultation paper proposing a review of the KYC process applicable to individual persons resident outside India, including NRIs, OCIs and foreign nationals. The proposed changes seek to simplify onboarding requirements, reduce compliance frictions and facilitate greater participation by overseas investors in the Indian securities market, while maintaining appropriate risk management and regulatory safeguards. SEBI has invited public comments on the consultation paper as part of its efforts to create a more efficient and investor-friendly KYC framework for overseas individuals.

1.1.9.     SEBI revises regulatory framework for Online Bond Platform Providers

SEBI has modified the regulatory framework applicable to Online Bond Platform Providers ("OBPPs") to promote ease of doing business and broaden investment offerings. Under the revised framework, OBPPs will be permitted to offer products, securities and services regulated by the International Financial Services Centres Authority ("IFSCA"), as well as bonds issued under Section 54EC of the Income-tax Act, 1961 and Section 85 of the Income-tax Act, 2025. SEBI has also introduced changes relating to compliance officer requirements for OBPPs. The amendments are intended to enhance operational flexibility, expand product availability for investors and further develop India’s digital bond market ecosystem.

1.1.10.  SEBI Issues Consultation Paper on Mandatory Credit Risk-O-Meter for Debt Securities

SEBI has issued a consultation paper proposing the mandatory adoption of a Credit Risk-O-Meter as an additional disclosure mechanism for debt securities. The proposal aims to enhance transparency and improve investors’ understanding of the credit risk associated with debt instruments by providing a standardised and easily comprehensible risk indicator alongside existing disclosures. Through this initiative, SEBI seeks to strengthen investor awareness, facilitate informed investment decisions and promote greater transparency in the corporate bond market. Stakeholders have been invited to provide comments on the proposed framework.

1.1.11.  SEBI seeks public comments on Review of Accredited Investor Framework

SEBI has issued a consultation paper proposing a comprehensive review of the Accredited Investor ("AI") framework to broaden investor participation and simplify accreditation processes. SEBI has proposed introducing securities market assets as an additional eligibility criterion, with thresholds of INR 50,000,000 (Indian Rupees Five Crore only) for individuals and INR 200,000,000 (Indian Rupees Twenty Crore only) for body corporates, alongside the existing income and net-worth criteria. The proposals also include manager-led accreditation at group level, a standardised accreditation validity period of three years and expansion of the deemed AI category to cover all Persons Resident Outside India ("PROI"), including NRIs, OCIs and other overseas investors. SEBI believes the changes could significantly expand the accredited investor base and enhance participation across Alternative Investment Funds ("AIFs"), Specialised Investment Funds ("SIFs"), Portfolio Management Services ("PMS") and Angel Funds. Public comments have been invited until 3 September 2026.

1.1.12.  SEBI issues consultation paper on Review of Vault Managers Regulations

SEBI has issued a consultation paper proposing a review and expansion of the scope of the SEBI (Vault Managers) Regulations, 2021. The proposed changes aim to strengthen the regulatory framework governing vault managers, enhance investor protection and improve operational efficiency in the safekeeping of physical assets. SEBI is also considering expanding the scope of permitted activities and products under the framework to support market development and improve accessibility. The consultation paper seeks stakeholder feedback on the proposed measures, which are intended to align the regulatory regime with evolving market requirements and facilitate broader participation in regulated vaulting services.

1.1.13.  SEBI amends Municipal Debt Securities Regulations and Operational Framework

SEBI has amended the SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015 (ILMDS Regulations) and introduced operational changes to strengthen the municipal bond market. Key measures include permitting privately placed municipal debt securities with a face value of either INR 100,000 (Indian Rupees One Lakh only) or INR 10,000 (Indian Rupees Ten Thousand only), with securities issued at the lower denomination required to have a fixed maturity and no structured obligations. SEBI has also introduced a two-step escrow mechanism for pooled finance vehicles and Special Purpose Vehicles ("SPVs") to enhance investor protection and ensure timely servicing of debt obligations. Further, disclosure timelines for municipalities have been relaxed, extending the submission period for half-yearly unaudited financial results from 45 days to 60 days and annual audited financial results from 60 days to 90 days. The revised framework is effective immediately.

1.1.14.  SEBI issues consultation paper on FPI participation in Commodity Derivatives Market

SEBI has issued a consultation paper seeking public comments on the participation of Foreign Portfolio Investors (FPIs) in Exchange Traded Commodity Derivatives (ETCDs). The proposal aims to broaden market participation, enhance liquidity and improve price discovery in the commodity derivatives segment while maintaining appropriate risk management safeguards. Through the consultation, SEBI seeks stakeholder feedback on the regulatory framework governing FPI access to ETCDs, with the objective of fostering greater integration of Indian commodity markets with global investors and strengthening the overall market ecosystem.

1.1.15.  SEBI issues consultation paper on Review of ISIN Framework for Debt Securities

SEBI has released a consultation paper proposing a review of provisions relating to International Securities Identification Numbers ("ISINs") for debt securities. The proposed review seeks to streamline the ISIN framework, enhance operational efficiency and improve standardisation in the issuance, listing and management of debt securities. Through the consultation, SEBI aims to address practical implementation issues and strengthen transparency, tracking and reporting mechanisms in the debt market. Stakeholders have been invited to submit comments on the proposed changes.

International Financial Services Centres Authority

1.1.16.  IFSCA issues framework for Leasing Activities in IFSCs

IFSCA has issued a framework governing leasing activities undertaken within International Financial Services Centres ("IFSCs") in India. The framework seeks to provide regulatory clarity, facilitate ease of doing business and promote the development of a robust leasing ecosystem in IFSCs. By establishing a structured regulatory regime for leasing transactions, IFSCA aims to enhance India’s attractiveness as a global financial services hub, support cross-border financing activities and encourage greater participation by domestic and international market participants in the IFSC ecosystem.

1.1.17.  IFSCA issues consultation paper on amendments to Banking Handbook Directions

IFSCA has issued a consultation paper proposing amendments to the IFSCA Banking Handbook on General Directions and invited stakeholder feedback. The proposed changes are aimed at refining the regulatory framework governing banking operations within IFSCs, enhancing regulatory clarity and aligning supervisory requirements with evolving market practices. The initiative forms part of IFSCA’s ongoing efforts to strengthen the ease of doing business, support innovation and ensure a robust and efficient banking ecosystem within IFSCs.  

1.1.18.  IFSCA invites public comments on Proposed Market Abuse Regulations for Securities Markets

IFSCA has invited public comments on the proposed IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026. The proposed regulations aim to establish a comprehensive framework for preventing and addressing market abuse practices within IFSCs, thereby enhancing market integrity, investor confidence and regulatory oversight. Through this consultation, IFSCA seeks stakeholder feedback on measures designed to strengthen surveillance, deter misconduct and align the regulatory framework with international best practices for fair and transparent securities markets.

1.1.19.  IFSCA directs REs to maintain valid SEZ approvals at all times

IFSCA has directed all regulated entities (REs) operating in IFSCs to ensure that they maintain a valid and subsisting Letter of Approval (LoA) under the Special Economic Zones Act, 2005 (SEZ Act), along with all other applicable regulatory approvals and instruments, at all times. The direction reinforces the importance of continuous regulatory compliance and aims to ensure that entities operating within IFSCs remain duly authorised throughout their period of operation. The measure is intended to strengthen regulatory oversight, promote orderly functioning of the IFSC ecosystem and enhance governance standards across regulated entities.

Monetary Penalty

Reserve Bank of India imposes Monetary Penalty on:

S. No.	Name of Bank	Amount of Penalty	Contravention
1.	The Amravati District Central Co-operative Bank Ltd., Maharashtra	INR 50,000 (Indian Rupees Fifty Thousand only)	Non-compliance with RBI directions on KYC and ensuring reasonableness of bank charges.
2.	Valuefin India Credit Services Private Limited	INR 1,80,000 (Indian Rupees One Lakh Eighty Thousand only)	Failure to obtain prior written approval from RBI for a change in shareholding exceeding 26 Per cent (Twenty-Six Per cent) of its paid-up equity capital, in contravention of RBI directions on ‘Acquisition of Shareholding or Control’.
3.	Jilla Sahakari Kendriya Bank Maryadit, Bhind, Madhya Pradesh	INR 2,50,000 (Indian Rupees Two Lakh Fifty Thousand only)	Failure to transfer eligible unclaimed amounts to the Depositor Education and Awareness Fund ("DEAF") within the prescribed period, in contravention of Section 26A read with Section 56 of the Banking Regulation Act, 1949.
4.	Muthoot MCred Limited (formerly Muthoottu Mini Financiers Limited)	INR 3,10,000 (Indian Rupees Three Lakh Ten Thousand only)	Non-compliance with RBI directions on asset classification by upgrading certain Non-Performing Asset ("NPA") accounts to ‘Standard’ status without repayment of the entire arrears of principal and interest relating to all credit facilities.
5.	IndusInd Bank Limited	INR 59,20,000 (Indian Rupees Fifty-Nine Lakh Twenty Thousand only)	Non-compliance with RBI directions on ‘Interest Rate on Deposits’ and ‘Securitisation of Standard Assets’. The bank paid interest on deposits held in certain current accounts and undertook activities in the nature of synthetic securitisation.
6.	Northern Arc Capital Limited	INR 6,20,000 (Indian Rupees Six Lakh Twenty Thousand only)	Non-compliance with RBI directions on ‘Disclosures in Financial Statements - Notes to Accounts’ and ‘Internal Ombudsman for Regulated Entities’. The company failed to disclose correct and complete information relating to customer complaints in its FY 2024-25 financial statements and did not ensure auto-escalation of certain partly or wholly rejected complaints to its Internal Ombudsman.

2.                Key Asian Markets – Sri-Lanka & Bangladesh

2.1.             Sri-Lanka

2.1.1.        CBSL releases Monetary Policy Report for August 2026

The Central Bank of Sri Lanka ("CBSL") has released its second Monetary Policy Report for 2026, providing an assessment of inflation, economic growth and key macroeconomic risks. CBSL noted that headline inflation, which has risen sharply from earlier low levels, is expected to remain elevated in the near term before gradually converging to the 5 percent (five percent) target. The report highlights the monetary policy tightening undertaken in May 2026 to contain inflationary pressures and anchor inflation expectations, while indicating that private sector credit growth is likely to moderate in response to these measures. CBSL further noted that the external sector remains resilient despite spillovers from the Middle East conflict and that the economic growth outlook remains broadly stable, although geopolitical and weather-related uncertainties continue to pose risks.

2.2.             Bangladesh

2.2.1.      BB announces successful completion of APG Pre-Mutual Evaluation Planning Mission

Bangladesh Bank (“BB”) has announced the successful completion of the Pre-Mutual Evaluation Planning Mission (P-MEP) conducted by the Asia/Pacific Group on Money Laundering ("APG") from 11 to 13 August 2026. The mission reviewed Bangladesh’s preparedness for the forthcoming Mutual Evaluation scheduled for 2027-28 and involved discussions with key government ministries, regulators, law enforcement agencies and private sector stakeholders. Bangladesh reaffirmed its commitment to strengthening its Anti-Money Laundering, Countering the Financing of Terrorism and Countering Proliferation Financing (AML/CFT/CPF) framework and implementing priority reforms. APG also reviewed progress made since previous evaluations and highlighted the importance of continuing regulatory, financial sector and governance reforms to enhance compliance with international standards.

3.              Trends

3.1.          RBI considering SFB Request for access to Co-Lending Framework

Small Finance Banks ("SFBs") have made representations to the RBI seeking permission to participate in co-lending arrangements, from which they are currently excluded. According to industry participants, SFBs have been engaging with RBI since October 2025 and have proposed a calibrated framework that would allow them to co-lend in specialised segments, such as gold loans and other niche lending areas, with appropriate regulatory safeguards. RBI is reportedly evaluating the proposal, while balancing concerns relating to the financial inclusion mandate of SFBs and the risk of outsourcing core lending functions. Industry stakeholders contend that permitting limited co-lending partnerships could enhance credit delivery, improve operational efficiency and expand access to specialised credit products without undermining the core objectives of SFBs.  

3.2.          RBI’s FCNR Scheme drives record growth in bank deposits

India’s banking system deposits have surged to a record high, driven largely by inflows under the RBI Foreign Currency Non-Resident (Bank) [“FCNR(B)”] deposit scheme. Banking system deposits increased by approximately INR 11 lakh crore (Indian Rupees Eleven Lakh Crore only) over the three fortnights ended 31 July 2026, reversing the earlier decline witnessed between April and mid-June 2026. RBI’s concessional swap window for FCNR(B) deposits and measures encouraging overseas fund mobilisation reportedly attracted nearly USD 41 billion in inflows by the end of July 2026, resulting in total banking system deposits reaching a record INR 269.4 lakh crore (Indian Rupees Two Hundred Sixty-Nine Lakh Forty Thousand Crore only). The growth is expected to strengthen bank liquidity, narrow the gap between credit and deposit growth and support lending activity without significant pressure on deposit rates.

4.              Sector Overview

4.1.          Indian Start-up Ecosystem records diverse funding activity across Wealth-Tech, AI and Med-Tech Sectors

Several Indian start-ups secured fresh funding during the week ended 15 August 2026, highlighting continued investor interest across wealth management, AI, consumer brands and healthcare technology. Notable transactions included Centricity’s Series A round of INR 280 crore (Indian Rupees Two Hundred Eighty Crore only) led by investors including Lightspeed India Partners and SMBC Asia Rising Fund; Discovered Materials’ seed funding of USD 9 million for its AI-driven semiconductor materials platform; Scrubsy’s USD 3 million investment to expand its direct-to-consumer home cleaning business; and Ayati Devices’ pre-Series A funding of INR 16 crore (Indian Rupees Sixteen Crore only) to scale portable diagnostic technologies for diabetic and vascular health screening. The fund-raising activity reflects sustained investor appetite for technology-led businesses addressing wealth management, advanced manufacturing, consumer products and healthcare innovation.

5.              Business Updates

5.1.          SEBI issues show cause notice to Paytm Management over 2023 loan disclosure

SEBI has issued a show cause notice to key managerial personnel of One 97 Communications Limited (Paytm), including its Chief Executive Officer and Chief Financial Officer, regarding the timing of the company’s disclosure relating to the scaling back of small-ticket personal loans in December 2023. The notice seeks clarification on whether the information, concerning the reduction of personal loans below INR 50,000 (Indian Rupees Fifty Thousand only) following the RBI tightening of consumer lending norms, was disclosed in a timely manner and whether it should have been classified as Unpublished Price Sensitive Information (UPSI). Paytm has stated that it does not expect any financial impact from the notice and intends to respond within the prescribed timeline.

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