Banking & Finance Digest February 03, 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 issues draft Directions to harmonise natural calamity relief norms across Regulated Entities

Reserve Bank of India (“RBI”) issued draft Directions to rationalise and harmonise prudential norms for relief and resolution of exposures affected by natural calamities across multiple Regulated Entities, including commercial banks, small finance banks, local area banks, urban and rural co-operative banks, regional rural banks, non-banking financial companies, and all India financial institutions.  The draft proposes a principle-based regime giving Regulated Entities discretion to design and implement resolution plans, guided by State Level Bankers’ Committee and District Consultative Committee decisions, and limits eligibility to exposures that are standard but overdue up to 30 (thirty) days (SMA-0) on the date of the calamity. It prescribes specific windows for invocation and implementation of the resolution plan, allows restructured exposures under these relief measures to remain standard with income recognition on accrual basis with reduced additional specific provisioning, and requires alternate arrangements to provide banking services in affected areas. The Directions are proposed to take effect from April 1, 2026, and public comments are invited until February 17, 2026, through the RBI’s “Connect2Regulate” mechanism or via post/email.

Securities and Exchange Board of India (SEBI)

1.1.2.      SEBI removes Letter of Confirmation requirement and mandates direct credit of securities to investors’ demat accounts

Securities and Exchange Board of India (“SEBI”) announced that it has issued a circular to simplify and streamline credit of securities to investors’ dematerialisation accounts by doing away with the requirement for listed companies and Registrars to an Issue and Share Transfer Agents (“RTAs”) to issue a Letter of Confirmation (“LOC”) for investor service requests such as duplicate certificate issuance, transmission, transposition, claims from unclaimed suspense account, and corporate actions. Under the revised framework, RTAs and listed companies will directly credit securities to the investor’s demat account after completing due diligence, which SEBI expects will reduce timelines from around 150 (one hundred and fifty) days to 30 (thirty) days and lower risks of loss or pilferage associated with LOCs.  The changes take effect from April 2, 2026, and any LOC issued before that date may continue to be used for dematerialisation within the prescribed timeline.

1.1.3.      SEBI issues Circular on Special window for Transfer cum Dematerialisation of Physical Securities

SEBI announced a special window from February 5, 2026, to February 4, 2027, to help investors who could not transfer physical securities before April 1, 2019—due to procedural or documentation-related challenges—regularise and complete transfer-cum-dematerialisation, including for transfer requests earlier rejected, returned, or not attended to because of document/process deficiencies. The press release notes that the circular’s provisions take effect from February 5, 2026, and can be accessed on SEBI’s website under Legal Circulars.

International Financial Services Centres Authority (IFSCA)

1.1.4.      IFSCA opens one-time window to extend validity of Placement Memorandums for IFSC fund schemes

International Financial Services Centres Authority (“IFSCA”) issued a circular offering Fund Management Entities (“FMEs”) in International Financial Services Centres (“IFSCs”) a one-time 3 (three) month window to extend the validity of a placement memorandum (“PPM”) for Venture Capital Schemes and Restricted Schemes under the IFSCA (Fund Management) Regulations, 2025. The circular addresses representations that fundraising timelines depend on market conditions, and covers (i) schemes where investments have not commenced and the PPM has expired (or is expiring shortly) and (ii) open-ended Restricted Schemes that commenced investments after raising at least USD 1,000,000 (United States Dollar One Million only) but could not reach the minimum corpus of USD 3,000,000 (United States Dollar Three Million only) within the PPM validity.  For eligible schemes, the FME must re-file or submit a request within 3 (three) months, avoid material changes to key scheme features, and pay a filing fee equal to 50 per cent (fifty per cent) of the fee for filing a fresh scheme; if granted, IFSCA may take the filing/request on record and extend the PPM validity by a further six (6) months, with additional extensions possible under the regulations on payment of 50 per cent (fifty per cent) of the applicable fresh-filing fee.

1.1.5.      IFSCA issues Consultation Paper on Alignment of the Default List of Authorized Services approved by the Department of Commerce with SAC Classification under the GST Regime

IFSCA has issued a consultation paper seeking public comments on aligning the Department of Commerce’s Default List of Authorised Services for Special Economic Zone (SEZ) units with the Services Accounting Code (“SAC”) classification under the Goods and Services Tax (“GST”) regime.  The Default List, originally issued with 58 (fifty-eight) services and now comprising 67 (sixty-seven) services, is based on legacy Service Tax-era descriptions, while suppliers classify services on invoices using SAC under GST, creating mismatches that complicate endorsements and the availability of Integrated Goods and Services Tax (IGST) exemption, particularly for IFSC units procuring financial services from the Domestic Tariff Area (DTA). IFSCA has prepared a draft revised list mapping existing services to corresponding SAC codes (Annexure A) to support uniform interpretation and smoother day-to-day operations. Stakeholders must email comments in MS Word or MS Excel format to [shobhit.tripathi@ifsca.gov.in] by February 16, 2026.

Miscellaneous

Ministry of Corporate Affairs (MCA)

1.1.6.      IEPFA issues draft rules for refund process from IEPF Authority

Investor Education and Protection Fund Authority (“IEPFA”) invited stakeholder comments on draft amendments to the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, under the Companies Act, 2013, to simplify and expedite refunds of unclaimed dividends and other entitlements. The draft shifts greater responsibility to the concerned company’s Nodal Officer for claim verification, requiring claimants to send original certificates and an indemnity bond to the company and upload the postal dispatch receipt on the Ministry of Corporate Affairs portal. The company must submit an online e-verification report within 45 (forty-five) days and may submit late by paying an additional fee of INR 50 (Indian Rupees Fifty only) per day, capped at INR 2,500 (Indian Rupees Two Thousand Five Hundred only). For low-value claims, securities up to INR 5,00,000 (Indian Rupees Five Lakhs only) in physical form or INR 15,00,000 (Indian Rupees Fifteen Lakhs only) in dematerialised form, and dividends up to INR 10,000 (Indian Rupees Ten Thousand only). IEPFA would rely solely on the company’s verification and dispose of claims within 30 (thirty) days, alongside simplified documentation for minor name mismatches. The draft also updates references to Securities and Exchange Board of India regulations “as amended from time to time”, clarifies delisting and corporate-benefit handling (including that claimants would generally receive only the amount realised on their behalf without interest), and introduces an appeal mechanism up to the Chief Executive Officer of the IEPFA. Comments are due by February 27, 2026, via the designated email address or the e-Consultation module.

Monetary Penalties

1.1.7.      RBI imposes penalties on 2 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.	Rajapur Urban Co-operative Bank Ltd., Rajapur, Maharashtra	INR 50,000 (India Rupees Fifty Thousand only)	Non-compliance with certain directions issued by RBI on ‘Loans and advances to directors, their relatives, and firms / concerns in which they are interested’. 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.[RBI]
2.	Northern Arc Capital Limited	INR 2,00,000 (Indian Rupees Two Lakh Seventy Thousand only)	Non-compliance with certain provisions of the ‘Reserve Bank of India [Know Your Customer (KYC)] Directions’ issued by RBI. This penalty has been imposed in exercise of powers conferred on RBI under Section 58G(1)(b) read with Section 58B(5)(aa) of the Reserve Bank of India Act, 1934. [RBI]

2.              Key Asian Markets - Philippines and Vietnam

2.1.          Philippines

2.2.1.      BSP projects January 2026 inflation at 1.4–2.2 per cent

Bangko Sentral ng Pilipinas (“BSP”) released its month-ahead inflation outlook, projecting January 2026 inflation to be within 1.4 to 2.2 per cent (one point four to two point two per cent). The BSP noted that upside risks could come from higher prices of key food items (including rice and fish), increased domestic fuel costs, the annual adjustment in excise taxes, and peso depreciation. It added that these pressures may be partly offset and reiterated that it will continue monitoring domestic and international developments affecting inflation and growth in line with its data-dependent approach to monetary polic

2.2.2.      BSP survey signals steady credit standards in Q1 2026

BSP reported results of its Senior Bank Loan Officers’ Survey showing most banks expect to keep credit standards unchanged in Q1 2026: 87.7 per cent (eighty-seven point seven per cent) for enterprise loans (up from 86.0 per cent (eighty-six point zero per cent) in Q4 2025) and 79.5 per cent (seventy-nine point five per cent) for household loans (down from 82.5 per cent (eighty-two point five per cent) in Q4 2025). Among banks anticipating changes, the net balance points to tightening rather than easing—8.8 per cent (eight point eight per cent) for business loans and 5.1 per cent (five point one per cent) for household loans, lower than Q4 2025’s net tightening expectations. On demand, banks largely expect stability but with rising optimism: 70.2 per cent (seventy point two per cent) see steady business-loan demand and 28.1 per cent (twenty-eight point one per cent) expect an increase, while 61.5 per cent (sixty-one point five per cent) see steady household-loan demand and 30.8 per cent (thirty point eight per cent) expect an increase.

2.2.          Vietnam

2.2.3.      SBV notes easing USD/VND rates and softer VND interbank funding costs

State Bank of Vietnam (“SBV”) reported that the USD/VND exchange rate declined over the week, with the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) closing January 19, 2026 at VND 26,088 (Vietnamese dong Twenty-six thousand and eighty-eight only) / VND 26,388 (Vietnamese dong Twenty-six thousand three hundred and eighty-eight only) per USD 1 (United States Dollar One only), and closing January 23, 2026 at VND 26,061 (Vietnamese dong Twenty-six thousand and sixty-one only) / VND 26,381 (Vietnamese dong Twenty-six thousand three hundred and eighty-one only) per USD 1 (United States Dollar One only), implying a drop of VND 27 (Vietnamese dong Twenty-seven only) and VND 7 (Vietnamese dong Seven only) respectively over the period.  SBV also stated that interbank trading volumes rose in VND terms to approximately VND 4,247,575 (Vietnamese dong Four Million Two Hundred Forty-seven Thousand Five Hundred Seventy-five only) billion for the week (an average of VND 849,515 (Vietnamese dong Eight Hundred Forty-nine Thousand Five Hundred Fifteen only) billion per day), while USD transactions (converted into VND) fell to around VND 625,161 (Vietnamese dong Six Hundred Twenty-five Thousand One Hundred Sixty-one only) billion (an average of VND 125,032 (Vietnamese dong One Hundred Twenty-five Thousand and thirty-two only) billion per day). Overnight tenors dominated activity at 95 per cent (ninety-five per cent) of VND trades and 89 per cent (eighty-nine per cent) of USD trades, and the average VND overnight rate fell by 0.74 per cent (zero point seven four per cent) to 3.27 per cent (three point two seven per cent) per annum, while the USD overnight rate dipped to 3.59 per cent (three point five nine per cent) per annum and the 1 (one) week USD rate increased to 3.66 per cent (three point six six per cent) per annum.

3.              Trends

3.1.          MeitY plans accelerated rollout of the DPDP Act and Rules

The Government intends to reduce the timeline for implementing the Digital Personal Data Protection (DPDP) Act, 2023, which is expected to be operationalised through the Ministry of Electronics and Information Technology. The report also flagged the prospect of immediate implementation of rules which will allow the Central Government to demand information from Data Fiduciaries and also provide exemptions for processing for research and statistical purposes.

3.2.          Budget Expectations Put IFSC GIFT City Reforms in Spotlight

Players were reported to have urged the government to use Budget 2026 to accelerate reforms for the IFSC at GIFT City. The reported asks included parity rules across financial players, removal of tax asymmetries, and reduced compliance frictions that are limiting the IFSC’s scale as an international banking, financial services and insurance hub. It is also noted that IFSCA is tasked with developing IFSCs into globally competitive financial centres, and that policy refinements in the upcoming budget could materially influence how quickly more global banks and market intermediaries expand operations from GIFT City. The direction of travel is towards deeper onshoring of cross-border financial activity into the IFSC, subject to what is ultimately announced in the budget.

4.              Sector Overview

4.1.          Economic Survey Flags Slower but Steady Growth Path for Next Year

The annual Economic Survey presented by Nirmala Sitharaman projected that the economy could grow between 6.8 per cent (six point eight per cent) and 7.2 per cent (seven point two per cent) in the financial year starting April 2026, compared with an estimated 7.4 per cent (seven point four per cent) in the current financial year. The Survey cautioned that geopolitical volatility, weak exports, and potential disruptions to capital flows remain key risks. For the banking, financial services and insurance sector, this matters because growth assumptions feed into credit demand, loan pricing, and stress-testing of asset quality under different macro scenarios.

4.2.          India’s Forex Reserves Touch Record High as Liquidity Measures Continue

RBI data showed foreign exchange reserves rose to a record USD 709,410,000,000 (United States Dollar Seven Hundred Nine Billion Four Hundred Ten Million only) as of January 23, 2026, up from USD 701,360,000,000 (United States Dollar Seven Hundred One Billion Three Hundred Sixty Million only) a week earlier. The RBI’s liquidity operations were reported as a contributing factor, alongside valuation gains, including gold holdings rising to about USD 123,000,000,000 (United States Dollar One Hundred Twenty-Three Billion only).

5.              Business Updates

5.1.          Pine Labs Turns Profitable for Third Straight Quarter on Digital Payments Demand

Pine Labs reported a profit of INR 423.9 million (Indian Rupees Four Hundred Twenty-Three Million and Nine Hundred Thousand only) for the quarter ended December 31, 2025, compared with a loss of INR 566.7 million (Indian Rupees Five Hundred Sixty-Six Million and Seven Hundred Thousand only) a year earlier. Revenue rose nearly 24 per cent (twenty-four per cent) year on year to INR 7.44 billion (Indian Rupees Seven Billion and Four Hundred Forty Million only), supported by continued growth in cashless transactions and merchant adoption. The company said its largest segment, digital infrastructure and transaction platform, grew 16.4 per cent (sixteen point four per cent) year on year.

5.2.          Paytm Returns to Profit as Core Payments and Financial Services Grow

Paytm posted net profit of INR 2.25 billion (Indian Rupees Two Billion and Two Hundred Fifty Million only) for the quarter ended December 31, 2025, compared with a loss of INR 2.08 billion (Indian Rupees Two Billion and Eighty Million only) a year earlier. Total revenue increased 20 per cent (twenty per cent) year on year to INR 21.94 billion (Indian Rupees Twenty-One Billion and Nine Hundred Forty Million only), led by a 19 per cent (nineteen per cent) rise in payments revenue and a 34 per cent (thirty-four per cent) increase in revenue from financial services distribution. Monthly transacting users grew by 6 (six) million year on year to 76 (seventy-six) million, while expenses declined 2 per cent (two per cent) year on year.

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