Banking & Finance Digest February 09, 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 Statement on Developmental and Regulatory Policies

Reserve Bank of India (“RBI”) issued its Statement on Developmental and Regulatory Policies setting out a pipeline of draft measures for public consultation across regulation, payments, financial inclusion, financial markets and capacity building. RBI proposed comprehensive instructions on advertising, marketing and sale of financial products (including third-party products sold at bank counters) to address mis-selling, and a harmonised conduct framework for loan recovery and recovery agents. RBI also proposed revising the framework for limiting customer liability in unauthorised digital transactions, including compensation for small-value fraudulent transactions. In credit regulation, RBI proposed permitting commercial bank lending to listed Real Estate Investment Trusts with prudential safeguards, rationalising lending norms for Primary (Urban) Co-operative Banks, exempting certain “Type I” Non-Banking Financial Companies (“NBFCs”) with assets up to INR 10,00,00,00,000 (Indian Rupees One Thousand Crore only) from registration subject to conditions, and removing prior approval requirements for opening new branches for certain gold-loan NBFC lenders with more than 1,000 (one thousand) branches. For inclusion and payments, RBI proposed a discussion paper on calibrated safeguards in digital payments to curb frauds, revisions to the Lead Bank Scheme with a unified reporting portal, updates to the Kisan Credit Card scheme (including extending tenure to 6 (six) years), a review of Business Correspondent guidelines, and an increase in the collateral-free loan limit for Micro and Small Enterprises to INR 20,00,000 (Indian Rupees Twenty Lakhs only) from INR 10,00,000 (Indian Rupees Ten Lakhs only) for loans sanctioned or renewed on or after April 1, 2026. For markets, RBI proposed enabling derivatives on corporate bond indices and total return swaps, refining the foreign exchange framework for Authorised Dealers under the Foreign Exchange Management Act, 1999, and modifying the Voluntary Retention Route for Foreign Portfolio Investor debt investments, noting that over 80 per cent (eighty per cent) of the current INR 2,50,00,00,00,00,000 (Indian Rupees Two Lakh Fifty Thousand Crore only) limit is utilised.

1.1.2.      RBI issues draft revised Master Direction – Reserve Bank of India (Credit Derivatives) Directions, 2022

RBI released the draft revised Master Direction – Reserve Bank of India (Credit Derivatives) Directions, 2022 and invited comments from market participants and stakeholders by February 27, 2026. RBI stated that an active derivatives market can improve credit-risk management, liquidity and efficiency in the corporate bond market, and support corporate bond issuance across the rating spectrum. The draft framework, linked to the Union Budget for Financial Year (FY) 2026-27 and RBI’s Statement on Developmental and Regulatory Policies dated February 6, 2026, consolidates provisions for all credit derivatives, including existing directions on credit default swaps, and proposes introducing derivatives on credit indices and total return swaps on corporate bonds (with the new provisions specifically highlighted for feedback).

1.1.3.      RBI issues draft NBFC Branch Authorisation Amendment Directions, 2026

RBI invited public comments on the draft Reserve Bank of India (Non-Banking Financial Companies – Branch Authorisation) Amendment Directions, 2026, which propose dispensing with the requirement of prior approval or intimation for NBFCs to open branches in India. RBI noted that the existing Reserve Bank of India (Non-Banking Financial Companies – Branch Authorisation) Directions, 2025 (Master Directions), issued on November 28, 2025, currently regulate the opening and closure of NBFC branches, including for Housing Finance Companies. RBI also stated that relevant provisions of 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 will be amended accordingly. Comments on the draft are open until February 27, 2026, and can be submitted via RBI’s ‘Connect 2 Regulate’ portal or by email with the specified subject line.

Securities and Exchange Board of India (SEBI)

1.1.4.      SEBI issues consultation paper on proposed amendments to Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 – ‘Fit and Proper Person’ Criteria

Securities and Exchange Board of India (“SEBI”) issued a consultation paper proposing amendments to Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 to reduce rigid, event-triggered disqualifications while retaining integrity safeguards. SEBI proposed omitting rule-based disqualifications that currently arise merely due to the pendency of a SEBI-filed criminal complaint or information under the Code of Criminal Procedure, 1973 and the pendency of a charge sheet in economic offences and instead addressing serious cases under the principle-based criteria (integrity, honesty, reputation and character) on a case-by-case basis. SEBI also proposed expanding the conviction-based disqualification to include convictions for any economic offence or offence under securities laws (in addition to moral turpitude), aligning the winding-up trigger to only when a winding-up order is passed (and not merely when proceedings are initiated), inserting an express hearing requirement before declaring a person not fit and proper, and imposing a disclosure obligation on the applicant or intermediary to inform SEBI within 7 (seven) days of relevant events. Further, SEBI proposed removing the default 5 (five) year ineligibility where an order does not specify a prohibition period, narrowing the registration “cooling-off” under clause 5 to show cause notices involving directions under the Securities and Exchange Board of India Act, 1992, and reducing the non-consideration period from 1 (one) year to 6 (six) months. To address concerns of irreversible harm, SEBI also proposed removing mandatory divestment by persons in control upon being declared not fit and proper and instead restricting only voting rights. Public comments are invited until February 25, 2026.

1.1.5.      SEBI issues Consultation Paper on Flexibility to Alternative Investment Funds (AIFs) in Winding up the scheme / Surrendering the Registration

SEBI issued a consultation paper proposing amendments to the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 to streamline winding up of Alternative Investment Fund (“AIF”) schemes and surrender of AIF registrations where funds remain undistributed beyond the permissible fund life. SEBI proposed allowing schemes to retain liquidation proceeds beyond the liquidation period in three scenarios: (i) where the AIF has demonstrably received a litigation or tax demand notice from tax authorities or other regulatory or law enforcement agencies; (ii) for anticipated litigation or tax liabilities, subject to consent from at least 75 per cent (seventy-five per cent) of investors by value; and (iii) for residual operational expenses, subject to substantiation through invoices or comparable past expenses, with a maximum retention period of 3 (three) years. Retained monies would be required to be parked only in permitted liquid instruments under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012. SEBI also proposed tagging AIFs seeking surrender as “inoperative funds” (including cases where no monies are retained but the fund remains only for contingent reasons such as potential favourable litigation outcomes), with proportionate compliances such as discontinuing audit reports, CTR reports and quarterly reporting to SEBI, requiring an annual status report to SEBI and investors, prohibiting new schemes and management fees, and permitting surrender only after liabilities are settled and a NIL bank balance is achieved. Comments are invited until February 26, 2026.

1.1.6.      SEBI issues Consultation Paper on Measures towards Ease of Doing Business for REITs and InvITs

SEBI issued a consultation paper proposing regulatory changes to improve operational flexibility for Real Estate Investment Trusts (“REITs”) and Infrastructure Investment Trusts (“InvITs”), based on inputs from the Indian REITs Association and Bharat InvITs Association and recommendations of the Hybrid Securities Advisory Committee. For InvITs, SEBI proposed expanding the definition of Special Purpose Vehicle (“SPV”) so that an SPV holding a Public Private Partnership (PPP) project can remain an SPV even after the concession ends or is terminated, subject to conditions including a requirement to exit, liquidate or acquire a new infrastructure project within 1 (one) year from the later of concession end/termination, conclusion of claims/litigation, or completion of defect liability period, alongside detailed annual-report disclosures at InvIT and SPV level. For both REITs and InvITs, SEBI proposed widening permitted investments in liquid mutual funds by lowering the Credit Risk Value threshold to at least 10 (ten) (covering Class A-I and Class B-I in the Potential Risk Class matrix) to reduce concentration risk. SEBI also proposed aligning privately listed InvIT investment flexibility with publicly listed InvITs by allowing private InvITs to invest up to 10 (ten) per cent in pure greenfield under-construction projects. Separately, where InvIT net borrowings exceed 49 (forty-nine) per cent of asset value, SEBI proposed clarifying that additional borrowings may also be used for specified capital expenditure, major maintenance for road projects, and refinancing of eligible debt (subject to safeguards such as no increase in net borrowings and refinancing only the principal). Public comments are invited until February 26, 2026.

1.1.7.      SEBI issues Creation/Invocation of pledge of securities through depository system

SEBI issued a circular to all depositories strengthening the framework for creation and invocation of pledge of securities through the depository system, building on paragraph 4.13 of the SEBI Master Circular for Depositories dated December 3, 2024, read with Regulation 79 of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018. SEBI directed that the depositories’ Pledge Request Forms must include undertakings that the pledgee will give reasonable notice to the pledger and comply with sections 176 and 177 of the Indian Contract Act, 1872 before sale of pledged assets, and that both pledger and pledgee will abide by applicable laws, including the Depositories Act, 1996 and SEBI regulations, circulars and bye-laws. SEBI also required a standardised format of the Pledge Request Form and mandated that, upon invocation, depositories send an intimation to both parties confirming invocation and recording of the pledgee as “beneficial owner”. Depositories must amend byelaws and implement system changes and ensure compliance on or before April 6, 2026.

1.1.8.      SEBI issues Consultation paper on ‘extending facility of standing instructions for Systemic Withdrawal Plan (SWP)/Systemic Transfer Plan (STP) for Mutual Fund units held in demat form

SEBI issued a consultation paper to seek public comments on extending standing instructions for Systemic Withdrawal Plan (“SWP”) and Systemic Transfer Plan (“STP”) for investors holding mutual fund units in dematerialised form. SEBI noted that SWP/STP standing instructions currently work for Statement of Account mode, but demat holders must presently give separate instructions for each redemption or transfer (often via Delivery Instruction Slip), with alternatives like Power of Attorney raising investor-control concerns. SEBI’s Working Group recommended extending the facility to demat holdings to improve ease of doing business, and the Secondary Market Advisory Committee suggested a two-phase implementation: Phase 1 would enable one-time registration of unit-based SWP/STP mandates through depositories or stock exchange members with execution on stock exchange platforms, while Phase 2 would route processing through the Registrar and Transfer Agent to enable amount-based and other variants (such as appreciation-based and swing transfers). SEBI invited comments by February 26, 2026, through its public comments portal or designated email IDs.

1.1.9.      SEBI issues Master Circular for Registrars to an Issue and Share Transfer Agents

SEBI has issued an updated master circular that consolidates the circulars applicable to Registrars to an Issue and Share Transfer Agents (“RTAs”) and rescinds earlier instructions to the extent they relate to RTAs. It reiterates key registration and compliance processes, including online filings through the SEBI Intermediary Portal. It also sets common service-request norms, including processing certain dematerialisation-related requests within 30 (thirty) days after removing objections, where applicable. The circular mandates an annual internal audit by independent professionals, caps auditor tenure at 5 (five) years with a 2 (two) year cooling-off period and requires the audit report and action-taken reporting within prescribed timelines to issuer companies. It further aligns RTAs with specified cyber security and cyber resilience requirements and highlights regulatory concern on cloud-based compliance tooling that may move sensitive governance, risk and compliance data outside India, urging retention of critical data within India’s legal boundary. For qualified RTAs, it also specifies business continuity and disaster recovery expectations, including a near site, at least 500 (five hundred) kilometres between the primary data centre and disaster recovery site, restoration within 45 (forty-five) minutes, and a maximum data-loss tolerance of 15 (fifteen) minutes.

1.1.10.   SEBI issues Reporting of value of units of Alternative Investment Funds (AIFs) to Depositories

SEBI has directed AIFs, through their RTAs, to upload the latest available Net Asset Value (“NAV”) for each International Securities Identification Number (ISIN) of AIF units into the depository system before May 1, 2026, or within 30 (thirty) days from the valuation date of the AIF’s investment portfolio, whichever is later, to enhance transparency and operational efficiency in the dematerialised (demat) issuance framework. For Category I and Category II AIFs, valuation is required at least once every 6 (six) months by an independent valuer, extendable to 1 (one) year with at least 75 per cent (seventy-five per cent) investor approval by value, while Category III AIFs must ensure independent NAV calculation and disclose NAV at intervals not longer than a quarter for close-ended funds and not longer than a month for open-ended funds. SEBI has clarified the valuation date as the date of the independent valuation report or, for internal valuation, the date the valuation is documented in internal records, and placed responsibility on the AIF manager for timely and accurate uploading; depositories must build the required infrastructure, display a prescribed NAV disclaimer, amend relevant bye-laws/rules/regulations, and disseminate the circular, while trustees/sponsors must ensure the Compliance Test Report captures compliance with these requirements, which take effect immediately.

1.1.11.   SEBI issues Master Circular for Investment Advisers

SEBI issued a Master Circular for Investment Advisers (“IAs”) to consolidate all applicable circular directions in one place and rescind earlier circulars to the extent they relate to IAs. It strengthens conduct requirements by restricting free trials, requiring risk profiling with client consent before advice, and mandating that advisory fees be received only via banking channels, alongside enhanced disclosures and annual compliance audits. For individual and Hindu Undivided Family clients who are not accredited investors, it reiterates fee caps, including a fixed-fee ceiling of INR 1,51,000 (Indian Rupees One Lakh Fifty-One Thousand only) per annum per family and a cap of 2.5 per cent (two point five per cent) of Assets under Advice per annum. It also introduces a scaled deposit framework, generally ranging from INR 1,00,000 (Indian Rupees One Lakh only) to INR 10,00,000 (Indian Rupees Ten Lakhs only), to be maintained as specified liquid assets or bank deposits and marked as lien in favour of the Investment Adviser Administration and Supervisory Body (IAASB). The Master Circular further notes the administration-and-supervision framework under which Bombay Stock Exchange Limited is recognised as IAASB for 5 (five) years from July 25, 2024, and flags investor-protection measures such as optional centralised fee collection and grievance redressal through the SEBI Complaints Redress System and Online Dispute Resolution platforms.

1.1.12.   SEBI consolidates compliance framework for Research Analysts through updated Master Circulars

SEBI issued updated Master Circulars for Research Analysts (“RAs”) to consolidate all applicable SEBI circulars in one place, while rescinding the earlier circulars on these subjects to the extent they relate to IAs and RAs (without affecting prior actions, liabilities, or pending applications). The consolidated framework reiterates key operational and conduct requirements (including eligibility, certification and other ongoing compliances), strengthens IA conduct expectations (including restrictions around “free trial” advice and enhanced investor-facing disclosures), and sets out procedural expectations for proxy advisers within the RA ecosystem (including prompt correction of factual errors). It also formalises administration and supervision through a recognised stock exchange framework, including BSE Limited’s recognition as the Research Analyst Administration and Supervisory Body and the Investment Adviser Administration and Supervisory Body for 5 (five) years starting from July 25, 2024, and consolidates common requirements on investor grievance handling via the SEBI Complaints Redress System platform and the Online Dispute Resolution platform, investor charter disclosures, technology and data-risk controls for Software as a Service-based solutions, prior SEBI approval for change in control, advertisement and brand-name usage norms, optional mechanisms for transparent fee collection, controls against unauthenticated market news, and outsourcing governance.

1.1.13.   SEBI issues Consultation Paper On Draft Circular on Review of Inclusion of Historical Scenarios in Stress Testing and Coverage of Settlement Guarantee Fund for Commodity Derivatives Segment

SEBI issued a consultation paper proposing amendments to the Securities and Exchange Board of India master circular for the Commodity Derivatives Segment dated August 4, 2023; to revise how recognised clearing corporations incorporate historical scenarios in standardised stress testing and how the Settlement Guarantee Fund (“SGF”) is sized. SEBI proposed reducing the Z-score threshold used to cap extreme historical price moves in peak historical return scenarios from 10 (ten) to 5 (five), and revising SGF coverage by dropping the requirement to additionally cover 50 per cent (fifty per cent) of the credit exposure from simultaneous default of all clearing members, replacing it with a requirement to size coverage based on the simultaneous default of at least 3 (three) clearing members (and their associates) causing the highest credit exposure. The proposals were examined by a Working Group and deliberated by the Risk Management Review Committee, and public comments are invited until February 26, 2026, through SEBI’s web-based form.

International Financial Services Centres Authority (IFSCA)

1.1.14.   IFSCA issues IFSCA (Fund Management) (Amendment) Regulations, 2026

International Financial Services Centres Authority (“IFSCA”) notified the International Financial Services Centres Authority (Fund Management) (Amendment) Regulations, 2026, amending the International Financial Services Centres Authority (Fund Management) Regulations, 2025 under the International Financial Services Centres Authority Act, 2019 and the Securities and Exchange Board of India Act, 1992. The amendments revise key managerial personnel experience norms by generally requiring 5 (five) years’ relevant experience in an “eligible institution”, while permitting reduced thresholds for specified key managerial personnel, subject to professional qualification and valid certifications. They also allow Fund Management Entities (“FME”) to extend the validity of a placement memorandum in 6 (six)-month blocks if the minimum corpus is not achieved within the prescribed period, with extension fees set at 25 per cent (twenty-five per cent) of the fresh-scheme filing fee for the first extension and 50 per cent (fifty per cent) for each subsequent extension. For open-ended schemes, investments in unlisted securities are permitted only after achieving a minimum corpus of USD 3,000,000 (United States Dollar Three Million only), with a similar 6 (six)-month extension mechanism if the corpus is not met. The regulations further add wind-up triggers where an FME has raised funds but fails to achieve the minimum corpus without extending validity, or where no investors have been onboarded and no funds collected and the FME voluntarily winds up the scheme, and they provide a 24 (twenty-four)-month transition window to appoint a custodian in the International Financial Services Centre (“IFSC”), during which an independent custodian in India or a regulated foreign jurisdiction may be appointed with information to be provided to IFSCA when directed.

1.1.15.   IFSCA mandates IFSC Units to obtain ISINs from recognised IFSC depositories

IFSCA directed Units in the IFSC that intend to dematerialise securities or other permitted financial products to obtain International Securities Identification Numbers (“ISINs”) from a depository recognised by IFSCA, noting that many Units were still using domestic depositories in India. Units that have already obtained ISINs from domestic depositories must obtain new ISINs from an IFSCA-recognised depository by August 31, 2026, while issuers may continue to use International Central Securities Depositories for issuance and listing of debt securities and other permitted financial products where allowed under the International Financial Services Centres Authority (Listing) Regulations, 2024. IFSCA also placed responsibilities on the recognised depository in the IFSC to coordinate a standardised onboarding process with domestic depositories and issue guidance, and it must submit a compliance report confirming completion of the transition by September 30, 2026.

1.1.16.   IFSCA mandates dedicated websites for IFSC Finance Companies and Units serving external clients

IFSCA issued a circular requiring every Finance Company or Finance Unit in an IFSC that provides services to clients other than its group entities to maintain a dedicated website or webpage to enhance transparency and consumer awareness. The website/webpage must, at a minimum, include a brief overview of the Gujarat International Finance Tec-City (GIFT) IFSC ecosystem, the Certificate of Registration showing the registration number and permitted activities, a detailed list of products and services offered, the grievance redressal procedure with contact details of the grievance redressal officer, and the name, designation, and contact details of key managerial personnel in the IFSC (such as the Head of the Finance Company/Finance Unit, Chief Executive Officer, Chief Financial Officer, Compliance Officer, and Principal Officer, as applicable).

Miscellaneous

Ministry of Corporate Affairs (MCA)

1.1.17.   MCA issues Draft Companies (Registered Valuers and Valuation) Amendment Rules, 2026

Ministry of Corporate Affairs (“MCA”) issued a public notice and a draft notification proposing to amend Rule 12(1)(i) of the Companies (Registered Valuers and Valuation) Rules, 2017 to prescribe a minimum paid-up share capital requirement for recognition of Registered Valuers Organisations (“RVOs”), which is currently not specified. The draft would require an RVO to be registered under Section 25 of the Companies Act, 1956 or Section 8 of the Companies Act, 2013, have the sole object of dealing with regulation of valuers of an asset class or asset classes, include the Annexure III bye-law requirements, and maintain a minimum paid-up share capital of INR 25,00,000 (Indian Rupees Twenty-Five Lakhs only). Existing RVOs would be given time to comply with the new capital threshold on or before March 31, 2028. MCA has invited stakeholder suggestions and brief justification on the draft through the e-Consultation module on its portal by March 5, 2026.

Monetary Penalties

1.1.18.   RBI imposes penalties on 6 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.	Jilla Sahkari Bank Limited, Kanpur, Uttar Pradesh	INR 3,00,000 (Indian Rupees Three Lakh only)	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 Banking Regulation Act, 1949.
2.	Jaipur Central Co-operative Bank Ltd., Rajasthan	INR 1,00,000 (Indian Rupees One Lakh only)	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 Banking Regulation Act, 1949.
3.	Vinayaka Capsec Private Limited	INR 1,00,000 (Indian Rupees One Lakh only)	Non-compliance with certain directions issued by RBI on ‘Acquisition of Shareholding or Control’. 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.
4.	Agartala Co-operative Urban Bank Limited, Tripura	INR 2,00,000 (Indian Rupees One Lakh only)	Non-compliance with certain directions issued by RBI on ‘Exposure Norms and Statutory/ Other Restrictions - UCBs’. 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.
5.	The Jeypore Co-operative Urban Bank Limited, Odisha	INR 2,00,000 (Indian Rupees One Lakh only)	Non-compliance with certain directions issued by RBI on ‘Exposure Norms and Statutory/Other Restrictions - UCBs’. 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.
6.	Daund Urban Co-operative Bank Limited, Daund, Maharashtra	INR 5,000 (Indian Rupees Five Thousand only)	Non-compliance with certain directions issued by RBI on ‘Credit Information Reporting’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 25 read with Section 23 of the Credit Information Companies (Regulation) Act, 2005.

2.              Key Asian Markets - Philippines and Indonesia

2.1.          Philippines

2.2.1.      BSP reports Foreign reserves climb to USD 112.5 billion, strengthening the external liquidity buffer

Bangko Sentral ng Pilipinas (“BSP”) In a press release published on February 5, 2026, preliminary data showed Gross International Reserves (“GIR”) rising to USD 112.5 billion (United States Dollar One Hundred Twelve Billion Five Hundred Million only) as of end-January 2026. This level was stated to be equivalent to 7.5 (seven point five) months’ worth of imports of goods and payments of services and primary income, and about 4.1 (four point one) times the country’s short-term external debt based on residual maturity. GIR was described as comprising foreign-denominated securities, foreign exchange, and other reserve assets (including gold), serving as a buffer against external economic shocks by helping meet import payments, service foreign debt, and stabilise the currency.

2.2.2.      BSP reports January headline inflation at 2.0 per cent, remaining within forecast and below the annual target

BSP reported that year-on-year headline inflation increased to 2.0 per cent (two per cent) in January 2026 from 1.8 per cent (one point eight per cent) in December 2025, remaining within its forecast range of 1.4 to 2.2 per cent (one point four to two point two per cent) for the month. Inflation for households in the lowest 30 per cent (thirty per cent) income group rose from 1.1 per cent (one point one per cent) to 1.6 per cent (one point six per cent). Non-food items, particularly housing, water, electricity, gas and other fuels, as well as restaurants and accommodation services, drove the increase, while food inflation eased due to slower price increases in vegetables, meat and fish, with rice prices declining at a slower pace amid an import ban in the last quarter of 2025. On a seasonally adjusted month-on-month basis, headline inflation moderated from 0.7 per cent (zero point seven per cent) in December to 0.1 per cent (zero point one per cent) in January, while core inflation rose from 2.4 per cent (two point four per cent) to 2.8 per cent (two point eight per cent), and BSP reiterated its expectation that inflation will settle close to the 3.0 per cent (three per cent) target for 2026 and 2027.

2.2.          Indonesia

2.2.3.      Moody’s affirms Indonesia’s Baa2 sovereign rating; outlook revised to negative

Moody’s affirmed the Republic of Indonesia’s sovereign credit rating at Baa2 and revised the outlook to negative, citing strong economic resilience and policy credibility while flagging risks around policy predictability. Bank Indonesia (“BI”) stated that the outlook change does not reflect weakening fundamentals, highlighting fourth-quarter 2025 growth of 5.39 per cent (five point three nine per cent), full-year 2025 growth of 5.1 per cent (five point one per cent), and 2025 inflation of 2.92 per cent (two point nine two per cent), alongside continued measures to strengthen rupiah stability and preserve financial system stability. Moody’s also projected growth of around 5 per cent (five per cent) in the short to medium term and expected the fiscal deficit to remain below 3 per cent (three per cent) of gross domestic product, while BI projected 2026 growth of 4.9 to 5.7 per cent (four point nine to five point seven per cent) and 2027 growth of 5.1 to 5.9 per cent (five point one to five point nine per cent). The release further highlighted external buffers, including a December 2025 trade surplus of USD 2.51 billion (United States Dollar Two Billion Five Hundred Ten Million only) and end-December 2025 foreign exchange reserves of USD 156.5 billion (United States Dollar One Hundred Fifty-Six Billion Five Hundred Million only), stated as equivalent to 6.4 (six point four) months of imports or 6.3 (six point three) months of imports plus government external-debt repayments.

2.2.4.      Bank Indonesia flags official reserve assets remain high despite debt-repayment and market-stabilisation outflows

BI stated that Indonesia’s official reserve assets at end-January 2026 remained high at USD 154.6 billion (United States Dollar One Hundred Fifty-Four Billion Six Hundred Million only), though lower than USD 156.5 billion (United States Dollar One Hundred Fifty-Six Billion Five Hundred Million only) at end-December 2025, largely due to government external debt repayments and BI’s rupiah stabilisation measures amid persistent global financial market uncertainty. BI noted that the end-January reserve level was equivalent to 6.3 (six point three) months of imports, or 6.1 (six point one) months of imports plus servicing government external debt, which it said is well above the international adequacy benchmark of around 3 (three) months of imports. BI assessed the reserve position as adequate to support external sector resilience and preserve macroeconomic and financial system stability, and it expects resilience to remain supported by sufficient reserves, continued foreign capital inflows, and ongoing coordination with the government to safeguard stability and sustainable growth.

3.              Trends

3.1.          Industrial Development Bank of India privatisation race narrows to three bidders

Government of India and Life Insurance Corporation of India received bids for the proposed sale of a 60.7 per cent (sixty point seven per cent) stake in Industrial Development Bank of India (IDBI Bank), with shortlisted interest said to include Fairfax Financial, Emirates NBD and Kotak Mahindra Bank. The transaction remains pending, with the authorities expected to run a selection process and announce a preferred bidder by March 2026.

3.2.          South Korean insurers explore entry into India as cross-border interest builds

Samsung Fire & Marine Insurance, Mirae Asset Financial Group and Hyundai Marine & Fire Insurance were in exploratory discussions about entering India’s insurance market. Reuters noted that talks were at an early stage and that no formal proposals had been made, meaning any entry would be a prospective development rather than a completed transaction.

4.              Sector Overview

4.1.          RBI holds repo rate and signals active liquidity management

RBI kept the policy repo rate unchanged at 5.25 per cent (five point two five per cent) and said it would take pre-emptive liquidity actions to support monetary-policy transmission. The decision implied no immediate rate shock for borrowers’ equated monthly instalments and no automatic reset for deposit rates. For the banking, financial services and insurance sector, an extended pause typically shifts competition towards margins, asset quality and duration positioning rather than outright rate re-pricing.

4.2.          India’s foreign exchange reserves hit record high, strengthening external buffers

India’s foreign exchange reserves rose to an all-time high of USD 723,800,000,000 (United States Dollar Seven Hundred Twenty-Three Billion Eight Hundred Million only) as of January 30, 2026, according to remarks by the RBI Governor. The RBI indicated that the reserves provide merchandise import cover for over 11 (eleven) months. For the banking, financial services and insurance sector, stronger reserves generally support confidence in currency stability and can reduce external funding stress during periods of volatility.

5.              Business Updates

5.1.          Advent investment values up for Aditya Birla Housing Finance

Aditya Birla Housing Finance Limited announced a primary capital infusion of INR 27,50,00,00,000 (Indian Rupees Two Thousand Seven Hundred Fifty Crore only) from Indriya, an entity managed by Advent International, which would translate into an approximately 14.3 per cent (fourteen point three per cent) stake on completion and a post-money valuation of around INR 1,92,50,00,00,000 (Indian Rupees Nineteen Thousand Two Hundred Fifty Crore only). The transaction was reported as subject to shareholder and regulatory approvals and other customary conditions.

5.2.          Blackstone secures RBI approval to acquire up to 9.99 per cent in Federal Bank

Blackstone received approval from the Reserve Bank of India to acquire up to a 9.99 per cent (nine point nine nine per cent) stake in Federal Bank, an investment reported at around USD 700,000,000 (United States Dollar Seven Hundred Million only). The approval enables Blackstone to proceed via a Singapore-based affiliate and includes the right to nominate a non-executive director to the bank’s board, as reported.

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