Banking & Finance Digest June 08, 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. India and Cambodia launch cross-border QR-code payment connectivity

The Reserve Bank of India (“RBI”), in collaboration with the National Bank of Cambodia, has launched the first phase of payment systems connectivity between India and Cambodia to enable QR code-based cross-border merchant payments. The initiative establishes interoperability between India’s Unified Payments Interface (“UPI”) and Cambodia’s KHQR system, allowing Indian travellers to make real-time payments at over 4.5 million KHQR-enabled merchants in Cambodia using UPI applications. The project forms part of RBI’s broader efforts to enhance cross-border payment linkages in line with the G20 Roadmap for cross-border payments, with the second phase expected to enable Cambodian travellers to make UPI QR-based merchant payments in India. The initiative is expected to promote secure, efficient and accessible digital payments while reducing reliance on cash and card-based transactions.

1.1.2. Central Government Re-Appoints Shri Swaminathan Janakiraman as RBI Deputy Governor

The Government of India has approved the extension of Shri Swaminathan Janakiraman's tenure as the Deputy Governor of the Reserve Bank of India, effective from June 26, 2026. The re-appointment has been introduced for a structural period of two years or until further official orders are issued, whichever timeline concludes earlier.

Securities and Exchange Board of India (SEBI)

1.1.3. SEBI proposes revised framework for calculation of NDCF for InvITs

The Securities and Exchange Board of India (“SEBI”) has issued a draft consultation paper proposing amendments to the framework governing the calculation of Net Distributable Cash Flows (“NDCF”) for Infrastructure Investment Trusts (“InvITs”). The proposal seeks to permit InvITs in the road sector to add back major maintenance (“MM”) expenses funded through external borrowings while calculating NDCF. SEBI noted that MM expenses incurred for road projects are operational expenses under accounting principles, despite being essential for maintaining road quality and complying with concession agreement obligations. The proposed framework would accordingly allow debt-funded MM expenditure for road projects to be considered while computing distributable cash flows, subject to prior unitholder approval, statutory auditor certification and detailed disclosure requirements. InvITs would additionally be required to disclose project-wise MM borrowings, repayment impact, debt maturity profiles and the effect of such borrowing on future growth potential and distributions to unitholders. SEBI has invited public comments on the draft circular until June 22, 2026.

1.1.4. SEBI issues updated Master Circular for AIFs

SEBI has issued a revised Master Circular for Alternative Investment Funds (“AIFs”) dated June 03, 2026, consolidating all circulars and regulatory directions issued up to May 31, 2026. The Master Circular supersedes the earlier Master Circular dated May 07, 2024 and provides a consolidated regulatory framework applicable to AIFs, custodians, depositories and registrars. The circular contains detailed provisions relating to registration, filing of Private Placement Memoranda (“PPMs”), fundraising, overseas investments, leverage norms, accredited investor frameworks, co-investment structures, operational modalities and reporting requirements. The circular also introduces updated compliance obligations relating to dematerialisation of AIF units and investments, risk management standards for Category III AIFs, due diligence obligations for investors and investments, valuation norms and investor grievance disclosures. In addition, SEBI has consolidated the operational framework applicable to Angel Funds, Special Situation Funds (“SSFs”), Large Value Funds (“LVFs”) and Accredited Investor (“AI”) only schemes. The Master Circular further rescinds and consolidates several earlier AIF circulars into a single comprehensive framework.

International Financial Services Centres Authority (IFSCA)

1.1.5. IFSCA Advises Regulated Entities to Strengthen Cyber Defences Against Emerging AI-Driven Threats

IFSCA has issued an advisory highlighting heightened cyber security risks arising from advanced frontier Artificial Intelligence (AI) models, which are increasingly capable of identifying vulnerabilities, generating exploits, and accelerating cyberattacks at unprecedented speed and scale. Recognising that the time between vulnerability disclosure and exploitation could shrink from weeks to hours, IFSCA has urged all regulated entities to reassess their cyber security risks and strengthen their security posture. Key measures recommended include maintaining Software Bills of Materials (SBOMs), implementing phishing-resistant multi-factor authentication, strengthening API security and monitoring controls, prioritising patch management, enhancing detection of AI-driven attack patterns, ensuring preparedness of critical service providers, and adopting AI-assisted vulnerability detection tools with appropriate safeguards. The advisory also requires entities to incorporate risks from frontier AI models into their cyber security risk assessments and ensure robust human oversight of any AI-generated or AI-remediated code before deployment in production environments.

Monetary Penalties

1.1.6.  RBI imposes penalties on three 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.	Nagar Sahkari Bank Ltd., Maharajganj (U.P.)	INR 14,25,000 (Indian Rupees Fourteen Lakh Twenty-Five Thousand only)	The RBI fined Nagar Sahkari Bank Ltd. (Maharajganj) for failing to follow banking regulations. The bank broke rules by ignoring loan-repayment tracking, breaching unsecured lending limits, and not sharing borrower data with credit agencies.
2.	Puran Associates Private Limited	INR 3,10,000 (Indian Rupees Three Lakh Ten Thousand only)	For failing to correctly classify restructured accounts as non-performing assets, violating regulatory directions regarding asset classification. The penalty, announced on June 5, 2026, followed a statutory inspection based on the company's financial position as of March 31, 2025.
3.	Canara Bank	INR 41,80,000 (Indian Rupees Forty-One Lakh Eighty Thousand only)	For failing to adhere to Know Your Customer (KYC) directives and regulations concerning inoperative accounts. Following a 2025 inspection, the RBI found that the bank did not upload customer data to the Central KYC Records Registry on time and incorrectly classified active accounts.

2.               Key Asian Markets - Philippines and Sri Lanka

2.1.           Philippines

2.1.1.     BSP Clarifies Documentation Requirements for Non-Deliverable FX Derivative Transactions

BSP has issued Memorandum No. M-2026-022 to clarify the regulatory intent of Circular No. 1212 dated April 11, 2025 concerning non-deliverable foreign exchange (FX) derivative transactions, particularly non-deliverable forward (NDF) transactions involving the sale of foreign currency against the Philippine peso to non-resident financial institutions. The BSP emphasised that such NDF transactions must be supported by legitimate underlying economic activities and appropriate documentary evidence, reinforcing that derivative transactions should not be undertaken for purely speculative purposes. The clarification aims to promote a consistent understanding among banks of the policy objectives underlying the existing framework and strengthen compliance with prudential requirements governing FX derivative transactions.

2.1.2.      BSP Reports Continued Growth in Bank Lending in April 2026

BSP has reported that loans extended by universal and commercial banks increased by 11.4 per cent (Eleven point Four per cent) year-on-year in April 2026, up from 10.7 per cent (Ten point Seven per cent) in March 2026, while outstanding loans rose by 1.1 per cent (One point One per cent) month-on-month after seasonal adjustment. Outstanding loans to residents grew by 11.8 per cent (Eleven point Eight per cent), compared to 11.1 per cent (Eleven point One per cent) in March 2026, with lending for business activities increasing by 10.7 per cent (Ten point Seven per cent), driven by growth in real estate, electricity and utilities, wholesale and retail trade, manufacturing, and financial and insurance activities. Consumer loans to residents also rose by 19.6 per cent (Nineteen point Six per cent), although at a slower pace than the previous month due to moderation in credit card and motor vehicle loans. BSP stated that it monitors bank lending as a key transmission channel of monetary policy and will continue to ensure that domestic liquidity and lending conditions remain aligned with its price and financial stability objectives.

2.2.         Sri Lanka

2.2.1.      Sri Lanka’s External Sector Records Deficit Amid Middle East Conflict Pressures

Central Bank of Sri Lanka has reported that the country’s external current account recorded a deficit in April 2026, compared to the surplus observed during January–March 2026, primarily due to a wider merchandise trade deficit, a moderation in the services surplus, and a higher primary income account deficit, despite increased workers’ remittances. The merchandise trade deficit widened to USD 3.7 billion (United States Dollars Three Billion Seven Hundred Million only) during January–April 2026, compared to USD 2.3 billion (United States Dollars Two Billion Three Hundred Million only) in the corresponding period of 2025, while fuel import expenditure rose by 149.9 per cent (One Hundred Forty Nine point Nine per cent) year-on-year to USD 886 million (United States Dollars Eight Hundred Eighty Six Million only) in April 2026. Tourist arrivals declined by 22.3 per cent (Twenty Two point Three per cent) year-on-year and tourist earnings fell by 38.8 per cent (Thirty Eight point Eight per cent) to USD 157 million (United States Dollars One Hundred Fifty Seven Million only), whereas workers’ remittances increased to USD 768 million (United States Dollars Seven Hundred Sixty Eight Million only) in April 2026 and reached USD 3,063 million (United States Dollars Three Billion Sixty Three Million only) during the first four months of the year. Gross official reserves stood at approximately USD 6.8 billion (United States Dollars Six Billion Eight Hundred Million only) at end-April 2026, and the Sri Lankan rupee depreciated by 5.4 per cent (Five point Four per cent) against the US dollar on a year-to-date basis as of end-May 2026. The update also noted that the International Monetary Fund completed the combined Fifth and Sixth Reviews under Sri Lanka’s Extended Fund Facility on May 27, 2026, providing immediate access to SDR 508 million (Special Drawing Rights Five Hundred Eight Million only), equivalent to approximately USD 695 million (United States Dollars Six Hundred Ninety Five Million only), to support economic policies and reforms.

2.2.2.      Sri Lanka Headline Inflation Edges Higher in May 2026

Central Bank of Sri Lanka has reported that Colombo Consumer Price Index (CCPI)-based headline inflation increased marginally to 5.5 per cent (Five point Five per cent) in May 2026 from 5.4 per cent (Five point Four per cent) in April 2026, reflecting the impact of upward adjustments to domestic energy prices amid the ongoing conflict in the Middle East. Non-food inflation accelerated to 7.8 per cent (Seven point Eight per cent) from 6.8 per cent (Six point Eight per cent), while food inflation moderated to 0.9 per cent (Zero point Nine per cent) from 2.8 per cent (Two point Eight per cent). On a month-on-month basis, the CCPI increased by 0.9 per cent (Zero point Nine per cent), driven primarily by higher prices in housing, water, electricity, gas and other fuels, and transport categories. Core inflation also rose marginally to 3.9 per cent (Three point Nine per cent) from 3.8 per cent (Three point Eight per cent). The Central Bank stated that the inflation outlook remains subject to elevated uncertainty due to ongoing tensions in the Middle East, and projections indicate that headline inflation is likely to remain above the 5 per cent (Five per cent) target in the near term before easing and stabilising around the target over the medium term with appropriate policy measures.

3.             Trends

3.1.           Satin Creditcare promoters to infuse INR 100 crore, raise stake

Satin Creditcare Network Limited’s promoters will infuse INR 100 crore (Indian Rupees One Hundred Crore only) through the issuance of 38.5 lakh (thirty eight lakh and fifty thousand) fully convertible warrants priced at INR 260 (Indian Rupees Two Hundred Sixty only) per warrant, representing a 17 per cent (seventeen per cent) premium over the floor price of INR 222.82 (Indian Rupees Two Hundred Twenty Two and Eighty Two Paise only). This capital infusion will increase promoter shareholding from 36.17 per cent (thirty-six point one seven per cent) to 38.32 per cent (thirty-eight point three two per cent) on a fully diluted basis, with each warrant convertible into one equity share of INR 10 (Indian Rupees Ten only) within 18 months. Management has stated that the funds will strengthen the lender’s capital base and support its long‑term growth plans, including its target to achieve INR 32,000 crore (Indian Rupees Thirty-Two Thousand Crore only) in consolidated assets under management (“AUM”) by 2030. Satin’s AUM stood at INR 15,174 crore (Indian Rupees Fifteen Thousand One Hundred Seventy Four Crore only) at the end of March 2026, reflecting a 19 per cent (nineteen per cent) year‑on‑year increase; on a standalone basis, the company recorded INR 12,853 crore (Indian Rupees Twelve Thousand Eight Hundred Fifty Three Crore only) in AUM, making it the fourth‑largest player in the NBFC‑microfinance (“NBFC‑MFI”) segment. Satin’s share price rose 3.1 per cent (three point one per cent) to INR 242 (Indian Rupees Two Hundred Forty-Two only) following the announcement.

3.2.           Bajaj Finserv to invest up to INR 2,000 Crore in AI, tech startups in 5 years

Bajaj Finserv Limited has announced plans to invest up to INR 2,000 crore (Indian Rupees Two Thousand Crore only) over the next five years in artificial intelligence (“AI”) and technology‑led startups, alongside launching a new applied research and innovation initiative called Finserv Intelligence (“FI”). The investment programme, focused on high‑tech, low‑unit‑cost and scalable solutions built in India, will target early‑stage companies with strong growth potential across AI, cybersecurity, quantum technologies, fintech and consumer technology. As part of this initiative, Bajaj Finserv has partnered with the Indian Institute of Technology, Bombay (“IIT‑Bombay”) to establish a joint research centre and develop collaborative workstreams on AI, cybersecurity and the redesign of physical retail experiences. According to the company, FI will operate as a holistic innovation ecosystem with a five‑to‑ten‑year horizon, encompassing research laboratories, centres of excellence, venture‑led innovation models and a scholars‑in‑residence programme. Leadership emphasised that this initiative will combine academic collaboration, startup investment and in‑house specialist capabilities to drive technology‑first value creation across India’s financial services sector.

4.               Sector Overview

4.1.           Finance Ministry Tightens BFSI Grievance Redressal Framework

India’s Finance Ministry has announced a series of measures to strengthen grievance redressal across the banking, financial services, and insurance (BFSI) sector. The initiative includes technology-driven customer feedback systems, regular reviews of complaints, and performance rankings for banks and insurers based on the quality and speed of complaint resolution. The reforms aim to improve transparency, reduce turnaround times, and enhance customer trust in financial institutions through stronger accountability and service standards.

4.2.           Corporate and Financial Deposits Drive Bank Deposit Growth in Q4 FY26

Bank deposit growth remained steady at 11 per cent (eleven per cent) year‑on‑year in the fourth quarter of FY26, driven primarily by strong expansion in corporate deposits, which grew 16 per cent (sixteen per cent), and financial deposits, which expanded 27 per cent (twenty-seven per cent). Private sector banks led deposit mobilisation with 13 per cent (thirteen per cent) growth, outpacing public sector banks (“PSBs”), which recorded 10 per cent (ten per cent) and lost approximately 50 basis points (fifty basis points) of market share, reducing the sectoral split to 60:40 in favour of PSBs. Household deposits continued to soften, growing at a slower pace, while private banks also outperformed PSBs in this category with 12 per cent (twelve per cent) growth compared to 9 per cent (nine per cent) for PSBs. Savings and term deposits saw modest improvement of 10 per cent (ten per cent) and 12 per cent (twelve per cent) respectively, though nearly 80 per cent (eighty per cent) of term deposits were sourced from metro and urban centres. The sector’s rising dependence on corporate, financial and bulk deposits reflects intensifying competition for liabilities, with deposit growth still lagging credit demand and consequently elevating funding costs.

4.3.           Deposit Competition Intensifies Amid Market Volatility

Banking and financial markets experienced heightened volatility as the RBI kept policy rates unchanged amid rising geopolitical tensions and intensifying competition for deposits. Bank deposit growth remained steady at 11 per cent (eleven per cent) year‑on‑year in the fourth quarter of FY26, but funding pressures increased as corporate deposits and financial deposits surged 16 per cent (sixteen per cent) and 27 per cent (twenty-seven per cent) respectively, overshadowing slower household deposit growth. Private sector banks outperformed public sector banks (“PSBs”), posting 13 per cent (thirteen per cent) deposit growth versus 10 per cent (ten per cent) for PSBs, which also lost around 50 basis points (fifty basis points) of market share. Savings and term deposits grew 10 per cent (ten per cent) and 12 per cent (twelve per cent) respectively, with nearly 80 per cent (eighty per cent) of term deposits mobilised from metro and urban centres. The report highlighted that rising reliance on bulk and wholesale deposits may address short‑term liquidity needs but risks elevating liquidity coverage pressures, particularly as deposit growth continues to lag robust credit demand. Analysts noted that lenders tightly linked to external benchmark lending rates may be better positioned to protect margins, but overall competition for liabilities is expected to remain intense.

5.              Business Updates

5.1.           SEBI approves Truhome Finance IPO

Truhome Finance has received approval from SEBI for its proposed Initial Public Offering (“IPO”) aggregating to INR 3,000 crore (Indian Rupees Three Thousand Crore only). The IPO comprises a fresh issue of equity shares aggregating to INR 1,500 crore (Indian Rupees One Thousand Five Hundred Crore only) and an offer for sale of equity shares aggregating to INR 1,500 crore (Indian Rupees One Thousand Five Hundred Crore only) by promoter shareholder Mango Crest Investment Limited. The company intends to utilise the proceeds from the fresh issue towards strengthening its capital base, supporting future lending operations and meeting capital adequacy requirements prescribed by the RBI. Formerly known as Shriram Housing Finance Limited, Truhome Finance was acquired by Warburg Pincus in December 2024 and continues to focus on affordable housing finance.

5.2.           Go Digit Insurance shares surge following INR 100 crore block deal

Shares of Go Digit General Insurance Limited rose by approximately 8.66 per cent (eight point six six per cent) following a block deal valued at nearly INR 100 crore (Indian Rupees One Hundred Crore only). The transaction involved the acquisition of 33.33 lakh shares by Aditya Birla Sun Life Mutual Fund and JPMorgan (Taiwan) Eastern Technology Fund at a weighted average price of INR 300 (Indian Rupees Three Hundred only) per share. Peak XV Partners Growth Investments III exited its entire stake through the transaction.

5.3.           Kotak Alts Raises USD 1 Billion Realty Fund with Strong Global Backing

Kotak Alternate Asset Managers (Kotak Alts) has successfully closed its 14th real estate fund at USD 1 billion (United States Dollar One Billion only), marking one of the largest capital raises in India’s alternative real estate investment space. The fund was anchored by a commitment of over USD 675 million (United States Dollar Six Hundred Seventy-Five Million only) from a subsidiary of the Abu Dhabi Investment Authority (“ADIA”), while South Korea’s National Pension Service (“NPS”) made its first-ever investment in Indian alternative assets through the fund. The milestone underscores growing international investor confidence in India’s real estate market and the increasing appeal of alternative investment opportunities in the country.

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