Banking & Finance Digest June 22, 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 amendment directions on Responsible Business Conduct for NBFCs

The Reserve Bank of India (“RBI”) has issued the Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Second Amendment Directions, 2026, strengthening norms on advertising, marketing, and sale of financial products by Non-Banking Financial Companies (“NBFC”), effective January 1, 2027. The RBI’s new directions mandate explicit consent, prohibit mis-selling and compulsory bundling, and restrict the use of misleading “dark patterns”, while requiring transparent disclosure of key features, risks, and charges of products. The framework further emphasises fair marketing practices, easy opt-out of promotional communications, and compliance with regulations issued by the Securities and Exchange Board of India (“SEBI”), Insurance Regulatory and Development Authority of India (“IRDAI”), and other authorities, thereby enhancing consumer protection and transparency in the NBFC sector.

1.1.2.     RBI issues amendment directions on NBFCs Undertaking Financial Services and Agency Business

The RBI has issued the Reserve Bank of India (Non-Banking Financial Companies – Undertaking of Financial Services) Second Amendment Directions, 2026, effective January 1, 2027, revising norms governing agency business and distribution of third-party financial products by NBFCs. The framework clarifies agency business as arrangements where NBFCs act as agents for third-party product and service providers (TPPSPs) without risk participation, limited to regulated financial products under authorities such as the SEBI, IRDAI, and PFRDA. The directions permit NBFCs to undertake insurance, mutual fund, and pension distribution on a fee basis without RBI approval, subject to compliance with respective sectoral regulations, upfront disclosure, and robust grievance redressal mechanisms. Additionally, the amendments streamline existing provisions, remove certain legacy requirements, and align conduct-related aspects with the RBI’s Responsible Business Conduct framework, thereby enhancing transparency and strengthening oversight of NBFC-led distribution activities. 

1.1.3.     RBI issue amendment directions on Advertising, Marketing and Sale of Financial Products and Services

The RBI has issued final amendment directions governing the advertising, marketing and sale of financial products and services by regulated entities (REs), including banks and NBFCs. RBI finalised these directions after stakeholder consultation on the draft issued in February 2026, introduce comprehensive norms covering third party product distribution, conduct of Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs), prevention of mis selling and addressing dark patterns. The RBI has incorporated feedback received and aligned the framework across multiple regulated entities through parallel amendments to responsible business conduct directions and agency/referral services guidelines. All amendment directions shall come into effect from January 1, 2027, with the objective of strengthening consumer protection, ensuring transparency in product marketing and promoting responsible conduct across the financial sector.

1.1.4.  RBI issue NBFC – Prudential Norms on Capital Adequacy Third Amendment   Directions, 2026

The RBI has issued the Reserve Bank of India (Non Banking Financial Companies – Prudential Norms on Capital Adequacy) Third Amendment Directions, 2026 applicable to NBFCs. The amendment introduces a specific risk weight treatment for exposures backed under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 notified by the Government of India (GoI). Accordingly, exposures guaranteed under ECLGS 5.0 shall attract a risk weight of 0 percent (zero per cent) to the extent of 75 per cent (seventy-five per cent) of the guaranteed portion, where settlement is expected within thirty days from invocation; the balance exposure shall continue to attract risk weight as per extant norms. The directions have been issued under the Reserve Bank of India Act, 1934 and come into force with immediate effect, thereby providing capital relief and supporting credit flow under the scheme.

1.1.5.  RBI issues revised Licensing Framework for Payment Systems introducing Perpetual Authorisation

The RBI has issued revised Master Directions governing authorisation to operate payment systems under the Payment and Settlement Systems Act, 2007 (PSS Act), introducing significant changes including perpetual validity of Certificates of Authorisation (CoA), stricter eligibility and governance norms, and the formalisation of on‑tap licensing for Payment System Operators (PSOs). Under the new framework, eligible entities may apply for authorisation at any time, while licences granted will remain perpetually valid subject to continued compliance, 

1.1.6.  RBI issues amendment directions on Responsible Business Conduct for Payments Banks

The RBI has issued the Reserve Bank of India (Payments Banks – Responsible Business Conduct) Second Amendment Directions, 2026, introducing enhanced norms for advertising, marketing, and sale of financial products by Payments Banks (“PBs”), effective January 1, 2027. The framework mandates PBs to ensure explicit consent, prohibit mis-selling, and prevent practices such as compulsory bundling and use of dark patterns, while requiring transparent disclosure of key product features, risks, and charges. The RBI’s directions also mandate strict compliance with applicable regulations issued by the SEBI, IRDAI, and other authorities, thereby strengthening consumer protection and transparency in the payments banking ecosystem.  

The Securities and Exchange Board of India (SEBI)

1.1.7.     SEBI issues amendments to AIF Regulations on Winding‑up and Inoperative Funds

The SEBI has introduced key amendments to the SEBI (Alternative Investment Funds) Regulations governing Alternative Investment Funds (“AIFs”), providing enhanced flexibility during the winding up phase. The amendments permit AIFs to retain a portion of liquidation proceeds beyond their permissible life for actual or potential legal, tax or regulatory liabilities, including ongoing litigation or investigations, based either on official communications or approval of at least 75 per cent (seventy-five per cent) of investors by value. SEBI has also introduced a new category of Inoperative Fund, enabling funds with fully liquidated investments but pending liabilities to continue operating solely for closure purposes, subject to restrictions such as prohibition on fresh investments and management fees, along with partial compliance relief. Further, retained funds may be used for residual operational expenses for up to three years, with mandatory disclosures and reporting obligations to ensure transparency.

International Financial Services Centres Authority (IFSCA)

1.1.8.     IFSCA revises AML/CFT and KYC exemption framework for transaction routing requirements

The International Financial Services Centres Authority (“IFSCA”) has issued a circular amending its earlier framework on exemptions from the International Financial Services Centres Authority (Anti‑Money Laundering, Counter‑Terrorist Financing and Know Your Customer) Guidelines, 2022 (the AML/CFT and KYC Guidelines). The amendment mandates that all financial institutions, including those availing exemptions, must route all monetary consideration arising from business transactions strictly through accounts maintained with a Banking Unit in an IFSC or a Special Non‑Resident Rupee (SNRR) account.

1.1.9.     Monetary Penalties

RBI imposes monetary penalties on the following financial institutions:

Name of the Financial Institution	Penalty Imposed	Reasons
Mahila Cooperative Bank Limited, Bangalore, Karnataka	INR 5,00,000/- (Indian Rupees Five Lakhs)	For non-compliance with RBI directions on loans and advances to directors and their related parties.
Five Star Business Finance Limited	INR 6,20,000 (Indian Rupees Six Lakhs Twenty Thousand)	For non-compliance with the RBI direction on KYC norms and fair practice code.
Can Fin Homes Limited	INR 2,70,000 (Indian Rupee Two Lakhs Seventy Thousand)	For non-compliance with RBI fair practices code.
Pahal Financial Services Private Limited	INR 3,10,000 (Indian Rupee Three Lakhs Ten Thousand)	For inadequate monitoring system for anti-money laundering.
Nasik Road Deolali Vyapari Sahakari Bank Limited	INR 2,10,000 (Indian Rupee Two Lakhs Ten Thousand)	For lending credits to related parties.
Chitradurga District Co‑operative Central Bank Limited	INR 1,50,000 (Indian Rupee One Lakhs Fifty Thousand)	Failed to upload customer KYC data to CKYCR (Central KYC Records Registry) within the required timeline.

2.           Key Asian Markets – Philippines and Bangladesh

2.1.       Philippines

2.1.1.   BSP raises policy rate to address inflationary pressures

The Bangko Sentral ng Pilipinas (“BSP”) has increased its target Reverse Repurchase (“RRP”) Rate by 25 basis points to 4.75 per cent (four point seven five per cent) in response to persistent inflationary pressures. Correspondingly, the overnight deposit and lending facility rates have been adjusted to 4.25 per cent (four point two five per cent) and 5.25 per cent (five point two five per cent), respectively. The BSP noted that elevated global oil and fertiliser prices, along with broadening domestic price pressures, have increased inflation risks. According to the BSP’s projections, headline inflation is expected to exceed the 4.0 per cent (four point zero per cent) upper tolerance limit in both 2026 and 2027. The central bank stated that the policy tightening is intended to anchor inflation expectations and mitigate the risk of second-round inflationary effects while supporting economic stability.

2.1.2.   BSP extends maximum tenor for Salary-Based Consumption loans to seven years

The BSP has increased the maximum repayment period for Salary-Based General-Purpose Consumption Loans (“SBGPCLs”) from three years, or five years in exceptional cases, to seven years. The revised framework applies to all borrowers and is intended to improve loan affordability while maintaining responsible lending standards. SBGPCLs are unsecured loans typically used to finance short-term personal requirements, including healthcare, education, travel, emergencies and household expenses. The BSP clarified that seven years represents the maximum permissible tenor rather than a mandatory repayment period, and supervised financial institutions must continue to assess borrowers’ repayment capacity before extending credit. The measure forms part of the BSP’s broader efforts to promote financial inclusion, financial literacy and sustainable borrowing practices.

2.2.       Bangladesh

2.2.1.   Bangladesh Bank permits B2C exports through Global Online Marketplaces

Bangladesh Bank has broadened the scope of Business-to-Consumer (“B2C”) exports by permitting Bangladeshi exporters to list goods on globally recognised online marketplaces and digital platforms accessible to foreign buyers. Under the revised framework, authorised dealers must verify exporters’ merchant agreements with such platforms and may facilitate export transactions of up to USD 5,000 (United States Dollars Five Thousand only) per transaction on Cost and Freight (“CFR”) terms. The circular also simplifies export procedures by exempting shipments valued at up to USD 1,000 (United States Dollars One Thousand only) from Export (“EXP”) form requirements, provided export proceeds are received in advance through banking channels or legitimate digital payment systems. Bangladesh Bank has additionally prescribed procedures relating to repatriation of export proceeds, refunds, remittances for platform-related services and compliance obligations to support small-value cross-border e-commerce exports.

3.           Trends

3.1.       Turtlemint to launch INR 883 Crore public issue

Insurtech platform Turtlemint has announced its IPO aggregating to INR 883 crore (Indian Rupees Eight Hundred Eighty Three Crore only), with a price band of INR 144–152 (Indian Rupees One Hundred Forty-Four to One Hundred Fifty-Two only) per share. The issue is scheduled to open on 19 June 2026 and close on 23 June 2026, comprising a fresh issue of INR 660.72 crore (Indian Rupees Six Hundred Sixty Crore Seventy-Two Lakh only) and an Offer for Sale (OFS) of INR 221.95 crore (Indian Rupees Two Hundred Twenty-One Crore Ninety-Five Lakh only) by promoters and existing investors. The proceeds from the fresh issue will be utilised towards technology infrastructure, product development, marketing, working capital requirements and potential acquisitions. 

3.2.       IRDAI set up working group on AI in insurance sector

The IRDAI has constituted a working group to guide the adoption and governance of Artificial Intelligence (“AI”) across the insurance sector, with a focus on ensuring responsible innovation and protection of policyholders’ interests. The group will assess the current level of AI adoption, maturity and governance frameworks among insurers, while reviewing global regulatory practices to address emerging risks.

4.           Sector Overview

4.1.       RBI Measures Expected to Support Banking Sector Recovery and Earnings Growth

According to a recent sector assessment by Motilal Oswal Financial Services, India’s banking sector is expected to witness stronger earnings growth over Financial Years (“FY”) 2026 to 2028, supported by stable net interest margins, healthy credit demand and improving asset quality. Private sector banks are projected to outperform public sector banks, with earnings expected to grow at a compound annual growth rate (“CAGR”) of approximately 21 per cent (twenty-one per cent) compared to around 8 per cent (eight per cent) for public sector lenders. Large private banks, including HDFC Bank Limited and ICICI Bank Limited, alongside State Bank of India (“SBI”), have been identified as key beneficiaries of the improving operating environment. The report also estimates banking system credit growth at a CAGR of 14 per cent (fourteen per cent) over FY2026–FY2028, driven by demand across corporate, retail and micro, small and medium enterprises (“MSME”) segments.

4.2.       Banking Liquidity Falls to Fiscal-Year Low Amid Advance Tax Outflows

India’s banking system liquidity declined to its lowest level in the current fiscal year, leading to an increase in money market rates. The decline has been attributed primarily to advance tax outflows, which reduced surplus liquidity from approximately INR 1.70 lakh crore (Indian Rupees One Lakh Seventy Thousand Crore only) to INR 4,772 crore (Indian Rupees Four Thousand Seven Hundred and Seventy-Two Crore only) as of 17 June 2026. Consequently, money market rates increased to 5.37 per cent (five point three seven per cent), compared to an average of 5.16 per cent (five point one six per cent) a week earlier. Economists expect liquidity conditions to improve during the second quarter owing to measures introduced by the RBI to attract foreign inflows, including initiatives relating to Foreign Currency Non-Resident (Bank) (“FCNR(B)”) deposits and External Commercial Borrowings (“ECBs”). In the interim, the RBI has been managing liquidity pressures through Variable Rate Repo (“VRR”) operations to provide temporary funding support to banks.

5.           Business Updates

5.1.       Zerodha, Groww, Angel One and Upstox receive IFSCA’s nod to offer US stock investments via GIFT City

The International Financial Services Centres Authority (“IFSCA”) has granted regulatory approval to Zerodha, Groww, Angel One and Upstox to offer United States (US) and international equity investments to Indian retail investors through Gujarat International Finance Tec-City (GIFT City). The IFSCA’s new framework allows Indian investors to invest in global equities within a regulated ecosystem, subject to RBI limits under the Liberalised Remittance Scheme (LRS), which permits outward remittances of up to USD 250,000 (United States Dollars Two Hundred Fifty Thousand only) per financial year.

5.2.       Razorpay files for IPO

Fintech major Razorpay has reportedly filed draft papers with the SEBI for an Initial Public Offering (“IPO”) expected to raise approximately USD 500 million–USD 600 million (United States Dollars Five Hundred Million to Six Hundred Million only). The development triggered a positive spillover across the fintech sector.   

5.3.       IIFL Fintech completes acquisition of Xtracap Fintech

Pursuant to Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR), IIFL Finance Limited (IIFL) has announced the completion of acquisition of Xtracap Fintech India Private Limited (Xtracap) through its wholly-owned subsidiary, IIFL Fintech Private Limited (IIFL Fintech).

5.4.       Pine Labs launches P3P for AI-driven UPI transactions

Pine Labs has introduced an AI-driven payment protocol, P3P, to enable seamless Unified Payments Interface (“UPI”) transactions through autonomous agents without requiring repeated human authentication. The protocol extends UPI’s existing mandate framework, allowing users to provide a one-time authorisation, after which AI agents can independently browse, select, and execute payments within defined limits. Built on UPI features such as Single Block Multiple Debit (SBMD) and One Time Mandate (OTM), P3P ensures secure, auditable, and controlled transactions, with identity verification and delegated authorisation layers integrated into the system. The development supports the evolving agentic commerce ecosystem, positioning India at the forefront of AI-powered payments and enabling frictionless, real-time financial interactions for consumers and merchants.

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