Banking & Finance Digest June 29, 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 revised guidelines on Lead Bank Scheme (LBS)

The Reserve Bank of India ("RBI") has issued revised guidelines on the Lead Bank Scheme (LBS), superseding earlier instructions, to strengthen coordination among banks, government bodies and development agencies for enhanced credit delivery and financial inclusion. The scheme operates through a structured three-tier mechanism comprising the Block Level Bankers’ Committee (BLBC), District Consultative Committee (DCC), District Level Review Committee (DLRC) and State Level Bankers’ Committee (SLBC) to monitor credit flow, resolve operational challenges and review performance. 

1.1.2.        RBI issues Master Direction on TReDS Framework rationalisation

The RBI has issued the Reserve Bank of India (Trade Receivables Discounting System) Directions, 2026, replacing earlier guidelines to streamline and harmonise the regulatory framework governing the Trade Receivables Discounting System (“TReDS”). The Directions aim to improve financing access for Micro, Small and Medium Enterprises (“MSMEs”) by simplifying onboarding, aligning capital requirements of TReDS operators with other non-bank Payment System Operators (PSOs), and permitting financiers to avail credit guarantee cover. Key provisions include a minimum net worth requirement of INR 25 crore (Indian Rupees Twenty-Five crore only), eligibility conditions for platform authorisation, and mandated participation of buyers, sellers, financiers and insurers. The Directions also prescribe operational norms such as transparent invoice discounting through multiple financiers, mandatory buyer payment obligation upon acceptance, customer due diligence compliance, and reporting obligations. Additionally, transactions on TReDS are to be without recourse to MSME sellers, while enabling insurance and credit guarantee support for financiers, thereby strengthening liquidity flow in the MSME ecosystem.

1.1.3.        RBI issues amendment directions on capital adequacy norms for AIFIs covering foreign exchange risk

The RBI has issued the Reserve Bank of India (All India Financial Institutions (“AIFIs”) – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026 to revise the framework for computation of capital charge on foreign exchange risk. The amendment introduces a refined methodology for calculating Net Open Position (“NOP”) and mandates that AIFIs maintain capital for foreign exchange risk on both consolidated and standalone basis, on a continuous daily basis. It clarifies exclusions from NOP, including positions deducted from regulatory capital and certain non‑performing or matured exposures, while permitting conditional exclusion of structural foreign currency positions subject to defined criteria.

Securities and Exchange Board of India (SEBI)

1.1.4.      SEBI issues relaxation in certification requirements for PAIA under ease of doing business initiative

The Securities and Exchange Board of India (“SEBI”) has issued a circular introducing relaxed certification requirements for Persons Associated with Investment Advice (PAIA) engaged in sales and other non‑core services, as part of its ease of doing business initiatives. Under the revised framework, such personnel will be required to obtain a simplified certification through the National Institute of Securities Markets (NISM) Series–XXV‑B examination, instead of the more rigorous Level 1 and Level 2 certifications applicable to advisory roles. Employees directly involved in providing investment advice will continue to comply with existing certification requirements.

1.1.5.        SEBI proposes Common Advertisement Code for regulated entities

The SEBI has proposed a Common Advertisement Code (CAC) to standardise advertisement norms across regulated entities, replacing fragmented frameworks. The proposal introduces post‑issuance reporting within 24 hours (twenty-four hours) instead of prior approvals and permits celebrity endorsements at a brand level, subject to conditions. It also enables use of ratings, simplifies digital disclosures, excludes educational content from advertising norms, and prohibits manipulative practices. Public comments are invited until July 14, 2026.

International Financial Services Centres Authority (IFSCA)

1.1.6.      IFSCA issues draft Mutual Insurer and P&I Club Regulations, 2026

The International Financial Services Centres Authority (“IFSCA”) has issued draft regulations to establish a framework for Mutual IFSC Insurance Office (MIIO), Mutual Protection & Indemnity Club (MPIC) and Non-Mutual P&I entities in the International Financial Services Centre (“IFSC”). The Regulations prescribe eligibility, governance, capital (including minimum USD 1.5 million (United States Dollars One Million Five Hundred Thousand only) and solvency norms, along with registration procedures and permissible insurance and reinsurance activities. They also introduce detailed provisions on member participation, risk-sharing, reinsurance, marine liability coverage, and compliance standards aligned with global practices, with public comments invited until 12 July 2026.

1.1.7.        IFSCA amends SNRR Account Transaction Framework for IFSC units

The IFSCA has amended the framework governing permissible transactions through Special Non-Resident Rupee (“SNRR”) accounts of IFSC units, with immediate effect. Under the revised provisions, financial institutions operating in IFSCs are permitted to route funds arising from business related transactions outside IFSC through SNRR accounts maintained with authorised dealers in India, subject to the condition that such amounts must be remitted to their IFSC Banking Unit (“IBU”) account in a specified foreign currency within 30 (thirty) working days of receipt. However, this remittance requirement does not apply to funds used for administrative expenses. The amendment aligns the SNRR framework with recent changes in Anti Money Laundering (“AML”), Counter Terrorist Financing (“CFT”) and Know Your Customer (“KYC”) guidelines and aims to enhance operational flexibility while maintaining regulatory oversight.

1.1.8.      IFSCA amends AML/CFT and KYC Exemption Framework for IFSC Transactions

The IFSCA has amended its circular on exemptions from the applicability of AML, CFT and KYC Guidelines, 2022, with immediate effect. Under the revised framework, all financial institutions operating in the IFSC, including those earlier exempted, are now required to route all monetary consideration arising from business transactions exclusively through accounts maintained with an IBU or via a SNRR account. All other provisions of the earlier exemption circular remain unchanged. The amendment seeks to strengthen traceability and regulatory oversight of financial transactions while aligning with applicable anti‑money laundering and record‑keeping requirements.

Insurance Regulatory and Development Authority of India (IRDAI)

1.1.9.        IRDAI issues amendment to obligatory cession for FY 2026–27

The IRDAI has issued an amendment to the obligatory cession requirements applicable to general insurance policies for the financial year 2026–27.  The revised framework mandates that 4 per cent (four per cent) of the sum insured on each general insurance policy must be ceded to Indian reinsurer(s), effective for policies incepting between April 1, 2026, and March 31, 2027.

Monetary Penalties

1.1.10.   RBI imposes penalties on six 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.	Nabapalli Co‑operative Bank Limited	INR 3 Lakh (Indian Rupees Three Lakh only)	Non-compliance with certain directions issued by RBI on KYC.
2.	Modern Co‑operative Bank Limited	INR 1 Lakh (Indian Rupees One Lakh only)	Non-compliance with certain directions issued by RBI on ‘Exposure Norms and Statutory / Other Restrictions – UCBs’ and KYC.
3.	Lalgudi Co‑operative Urban Bank Ltd.	INR 1 Lakh (Indian Rupees One Lakh only)	Non‑compliance with certain directions issued by RBI on ‘Prudential Norms on Capital Adequacy - Primary (Urban) Co-operative Banks (UCBs).
4.	Hutatma Sahakari Bank Ltd.	INR 5 Lakh (Indian Rupees Five Lakh 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.
5.	Shimoga District Co‑operative Central Bank Ltd.	INR 1 Lakh (Indian Rupees One Lakh 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.
6.	Chittoor District Co‑operative Central Bank Ltd.	INR 1 Lakh (Indian Rupees One Lakh only)	Contravention of provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949.

2.               Key Asian Markets - Philippines and Indonesia

2.1.           Philippines

2.2.1.      BSP mandates stronger authentication measures for digital transactions

The Bangko Sentral ng Pilipinas (“BSP”) has mandated implementation of enhanced authentication measures by BSP‑supervised financial institutions (“BSFIs”) to strengthen protection against fraud and unauthorised account access in digital banking. Under BSP Circular No. 1213, covered BSFIs—primarily banks and e‑wallet operators with average monthly online transactions exceeding P75 Million (Philippine Pesos Seventy Five Million only)—are required to replace SMS‑ and email‑based one‑time passwords (OTPs) with more secure technologies such as biometric, behavioural, adaptive, or password-less authentication by June 25, 2026. The framework adopts a risk‑based approach, requiring stronger authentication for high‑risk transactions based on factors such as transaction value, customer behaviour, and beneficiary profile, while allowing simplified methods for lower risk transactions. Additionally, BSFIs must enhance fraud management systems to detect suspicious activities, including unusual transaction patterns and unrecognised devices. The measure aims to bolster cyber resilience, reduce digital fraud, and promote a secure and reliable digital payments ecosystem while supporting innovation in financial services.

2.2.2.     BSP grants temporary regulatory relief on capital computation amid market volatility

The BSP has issued Memorandum No. 2026 027 providing temporary regulatory relief to banks and quasi banks to mitigate the impact of market volatility arising from geopolitical tensions. Under the measure, regulated entities are permitted to exclude unrealised losses on Peso denominated government securities from the computation of regulatory capital, thereby preventing short term market fluctuations from adversely affecting reported capital adequacy. The relief is applicable for the period from April 1, 2026 to December 31, 2026, after which standard capital rules will be reinstated from January 2027. Notwithstanding this relaxation, banks and quasi banks are required to fully disclose such unrealised losses in their financial statements and reports submitted to BSP. The measure aims to preserve financial stability while ensuring transparency and prudent risk reporting within the banking system.

2.2.           Indonesia

2.2.1.     SBV issued Circular 25/2026 amending prudential norms for banks

The State Bank of Vietnam (SBV) has issued Circular No. 25/2026/TT NHNN amending prudential limits and ratios applicable to banks and foreign bank branches, with effect from July 1, 2026. The Circular revises liquidity and risk management norms by increasing the cap on utilisation of short term funds for medium  and long term lending to 40 per cent (forty per cent), thereby providing greater flexibility for credit expansion and long-term financing. It also modifies the methodology for calculating deposit components in prudential ratios, including treatment of state treasury deposits, while repealing earlier circulars to streamline the regulatory framework. The amendments are aimed at enhancing liquidity management, supporting credit flow to key sectors, and aligning banking regulations with evolving market conditions and supervisory requirements. 

3.              Trends

3.1.        SBI Mutual Fund IPO of INR 13,000 Crore receives approval from SEBI

State Bank of India Mutual Fund (SBI MF), India’s largest Asset Management Company (AMC), has received approval from the SEBI for its initial public offering (“IPO”), estimated at approximately INR 13,000 Crore (Indian Rupees Thirteen Thousand Crore only). The issue will be entirely an offer for sale (OFS), with no fresh equity issuance, as existing shareholders including State Bank of India (SBI) and Amundi India Holding pare their stakes.

3.2.        Jio BlackRock filed application with IFSCA for broker licence in GIFT City

Jio BlackRock Broking Private Limited (Jio BlackRock), a 50:50 joint venture between Jio Financial Services Limited (JFSL) and BlackRock, has applied to the IFSCA for a licence to operate as a broker-dealer and investment adviser in Gujarat International Finance Tec-City (GIFT City). This move marks a strategic expansion beyond asset management into capital market and wealth intermediation services, complementing its existing Fund Management Entity operations in the IFSC. The development reflects Jio BlackRock’s broader ambition to build an integrated financial services platform, although it will enter a competitive ecosystem with over 100 existing broker-dealer entities. The pace of regulatory approval, scale of initial operations, and ability to gain market share will remain key factors to watch.

4.               Sector Overview

4.1.           Indian fintech sector sees shift towards diversified exit strategies beyond IPOs 

India’s Financial Technology (FinTech) sector is witnessing a shift in exit strategies, with increasing reliance on alternative liquidity avenues beyond traditional IPO, While a strong IPO pipeline remains—targeting over INR 2.5 lakh crore (Indian Rupees Two lakh fifty thousand crore only)—listing activity has moderated due to global volatility, geopolitical uncertainty, and more selective investor sentiment. 

5.               Business Updates

5.1.           Meta Invests USD 900 Million (United States Dollars Nine Hundred Million only) in CRED at USD 4.5 Billion Valuation

Meta Platforms Inc. (Meta) has announced an investment of USD 900 million (United States Dollars Nine Hundred Million only) in Indian fintech company CRED, valuing the company at approximately USD 4.5 billion (United States Dollars Four Billion Five Hundred Million only), underscoring a significant strategic push into India’s financial services ecosystem.  

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