Banking & Finance Digest March 02, 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 amends NBFC Miscellaneous Directions to enable equity mobilisation by NUCFDC

The Reserve Bank of India (“RBI”), vide Reserve Bank of India (Non-Banking Financial Companies – Miscellaneous) Amendment Directions, 2026 dated February 26, 2026, has introduced a special framework permitting the National Urban Co-operative Finance and Development Corporation Limited (NUCFDC) to undertake private placement of equity shares to more than 200 persons in a financial year. The amendment facilitates NUCFDC’s role as an Umbrella Organisation for Urban Co-operative Banks (UCBs) by enabling broader membership participation through equity subscription, subject to conditions including a board-approved resource planning policy, restricted issuance to UCBs and NCDC, prohibition on lending against its own shares, and regulatory reporting requirements. The Directions, issued under Section 45L of the RBI Act, 1934, have come into immediate effect and will remain valid until March 31, 2029, unless modified or withdrawn earlier.

Securities and Exchange Board of India (SEBI)

1.1.2.     SEBI mandates disclosure of registration details by regulated entities on social media

The Securities and Exchange Board of India (‘SEBI’), vide Circular dated February 26, 2026, has introduced new disclosure requirements for all SEBI-regulated entities and their agents posting securities market–related content on social media platforms. The circular requires intermediaries to prominently display their registered name and SEBI registration number on the home page of their social media handles and at the beginning of all relevant content, with specific disclosure formats prescribed for entities and agents holding single or multiple registrations. The measure aims to enhance transparency, enable investors to distinguish verified market participants from unregistered entities, and strengthen investor protection amid growing use of social media for financial communication. The requirements will come into effect from May 1, 2026.

1.1.3.      SEBI revises framework for independent third-party reviewers of green debt securities

SEBI vide circular dated February 27, 2026, has revised the regulatory framework governing appointment of independent third-party reviewers or certifiers for green debt securities to align it with the broader ESG debt securities regime. The revised norms require issuers to appoint an independent reviewer possessing relevant ESG expertise to certify compliance of green debt issuances with regulatory definitions and eligible project criteria, while ensuring independence and avoidance of conflicts of interest. The circular also recognises multiple forms of external review, including second-party opinions, verification, certification, and ESG scoring or rating, and mandates disclosure of reviewer details and scope of review in offer documents. The revised provisions have come into force with immediate effect to strengthen transparency, comparability, and investor confidence in sustainable finance instruments.

International Financial Services Centres Authority (IFSCA)

1.1.4.      IFSCA issues draft regulations for Electronic Trading Platforms in IFSCs for public consultation

The International Financial Services Centres Authority (“IFSCA”), vide public consultation dated February 24, 2026, has released draft International Financial Services Centres Authority (Electronic Trading Platform) Regulations, 2026 proposing a comprehensive framework for establishment and operation of Electronic Trading Platforms (ETPs) within IFSCs. The draft regulations prescribe authorisation requirements, including incorporation in IFSC, minimum net worth of USD 250,000, fit and proper criteria for management, and robust risk management and governance standards. The framework mandates transparent operating rules, fair access criteria for trading members, cybersecurity and business continuity measures, and long-term data retention obligations, while permitting trading only in specified eligible financial instruments and expressly prohibiting cryptocurrency trading on ETPs. Stakeholders have been invited to submit comments on the draft regulations by March 18, 2026, following which the Authority will finalise the regulatory framework aimed at strengthening institutional trading infrastructure within IFSCs.

1.1.5.      IFSCA updates AML, CFT and KYC Guidelines for regulated entities in IFSCs

IFSCA has issued an updated version of the Anti-Money Laundering, Counter-Terrorist Financing and Know Your Customer (AML/CFT/KYC) Guidelines, 2022, incorporating amendments and clarifications up to February 26, 2026. The revised framework strengthens compliance obligations for regulated entities operating in IFSCs by reinforcing a risk-based approach to identification and mitigation of money laundering and terrorist financing risks, enhanced customer due diligence requirements, beneficial ownership identification thresholds, and enterprise-wide risk assessment mechanisms. The update also expands provisions relating to customer identification procedures, reliance on digital and video-based KYC processes, record-keeping, suspicious transaction reporting, and governance responsibilities of senior management. The revised guidelines aim to align IFSC regulatory standards with evolving FATF recommendations and international AML/CFT best practices while enhancing supervisory oversight and financial system integrity.

1.1.6.      IFSCA publishes public comments on draft regulations for registration of factors and assignment of receivables

IFSCA has released a compilation of public comments received on the draft IFSCA (Registration of Factors and Registration of Assignment of Receivables) Regulations, 2024, originally issued for consultation on August 30, 2024. The feedback includes stakeholder suggestions relating to recognition of RBI-licensed NBFC Factors, inclusion of International Trade Finance Services (ITFS) alongside TReDS platforms, and permitting licensed factors and banks to directly register assignment of receivables with the Central Registry (CERSAI) at invoice or whole-turnover level. Additional comments address procedural clarifications on filing mechanisms, treatment of IFSC Banking Units, allocation of delay charges, and alignment of factoring and forfaiting guidelines within the IFSC framework. The publication of stakeholder responses forms part of IFSCA’s consultative process prior to finalisation of the regulatory framework governing receivables financing in IFSCs.

1.1.7.      IFSCA issues consultation paper on draft IFSC Financial Advisers Regulations, 2026

IFSCA has issued a consultation paper proposing the IFSCA (IFSC Financial Advisers) Regulations, 2026, aimed at establishing a structured regulatory framework for engagement of financial advisers by Financial Institutions operating in IFSCs. The proposed regulations seek to formalise advisory and client-solicitation activities by introducing eligibility criteria, registration through an IFA Registry, fit and proper requirements, continuing professional development obligations, and a detailed code of conduct to strengthen investor protection from the advisory stage itself. The framework permits globally located advisers to provide cross-border advisory services through affiliated IFSC entities while prohibiting handling of client funds and mandating robust supervision, disclosure standards, and conflict-management controls by Financial Institutions. Public comments on the draft regulations have been invited until March 16, 2026, as part of IFSCA’s consultative process to enhance retail and NRI participation and align the IFSC ecosystem with global advisory standards.

Miscellaneous

Ministry of Corporate Affairs (MCA)

1.1.8.     MCA introduces Companies Compliance Facilitation Scheme, 2026

The Ministry of Corporate Affairs (MCA), vide General Circular No. 01/2026 dated February 24, 2026, has introduced the Companies Compliance Facilitation Scheme, 2026 (CCFS-2026) to provide a one-time opportunity for companies to regularise pending statutory filings. Under the scheme, companies may complete delayed filings of annual returns and financial statements by paying only 10% of the applicable additional fees, apply for dormant status at half the prescribed fee, or seek strike-off by paying 25% of the applicable filing fees. The scheme will be operational from April 15, 2026 to July 15, 2026 and aims to improve corporate compliance, reduce financial burden arising from delayed filings, and enable inactive entities to regularise or exit the registry efficiently. [MCA]

Monetary Penalties

1.1.9.   RBI imposes penalties on 5 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.	The Mahbubnagar District Co-operative Central Bank Ltd., Telangana Limited	INR 1,00,000 (Indian Rupees One Lakh only)	For contravention of provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949 (BR Act). 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 BR Act.
2.	The Guntur Women Co-operative Urban Bank Limited, Andhra Pradesh	INR 50,000 (Indian Rupees Fifty Thousand 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.
3.	The Belagavi District Central Co-operative Bank Limited, Karnataka	INR 2,00,000 (Indian Rupees Two Lakh only)	Contravention of provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949 (BR Act) and non-compliance with certain directions issued by RBI on ‘Gold Loan – Bullet Repayment’ and ‘Exposure to Commercial Real Estate’. 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 BR Act.
4.	The Prakasapuram Co-operative Urban Bank Limited, Tamil Nadu	INR 50,000 (Indian Rupees Fifty Thousand only)	Non-compliance with certain directions issued by RBI on ‘Declaration of dividend by 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.	Vita Merchants’ Co-operative Bank Ltd., Vita, Maharashtra	INR 3,10,000 (Indian Rupees Three Lakh Ten Thousand only)	Non-compliance with certain directions issued by RBI on ‘Exposure Norms and Statutory / Other Restrictions – UCBs’ and ‘Fair Lending Practice - Penal Charges in Loan Accounts’. 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.              Key Asian Markets - Sri Lanka and Bangladesh

2.1.          Sri Lanka

2.1.1.     Central Bank of Sri Lanka issues public notice on prohibited pyramid schemes

The Central Bank of Sri Lanka has issued a public notice warning against multiple entities and applications identified as prohibited pyramid schemes under Section 83C of the Banking Act, No. 30 of 1988. Following an investigation, the regulator determined that I.C.A.N Advertising (Pvt) Ltd and its affiliated platforms were engaged in promoting unlawful schemes, along with several other companies and digital applications operating similar models. The notice cautions the public against participating in such arrangements, highlighting risks of financial loss and regulatory action, and reiterates that operating or promoting prohibited schemes constitutes a violation of applicable banking laws.

2.1.2.     Sri Lanka PMI – Construction records strong growth in January 2026

The Central Bank of Sri Lanka has reported a notable increase in construction sector activity, with the Purchasing Managers’ Index (PMI – Construction) reaching 75.0 in January 2026, marking the second-highest reading on record. The expansion was driven by the commencement of new projects at the start of the year and improved operating conditions following weather-related disruptions in December. Growth was observed across key indicators, including new orders, employment, and quantity of purchases, reflecting higher project activity and increased hiring, although firms continued to report shortages of skilled labour. Construction activity is expected to remain positive in the coming months, supported by anticipated project commencements and sustained sector momentum.

2.1.3.     Sri Lanka reports improved external sector performance in January 2026

The Central Bank of Sri Lanka has reported continued improvement in external sector performance for January 2026, supported by stronger export growth and increased foreign currency inflows. Total exports of goods and services reached USD 1,883 million, while the merchandise trade deficit narrowed to USD 655 million as export growth outpaced imports. Workers’ remittances recorded a notable year-on-year increase to USD 751 million, and tourist earnings were estimated at USD 378 million amid higher tourist arrivals. The current account registered a surplus of approximately USD 370 million, reflecting improved external balances, while gross official reserves stood at USD 6.8 billion at end-January 2026. Overall, the data indicates strengthening external stability supported by export performance and sustained inflows to the economy.

2.2.          Bangladesh

2.2.1.     Bangladesh Bank issues revised Guidelines for Open Market Operations

Bangladesh Bank has issued updated Guidelines for Open Market Operations (OMOs) to streamline liquidity management and strengthen monetary policy implementation within the banking system. The framework consolidates operational procedures for liquidity injection and absorption through instruments such as Repo, Standing Lending Facility (SLF), Standing Deposit Facility (SDF), Bangladesh Bank Bills, outright transactions in government securities, and the Islamic Banks Liquidity Facility (IBLF) for Shari’ah-compliant institutions. The guidelines introduce standardized operational timelines, collateral and settlement mechanisms, auction procedures, and default management provisions, while clarifying accounting treatment for collateral-based transactions. The revised framework aims to enhance money market stability, improve transmission of monetary policy, and ensure efficient liquidity management across conventional and Islamic financial institutions. [Link]

2.2.2.     Bangladesh Bank revises rules on exports exempted from declaration and repatriation requirements

Bangladesh Bank has issued FEPD-1 Circular Letter No. 03 dated February 26, 2026, modifying paragraph 7 of FE Circular No. 31 of 2025 relating to exports exempted from declaration and repatriation of export proceeds. The revised provisions clarify categories of exports not requiring foreign exchange declaration, including bona fide trade samples, personal effects of travellers, ship stores and transhipment cargo, government-ordered shipments, qualifying gift packets within prescribed value limits, and parcels certified by Bangladesh Bank as not involving foreign exchange transactions. All other instructions under earlier circulars, including provisions governing e-commerce exports without EXP Form declaration, remain unchanged.

2.2.3.     Bangladesh Bank extends deadline for loan regularisation facility for exporters

Bangladesh Bank has issued BRPD Circular Letter No. 06 dated February 22, 2026 extending the deadline for exporters to avail loan rescheduling facilities introduced to address financial stress in the export sector. The circular allows eligible borrowers to submit applications for restructuring classified loans upon payment of a 2% down payment, with the application deadline extended until June 30, 2026, from the earlier cut-off of December 31, 2025. The extension has been granted in view of operational difficulties faced by exporters in complying with earlier timelines, while all other conditions under the existing circulars remain unchanged.

3.              Trends

3.1.          IIFL Finance plans to raise up to USD 750 million through ECBs and dollar bonds

IIFL Finance has announced plans to raise between USD 500 million and USD 750 million through a combination of external commercial borrowings (ECBs) and dollar-denominated bonds as part of its strategy to diversify funding sources and support business expansion. The fundraising, expected to be completed by March 2026, will include foreign currency loans and social bonds, with discussions underway with existing global investors and banks based in Singapore and Taiwan. The gold-loan focused NBFC aims to reduce reliance on domestic bank funding while strengthening its liability profile, alongside ongoing domestic bond issuances. The proposed fundraising follows recent regulatory easing by the Reserve Bank of India on ECB limits and maturity norms, which has supported increased overseas borrowing by Indian corporates.

3.2.     BillDesk to acquire Worldline India’s payments business in strategic digital payments deal

Digital payments platform BillDesk has entered into a definitive agreement to acquire Worldline India’s payments businesses, marking a significant consolidation in India’s fintech ecosystem. The transaction will combine BillDesk’s large-scale online payments capabilities with Worldline India’s payment aggregation, bank transaction switching, and in-store acceptance infrastructure to create an integrated omnichannel payments platform. The acquisition is expected to expand BillDesk’s merchant distribution, strengthen its presence across urban and emerging markets, and enhance offerings spanning digital transactions, recurring mandates, cross-border payments, and POS and QR-based acceptance. The deal remains subject to customary regulatory approvals and closing conditions.

4.              Sector Overview

4.1.        Microfinance sector shows signs of revival as MFIs and private banks expand lending

India’s microfinance sector is showing early signs of recovery, with private banks and NBFC-MFIs expanding their lending portfolios in January after a prolonged period of stress. Industry data indicates that NBFC-MFIs’ portfolio increased to approximately INR 1.34 lakh crore from INR 1.32 lakh crore in the previous month, while private banks’ microfinance exposure rose to about INR 84,735 crore. Although the overall microfinance market marginally declined to INR 3.21 lakh crore due to contraction among some lenders, asset quality indicators improved, with early-stage delinquencies declining and liquidity conditions stabilising. Industry experts view the developments as an inflection point, expecting the sector to return to a normal growth trajectory by the end of the first quarter of FY27 as stress levels ease and credit demand strengthens.

4.2.          India’s forex reserves decline to USD 723.608 billion

India’s foreign exchange reserves declined by USD 2.119 billion to USD 723.608 billion for the week ended February 20, 2026, retreating from the previous week’s record high levels, according to data released by the Reserve Bank of India. The decline was primarily driven by a fall in foreign currency assets, which decreased by USD 1.039 billion to USD 572.564 billion, along with a reduction in gold reserves by USD 977 million to USD 127.489 billion. Special Drawing Rights (SDRs) and India’s reserve position with the International Monetary Fund also recorded marginal declines during the period. Despite the weekly dip, overall reserve levels remain robust, reflecting continued external sector resilience and adequate import cover for the economy.

5.              Business Updates

5.1.      IIFL Home Finance secures USD 300 million ADB loan for women-focused affordable housing

IIFL Home Finance Limited has secured a USD 300 million loan facility from the Asian Development Bank (ADB) to expand affordable housing finance, with a specific focus on women borrowers in low-income and economically weaker segments. The funding, structured as the company’s first syndicated external commercial borrowing, includes USD 150 million from ADB and parallel financing from international lenders including MUFG, Emirates Bank, Sampath Bank, and Hatton National Bank. The proceeds will be on-lent towards mortgages in peri-urban and urban regions, with over 25% earmarked for green-certified affordable housing projects, supporting sustainable housing development and increased homeownership among women.

5.2.        JioFinance launches intelligent digital marketplace to expand AI-driven financial services

Jio Financial Services has unveiled an AI-powered intelligent digital marketplace through its revamped JioFinance app, positioning it as a unified platform offering personalised financial products and advisory services. The marketplace aggregates offerings from Jio group entities and third-party financial institutions, including home loans, personal loans, credit cards, insurance, UPI services, fixed deposits, digital gold, tax planning, and investment products such as mutual funds and advisory solutions. Powered by artificial intelligence, machine learning and neural networks, the platform delivers hyper-personalised recommendations based on user behaviour and financial context, with dynamic interfaces and natural-language interaction capabilities. The company has also launched a ‘Finsider’ early-access programme inviting users to test the platform and provide feedback, as part of its strategy to reimagine digital financial distribution and build a more integrated, user-centric financial 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