Banking & Finance Digest March 23, 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 Reserve Bank of India – Financial Statements: Presentation and Disclosures – Amendment Directions, 2026 across multiple REs

Reserve Bank of India (“RBI”) issued 7 (seven) directions amending the financial statement presentation and disclosure framework for commercial banks, small finance banks, payments banks, local area banks, regional rural banks, urban co-operative banks and rural co-operative banks, pursuant to the Deposit Insurance and Credit Guarantee Corporation (“DICGC”) Risk Based Premium framework dated February 6, 2026, to require disclosure in annual reports that the applicable deposit insurance premium was paid within prescribed timelines and, where relevant, to disclose any arrears or delay, with effect from April 1, 2026.

1.1.2.      RBI directs currency chests to remain open for year-end Government transactions

RBI has advised all Currency Chest (“CC”) holding banks to keep their currency chests open on March 31, 2026, as on a normal working day, because bank branches handling Government receipts and payments are required to remain open on that date, despite it being a Tuesday public holiday, so that Government transactions are accounted for within financial year 2025-26 itself. The circular, dated March 16, 2026, also requires CC holding banks to suitably inform their linked branches.

1.1.3.   RBI issues Foreign Exchange Management (Export and Import of Currency) (Amendment) Regulations, 2026

RBI has amended the Foreign Exchange Management (Export and Import of Currency) Regulations, 2015, through the Foreign Exchange Management (Export and Import of Currency) (Amendment) Regulations, 2026, to insert a new Annex containing a Currency Declaration Form for passengers arriving in India. The form is not required where the aggregate foreign exchange carried in the form of currency notes, bank notes, or travellers’ cheques does not exceed USD 10,000 (United States Dollars Ten Thousand only), or where foreign currency notes alone do not exceed USD 5,000 (United States Dollars Five Thousand only), or the equivalent of either amount. The amendment also clarifies that passengers should retain and produce the form for conversion, reconversion, and customs purposes at the time of departure.

Securities and Exchange Board of India (SEBI)

1.1.4.   SEBI issues consultation paper on modified norms for nomination in demat accounts and mutual fund folios

Securities and Exchange Board of India (“SEBI”) has issued a consultation paper proposing significant changes to the 10 January 2025 framework on nomination in dematerialised (“demat”) accounts and mutual fund folios, with a view to easing investor on‑boarding and aligning nomination norms with banking practices. Key proposals include: relying on the existing power of attorney mechanism instead of empowering nominees to operate accounts during the investor’s lifetime; drastically simplifying mandatory nominee details to only name and relationship; making nomination the default choice with an explicit opt‑out flow supported by pop‑up disclosures; and capping the number of nominees at four, based on usage data indicating minimal demand for higher nominee limits.

1.1.5.   SEBI issues master circular for Mutual Funds aligned with SEBI (Mutual Funds) Regulations, 2026

SEBI has issued a comprehensive Master Circular for Mutual Funds consolidating and updating all applicable directions in line with the Securities and Exchange Board of India (Mutual Funds) Regulations, 2026, effective from 1 April 2026. The Master Circular replaces the 27 June 2024 version, rescinds specified earlier circulars to the extent they relate to mutual funds, preserves actions taken under rescinded directions, and mandates periodic and continuous reporting by mutual funds, asset management companies and other intermediaries under a single, harmonised compliance framework.

1.1.6.      SEBI issues circular on Review of coverage of Settlement Guarantee Fund for commodity derivatives segment

SEBI has revised the methodology for coverage of the Core Settlement Guarantee Fund in the commodity derivatives segment by modifying paragraph 22 (Part C – Coverage) of Annexure O to the Master Circular for Commodity Derivatives Segment dated 4 August 2023. Clearing corporations will now be required, for each stress scenario, to calculate credit exposure assuming the simultaneous default of at least three clearing members (and their associates) causing the highest credit exposure (instead of the earlier two‑member plus 50 per cent all‑member formulation), and SEBI has explicitly reserved power to grant case‑by‑case exemptions or relaxations from SGF‑related provisions based on market conditions and the robustness of the risk management framework.

International Financial Services Centres Authority (IFSCA)

1.1.7.      IFSCA approves FinTech Sandbox Framework to strengthen innovation ecosystem in IFSCs

IFSCA has approved the IFSCA FinTech Sandbox Framework to facilitate access to its sandbox mechanisms for applicants seeking to test FinTech and TechFin products, services, and solutions across financial sectors in IFSCs. The Framework aims to foster innovation through structured regulatory and innovation sandboxes, interoperable sandbox arrangements, and overseas regulatory referral mechanisms, and is informed by the earlier framework issued on April 27, 2022, global developments, and stakeholder feedback. The revised framework introduces key enhancements, including expanded eligibility to individuals and groups affiliated with recognised academic institutions, incubators, and accelerators, a two-stage digital application process involving preliminary and final evaluation, and a two-stage approval mechanism comprising In-Principle Approval and Limited Use Authorisation. It also enables market exploration for developed products within IFSCs and broadens the scope of testing to cover all financial services, products, and institutions regulated or proposed to be regulated by IFSCA, with the objective of strengthening innovation and participation within the IFSC ecosystem.

1.1.8.    IFSCA issues consultation paper on proposed amendments relating to Credit Rating Agencies

IFSCA has released a consultation paper seeking public comments on proposed amendments to the IFSCA (Capital Market Intermediaries) Regulations, 2024 (“CMI Regulations”) and the Master Circular for Credit Rating Agencies dated August 05, 2025. The proposals relate to regulatory provisions governing Credit Rating Agencies (“CRAs”), including their obligations and responsibilities under Regulation 28 of the CMI Regulations, and are based on representations received from stakeholders. The consultation paper specifically seeks feedback on matters relating to withdrawal of ratings, record-keeping requirements, disclosure of private ratings, permissible activities for CRAs, and dissemination of ratings, with the objective of refining the regulatory framework applicable to CRAs operating in IFSCs.

1.1.9.      IFSCA issues consultation paper on proposed framework for TCSPs and SPVs in leasing ecosystem

IFSCA has released a consultation paper seeking public comments on a proposed regulatory framework for Trust and Company Service Providers (“TCSPs”) under the IFSCA (TechFin and Ancillary Services) Regulations, 2025 and Special Purpose Vehicles (“SPVs”) under the IFSCA (Finance Company) Regulations, 2021, in the leasing ecosystem at IFSCs. The proposed framework aims to strengthen institutional, governance, and operational aspects of leasing and financing activities, particularly in the aircraft leasing sector, and align the IFSC with global best practices. It envisages permitting regulated TCSPs to support the incorporation, administration, governance, and compliance of SPVs undertaking leasing and financing activities, while ensuring transparency, AML/CFT safeguards, and investor protection. The framework also proposes a proportionate regulatory approach for SPVs alongside enhanced oversight of TCSPs, with the objective of improving structuring capabilities, attracting global investors, and supporting the development of a competitive leasing ecosystem in IFSCs. Public comments on the proposed amendments have been invited until April 06, 2026.

1.1.10.   IFSCA issues circular on support for export factoring under Niryat Protsahan scheme

IFSCA has issued a circular directing IFSC Banking Units and Finance Company/Units undertaking factoring activities to implement the Export Promotion Mission – Niryat Protsahan scheme, as notified by the Directorate General of Foreign Trade on February 20, 2026. The scheme aims to improve access to export finance for MSMEs engaged in international value chains by supporting alternative trade finance instruments, particularly export factoring, including both recourse and non-recourse arrangements in Indian Rupees or freely convertible foreign currencies. Eligible financial institutions are required to extend benefits in the form of interest subvention or equivalent cost support on export factoring interest costs to eligible MSME exporters, and ensure compliance with operational requirements, reporting obligations, and timelines prescribed under the scheme.

1.1.11.   IFSCA highlights supervisory observations on substance requirements for capital market intermediaries

IFSCA has undertaken supervisory measures, including market intelligence visits, to assess compliance by Capital Market Intermediaries (“CMIs”) in GIFT IFSC with the IFSCA (Capital Market Intermediaries) Regulations, 2025, particularly in relation to maintenance of operational substance. During these visits, IFSCA observed instances of non-compliance, including absence of Principal Officer and Compliance Officer, inadequate infrastructure, lack of regulatory awareness among designated personnel, and use of remote access tools for trading, raising concerns of conflict of interest and regulatory breaches. Such findings were noted to be in contravention of provisions including Regulations 9(1), 9(6), 11(b) and Clause 16 of Part A of Schedule II. Based on these observations, IFSCA has initiated appropriate regulatory action against the concerned entities and has advised all CMIs to ensure strict adherence to substance requirements and applicable regulatory provisions to maintain a transparent and robust financial ecosystem in IFSCs.

Insurance Regulatory and Development Authority of India (IRDAI)

1.1.12.   IRDAI issues transitional arrangements for registration and annual fee payment for insurance intermediaries

IRDAI has issued a circular dated March 16, 2026 outlining transitional arrangements for issuance of Certificates of Registration and payment of annual fees for insurance intermediaries following the coming into force of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 on February 05, 2026. Pursuant to the amendment to Section 42D of the Insurance Act, 1938, registrations granted to insurance intermediaries will now remain valid on a continuous basis, subject to payment of an annual fee, replacing the earlier system of three-year validity and renewal fees. As an interim measure, intermediaries granted fresh registration or renewal during the period from February 05, 2026 to June 30, 2026 will be required to pay an interim annual fee at the time of issuance of the Certificate of Registration, with adjustments and refunds provided where renewal fees have already been paid. The interim arrangement will remain in force until a comprehensive regulatory framework governing annual fee payments is notified.

1.1.13.   IRDAI convenes stakeholder discussion on Public Insurance Registry and Bima Sugam

IRDAI convened an Industry Stakeholders’ Discussion on the proposed Public Insurance Registry (PIR) and Bima Sugam on March 17, 2026 at the India International Centre, New Delhi, bringing together senior leadership from insurance companies and other stakeholders to deliberate on the vision, design, and implementation roadmap of the proposed digital insurance infrastructure. The PIR has been envisaged as a consent-driven and legally compliant digital framework covering the entire policy lifecycle, including issuance, claims, grievance redressal, and dispute resolution, with the objective of enhancing transparency, consumer protection, and market efficiency. The platform is intended to consolidate structured insurance data across stakeholders, reduce information asymmetry, improve fraud detection, and enable data-driven regulatory oversight, while complementing the objectives of Bima Sugam in improving insurance accessibility. The discussion also focused on data governance, cybersecurity safeguards, compliance readiness, and the role of interoperable digital infrastructure, with stakeholders providing feedback on implementation and the need for alignment between PIR and Bima Sugam to strengthen the overall insurance ecosystem.

Monetary Penalties

1.1.14.   RBI imposes penalties on 2 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.	Hongkong and Shanghai Banking Corporation Limited	INR 31,80,000 (Indian Rupees Thirty-One Lakh Eighty Thousand only)	For non-compliance with certain directions issued by RBI on ‘Inoperative Accounts / Unclaimed Deposits in Banks - Revised Instructions’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of section 47 A(1)(c) read with section 46(4)(i) of the Banking Regulation Act, 1949.
2.	Cashfree Payments India Private Limited	INR 3,10,000 (Indian Rupees Three Lakh Ten Thousand only)	For non-compliance with certain directions issued by RBI on ‘Guidelines on Regulation of Payment Aggregators (PAs) and Payment Gateways (PGs)’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of section 30(1) read with section 26(6) of the Payment and Settlement Systems Act, 2007.

2.               Key Asian Markets - Philippines and Indonesia

2.1.           Philippines

2.1.1.   Philippines records BOP deficit in February 2026; reserves remain adequate

The Philippines’ balance of payments recorded a deficit of USD 2.3 Billion (United States Dollar Two Billion Three Hundred Million only) in February 2026, with the cumulative deficit for January–February 2026 standing at USD 2.7 Billion (United States Dollar Two Billion Seven Hundred Million only). The country’s gross international reserves increased to USD 113.3 billion (United States Dollar One Hundred Thirteen Billion Three Hundred Million only) as of end-February 2026, providing an adequate external liquidity buffer, equivalent to 7.5 (Seven point Five) months of imports and covering approximately 4.3 (Four point Three) times the short-term external debt based on residual maturity.

2.1.2.   FSCC reaffirms strength of Philippine financial system; flags concentration risks

The Financial Stability Coordination Council (“FSCC”) has reaffirmed the strength of the Philippine financial system while continuing to monitor concentration risks during its meeting held on March 13, 2026. The council noted that the banking system remains resilient, supported by strong capital and liquidity, but highlighted that concentrated corporate exposures could amplify shocks amid increasing linkages between large conglomerates and economic sectors. It also observed rising corporate leverage, consumer credit, and housing loans, noting the associated risk implications. To address emerging risks, particularly from non-bank financial institutions adopting new business models, the FSCC is enhancing its surveillance network, data quality, and regulatory oversight, and acknowledged the Philippine Deposit Insurance Corporation’s efforts to strengthen early intervention frameworks to manage bank distress and maintain financial stability.

2.2.           Indonesia

2.2.1.   Indonesia’s external debt remains stable in January 2026

Indonesia’s external debt stood at USD 434.7 billion (United States Dollars Four Hundred Thirty-Four Billion Seven Hundred Million only) in January 2026, with annual growth moderating to 1.7 per cent (One point Seven per cent) from 1.8 per cent (One point Eight per cent) in the previous month. Government external debt remained stable at USD 216.3 billion (United States Dollar Two Hundred Sixteen Billion Three Hundred Million only), with growth of 5.6 per cent (Five point Six per cent), supported by foreign loan drawdowns and inflows into government securities. In contrast, private external debt declined to USD 193 billion (United States Dollar One Hundred Ninety-Three Billion only), reflecting a 0.7 per cent (Zero point Seven per cent) contraction, primarily driven by non-financial corporations. The overall external debt profile remained prudent and sustainable, with the debt-to-GDP ratio improving to 29.6 per cent (Twenty-Nine point Six per cent) and long-term maturities accounting for a significant share of total external debt.

2.2.2.   Bank Indonesia holds policy rates; strengthens measures to maintain stability

Bank Indonesia has decided to maintain the BI-Rate at 4.75 per cent (Four point Seven Five per cent), along with the Deposit Facility rate at 3.75 per cent (Three point Seven Five per cent) and the Lending Facility rate at 5.50 per cent (Five point Five Zero per cent), following its meeting held on March 16–17, 2026. The decision aims to maintain Rupiah stability amid global uncertainties, support the inflation target of 2.5 per cent ±1 per cent (Two point Five per cent plus/minus One per cent), and sustain economic growth. Bank Indonesia also announced a policy mix spanning monetary, macroprudential, and payment system measures, including foreign exchange market interventions, revised thresholds for forex transactions and reporting, and measures to attract capital inflows while maintaining liquidity. Additionally, the central bank outlined initiatives to strengthen digital payment infrastructure, expand cross-border payment connectivity, and enhance credit growth, while continuing close policy coordination with the Government and financial stability authorities to mitigate the impact of evolving global economic conditions. 

3.               Trends

3.1.           Capital SFB Sets Target to Double Loan Book to INR 16,000 Crore by FY29

Capital Small Finance Bank, India's first small finance bank, is targeting an advance book exceeding INR 16,000 Crore (Indian National Rupees Sixteen Thousand Crores only) by FY29, implying around 24 per cent (twenty-four per cent) CAGR from its current base. In Q3 FY26, the bank reported total deposits rising 18.5 per cent (eighteen point five per cent) year-on-year and gross advances growing 19.8 per cent (nineteen per cent), driven by strong demand in the MSME, mortgage, and agriculture sectors. The Asset quality showed sequential improvement, with Gross NPAs at 2.68 per cent (Two point Six Eight per cent) and Net NPAs at 1.35 per cent, while the slippage ratio improved significantly to 1.21 per cent (one point two one per cent) from 1.73 per cent (one point seven three per cent) in the previous quarter.

3.2.           Axis Bank to infuse INR 1,500 Crore into Axis Finance after RBI eases rules

Axis Bank has approved a capital infusion of INR 500 Crore (Indian Rupees Five Hundred Crore only) into its wholly owned non‑banking finance subsidiary, Axis Finance Limited, to be executed in one or more tranches before March 31, 2027, through subscription to a rights issue. The decision was approved by the bank’s board committee on March 18, 2026, and disclosed through an exchange filing. The move follows the Reserve Bank of India’s revision of its ‘forms of business’ guidelines, which now permit banks and their group entities to operate in the same line of business, subject to board approval and adequate justification. Under the earlier October 2024 draft circular, Axis Bank was restricted from infusing additional capital into Axis Finance, prompting it to explore stake dilution and appoint Morgan Stanley to scout for external investors.

4.               Sector Overview

4.1.       Short‑term funding costs surge for Indian lenders as credit growth outpaces deposits

Indian lenders are paying the steepest premium for short-term funds in six years, with the FBIL three-month certificates of deposit (“CD”) rate at 7.41 per cent (seven point four one per cent) versus the treasury bill yield of 5.31 per cent (five point three one per cent), a 210 basis points (Two Hundred Ten Basis Points) spread last seen in March 2020, as CD borrowings hit a record INR 6.64 Trillion (Indian Rupees Six Lakh Sixty-Four Thousand Crore Rupees only) USD 71 Billion (United Sates Dollar Seventy One Billion only) due to credit growth outpacing deposits.

4.2.           Indian Rupees hits a record low and might decline further

The Indian rupee has hit a record low of INR 93.71 (Indian Rupees Ninety-Three Rupees and Seventy-One Paise only) against the US Dollar, driven by a perfect storm of surging oil prices like Brent crude near USD 107 (United States Dollar One Hundred and Seven only) per barrel, following Middle East conflict, massive foreign investor outflows of USD 9.83 Billion (United Stated Dollar Nine Billion Eight Hundred Thirty Million only) in March alone, and a strong US dollar. (LINK)

4.3.           FPIs continue heavy sell‑off in financial services amid global risk

Indian markets witnessed record foreign portfolio investor (“FPI”) outflows from the financial services sector in the first half of March 2026, with overseas investors selling shares worth INR 31,831 Crore (Indian Rupees Thirty-One Thousand Eight Hundred Thirty-One Crore only), the highest-ever fortnightly sell‑off for the sector. This accounted for nearly 60 per cent of total FPI outflows of INR 59,382 Crore (Indian Rupees Fifty-Nine Thousand Three Hundred Eighty-Two Crore only) across 16 (sixteen) sectors, reflecting heightened global risk aversion triggered by geopolitical tensions, particularly the West Asia conflict.

5.               Business Updates

5.1.           Punjab National Bank Commences Auction for Rolta India Assets

Punjab National Bank (“PNB”) has initiated the sale of non-performing assets (NPAs) belonging to Rolta India Ltd in an effort to recover outstanding dues totalling INR 450.85 Crore (Indian Rupees Four Hundred Fifty Crore and Eighty-Five Lakh only). The assets primarily comprise a 7,800-square-metre land parcel and building situated in Gurugram, for which the bank has set a reserve price of INR 250 Crore (Indian Rupees Two Hundred Fifty Crore only). PNB, having already taken physical possession of the property, is scheduled to conduct an online e-auction on 7 April 2026. The sale will be executed on an "as is where is" basis, with the successful bidder also becoming responsible for over INR 2.1 Crore (Indian Rupees Two Crore and Ten Lakh only) in outstanding municipal dues.

5.2.           Centrum Group Divests Housing Finance Subsidiary

The Centrum Group has successfully finalised the sale of its housing finance arm, Centrum Housing Finance, to Weaver Services, an entity backed by Premji Invest. Weaver Services acquired a 75 per cent (seventy-five per cent) controlling stake in the mortgage lender, leading Centrum Housing Finance to cease being a subsidiary of the group as of Wednesday. To facilitate this acquisition, Weaver Services completed a two-tranche capital raise totalling INR 1,450 Crore (Indian Rupees One Thousand Four Hundred Fifty Crore only), with the most recent round of INR 950 Crore (Indian Rupees Nine Hundred Fifty Crore only) co-led by Premji Invest and Lightspeed Venture Partners. The transaction, which also involved a syndicate of senior financial professionals and Gaja Capital, received the necessary regulatory approvals earlier this month.

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