Banking & Finance Digest March 30, 2026

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1.               Regulatory Updates

1.1.           India

Reserve Bank of India (RBI)

1.1.1.      RBI sanctions amalgamation of Bapunagar Mahila Co-operative Bank with Shri Vinayak Sahakari Bank

The Reserve Bank of India (“RBI”) has sanctioned the voluntary amalgamation of The Bapunagar Mahila Co-operative Bank Ltd., Ahmedabad, Gujarat with Shri Vinayak Sahakari Bank Ltd., Ahmedabad, Gujarat, in exercise of its powers under the Banking Regulation Act, 1949. The scheme of amalgamation will come into force on March 27, 2026, from which date all branches of The Bapunagar Mahila Co-operative Bank Ltd. will operate as branches of Shri Vinayak Sahakari Bank Ltd.

1.1.2.      RBI issues Master Direction on Unique Identifiers in Financial Markets

RBI has issued the Master Direction – Reserve Bank of India (Unique Identifiers in Financial Markets) Directions, 2026 on March 27, 2026, consolidating earlier instructions on Legal Entity Identifier (“LEI”) and Unique Transaction Identifier (UTI) to improve regulatory accessibility and ease of doing business. Section A, which comes into force immediately, applies LEI to all over-the-counter (“OTC”) transactions by non-individual entities in RBI-regulated markets for Government securities, money market instruments, foreign exchange instruments and derivatives, while for non-derivative foreign exchange transactions, the requirement applies only where the transaction value is USD 1,000,000 (United States Dollar One Million only) or above. Section B, which takes effect from January 1, 2027, mandates UTI for OTC derivative transactions, sets out the framework and waterfall for UTI generation, and recognises a backstop role for the Clearing Corporation of India Limited – Trade Repository where the identifier is not otherwise generated. The Directions also supersede 5 (five) earlier circulars on this subject.

1.1.3.      RBI notifies regulated entities of new additions to UN sanctions list

RBI has informed banks and other regulated entities that 2 (two) individuals have been added to the United Nations Security Council (UNSC) ISIL (Da’esh) and Al-Qaida sanctions list pursuant to press releases dated March 26, 2026, and has directed them to take appropriate action under Chapter IX of the Reserve Bank of India – Know Your Customer, Directions, 2025 and Section 51A of the Unlawful Activities (Prevention) Act, 1967. The circular, issued on March 27, 2026, requires regulated entities to ensure strict compliance with the procedure prescribed under the relevant Unlawful Activities (Prevention) Order, 2021, as amended, including with respect to asset freeze and related sanctions compliance measures.

1.1.4.      RBI caps Authorised Dealers’ NOP-INR positions in onshore deliverable market

RBI has directed Authorised Dealers to ensure that their open positions involving the Indian Rupee (NOP-INR) in the onshore deliverable market remain within USD 100,000,000 (United States Dollar One Hundred Million only) at the end of each business day, with compliance required at the earliest and no later than April 10, 2026. The circular, issued on March 27, 2026, states that this step has been taken under the existing framework in the Master Direction – Risk Management and Inter-Bank Dealings, which permits the Reserve Bank to prescribe such limits for exchange rate management depending on market conditions, and has been issued under the Foreign Exchange Management Act, 1999.

1.1.5.      RBI approves amalgamation of Lalbaug Co-operative Bank with Akhand Anand Co-operative Bank

RBI has sanctioned the voluntary amalgamation of Lalbaug Co-operative Bank Ltd., Vadodara, Gujarat with Akhand Anand Co-operative Bank Ltd., Surat, Gujarat, in exercise of its powers under the Banking Regulation Act, 1949. The scheme will come into effect from March 23, 2026, from which date all branches of Lalbaug Co-operative Bank Ltd. will operate as branches of Akhand Anand Co-operative Bank Ltd.

Securities and Exchange Board of India (SEBI)

1.1.6.      SEBI issues framework of IT Resilience Index for Market Infrastructure Institutions

The Securities and Exchange Board of India (“SEBI”) has issued a consultation paper proposing an IT Resilience Index for Market Infrastructure Institutions, aimed at periodically assessing the robustness of critical IT systems across parameters such as availability, security, integrity, governance, reliability and monitoring, business continuity, modularity, flexibility, scalability and incident handling. The index is intended to be system driven and non-discretionary, enabling comparison of IT health over time and across institutions through uniform metrics and weightages, with detailed sub parameters and scoring methodology to be finalised by the Industry Standards Forum within three months of the circular. Market Infrastructure Institutions will be required to compute the index on a half yearly basis, submit comparative analyses and board observations to SEBI, and fully operationalise the standardised framework within six months, with the first reporting due for the half year ending 30 September 2026. Public comments on the proposed framework have been invited until 15 April 2026 through SEBIs online portal or email, underscoring the consultative approach to strengthening technological resilience in the securities market.

1.1.7.   SEBI issues circular on Eligibility of Cost Accountants for Investment Adviser Audits

SEBI has clarified that members of the Institute of Cost Accountants of India are now expressly eligible, alongside members of the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India, to conduct the annual compliance audit of Investment Advisers under Regulation 19(3) of the SEBI Investment Advisers Regulations 2013. Accordingly, the Master Circular for Investment Advisers has been amended to require Investment Advisers to obtain, within six months of the end of each financial year, an annual audit report from any of these professionals covering compliance with the regulations and circulars, and to submit the report and any adverse findings, with action taken, within one month of the audit date but no later than 31 October for the previous year. The Master Circular has also been modified to mandate that Investment Advisers maintain on record an annual certificate from a member of ICAI, ICSI, ICMAI or an auditor confirming adherence to client level segregation norms under Regulation 22, with this certification forming part of the overall compliance audit framework. These changes, effective immediately, are aimed at broadening the pool of qualified auditors, enhancing regulatory oversight and reinforcing investor protection in the investment advisory space.

1.1.8.      SEBI issues addendum to its circular deferred applicability of intraday borrowing norms for mutual funds

SEBI has issued an addendum to its recent circular on borrowing by mutual funds, deferring the implementation date of the new intraday borrowing guidelines to 15 July 2026 to address operational challenges highlighted by asset management companies. The original circular of 13 March 2026, which has been incorporated into the Master Circular for Mutual Funds as clause 5.9, laid down detailed conditions for borrowing by mutual funds, including specific requirements for intraday facilities under clause 5.9.1. By postponing the effective date of the intraday provisions, SEBI is providing additional time for industry participants to recalibrate systems, processes and liquidity management practices, while retaining the broader objective of safeguarding investor interests and ensuring orderly functioning of mutual fund schemes. The addendum reiterates that it has been issued under SEBIs statutory powers and that the updated timeline and applicable guidelines are available on the regulator’s website under the legal circulars section.

1.1.9.      SEBI issues relaxation in broker reporting requirements

SEBI has introduced ease of doing business measures by relaxing certain reporting obligations for stock brokers and aligning the treatment of brokers that are primary dealers with that of brokers which are banks, while also removing the requirement for brokers to report their demat accounts to stock exchanges. Under the amended provisions of the Master Circular for Stock Brokers, all demat accounts of stock brokers must continue to be appropriately tagged, but this tagging requirement will not apply to demat accounts of brokers that are also primary dealers where such accounts are used exclusively for non broking activities. For bank and primary dealer brokers, only those bank accounts used for stock broking activities now need to be reported to stock exchanges, and going forward brokers will communicate details only of bank accounts, not demat accounts, within seven working days of opening or closure, while depositories will separately share demat account opening and closure data with exchanges at agreed intervals. These amendments, effective from 17 April 2026.

International Financial Services Centres Authority (IFSCA)

1.1.10.   IFSCA grants QCCP status to IIBX in GIFT IFSC

IFSCA has granted Qualifying Central Counterparty (QCCP) status to India International Bullion Exchange (IFSC) Limited (IIBX), which is recognised under the Securities Contracts (Regulation) Act, 1956, read with the IFSCA Act and IFSCA (Bullion Market) Regulations, 2025, to operate as both a Bullion Exchange and Bullion Clearing Corporation in GIFT IFSC. The recognition reflects IIBX’s alignment with the Principles for Financial Market Infrastructures (PFMIs) issued by CPMI-IOSCO, aimed at enhancing safety, efficiency, and systemic stability in financial market infrastructure. As a Market Infrastructure Institution (MII), IIBX will be subject to regulatory oversight in accordance with PFMI standards, with the QCCP designation reinforcing its role in strengthening the bullion market ecosystem and risk management framework within IFSCs.

Miscellaneous

Ministry of Corporate Affairs (MCA)

1.1.11.   Corporate Laws Amendment Bill proposes decriminalisation of Section 186 disclosure lapses

The Government of India has introduced the Corporate Laws (Amendment) Bill in Parliament, proposing amendments to the Companies Act, 2013 and the Limited Liability Partnership Act, 2008, including the decriminalisation of certain procedural non-compliances under Section 186 relating to inter-corporate loans, guarantees and investments. The Bill proposes to amend sub-section (13) of Section 186 to exclude contraventions of sub-sections (9) and (10), which pertain to maintenance of registers and disclosure requirements, from criminal punishment and to introduce a civil penalty framework through insertion of a new sub-section (14). Under the proposed framework, a company in default shall be liable to a penalty of INR 1 lakh (Indian Rupees One Lakh only), with an additional INR 500 (Indian Rupees Five Hundred only) per day for continuing default, capped at INR 5 lakh (Indian Rupees Five Lakh only), while officers in default shall be liable to a penalty of INR 25,000 (Indian Rupees Twenty Five Thousand only) with an additional INR 200 (Indian Rupees Two Hundred only) per day, subject to a maximum of INR 1 lakh (Indian Rupees One Lakh only). The amendment seeks to replace criminal liability with a graded monetary penalty regime for disclosure-related lapses.

Monetary Penalties

1.1.12.   RBI imposes penalties on 9 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.	Pali District Central Co-operative Bank Ltd.	INR 50,000 (Indian Rupees Fifty Thousand only)	For 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.
2.	Loknete R.D. Appa, Kshirsagar Sahakari Bank Ltd., Niphad, Maharashtra	INR 30,000 (Indian Rupees Thirty Thousand only)	For non-compliance with certain directions issued by RBI on ‘Loans and advances to directors, their relatives, and firms / concerns in which they are interested’ and contravention of the provisions of Section 20(1) and Section 35(2) 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)(a) and 47A(1)(c) read with Sections 46(2) and 46(4)(i) respectively, read with Section 56 of the BR Act.
3.	Vedvyas Finance Private Limited, Odisha	INR 30,000 (Indian Rupees Thirty Thousand Only)	For non-compliance with certain -directions issued by RBI on ‘Governance’. This penalty has been imposed in exercise of powers conferred on RBI under Section 58G(1)(b) read with Section 58B(5)(aa) of the Reserve Bank of India Act, 1934.
4.	Mysore and Chamarajnagar District Co-operative Central Bank Limited, Karnataka	INR 1,00,000 (Indian Rupees One Lakh only)	For contravention of provisions of Section 19 read with Section 56 of the Banking Regulation Act, 1949 (BR Act) and 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 BR Act.
5.	Kodagu District Co-operative Central Bank Limited, Karnataka	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.
6.	Tanur Co-operative Urban Bank Limited, Kerala	INR 50,000 (Indian Rupees Fifty Thousand only)	For 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.
7.	Central Bank of India	INR 63,60,000 (Indian Rupees Sixty Three Lakh Sixty Thousand only)	For non-compliance with certain provisions of directions issued by RBI on ‘Know Your Customer (KYC)’ and ‘Financial lnclusion - Access to Banking Services - Basic Savings Bank Deposit Account (BSBDA)'. 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 51(1) of the Banking Regulation Act, 1949.
8.	Pine Labs Limited	INR 3,10,000 (Indian Rupees Three Lakh Ten Thousand only)	For non-compliance with certain provisions of the directions issued by RBI on ‘Prepaid Payment lnstruments (PPIs)’. 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.
9.	Bank of India	INR 58,50,000 lakh (Indian Rupees Fifty Eight Lakh Fifty Thousand only)	For non-compliance with certain provisions of the directions issued by RBI on ‘Priority Sector Lending (PSL) – Targets and Classification’ and ‘Interest Rate on Deposits’. 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 51(1) of the Banking Regulation Act, 1949.

2.               Key Asian Markets - Philippines and Sri Lanka

2.1.           Philippines

2.2.1.      Monetary Board holds policy rate; flags inflation risks amid global uncertainties

The Monetary Board has decided to maintain the policy rate at 4.25 per cent (Four point Two Five per cent) amid evolving global and domestic economic conditions. The decision reflects a data-driven approach considering rising inflationary pressures driven by global commodity price increases, particularly due to the ongoing Middle East conflict, which has impacted fuel prices and transport costs. The central bank indicated that inflation in 2026 may exceed the 4.0 per cent (Four point Zero per cent) ceiling, before moderating towards the target range by 2027, while noting that risks remain largely supply-driven. At the same time, concerns around weak economic growth informed the decision to hold rates, with the Monetary Board reiterating its commitment to closely monitor inflation dynamics and act as necessary to maintain price stability.

2.2.2.      Philippines records slowest residential property price growth since Q1 2019

Residential property prices in the Philippines increased by 1.6 per cent (One point Six per cent) year-on-year in Q4 2025, easing from 1.9 per cent (One point Nine per cent) in the previous quarter and marking the slowest growth since Q1 2019, based on the Residential Property Price Index (RPPI). Growth remained higher in the National Capital Region at 2.3 per cent (Two point Three per cent), while areas outside NCR recorded 1.0 per cent (One point Zero per cent), the lowest on record. By segment, house prices rose marginally by 0.1 per cent (Zero point One per cent), while condominium prices increased by 3.5 per cent (Three point Five per cent), indicating divergence in price trends across housing categories.

2.2.       Sri Lanka

2.2.1.   Central Bank maintains policy rate; monitors inflation and external risks

The Central Bank of Sri Lanka has decided to maintain the Overnight Policy Rate (OPR) at 7.75 per cent (Seven point Seven Five per cent), following its latest monetary policy meeting, amid evolving domestic and global conditions. The decision reflects low inflation at 1.6 per cent (One point Six per cent) in February 2026, providing room to absorb pressures from rising global energy prices, with inflation now expected to reach the 5 per cent (Five per cent) target by Q2 2026. The economy recorded 5.0 per cent (Five point Zero per cent) growth in 2025, with indicators pointing to continued recovery, although geopolitical risks may impact future activity. The external sector remained robust, supported by exports, remittances, and tourism, with gross official reserves rising to USD 7.3 billion (United States Dollars Seven Billion Three Hundred Million only) as of end of February 2026, while the central bank reiterated its readiness to take appropriate policy measures to ensure price stability and support economic growth.

3.               Trends

3.1.           JICA eyes deeper private investment push in India, targeting semiconductors, startups and manufacturing

JICA is looking to expand its private investment and finance operations in India, where it has already committed around INR 6,500 Crore (Indian National Rupees Six Thousand Five Hundred Crores only) across nine projects. Its portfolio is largely debt-oriented, with about 80 per cent (Eighty per cent) in debt and 20 per cent (Twenty per cent) in equity, and it is focusing on sectors such as energy, agriculture, financial inclusion, women’s empowerment, and venture capital. The agency also recently signed fresh loan agreements worth INR 16,420 Crores (Indian National Rupees Sixteen Thousand Four Hundred and Twenty Crores only) with the Government of India for four projects covering sustainable horticulture in Punjab, healthcare and medical education in Maharashtra, Bengaluru Metro Phase 3, and Mumbai Metro Line 11. These loans carry interest rates of 2.7 per cent (Two Point Seven per cent) to 2.9 per cent (Two Point Nine per cent), consulting services at 0.8 per cent (Zero Point Eight per cent), and a 30-year repayment period with a 10-year grace period. JICA said it does not raise funds in India but is financed through borrowing from the Government of Japan and by issuing JICA bonds in global markets. It also plans to commit JPY 275 Billion (Japanese Yen Two Hundred and Seventy-Five Billion only) this year, up from JPY 191 Billion (Japanese Yen One Ninety-One Billion only) last year.

3.2.           Investor flows diverge from large private banks to emerging financial platforms

A notable realignment is underway in India's BFSI investment landscape, with institutional and retail investor flows increasingly bypassing large private sector banks in favour of faster-growing financial platforms including NBFCs, fintechs, and small finance banks. While India's total bank credit has crossed INR 200 Lakh Crore (Indian National Rupees Two Hundred Lakh Crores only) for the first time public sector banks have overtaken private banks in credit growth for the first time in 14 years, eroding a key competitive advantage that large private lenders had long enjoyed. NBFCs are projected to grow their AUM at 15 per cent (Fifteen per cent) to 17 per cent (Seventeen per cent) in FY26, significantly outpacing overall bank credit growth, with cumulative assets expected to cross INR 50 Lakh Crore (Indian National Rupees Fifty Lakh Crores only) by March 2027. A wave of digital lenders and platforms including PhonePe, Razorpay, KreditBee, and Moneyview are expected to file DRHPs and pursue IPOs in 2026, collectively representing around USD 30 Billion (United States Dollar Thirty Billion only) in value yet to be unlocked for public market investors. The shift in investor preference reflects a broader structural re-rating, as margin pressure, deposit competition, and slowing loan growth weigh on large private banks, capital is gravitating toward more nimble platforms that are gaining share in underserved segments.

4.               Sector Overview

4.1.           Union Budget 2026 receives parliamentary approval

Parliament has approved the Finance Bill, 2026, completing the legislative process for the Union Budget 2026–27. The Budget envisages total expenditure of INR 53.47 Lakh Crore (Indian National Rupees Fifty-Three Point Four Seven Lakh Crores only), a 7.7 per cent (Seven Point Seven per cent) increase year‑on‑year, with capital expenditure pegged at INR 12.2 Lakh Crore (Twelve Point Two Lakh Crores only) to support infrastructure‑led growth. The fiscal deficit for FY27 is projected at 4.3 per cent (Four Point Three per cent) of GDP, reflecting continued fiscal consolidation, while no changes were announced to personal income tax rates. The passage of the Finance Bill provides legal backing for budget proposals to take effect from 1 April 2026.

4.2.           Indian banks' margin recovery pushed further out as funding pressures mount

Indian banks’ NIM recovery is being delayed as credit growth continues to outpace deposit mobilisation, intensifying funding strains. Credit growth of nearly 15 per cent (Fifteen per cent) has been largely supported by liquidity drawdowns, pushing the system credit‑to‑deposit ratio to elevated levels and keeping funding costs sticky despite RBI rate cuts. Slowing deposit growth, declining CASA ratios and increased reliance on higher‑cost deposits have led analysts to cut FY27–FY28 earnings and margin estimates. As a result, NIM improvement is now expected to be gradual and pushed beyond earlier expectations, with recovery dependent on sustained deposit growth and liquidity conditions.

4.3.           Insurance sector to see accounting shift with IND AS implementation

India’s insurance sector will transition to Indian Accounting Standards (Ind AS) from 1 April 2026, marking a significant shift in financial reporting and profit recognition. Insurers will move to market‑linked valuation of liabilities and adopt the contractual service margin (CSM), requiring profits to be deferred and recognised over the life of policies rather than upfront. The change is expected to increase earnings volatility, particularly for life insurers with a higher share of savings‑oriented products and may alter investor focus towards metrics such as embedded value, value of new business and CSM. While policyholders will see no direct impact, insurers face material operational and system‑readiness challenges during the transition.

5.               Business Updates

5.1.           Svatantra Microfin Completes Amalgamation with Chaitanya India Fin Credit

Marking a major consolidation in the microfinance space, Svatantra Microfin officially completed its merger with Chaitanya India Fin Credit in late March 2026. This transaction creates one of the largest non-bank microfinance entities in India, significantly expanding its reach into rural and semi-urban markets. The merger is expected to drive operational efficiencies and provide a more robust platform for credit delivery to underserved segments as the new fiscal year begins.

5.2.           Wipro establishes ai hub in gift city to serve global BFSI clients

Wipro has expanded its presence in Gujarat’s GIFT City by launching a new dedicated hub focused on Agentic AI and advanced data analytics for the global BFSI sector. The facility is designed to help international financial institutions automate legacy systems and enhance compliance through AI-driven risk management. This move aligns with the increasing trend of "Agentic AI" in banking, aimed at achieving higher precision in autonomous financial transactions and last-mile customer delivery.

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