Banking & Finance Digest May 04, 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 approves voluntary amalgamation of The Bhavani Sahakari Bank Ltd. with TJSB Sahakari Bank Ltd. 

The Reserve Bank of India (“RBI”) has sanctioned the Scheme of Amalgamation of The Bhavani Sahakari Bank Ltd., Mumbai (Maharashtra) with TJSB Sahakari Bank Ltd. (Maharashtra), in exercise of powers under Section 44A(4) read with Section 56 of the Banking Regulation Act, 1949. The Scheme will come into effect from May 04, 2026 (Monday), pursuant to which all branches of The Bhavani Sahakari Bank Ltd., Mumbai (Maharashtra) shall operate as branches of TJSB Sahakari Bank Ltd. (Maharashtra).

1.1.2.      RBI issues Amendment Directions for NBFC registration, exemptions and scale-based regulation, 2026 

RBI has issued the ‘Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Amendment Directions, 2026’, pursuant to its draft Directions released on February 10, 2026 for stakeholder comments. The amendments, inter alia, provide exemption from registration to NBFCs not availing public funds and not having customer interface, including Type I NBFCs, with asset size below INR 1,000 crore (Indian Rupees One Thousand Crore only), subject to specified conditions. The Directions also prescribe the procedure for deregistration or conversion of existing NBFCs falling within the aforesaid category and incorporate other related regulatory changes. The RBI has stated that stakeholder feedback received on the draft Directions has been examined and suitably incorporated in the final framework.

1.1.3.      RBI issues Amendment Directions revising lending norms for Urban Co-operative Banks

RBI has issued Amendment Directions revising lending norms for Urban Co-operative Banks (UCBs), pursuant to its draft Directions released on February 10, 2026 for stakeholder feedback. The amendments, inter alia, rationalise the definition of unsecured advances, enhance single and aggregate limits for such advances, increase the lending limit to nominal members for purchase of consumer durables, and provide certain discretions to Tier 3 and Tier 4 UCBs in relation to housing loans. The Amendment Directions also introduce revised disclosure requirements for UCBs. The RBI has stated that stakeholder feedback received on the draft Directions has been examined and suitably incorporated in the final framework, with a statement of feedback provided in the Annex. Accordingly, the RBI has issued the following Amendment Directions: (i) Reserve Bank of India (Urban Co-operative Banks – Concentration Risk Management) – Amendment Directions, 2026; (ii) Reserve Bank of India (Urban Co-operative Banks – Credit Facilities) – Amendment Directions, 2026; and (iii) Reserve Bank of India (Urban Co-operative Banks – Financial Statements: Presentation and Disclosures) – Second Amendment Directions, 2026.

Monetary Penalties

1.1.6.      RBI imposes penalties on one bank 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.	Janakalyan Sahakari Bank Limited, Mumbai	INR 3,30,000 (Indian Rupees Three Lakh Thirty Thousand only)	For non-compliance with certain directions issued by RBI on ‘Exposure Ceiling to Group Borrowers’. 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 - Philippines and Sri Lanka

2.1.           Philippines

2.2.1.      BSP Projects April 2026 Inflation in the Range of 5.6 per cent to 6.4 per cent

The Bangko Sentral ng Pilipinas (“BSP”) has projected inflation for April 2026 to be within the range of 5.6 per cent (Five point Six per cent) to 6.4 per cent (Six point Four per cent). The forecast reflects intensified inflationary risks driven by higher domestic petroleum prices, rising prices of key food items including rice, fish, and meat, increased electricity charges, and peso depreciation, while expected declines in vegetable and fruit prices may partially offset these pressures. The BSP has indicated that it will remain vigilant and guided by incoming data on inflation and growth prospects, while closely monitoring developments in the Middle East for their potential impact on inflation and economic activity.

2.2.2.      BSP Survey Indicates Stable Lending Standards Outlook for Q2 2026

BSP has released the results of its Senior Bank Loan Officers’ Survey (SLOS), indicating that most banks expect to maintain existing lending standards in Q2 2026. The survey shows that 61.5 per cent  (Sixty One point Five per cent) of banks expect unchanged credit standards for business loans, compared to 30.8 per cent  (Thirty point Eight per cent) expecting tightening and 7.7 per cent  (Seven point Seven per cent) expecting easing, while for household loans, 65.7 per cent  (Sixty Five point Seven per cent) expect standards to remain unchanged, against 28.6 per cent  (Twenty Eight point Six per cent) tightening and 5.7 per cent  (Five point Seven per cent) easing. Based on the diffusion index method, banks anticipate net tightening of 23.1 per cent (Twenty-Three point One per cent) for business loans and 22.9 per cent (Twenty-Two point Nine per cent) for household loans. The survey further indicates that loan demand is expected to generally remain stable, with 53.8 per cent (Fifty Three point Eight per cent) of banks expecting unchanged demand from businesses and 52.9 per cent (Fifty-Two point Nine per cent) from households, reflecting continued credit support to the economy amid global uncertainties.

2.2.           Sri Lanka

2.2.1.      Sri Lanka Headline Inflation Rises to 5.4 per cent in April 2026

Central Bank of Sri Lanka (“CBSL”) has reported that CCPI-based headline inflation (year-on-year) accelerated to 5.4 per cent (Five point Four per cent) in April 2026 from 2.2 per cent (Two point Two per cent) in March 2026, reflecting spillovers from the ongoing Middle East conflict and higher domestic energy prices. Food inflation rose to 2.8 per cent (Two point Eight per cent) from 0.7 per cent (Zero point Seven per cent), while non-food inflation increased to 6.8 per cent (Six point Eight per cent) from 2.9 per cent (Two point Nine per cent), contributing significantly to the overall rise. On a month-on-month basis, CCPI increased by 2.99 per cent (Two point Nine Nine per cent), driven primarily by the non-food category, while core inflation also rose to 3.8 per cent (Three point Eight per cent) from 2.5 per cent (Two point Five per cent). The Central Bank indicated that inflation dynamics are subject to elevated uncertainty due to external developments but are expected to remain around the 5 per cent (Five per cent) target over the medium term with appropriate policy support.

2.2.2.      Sri Lanka Reports Current Account Surplus in March 2026

CBSL has reported that the external current account recorded a marginal surplus in March 2026, with the cumulative surplus reaching USD 531 million (United States Dollars Five Hundred Thirty-One Million only) in Q1 2026, supported by higher workers’ remittances despite a widening merchandise trade deficit of USD 2.3 billion (United States Dollars Two Billion Three Hundred Million only). Fuel imports rose by 74.7 per cent (Seventy-Four point Seven per cent) to USD 630 million (United States Dollars Six Hundred Thirty Million only), while the services surplus declined by 42.4 per cent (Forty-Two point Four per cent) to USD 227 million (United States Dollars Two Hundred Twenty-Seven Million only) amid lower tourist arrivals. Remittances increased to USD 815 million (United States Dollars Eight Hundred Fifteen Million only), while gross official reserves stood at USD 7.0 billion (United States Dollars Seven Billion only) at end March 2026 and the Sri Lanka rupee depreciated by 2.9 per cent (Two point Nine per cent), reflecting external pressures.

3.               Trends

3.1.           PNB Housing Finance targets INR 1 lakh crore AUM driven by accelerated loan book growth

PNB Housing Finance Limited (“PNB Housing”) has stated that it expects to cross assets under management of approximately INR 1 lakh crore (Indian Rupees One Lakh Crore only) within the next six to seven months, marking a key milestone in its growth trajectory. The company’s Managing Director and Chief Executive Officer has indicated that the lender is targeting loan book growth of 18–20 per cent (eighteen to twenty per cent) for the financial year 2026–27, significantly higher than the broader industry growth rate. This expansion is supported by improving asset quality, with gross non‑performing assets remaining below 1 per cent (one per cent), stable net interest margins and increasing focus on affordable and emerging housing segments. The company has also been investing in digital transformation and plans to expand its branch network to sustain medium‑term growth and profitability.

3.2.           Smaller UPI players seek regulatory intervention for level playing field

Smaller third‑party Unified Payments Interface (“UPI”) service providers are preparing to approach the National Payments Corporation of India (“NPCI”) to seek regulatory measures aimed at creating a more level competitive environment vis‑à‑vis dominant market participants. These entities are expected to propose restrictions on aggressive user‑acquisition practices by large players such as PhonePe, Google Pay and Paytm, along with tighter norms on monetisation and merchant services. The move comes amid continued delay in implementation of the proposed 30 per cent (thirty per cent) market share cap, first announced in 2020, which was intended to limit concentration risk. The smaller firms argue that sustained dominance by a few applications has created structural imbalances within the UPI ecosystem, prompting calls for interim safeguards until long‑term regulatory solutions are finalised.

3.3.     Fintechs gain direct access to core payment rails, reshaping banking intermediation

Fintech firms in India are increasingly gaining direct access to core payment infrastructure, marking a structural shift in the financial services ecosystem and potentially altering the traditional intermediary role of banks. Select fintech entities have begun integrating directly with centralised payment systems, reducing their reliance on bank sponsorship for transaction processing and settlement. This development is expected to improve operational efficiency, accelerate innovation and lower costs for high‑volume payment services. At the same time, direct participation in payment rails is likely to bring fintechs under enhanced regulatory scrutiny, increasing compliance and governance obligations. The trend signals a gradual rebalancing of power between banks and fintechs, with broader implications for competition, consolidation and systemic risk management within the banking and financial services sector.

4.               Sector Overview

4.1.           NBFCs highlight credit and cyber risks as top priorities amid rapid digital growth

Non‑banking financial companies (“NBFCs”) have identified credit risk and cyber security threats as their most significant challenges as they scale operations driven by rising digital adoption and increasing credit demand. Discussions at an industry forum underscored that traditional credit appraisal models are proving inadequate in addressing emerging stress scenarios, prompting NBFCs to move towards more dynamic, data‑driven and cash‑flow‑based risk assessment frameworks. Industry leaders also emphasised that collaborative models such as co‑lending add further complexity, requiring stronger governance and continuous monitoring. Alongside credit risks, growing reliance on digital platforms, application programming interfaces and artificial intelligence has heightened cyber and data security concerns, leading NBFCs to invest progressively in governance, internal controls and employee awareness to balance growth with long‑term resilience.

4.2.           India’s credit card base crosses 119 million as PSU banks gain traction in spends

India’s credit card market has expanded to approximately 119 million cards, reflecting steady growth in card penetration across the banking system. While private sector lenders such as HDFC Bank, SBI Cards, ICICI Bank and Axis Bank continue to dominate issuance and spending, public sector banks (“PSU banks”) have recorded faster growth, particularly in tier‑2 and tier‑3 markets. Data indicates that PSU banks have benefitted from wider distribution networks and co‑branded partnerships, resulting in higher growth in both card issuance and per‑card spending. Although private banks still account for a majority share of overall card spends, their relative share has moderated, pointing to a gradual rebalancing within the credit card ecosystem as consumption patterns broaden and new customer segments are added.

5.               Business Updates

5.1.           MobiKwik Receives RBI Approval for NBFC License

One MobiKwik Systems secured RBI approval for its NBFC application on April 27, 2026, paving the way for the launch of its wholly owned lending subsidiary, MobiKwik Financial Services Private Limited (“MFSPL”). The license will enable the company to offer both secured and unsecured credit products for consumers and MSMEs, with a focus on co-lending arrangements and improved lending margins. Leveraging its base of over 186.6 million users and 4.79 million merchants, MobiKwik aims to deepen financial inclusion particularly in Tier 2 and Tier 3 cities through AI-driven, personalised credit offerings.

5.2.           Kissht IPO: Temasek‑Backed OnEMI Technology Announces INR 162- INR 171 Price Band

Temasek Holdings-backed OnEMI Technology Solutions, which operates the Kissht digital lending platform, announced a price band of INR 162 (Indian Rupees One Hundred and Sixty Two only) to INR 171 (Indian Rupees One Hundred and Seventy One only) per share for its IPO, opening April 30, 2026 and closing May 5, 2026, with anchor investor bidding on April 29, 2026. The company aims to raise INR 925.92 Crore (Indian Rupees Nine Hundred Twenty Five Crore and Ninety Two Lakh only) through a combination of a fresh issue of INR 850 Crore (Indian Rupees Eight Hundred and Fifty Crore only) and an offer-for-sale of shares worth INR 75.9 Crore (Indian Rupees Seventy Five Crores and Ninety Lakhs only) by existing investors, including Temasek's Vertex and Ventureast Proactive Fund. A significant portion of the fresh issue proceeds INR 637.5 Crore (Indian Rupees Six Hundred and Thirty-Seven Crores and Fifty Lakhs only) will be used to strengthen the capital base of its NBFC subsidiary, Si Creva Capital Services, with shares expected to list on the NSE and BSE on May 8, 2026.

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