Banking & Finance Digest October 05, 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
1.1.1. RBI releases data on Lending and Deposit Rates of Scheduled Commercial Banks
The Reserve Bank of India ("RBI") has released data on lending and deposit rates of Scheduled Commercial Banks (SCBs) for September 2026. The weighted average lending rate (WALR) on outstanding rupee loans marginally declined to 8.96 per cent (eight point nine six per cent) in August 2026 from 8.97 per cent (eight point nine seven per cent) in July 2026, while the WALR on fresh rupee loans increased to 8.61 per cent (eight point six one per cent). The one-year median Marginal Cost of Funds Based Lending Rate (MCLR) declined to 8.61 per cent (eight point six one per cent) in September 2026 from 8.70 per cent (eight point seven zero per cent) in August 2026. On the deposit side, the weighted average domestic term deposit rate (WADTDR) on outstanding rupee term deposits declined to 6.56 per cent (six point five six per cent), while the rate on fresh term deposits fell to 5.67 per cent (five point six seven per cent) in August 2026. RBI also noted that External Benchmark Based Lending Rate (EBLR) linked loans accounted for 68.2 per cent (sixty-eight point two per cent) of outstanding floating-rate rupee loans as at end-June 2026.
1.1.2. RBI issues amendment directions simplifying approval process for Acquisition of Major Shareholding in Banks
RBI has issued amendment directions to simplify the approval process for subsequent acquisitions of major shareholding in banking companies by mutual funds, insurance companies and pension funds. The amendments follow public consultation on the draft Reserve Bank of India (Acquisition and Holding of Shares or Voting Rights) Amendment Directions, 2026 and incorporate stakeholder feedback received by the RBI. The revised framework has been made effective immediately through separate amendment directions applicable to commercial banks, small finance banks, payments banks and local area banks. The changes are intended to streamline regulatory approvals while maintaining oversight of significant shareholding acquisitions in the banking sector.
Securities and Exchange Board of India (SEBI)
1.1.3. SEBI issues Revised Master Circular for Debenture Trustees
The Securities and Exchange Board of India ("SEBI") has issued a revised Master Circular for Debenture Trustees, consolidating and superseding all applicable circulars issued up to 28 September 2026. The circular introduces a comprehensive framework covering due diligence requirements, security creation and monitoring, Security and Covenant Monitoring System, Recovery Expenses Fund (REF), security cover certification, investor grievance redressal, covenant monitoring, default management, reporting obligations and outsourcing standards for Debenture Trustees. SEBI has also strengthened requirements relating to independent verification of security, continuous monitoring of covenants, disclosure of defaults, maintenance of security cover, use of technology-driven monitoring platforms and investor protection mechanisms. The Master Circular is intended to enhance transparency, strengthen the protection of debenture holders and improve oversight of listed debt securities.
1.1.4. SEBI mandates display of Investor Awareness Messages by stockbrokers under Project Jagrook
SEBI has directed stockbrokers to prominently display investor awareness messages on their websites and trading applications as part of Project Jagrook, SEBI’s investor awareness initiative. From 1 November 2026, stockbrokers will be required to display prescribed investor awareness messages on the landing page of their websites and, on trading applications, display investor awareness messages and risk disclosures on an alternate-day basis. During the transition period from 5 October 2026 to 31 October 2026, brokers must display the messages on their websites and may do so voluntarily on trading applications. The initiative aims to enhance investor education, safety and informed participation in the securities market.
1.1.5. SEBI revamps Document Number Verification System
SEBI has upgraded its Document Number Verification System (DNVS) to strengthen the authentication of SEBI-issued letters, notices and communications. The enhanced system now requires the subject matter of the communication as an additional mandatory verification field and has been aligned with SEBI’s e-Office outward numbering format. Recipients can verify the authenticity of SEBI communications by entering prescribed details, including outward number, issuing official’s name, date, subject matter and recipient details. The revamped system has been operational since September 2026 and is intended to improve the reliability and integrity of document authentication processes.
International Financial Services Centres Authority
1.1.6. IFSCA extends timeline for completion of Certification Course by capital market intermediaries
The International Financial Services Centres Authority ("IFSCA") has extended the deadline for successful completion of the prescribed certification course by Key Managerial Personnel (KMPs) and other employees of Capital Market Intermediaries under the IFSCA (Capital Market Intermediaries) Regulations, 2025 (CMI Regulations). The revised deadline has been extended to 31 December 2026, providing additional time for regulated entities to comply with the certification requirements specified under the earlier IFSCA circulars dated 2 April 2026 and 6 August 2026. All other provisions of the earlier circulars remain unchanged and the extension has taken immediate effect.
1.1.7. IFSCA issues framework for Differential Distribution in Venture Capital and Restricted Schemes
IFSCA has introduced a regulatory framework permitting Venture Capital Schemes and Restricted Schemes to issue multiple classes of units with differential distribution rights, with the objective of facilitating blended finance structures and supporting sustainable and climate-focused investments. Under the framework, junior or subordinate unit classes may bear higher risks or receive lower returns than their pro-rata entitlement, enabling the participation of concessional and commercial capital within the same fund structure. The framework also permits eligible Environmental, Social and Governance (ESG) Schemes aligned with the United Nations Sustainable Development Goals (SDGs) to accept grants, subject to prescribed conditions. To strengthen investor protection, IFSCA has mandated enhanced disclosures relating to distribution waterfalls, risk allocation, conversion mechanisms, grant utilisation and valuation methodologies. The framework forms part of IFSCA’s broader efforts to promote sustainable finance and attract global capital through GIFT International Financial Services Centre (GIFT IFSC).
Miscellaneous
IRDAI
1.1.8. IRDAI extends timeline for submission of feedback on Public Insurance Registry Consultation Paper
The Insurance Regulatory and Development Authority of India (IRDAI) has extended the deadline for submission of comments and suggestions on its consultation paper relating to the proposed Public Insurance Registry (PIR) from 30 September 2026 to 17 October 2026. The PIR is envisaged as a population-scale Digital Public Infrastructure (DPI) aimed at enhancing trust, improving service delivery and expanding insurance coverage across India. IRDAI has stated that the extension is intended to facilitate broader stakeholder participation, industry deliberations and detailed feedback from policyholders, insurers, intermediaries and other ecosystem participants. All other provisions of the consultation paper remain unchanged.
1.1.9. IRDAI issues public warning against fraudulent website impersonating Official Consumer Portal
IRDAI has issued a public notice cautioning policyholders and the general public against a fraudulent website, policyholdergov.org, which is falsely portraying itself as IRDAI’s official consumer education portal. IRDAI clarified that its authentic consumer education website is policyholder.gov.in and that it neither collects insurance premiums nor facilitates claim settlements or any financial transactions through its website. The regulator noted that the fraudulent website was misusing official emblems and attempting to induce policyholders to make online payments and provide personal information. IRDAI has advised the public to avoid interacting with the fraudulent website and rely only on its official portals for authentic information and grievance redressal.
Court Updates
1.1.20. The Hon’ble Calcutta High Court upholds RBI wilful defaulter proceedings despite pending Arbitration
The Calcutta High Court, in Kitply Industries Limited & Ors. v. Reserve Bank of India & Anr., dismissed a writ petition challenging a show cause notice issued by SREI Equipment Finance Limited (SEFL) for classification of the borrowers as wilful defaulters under the RBI Master Directions on Treatment of Wilful Defaulters and Large Defaulters, 2024. The Court held that proceedings for declaration of a wilful defaulter emanate from statutory and regulatory requirements and are independent of contractual disputes pending before an arbitral tribunal. The Court observed that the show cause notice was issued on allegations that the borrowers had disposed of secured immovable and movable assets without the lender’s approval, a ground expressly recognised under the RBI’s wilful default framework. Reiterating that courts should ordinarily not interfere at the show cause notice stage, the Court held that the borrowers must first submit their response before the designated committees under the RBI framework. While dismissing the petition, the Court granted the borrowers an additional two weeks to file their reply to the show cause notice. India Kanoon
2. Key Asian Markets – Sri-Lanka & Bangladesh
2.1. Sri-Lanka
2.1.1. CBSL sets inflation target at 5 Per cent for the next three years
The Central Bank of Sri Lanka ("CBSL") has announced that Sri Lanka’s inflation target will remain at 5 percent (five percent) for the next three years under a new Monetary Policy Framework Agreement (MPFA) signed between the Government of Sri Lanka and CBSL on 1 October 2026. The framework provides for an accountability margin of ±2 percentage points, with inflation measured using quarterly headline inflation based on the Colombo Consumer Price Index (CCPI). The target was retained following a comprehensive review of economic conditions, historical evidence, monetary policy considerations, stakeholder feedback and international practices. CBSL stated that it remains committed to achieving and maintaining domestic price stability through forward-looking and data-driven monetary policy decisions.
2.1.2. CBSL releases Sri Lanka Socio-Economic Data 2026 publication
CBSL has released the 49th edition of its annual publication, “Sri Lanka Socio-Economic Data – 2026”, providing a consolidated statistical overview of the country’s socio-economic landscape. The publication contains data across 14 key areas, including economic indicators, socio-economic conditions, human resources, national accounts, agriculture, industry, infrastructure, prices and wages, external trade, government finance, and banking and financial sector developments. CBSL stated that the publication is intended to serve as a comprehensive reference for policymakers, researchers, academics, professionals, students and the general public.
2.1.3. CBSL maintains policy rate at 8.75 Per cent in Monetary Policy Review
CBSL has decided to maintain the Overnight Policy Rate (OPR) at 8.75 per cent (eight point seven five per cent) following its Monetary Policy Review No. 5 of 2026. CBSL noted that domestic economic activity remains resilient, with real economic growth of 4.7 per cent (four point seven per cent) recorded during the first half of 2026, while private sector credit growth is gradually moderating in response to earlier policy tightening measures. Headline inflation increased to 8.0 per cent (eight point zero per cent) in August 2026 due to the pass-through of higher energy costs but is expected to ease towards the inflation target of 5 per cent (five per cent) over the medium term. The regulator further highlighted the resilience of Sri Lanka’s external sector, with gross official reserves reaching USD 6.9 billion at the end of August 2026, and reiterated its commitment to taking appropriate policy measures should inflationary pressures intensify or inflation expectations become unanchored.
2.2. Bangladesh
2.2.1. BB issues consolidated circular on Foreign Exchange Regulations for current account remittances
The Bangladesh Bank (“BB”) has issued a comprehensive consolidated circular on foreign exchange regulations governing outward remittances for current account transactions, other than imports and transportation services. The circular consolidates and updates previous instructions relating to travel, education, health-related remittances, family maintenance, profit and dividend repatriation, royalty and technical fee payments, institutional remittances, international card usage, digital payment channels and cross-border digital payment arrangements. The framework delegates specified approval powers to Authorised Dealers (ADs), streamlines documentation and reporting requirements, and provides an updated regulatory roadmap for foreign exchange transactions. The consolidated circular will remain valid for one year from the date of issuance and supersedes earlier instructions on the subject, except specified reporting requirements.
2.2.2. BB revises merchant charges for interoperable QR-Based Payments
BB has revised the merchant charge framework applicable to interoperable QR-based payment transactions under the National Payment Switch Bangladesh (NPSB) ecosystem. The revised structure prescribes differentiated charges for QR transactions and merchant acquiring arrangements, with provisions aimed at supporting wider acceptance of digital payments while ensuring sustainability of payment service infrastructure. The measure forms part of Bangladesh Bank’s efforts to promote cashless transactions, expand QR-based payment adoption and strengthen the country's digital payments ecosystem.
3. Trends
3.1. IBAI raises concerns over IRDAI’s proposed insurance distribution reforms
The Insurance Brokers Association of India (IBAI) has expressed concerns regarding the consultation paper issued by the IRDAI on reforms to the economics of insurance distribution. While supporting measures aimed at enhancing policyholder protection, transparency and curbing mis-selling, IBAI has cautioned that the proposed framework, which includes over 30 commission caps across insurance products and distribution channels and a significant reduction in insurers’ Expense of Management (EoM) limits, could adversely affect insurance penetration, employment and customer service quality.
3.2. RBI releases sectoral deployment of Bank Credit Data for August 2026
RBI has released data on the sectoral deployment of bank credit for August 2026, highlighting strong growth across major segments of the economy. Non-food bank credit grew by 18.8 per cent (eighteen point eight per cent) year-on-year as on 31 August 2026, compared to 10.2 per cent (ten point two per cent) in the corresponding period of the previous year. Credit to agriculture and allied activities increased by 17.2 per cent (seventeen point two per cent), while credit to industry grew by 18.2 per cent (eighteen point two per cent), driven by robust lending to infrastructure, engineering, metals, chemicals, food processing, textiles and construction sectors.
3.3. India-UAE advance local currency trade and payment integration initiatives
India and the United Arab Emirates ("UAE") have agreed to accelerate initiatives relating to local currency settlement, payment and financial messaging system integration, and Central Bank Digital Currencies (CBDCs) as part of efforts to strengthen bilateral trade and investment ties. The developments were reviewed during the 14th meeting of the India-UAE High Level Joint Task Force on Investments, where both countries reiterated their objective of increasing bilateral trade to USD 200 billion by 2032. The two sides agreed to support the timely implementation of frameworks for settlement of trade in Indian Rupees (INR) and UAE Dirhams (AED), integration of payment systems, and enhanced cross-border digital payment infrastructure. Discussions also covered potential linkages between India's Unified Payments Interface (“UPI”) and the UAE's payment ecosystem, as well as cooperation in sectors such as energy, infrastructure, logistics, technology, artificial intelligence, food security and startups. The initiatives are expected to make bilateral trade and investment more efficient, accessible and resilient while reducing transaction costs and settlement timelines.
4. Sector Overview
4.1. Indian Fintech IPO Pipeline exceeds INR 30,000 crore as major players prepare for public listings
India’s fintech sector is witnessing a strong pipeline of public offerings, with proposed and reported Initial Public Offerings (IPOs) collectively exceeding INR 30,600 crore (Indian Rupees Thirty Thousand Six Hundred Crore only). The pipeline includes prominent fintech companies such as PhonePe, Razorpay, Navi, InCred Holdings, InsuranceDekho, Fibe and Upstox, reflecting sustained investor interest in India's digital financial services ecosystem.
4.2. NPCI reports record daily UPI Transaction Volumes in September 2026
The National Payments Corporation of India (NPCI) reported that the UPI processed 24.07 billion transactions with a total value of INR 29.37 lakh crore (Indian Rupees Twenty-Nine Lakh Thirty-Seven Thousand Crore only) in September 2026. While transaction volumes were 1.8 per cent (one point eight per cent) lower than the record levels recorded in August 2026, they remained 23 per cent (twenty-three per cent) higher on a year-on-year basis. Transaction value also increased 18 per cent (eighteen per cent) compared to September 2025.
5. Business Updates
5.1. PayU integrates Apple Pay across its merchant network in India
PayU has launched Apple Pay across its merchant network in India, enabling customers to make secure contactless payments in-store, in-app and online through supported Apple devices. The integration follows the launch of Apple Pay in India, with Axis Bank serving as the first banking partner for eligible Visa and Mastercard credit cardholders. PayU stated that the rollout will make Apple Pay available to lakhs of merchants through its unified checkout platform, simplifying technical integration and compliance requirements while providing customers with a faster and more convenient payment experience. Security features include device-based authentication through Face ID, Touch ID or passcode and the use of encrypted Device Account Numbers instead of actual card details.
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
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