Banking & Finance Digest October 12, 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 issues final directions on Credit Valuation Adjustment Framework for Commercial Banks
The Reserve Bank of India ("RBI") has issued the Reserve Bank of India (Commercial Banks – Credit Valuation Adjustment Framework) Directions, 2026, introducing a revised framework for calculation of capital charges relating to Credit Valuation Adjustment ("CVA") risk. The framework incorporates stakeholder feedback on the draft directions and introduces measures such as an optional simplified approach for eligible banks, enhanced supervisory risk weight sensitivity based on sector and credit quality, clearer recognition of CVA hedges, and separate treatment of systematic and idiosyncratic CVA risk components under the Basic Approach CVA (BA-CVA). The directions will come into effect from 1 April 2027.
1.1.2. RBI issues amendment directions on Standardised Approach for Counterparty Credit Risk
RBI has issued amendment directions relating to the Standardised Approach for Counterparty Credit Risk ("SA-CCR") applicable to commercial banks. The amendments clarify the scope of counterparty credit risk exposure across banking and trading books, provide guidance on multiple margin agreements and netting sets, prescribe treatment for transactions undertaken by clearing members of Securities and Exchange Board of India ("SEBI")-recognised stock exchanges, clarify the treatment of deferred option premiums and effective notional computation for options, and introduce disclosure templates under the SA-CCR framework. The revised directions will be effective from 1 April 2027.
1.1.3. RBI deregisters 10 NBFCs following exit from NBFC Business
RBI has cancelled the Certificates of Registration ("CoRs") of ten Non-Banking Financial Companies ("NBFCs") after they voluntarily surrendered their registrations. The cancellations relate to entities that exited the non-banking financial business, qualified as unregistered Core Investment Companies (CICs) or Type-I NBFCs exempt from registration requirements, or ceased to exist following amalgamation, merger, dissolution or voluntary strike-off. RBI exercised its powers under Section 45-IA(6) of the Reserve Bank of India Act, 1934 to cancel the registrations, including those of entities such as Pragati Fincap Limited, HCL Corporation Private Limited, Vivriti Capital Limited, PCR Investments Ltd and other companies identified in the notification.
1.1.4. RBI cancels Registration Certificates of 13 NBFCs
RBI has cancelled CoRs of 13 NBFCs in exercise of its powers under Section 45-IA(6) of the Reserve Bank of India Act, 1934. The affected entities include Nakodar Finance Private Limited, Augment Finvest Private Limited (formerly Ajitnath Steels Pvt Ltd), Astrol Dealcom Pvt Ltd, Bhagyashri Trading Pvt Ltd, Booh Finance Company Pvt Ltd, Britex Financial Services Pvt. Ltd. and other companies listed in the notification. Following the cancellation of their CoRs, these entities are prohibited from carrying on the business of a Non-Banking Financial Institution as defined under the RBI Act.
Securities and Exchange Board of India (SEBI)
1.1.5. SEBI launches ‘Samajh Se Investing Simple’ campaign under project Jagrook
SEBI has launched the ‘Samajh Se Investing Simple’ investor awareness campaign under Project Jagrook during World Investor Week 2026, with the objective of promoting financial literacy, responsible investing and protection against financial frauds. The campaign, implemented in collaboration with key Securities Market Partners (SMPs), including National Institute of Securities Markets (NISM), BSE Limited (BSE), National Stock Exchange of India Limited (NSE), Central Depository Services (India) Limited (CDSL), National Securities Depository Limited (NSDL) and the Association of Mutual Funds in India (AMFI), seeks to encourage investors to understand investment products, assess risks, verify the authenticity of platforms and make informed investment decisions. SEBI also launched the ‘Mentoring of University/College Students by Trainers’ (MUST) initiative to strengthen securities market awareness among students through certified trainers within educational institutions. In addition, SEBI announced its official WhatsApp channel, accessible through 1800 22 7575, to disseminate investor awareness content through a verified digital platform. The initiatives form part of SEBI’s broader efforts to enhance investor education and financial literacy across the country.
1.1.6. SEBI introduces mandatory Credit Risk-o-Meter for Debt Securities
SEBI has introduced a mandatory Credit Risk-o-Meter framework as an additional disclosure mechanism for debt securities to help investors better assess credit risk through a standardised colour-coded visual representation. The requirement will apply to offer documents, abridged prospectuses, private placement memoranda, advertisements, and the web and mobile platforms of Online Bond Platform Providers ("OBPPs"). Under the framework, credit ratings assigned by SEBI-registered Credit Rating Agencies (CRAs) will be mapped to six risk categories ranging from “Lowest Credit Risk” to “High to Very High Risk of Default”, with corresponding colour indicators. Where multiple ratings exist, the lowest rating will determine the Credit Risk-o-Meter display. OBPPs will be required to update the risk indicator within 24 hours of a rating change and prominently display the Credit Risk-o-Meter before investment action buttons on their platforms. The circular will come into effect 45 days from the date of issuance and aims to improve transparency and investor awareness in the debt securities market.
1.1.7. SEBI revises ISIN framework for privately placed Debt Securities
SEBI has revised the framework governing International Securities Identification Numbers ("ISINs") for debt securities issued on a private placement basis to enhance ease of fund-raising and improve Asset Liability Management (ALM) flexibility for issuers. Under the revised framework, issuers may have up to 17 ISINs maturing in a financial year, compared to the earlier cap, with an additional six ISINs permitted for specified capital gains tax bonds issued under Section 54EC of the Income-tax Act, 1961. SEBI has also introduced a revised bifurcation of ISIN limits across plain vanilla debt securities and specialised instruments such as structured debt securities, Market Linked Debentures (MLDs), Floating Rate Bonds (FRBs), Zero Coupon Bonds (ZCBs) and Tier II debt instruments. Further, Government of India (GoI) serviced/Extra Budgetary Resources (EBR) bonds and Environmental, Social and Governance (ESG) debt securities will be excluded from ISIN limit calculations. The revised framework took effect immediately upon issuance of the circular.
1.1.8. SEBI notifies revised Settlement Regulations for Administrative and Civil Proceedings
SEBI has notified the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2026, replacing the existing settlement framework for administrative and civil enforcement proceedings. The revised regulations prescribe the mechanism, eligibility conditions, procedural requirements and settlement terms for resolving enforcement actions without admission or denial of findings, while ensuring regulatory efficiency and investor protection. The framework introduces a comprehensive process governing settlement application, computation of settlement amounts, confidentiality obligations, settlement orders, revocation of settlement benefits and the consequences of non-compliance with settlement terms. The regulations have been issued in exercise of SEBI’s statutory powers under the SEBI Act, 1992, the Securities Contracts (Regulation) Act, 1956 and the Depositories Act, 1996, and are intended to streamline enforcement proceedings while promoting timely resolution of regulatory matters.
Telecom Regulatory Authority of India (TRAI)
1.1.9. TRAI releases Draft DRM-Based DAS Audit Manual for IPTV and Other DRM systems
The Telecom Regulatory Authority of India ("TRAI") has released the draft Telecommunication (Broadcasting and Cable) Services Digital Rights Management (DRM)-based Digital Addressable Systems (DAS) Audit Manual, 2026 for stakeholder consultation. The draft manual seeks to provide detailed audit procedures for DRM-based systems covered under Schedule X of the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017, particularly for Internet Protocol Television (IPTV)-based distribution services. The proposed manual prescribes clause-wise audit methodologies for subscriber management systems, encryption and conditional access controls, fingerprinting mechanisms, and set-top box (STB) or software applications. It also sets out the scope of work, documentary requirements, timelines for pre-signal compliance audits and annual subscription audits, roles and responsibilities of Distribution Platform Operators (DPOs), broadcasters and auditors, and standardised reporting formats. TRAI has invited stakeholder comments on the draft manual by 30 October 2026.
National Payment Corporation of India (NPCI)
1.1.10. NPCI expands UPI Access to international mobile numbers from 19 additional countries
The National Payments Corporation of India ("NPCI") has expanded the scope of the Unified Payments Interface ("UPI") by permitting onboarding and transactions through international mobile numbers from 19 additional countries for eligible non-resident and other permissible accounts linked to UPI. The newly added countries include Bahrain, Bhutan, Brazil, Germany, Greece, Ireland, Italy, Japan, Kuwait, Maldives, Nepal, Netherlands, New Zealand, Philippines, Portugal, South Africa, Spain, Sweden and Thailand. With this expansion, UPI can now be accessed using international mobile numbers from 31 countries, including previously permitted jurisdictions such as Australia, Canada, France, Hong Kong, Malaysia, Oman, Qatar, Saudi Arabia, Singapore, United Arab Emirates, United Kingdom and United States of America. NPCI clarified that all existing compliance requirements applicable to non-resident accounts and other permissible accounts will continue to apply to users from the newly added countries.
Monetary Penalties
RBI imposes monetary penalties on following Financial Institutions:
S. No. | Name of Bank | Amount of Penalty | Contravention
|
1. | The Monghyr-Jamui Central Co-operative Bank Limited, Bihar
| INR 5,00,000 (Indian Rupees Five Lakh only)
| Non-compliance with RBI directions on Know Your Customer ("KYC"). The bank failed to upload customer KYC records to the Central KYC Records Registry (CKYCR) within the prescribed timeline.
|
2. Key Asian Markets – Philippines & Indonesia
2.1. Philippines
2.1.1. BSP and Philippine Regulators adopt International Bond Pricing Convention
The Bangko Sentral ng Pilipinas ("BSP"), together with the Bureau of the Treasury (BTr), Securities and Exchange Commission (SEC), Insurance Commission (IC), Philippine Dealing and Exchange Corp. (PDEx), and various industry associations, has announced the adoption of the international bond pricing convention for settlement of Philippine peso-denominated government and corporate bonds, effective 4 January 2027. The reform is intended to align the Philippine bond market with international market practices, improve trading efficiency, deepen market liquidity and enhance participation by global investors. The authorities clarified that the transition will not alter the contractual terms of existing bonds, tax obligations, coupon payments or principal repayments at maturity. While certain investors may observe changes in the computation of bond settlement values, investors holding bonds until maturity are not expected to experience any material impact. The initiative follows the announcement that Philippine peso-denominated government bonds will be included in J.P. Morgan's Government Bond Index – Emerging Markets series from 29 January 2027, and is expected to support broader investor participation, more efficient government borrowing, improved price discovery and long-term development of the domestic capital market.
2.2. Indonesia
2.2.1. BI reports Stable Foreign Exchange Reserves in September 2026
Bank Indonesia ("BI") has reported that Indonesia's official foreign exchange reserves remained robust at USD 146.3 billion as at the end of September 2026, compared to USD 146.5 billion at the end of August 2026. The reserve position was supported by government foreign loan withdrawals and receipts from taxes and services, offset by external debt repayments and BI's rupiah stabilisation measures undertaken amid continued uncertainty in global financial markets. BI noted that the reserve assets were equivalent to 5.3 months of imports or 5.2 months of imports and government external debt servicing, remaining well above the international adequacy benchmark of approximately three months of imports. The central bank stated that the current reserve level is sufficient to support external sector resilience and maintain macroeconomic and financial stability. Looking ahead, BI expects reserve adequacy to remain strong, supported by foreign capital inflows, favourable investor sentiment towards Indonesia's economic outlook and attractive domestic investment opportunities.
3. Trends
3.1. Indian Banks face decline in Treasury Income amid rising Bond Yields
Indian banks are expected to report a sharp decline in treasury income for the July-September 2026 quarter as rising government bond yields reduce mark-to-market and trading gains on investment portfolios. Analysts estimate aggregate treasury gains of approximately INR 5,500 crore (Indian Rupees Five Thousand Five Hundred Crore only), representing a decline of around 58 per cent (fifty-eight per cent) from INR 13,100 crore (Indian Rupees Thirteen Thousand One Hundred Crore only) recorded in the corresponding period of the previous year. The benchmark 10-year Government Security (G-Sec) yield increased by approximately 44 basis points, rising to around 7.19 per cent (seven point one nine per cent) by the end of September 2026. As bond yields move inversely to bond prices, the increase in yields has reduced treasury gains and is expected to weigh on banks’ profitability. Market participants expect future earnings growth to rely increasingly on core lending income, fee-based revenues and controlled credit costs, particularly if bond yields remain elevated. Public sector banks may experience a more pronounced impact due to their relatively larger holdings of government securities.
4. Sector Overview
4.1. RBI releases sectoral deployment of NBFC credit data for August 2026
RBI has released data on the sectoral deployment of credit by NBFCs and Housing Finance Companies (HFCs) for August 2026. NBFC credit growth accelerated to 15.8 per cent (fifteen point eight per cent) year-on-year, compared to 10 per cent (ten per cent) in the corresponding period of the previous year. Credit to agriculture and allied activities recorded strong growth of 17.4 per cent (seventeen point four per cent), while credit to industry grew 8.4 per cent (eight point four per cent), supported by steady lending to the infrastructure sector. Credit growth in the services sector moderated to 16.2 per cent (sixteen point two per cent), although lending to commercial real estate remained robust. Retail lending accelerated significantly to 22 per cent (twenty-two per cent), driven by stronger growth in housing loans and loans against gold jewellery, while vehicle loans continued to record resilient growth.
5. Business Updates
5.1. RBI excludes Paytm Payments Bank from Second Schedule to RBI Act
RBI has announced that Paytm Payments Bank Limited (PPBL) has been excluded from the Second Schedule to the Reserve Bank of India Act, 1934. The exclusion was affected through RBI Notification No. DoR.LIC.No. S3674/16.13.215/2026-27 dated 31 July 2026 and was subsequently published in the Gazette of India on 7 September 2026. The notification formally removes PPBL from the list of scheduled banks maintained under the RBI Act.
5.2. Ageas Federal launches multi-currency Life Insurance Plan at GIFT IFSC
Ageas Federal Life Insurance Company Limited (Ageas Federal) has launched the Aurum Advantage Plan, a multi-currency Unit Linked Insurance Plan (ULIP), marking the commencement of its operations at Gujarat International Finance Tec-City International Financial Services Centre (“GIFT IFSC”). The plan allows policyholders to invest in United States Dollars (USD), Euros (EUR) or British Pounds (GBP) while receiving life insurance protection, making it one of the first offerings of its kind from a life insurer in GIFT IFSC. The ULIP provides exposure to international equities, fixed income instruments and gold, enabling diversification across asset classes and geographies. The product offers multiple premium payment options, fund strategies, partial withdrawals without a lock-in period, and maturity and death benefits, subject to applicable terms and conditions. The plan is available to customers of any nationality, including Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and Persons of Indian Origin (PIOs), with a minimum investment threshold of USD 3,000, EUR 3,000 or GBP 3,000, depending on the selected currency.
5.3. RBI grants conditional approval for Mizuho’s acquisition of Avendus
RBI has reportedly granted conditional approval for Mizuho Financial Group (Mizuho) to acquire a controlling stake in Avendus Capital Private Limited (Avendus), a transaction valued at more than USD 520 million. As a condition of approval, RBI has directed Mizuho to submit a comprehensive plan within six months detailing the proposed consolidation or integration of its existing NBFC operations in India with Avendus.
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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