Banking & Finance Digest September 07, 2026

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1.              Regulatory Updates

1.1.          India

Reserve Bank of India

1.1.1.     RBI releases Scheduled Commercial Banks’ Lending and Deposit Rate Data for August 2026

The Reserve Bank of India ("RBI") has released data on lending and deposit rates of Scheduled Commercial Banks (SCBs) for August 2026. The Weighted Average Lending Rate (WALR) on outstanding rupee loans marginally increased to 8.97 per cent (eight point nine seven per cent) in July 2026 from 8.96 per cent (eight point nine six per cent) in June 2026, while the WALR on fresh rupee loans eased to 8.52 per cent (eight point five two per cent) from 8.53 per cent (eight point five three per cent). The one-year median Marginal Cost of Funds based Lending Rate (MCLR) increased to 8.70 per cent (eight point seven zero per cent) in August 2026 from 8.60 per cent (eight point six zero per cent) in July 2026. On the deposit side, the Weighted Average Domestic Term Deposit Rate (“WADTDR”) on outstanding rupee term deposits remained unchanged at 6.58 per cent (six point five eight per cent), while the WADTDR on fresh rupee term deposits declined to 5.90 per cent (five point nine zero per cent) from 5.99 per cent (five point nine nine per cent). RBI noted mixed sectoral movements in lending rates during the period.

1.1.2.     RBI releases Data on Forex Inflows under Special Swap Facility

RBI has released provisional data on foreign exchange inflows mobilised under its special USD-INR swap facility introduced on 8 June 2026 for Foreign Currency Non-Resident (Bank) (“FCNR(B)”) deposits, External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs). As on 31 August 2026, total inflows under the facility stood at USD 136.38 billion, comprising USD 127.23 billion through FCNR(B) deposits, USD 5.26 billion through OFCBs and USD 3.89 billion through ECBs. RBI noted that while the facility for FCNR(B) deposits closed on 31 August 2026, the swap window for ECBs and OFCBs will remain available until 31 December 2026.

Securities and Exchange Board of India (SEBI)

1.1.3.     SEBI signs MoU with ESMA for co-operation on central counterparties

SEBI has signed a Memorandum of Understanding (“MoU”) with the European Securities and Markets Authority (“ESMA”) to strengthen cooperation and facilitate the exchange of information relating to Central Counterparties (“CCPs”). The MoU is intended to enhance cross-border regulatory coordination, support supervisory oversight of CCPs operating across jurisdictions and promote financial market stability. The arrangement is expected to facilitate effective information sharing and regulatory cooperation between SEBI and ESMA in relation to clearing and settlement infrastructure.

1.1.4.     SEBI issues Consultation Paper on Net Settlement of Mutual Fund Cash Market Transactions

SEBI has issued a consultation paper proposing to permit net settlement of funds for transactions undertaken by Mutual Fund (MF) schemes in the cash market, while continuing gross settlement of securities. The proposal aims to improve settlement efficiency, reduce temporary liquidity requirements and promote ease of doing business without affecting existing safeguards relating to delivery-based settlement, scheme-wise accounting, valuation and investor protection. The framework is broadly aligned with the net settlement mechanism already permitted for Foreign Portfolio Investors (“FPIs”), under which fund obligations may be netted for eligible outright transactions while securities continue to be settled on a gross basis. SEBI has invited public comments on the proposal.   

1.1.5.     SEBI to review Derivatives Settlement Price Methodology following CAS rollout

SEBI has announced that it will review the methodology for determining settlement prices of derivative contracts in light of the implementation of the Closing Auction Session (“CAS”) in the equity cash segment from 3 August 2026. CAS was introduced to determine the closing price of securities, which currently serves as the basis for settlement prices of expiring derivative contracts. Following the first month of implementation, SEBI has engaged with stock exchanges, brokers, mutual funds, FPIs and other market participants, and has received feedback regarding the use of CAS-based closing prices for derivative settlement. Based on stakeholder feedback and operational experience, SEBI has indicated that it may propose changes to the settlement price methodology and will issue a consultation paper shortly.

International Financial Services Centres Authority

1.1.6.     IFSCA signs FinTech Co-operation Agreement with Taiwan’s FSC

The International Financial Services Centres Authority ("IFSCA") has entered into a cooperation agreement on financial technology (FinTech) with the Financial Supervisory Commission ("FSC"), Taiwan, to strengthen regulatory collaboration and innovation in financial services. Operationalised on 28 August 2026 during the 19th India-Taiwan Economic Consultations, the agreement establishes a referral mechanism for innovative businesses seeking to operate in each other’s jurisdictions and facilitates the exchange of information on emerging technologies, market trends and regulatory developments relating to financial innovation. The agreement builds upon the broader MoU executed between IFSCA and FSC in December 2025 and is aimed at deepening cross-border cooperation in the FinTech ecosystem.

Miscellaneous

1.1.7.     IRDAI issues Consultation Paper on Public Insurance Registry for digital insurance infrastructure

The Insurance Regulatory and Development Authority of India (“IRDAI”) has released a consultation paper proposing a Public Insurance Registry (PIR) as a Digital Public Infrastructure (DPI) for the insurance sector. Envisaged under the objectives of the Sabka Bima Sabki Raksha Act, 2025, the PIR aims to create a connected, interoperable and transparent insurance ecosystem by establishing a consistent and authoritative view of insurance records while enabling appropriate data sharing across stakeholders. The proposed framework is expected to facilitate easier product comparison, a consolidated view of policies across insurers, reduced documentation, improved servicing and claims experience, and easier identification of unclaimed amounts. IRDAI has invited public and stakeholder comments on the proposed framework, including its governance, data architecture, privacy safeguards and implementation approach, until 30 September 2026.

Monetary Penalty

1.1.8. Reserve Bank of India imposes a monetary penalty on the following institutions:

S. No.	Name of Bank	Amount of Penalty	Contravention
1.	The Mumbai District Central Co-operative Bank Ltd., Maharashtra	INR 20,000 (Indian Rupees Twenty Thousand only)	Non-compliance with RBI directions on Know Your Customer ("KYC") by failing to upload customer KYC records to the Central KYC Records Registry ("CKYCR") within the prescribed timeline.
2.	Jai Bhawani Sahakari Bank Ltd. Pune	INR 203,000 (Indian Rupees Two Lakh Three Thousand only)	Non-compliance with RBI directions on ‘Membership of Credit Information Companies (“CICs”) by Co-operative Banks’ and ‘KYC’. The bank failed to report borrower credit information to all CICs and failed to review customer risk categorisation within the prescribed periodicity.
3.	TransUnion CIBIL Limited	INR 2,682,800 (Indian Rupees Twenty-Six Lakh Eighty-Two Thousand Eight Hundred only)	Non-compliance with RBI directions on the ‘Framework for Compensation to Customers for Delayed Updation/Rectification of Credit Information’. The company failed to credit compensation amounts to the bank accounts of certain eligible complainants within the prescribed timeline.
4.	CRIF High Mark Credit Information Services Private Limited	INR 689,600 (Indian Rupees Six Lakh Eighty-Nine Thousand Six Hundred only)	Non-compliance with RBI directions on the ‘Framework for Compensation to Customers for Delayed Updation/Rectification of Credit Information’. The company failed to credit compensation amounts to the bank accounts of certain eligible complainants within the prescribed timeline.
5.	Sammaan Finserve Limited	INR 420,000 (Indian Rupees Four Lakh Twenty Thousand only)	Non-compliance with RBI directions on ‘Early Recognition of Stress and Reporting to Central Repository of Information on Large Credits ("CRILC")’. The company failed to report credit information of its borrower to CRILC as required under the applicable regulatory framework.
6.	Equifax Credit Information Services Private Limited	INR 119,400 (Indian Rupees One Lakh Nineteen Thousand Four Hundred only)	Non-compliance with RBI directions on the‘Framework for Compensation to Customers for Delayed Updation/Rectification of Credit Information’. The company failed to credit compensation amounts to the bank accounts of certain eligible complainants within the prescribed timeline.

2.               Key Asian Markets – Indonesia & Philippines

2.1.          Indonesia

2.1.1.     BI and MAS operationalise Local Currency Transaction Framework for bilateral trade

Bank Indonesia (BI) and the Monetary Authority of Singapore (MAS) have operationalised the Local Currency Transaction (LCT) Framework for the settlement of bilateral transactions between Indonesia and Singapore in Indonesian Rupiah and Singapore Dollar. The framework, developed pursuant to a MoU signed in 2022 and operational guidelines agreed in April 2026, aims to promote the wider use of local currencies in trade, direct investment and cross-border payments, while supporting ASEAN financial integration. Under the framework, designated Appointed Cross Currency Dealers (ACCDs) in both jurisdictions will facilitate eligible transactions, with key features including direct Rupiah-Singapore Dollar quotations and measures to reduce exchange rate risks, transaction costs and dependence on third-country currencies.

2.2.             Philippines  

2.2.1.        BSP reports Weaker Business Confidence in July 2026

The Bangko Sentral ng Pilipinas ("BSP") has reported that business sentiment turned pessimistic in July 2026, with the Overall Confidence Index (CI) declining from a neutral position in June. The deterioration was attributed to renewed geopolitical tensions in the Middle East, higher oil prices and persistent inflationary pressures. Despite the weaker near-term outlook, firms remained optimistic about business conditions over the next 12 months, although at a lower level than in the previous survey. Businesses expect economic activity to moderate and inflation to remain above the BSP’s 4.0 per cent (four point zero per cent) upper tolerance limit. The survey also indicated that fewer firms plan to expand hiring over the coming year due to expectations of softer growth and elevated inflation, although companies in the industry sector continue to report expansion plans. The BSP stated that it is closely monitoring the impact of these developments on business and consumer sentiment, spending and investment decisions as part of its monetary policy assessment.

2.2.2.        BSP welcomes Moody’s Affirmation of Philippines’ Credit Strengths

The BSP has welcomed Moody’s Ratings’ reaffirmation of the Philippines’ investment-grade sovereign credit rating of Baa2 with a stable outlook. According to the BSP, the assessment recognises the central bank’s strong track record in maintaining monetary and financial stability, supporting macroeconomic resilience and strengthening policy credibility. Moody’s expects inflation to return towards the BSP’s target range of 2.0 per cent (two point zero per cent) to 4.0 per cent (four point zero per cent) during 2027-2028 and highlighted the country’s well-capitalised and profitable banking system, supported by prudent supervision and regulatory standards. The rating agency also cited ample foreign exchange reserves, stable remittance inflows and resilient business process outsourcing earnings as key factors underpinning the Philippines’ ability to withstand external shocks.

3.              Trends

3.1.          RBI releases survey on Foreign Liabilities and Assets of Mutual Funds for 2025-26

RBI has released the results of its Survey of Foreign Liabilities and Assets of Mutual Funds (“MFs”) for 2025-26, covering 53 Indian MFs and their Asset Management Companies (“AMCs”). Foreign liabilities of MFs increased by 3.3 per cent (three point three per cent) year-on-year to USD 31.5 billion as on 31 March 2026, primarily due to the rise in the market value of units held by non-residents, while overseas assets grew by 23.9 per cent (twenty-three-point nine per cent) to USD 10.2 billion, driven mainly by higher investments in foreign equity securities. As a result, net foreign liabilities declined to USD 21.3 billion from USD 22.3 billion a year earlier. The United Arab Emirates, the United States of America, the United Kingdom and Singapore together accounted for around 50 per cent (fifty per cent) of MF units held by non-residents. RBI also reported that foreign liabilities of AMCs rose by 18.1 per cent (eighteen-point one per cent) to USD 8.7 billion, largely on account of increased foreign direct and portfolio investments, with Japan and Canada contributing around 80 per cent (eighty per cent) of total foreign direct investment in AMCs.

3.2.     UPI integration expected to accelerate Credit Card adoption in India

A recent industry report has indicated that the integration of credit cards with the Unified Payments Interface (UP) is expected to drive wider credit card usage by enabling payments through UPI Quick Response (QR) codes and at merchants without traditional point-of-sale infrastructure. The report notes that credit cards are likely to witness higher utilisation, particularly for e-commerce and larger-ticket transactions, supported by benefits such as rewards, discounts and instalment payment options. As of July 2026, India had approximately 122.9 million outstanding credit cards compared to 1.03 billion debit cards. While credit card penetration remains relatively low due to limited formal credit histories and concerns around borrowing costs, growing incomes, increasing financial awareness and the expansion of UPI-linked payment acceptance are expected to support broader adoption and usage.

4.              Sector Overview

4.1.          RBI’s Draft Foreign Investment Rules, 2026 recast Foreign Investment Framework for BFSI Sector

RBI Draft Foreign Exchange Management (Foreign Investment) Rules, 2026 propose significant changes to India’s foreign investment framework for banks, Non-Banking Financial Companies (NBFCs), asset managers and other financial institutions. The proposed framework shifts the focus of determining foreign control from ownership structures to substantive governance rights, including voting rights, shareholder agreements and management prerogatives, potentially affecting the classification of entities as Indian-controlled or foreign-controlled. The draft rules also propose aligning the definition of equity with applicable accounting standards and streamlining the foreign investment regime by replacing the existing Foreign Exchange Management (Non-Debt Instruments) Rules, 2019. The changes are expected to have important implications for foreign capital raising, private equity investments, strategic partnerships and downstream investment structures across the Banking, Financial Services and Insurance (BFSI) sector, necessitating a reassessment of existing ownership and governance arrangements.

4.2.          Corporate Credit drives Bank Loan Growth amid soft retail demand

India’s bank credit growth remains robust at around 15 per cent (fifteen per cent) year-on-year, with incremental growth increasingly driven by corporate lending rather than retail credit. Public sector banks are reporting loan growth of approximately 17 per cent (seventeen per cent), while private sector banks are growing at around 15 per cent (fifteen per cent), supported by favourable asset quality and broad-based demand across sectors and regions. Corporate credit has accelerated to nearly 20 per cent (twenty per cent) growth, outpacing retail and household lending, which remains below 15 per cent (fifteen per cent). The trend is attributed in part to corporates shifting from bond market funding to bank borrowings following higher bond yields, alongside increased short-term funding requirements. Strong growth has also been observed in higher-ticket loans and lending to financial companies, indicating continued momentum in business credit demand.

4.3.   Indian Start-up Ecosystem attracts fresh funding across AI, SpaceTech and CleanTech segments

Several Indian start-ups secured fresh funding during the week ended 6 September 2026, reflecting continued investor interest in technology-led and innovation-focused businesses. Notable transactions included Cradlewise, which raised USD 12 million in a Series A round for its artificial intelligence (“AI”)-enabled smart crib platform; Kepler Aerospace, which secured USD 8 million in seed funding to expand satellite and ground-system capabilities; Aeron Systems, which raised INR 45 crore (Indian Rupees Forty-Five Crore only) to strengthen aerospace and industrial technology solutions; Zenergize, which secured USD 4 million to scale electric vehicle (EV) charging and solar inverter operations; and Minimac Systems, which raised INR 30 crore (Indian Rupees Thirty Crore only) to expand lubricant recycling and lifecycle management technologies. The funding activity highlights sustained investor appetite for AI, aerospace, climate technology, clean energy and advanced manufacturing ventures.

5.              Business Updates

5.1.          Jar launches P2P lending platform ‘Jar Plus’

FinTech platform Jar has announced its entry into the peer-to-peer (P2P) lending segment through the launch of Jar Plus, expanding its product suite beyond savings and investment offerings. The new platform is expected to connect lenders and borrowers through a regulated P2P lending framework, enabling users to earn returns while providing access to credit. Backed by investors including Tiger Global, Jar’s move reflects the growing interest of FinTech firms in alternative lending models and the expanding role of digital platforms in broadening access to retail credit and investment opportunities in India.

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