Banking & Finance Digest September 14, 2026
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1. Regulatory Updates
1.1. India
Reserve Bank of India
1.1.1. RBI invites comments on Draft KYC Amendment Directions for handling Money Mule Accounts and Cyber Fraud
The Reserve Bank of India ("RBI") has invited public comments on the draft Reserve Bank of India (Know Your Customer) Amendment Directions, 2026, proposing amendments to the KYC framework relating to operations of bank accounts and money mule activities. The draft directions have been issued pursuant to an order of the Hon’ble Supreme Court dated 4 August 2026 directing RBI to formulate a Standard Operating Procedure (SOP) for temporary debit holds on amounts or accounts linked to money mule activity and cyber-enabled financial fraud. The proposed amendments provide guidance to banks on the actions to be taken for placing temporary debit restrictions in such cases and are intended to strengthen fraud prevention and customer protection measures. RBI has invited comments from stakeholders until 2 October 2026, following which final directions will be issued for the relevant regulated entities.
1.1.2. RBI recognises UFF as self-regulatory organisation for FinTech Sector
RBI has granted recognition to the Unified Fintech Forum ("UFF") as a Self-Regulatory Organisation for the FinTech Sector ("SRO-FT"). RBI stated that UFF’s application was assessed against the requirements prescribed under the SRO-FT framework and was found suitable for recognition. UFF becomes the second entity to receive SRO-FT recognition, following the recognition of the FinTech Association for Consumer Empowerment (FACE) in August 2024. The move is aimed at strengthening self-regulation, industry governance and responsible growth within India's FinTech ecosystem.
Securities and Exchange Board of India (SEBI)
1.1.3. SEBI launches ‘Demat 2.0’ pilot for Tokenised Corporate Bonds
The Securities and Exchange Board of India ("SEBI") has announced the successful launch of the “Demat 2.0” pilot project for tokenised corporate bonds. The initiative is aimed at leveraging distributed ledger and tokenisation technologies to modernise the corporate bond ecosystem, enhance operational efficiency and improve transparency in the issuance, holding and transfer of debt securities. The pilot marks a significant step towards the adoption of innovative digital market infrastructure and reflects SEBI’s continued focus on strengthening India’s capital markets through technology-driven solutions.
International Financial Services Centres Authority
1.1.4. IFSCA amends Capital Market Intermediaries Regulations Framework
The International Financial Services Centres Authority ("IFSCA") has notified amendments to the IFSCA (Capital Market Intermediaries) Regulations, strengthening and refining the regulatory framework applicable to intermediaries operating in International Financial Services Centres ("IFSCs"). The amendments are aimed at enhancing regulatory clarity, streamlining compliance requirements and aligning the framework with evolving market practices. The revised provisions seek to facilitate ease of doing business while maintaining robust oversight of capital market intermediaries and supporting the continued development of the IFSC ecosystem.
1.1.5. IFSCA notifies Prohibition of Market Abuse in Securities Markets Regulations, 2026
IFSCA has notified the IFSCA (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, establishing a comprehensive framework to prevent and address market abuse in securities markets operating within IFSCs. The Regulations prohibit practices such as insider dealing, unlawful disclosure of inside information and market manipulation, and provide for surveillance, investigation and enforcement mechanisms. The framework seeks to strengthen market integrity, enhance investor confidence and align the regulatory regime for IFSC securities markets with internationally accepted standards and best practices.
1.1.6. IFSCA amends master circular for Credit Rating Agencies in IFSCs
IFSCA has amended the Master Circular for Credit Rating Agencies in the IFSC, refining the regulatory framework applicable to credit rating agencies operating within IFSCs. The amendment is intended to enhance regulatory clarity, strengthen compliance requirements and align the operational framework with evolving market practices and supervisory expectations. The revised provisions form part of IFSCA’s ongoing efforts to promote a robust, transparent and efficient credit rating ecosystem while facilitating the development of the IFSC financial markets.
1.1.7. IFSCA notifies Second Amendment to Fund Management Regulations, 2026
IFSCA has notified the IFSCA (Fund Management) (Second Amendment) Regulations, 2026, introducing changes to the regulatory framework governing Fund Management Entities (FMEs) and venture capital schemes in IFSCs. Key amendments include a revised definition of “associate” based on a 20 per cent (twenty per cent) economic interest threshold, relaxation of provisions relating to pre-first-close deployment of investor funds into highly liquid and capital-protected instruments, and permitting venture capital schemes to participate in follow-on funding rounds of investee companies older than ten years, subject to specified safeguards. The amendments also introduce provisions for the issuance of senior and junior (subordinated) units in venture capital schemes in accordance with the framework prescribed by IFSCA, thereby providing greater flexibility in fund structuring while strengthening investor protection and regulatory clarity.
Miscellaneous
1.1.8. IRDAI facilitates Ind AS implementation across Insurance Sector
The Insurance Regulatory and Development Authority of India ("IRDAI") has announced significant progress in the implementation of Indian Accounting Standards (“Ind AS”) across the insurance sector. Following the amendment of the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024, IRDAI has issued guidance and clarification circulars, conducted industry workshops and provided implementation support to insurers transitioning to Ind AS from 1 April 2026. As of Financial Year (FY) 2026-27, 11 insurers have adopted Ind AS, including life, general and health insurers, as well as a Foreign Reinsurance Branch (FRB). IRDAI noted that insurers granted forbearance and scheduled to adopt Ind AS from FY 2027-28 are being closely monitored against board-approved implementation milestones. The regulator expects Ind AS adoption to enhance transparency, comparability, governance and the quality of financial reporting across the insurance sector.
Monetary Penalty
Reserve Bank of India imposes a monetary penalty on:
S. No. | Name of Bank | Amount of Penalty | Contravention |
1. | Jilla Sahakari Bank Ltd., Azamgarh, Uttar Pradesh
| INR 1,15,000 (Indian Rupees One Lakh Fifteen Thousand only)
| Non-compliance with Reserve Bank of India directions on Membership of Credit Information Companies ("CICs") by Co-operative Banks and Know Your Customer ("KYC"). The bank failed to report borrowers’ credit information to all CICs and failed to upload customers’ KYC records to the Central KYC Records Registry (CKYCR) within the prescribed timeline. |
2. | Asset Care & Reconstruction Enterprise Limited | INR 27,30,000 (Indian Rupees Twenty-Seven Lakh Thirty Thousand only)
| Non-compliance with Reserve Bank of India directions on Income Recognition. The company violated regulatory requirements relating to the charging of management fees. |
2. Key Asian Markets – Bangladesh and Philippines
2.1. Bangladesh
2.1.1. BB issues KPI Framework for Bank MDs and CEOs
The Bangladesh Bank (“BB”) has introduced a uniform Key Performance Indicators (KPI) Framework for the evaluation, appointment, reappointment and tenure extension of Managing Directors ("MDs") and Chief Executive Officers ("CEOs") of scheduled banks. The framework assigns weightages across five key assessment areas, namely bank solvency and liquidity (25 per cent (twenty-five per cent)), asset quality (25 per cent (twenty-five per cent), governance and internal controls (25 per cent (twenty-five per cent)), inclusion and customer conduct (15 per cent (fifteen per cent)), and profitability (10 per cent (ten per cent). Performance evaluation will be linked to factors such as Capital to Risk-Weighted Assets Ratio (CRAR), Non-Performing Loan (NPL) ratios, recovery of classified and written-off loans, regulatory compliance, Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) compliance, digital banking adoption, financial inclusion and risk management. The framework will also be used for determining remuneration, incentives and succession planning, with banks required to submit periodic performance assessments of MDs and CEOs to Bangladesh Bank.
2.1.2. BB issues guidance on Import Policy Order, 2026-2029
BB has issued guidance to Authorised Dealer Banks on the implementation of the Import Policy Order, 2026-2029, notified by the Government of Bangladesh and effective until 31 December 2029. Key changes include permitting imports under the Open Account method, allowing imports for industrial and commercial sectors without opening a Letter of Credit (LC), and introducing detailed provisions for import and local sourcing of inputs by export-oriented industries, including through bonded warehouse arrangements. The policy also expands flexibility for procurement of raw materials from local sources under Back-to-Back Letter of Credit (Back-to-Back LC) and Free of Cost (FOC) arrangements. Authorised Dealer Banks have been directed to ensure compliance with the revised import policy framework and the applicable foreign exchange regulations while processing import-related transactions.
2.2. Philippines
2.2.1. BSP reports domestic liquidity growth of 10.3 Per cent in July 2026
The Bangko Sentral ng Pilipinas ("BSP") reported that domestic liquidity, measured by M3, increased by 10.3 per cent (ten point three per cent) year-on-year to PHP 20.5 trillion in July 2026, continuing to support economic activity. Growth moderated slightly from 10.7 per cent (ten point seven per cent) in June 2026, primarily due to a contraction in Net Foreign Assets ("NFA"). Domestic liquidity remained supported by stronger leper cento the per cent and public sectors, continued bank credit to production sectors and households, and financing activities of the National Government through debt issuances and withdrawal of deposits. While banks’ NFA contracted due to higher foreign currency liabilities, domestic claims expanded by 11.2 per cent (eleven point two per cent) and claims on the private sector grew by 12.1 per cent (twelve point one per cent). The BSP stated that it will continue to ensure that liquidity conditions remain aligned with its price and financial stability objectives.
2.3. Indonesia
2.3.1. BI reports improvement in Indonesia’s international investment position in Q2 2026
Bank Indonesia (BI) has reported an improvement in Indonesia’s International Investment Position (IIP) during the second quarter of 2026, with the net liability position declining to USD 197.4 billion from USD 223.0 billion in the previous quarter. The improvement was driven by a reduction in Foreign Financial Liabilities ("FFL") and an increase in Foreign Financial Assets ("FFA"). FFL declined by 1.9 per cent (one point nine per cent) quarter-on-quarter to USD 769.0 billion, despite continued inflows through direct and portfolio investment, mainly due to valuation effects and the appreciation of the United States Dollar. Meanwhile, FFA increased by 1.9 per cent (one point nine per cent) to USD 571.5 billion, supported by higher holdings of foreign financial instruments, particularly direct, portfolio and other investments. BI noted that Indonesia’s external resilience remains strong, with the IIP-to-Gross Domestic Product (GDP) ratio improving to 13.3 per cent (thirteen point three per cent) from 15.2 per cent (fifteen point two per cent) in the previous quarter, while the liability structure continues to be dominated by long-term instruments, especially direct investment.
3. Trends
3.1. RBI reports strong NBFC credit growth in July 2026
RBI has released data on sectoral deployment of credit by Non-Banking Financial Companies (NBFCs) for July 2026, showing that overall NBFC credit grew by 14.9 per cent (fourteen point nine per cent) year-on-year, compared to 10.6 per cent (ten point six per cent) a year earlier. Credit to agriculture and allied activities recorded robust growth of 18 per cent (eighteen per cent), while retail lending accelerated to 21.4 per cent (twenty-one point four per cent), driven by stronger growth in housing loans and loans against gold jewellery. Credit to the services sector moderated to 15.2 per cent (fifteen point two per cent) from 24.5 per cent (twenty-four point five per cent) in the previous year, and industry credit growth eased to 7.4 per cent (seven point four per cent) due to slower lending to infrastructure.
4. Sector Overview
4.1. Public Sector Banks exceed FCNR(B) mobilisation targets amid strong inflows
Public sector banks have significantly exceeded their initial mobilisation targets under the Reserve Bank of India’s special Foreign Currency Non-Resident (Bank) (“FCNR(B)”) deposit scheme, reflecting robust participation from overseas depositors. Bank of Baroda mobilised approximately USD 8 billion against an initial target of USD 4 billion to USD 5 billion, while Bank of India raised around USD 2.33 billion against a target of USD 1.2 billion, and Bank of India mobilised about USD 760 million against USD 400 million. The funds are expected to be utilised to replace higher-cost deposits and borrowings, support lending activities and strengthen liquidity positions. The mobilisation contributed to total FCNR(B) inflows of approximately USD 127.22 billion under the RBI’s special swap facility, accounting for the majority of the USD 136.37 billion raised across FCNR(B) deposits, Overseas Foreign Currency Borrowings (OFCBs) and External Commercial Borrowings (ECBs).
4.2. Indian Start-up Ecosystem sees fresh funding across AI, Consumer, Mobility and Water-Tech sectors
Several Indian start-ups attracted fresh capital during the week ended 13 September 2026, reflecting continued investor interest across Artificial Intelligence (AI), consumer brands, mobility and sustainability-focused businesses. Key transactions included Graph AI, which raised USD 13.3 million in a Series A round for its AI-powered patient safety and pharmacovigilance platform; Theater, which secured INR 75 crore (Indian Rupees Seventy-Five Crore only) for expansion of its fashion and lifestyle business; Carrum Mobility, which raised USD 10 million in a Series B round led by Uber to strengthen its fleet management platform; DigitalPaani, which secured INR 22 crore (Indian Rupees Twenty-Two Crore only) to scale AI-driven water and wastewater management solutions; and Iztri, which raised INR 10 crore (Indian Rupees Ten Crore only) to expand its hyperlocal fabric-care network. The funding activity highlights sustained investor appetite for technology-enabled solutions addressing healthcare, consumer products, mobility and infrastructure efficiency.
5. Business Updates
5.1. Fairfax evaluates exit from IIFL Finance as Advent and Temasek explore stake acquisition
Fairfax Financial Holdings is reportedly in discussions with investors, including Advent International and Temasek Holdings, for a potential sale of its 13.7 per cent (thirteen point seven per cent) stake in IIFL Finance Limited. The stake, held through FIH Mauritius Investments, is estimated to be worth approximately INR 35 billion (Indian Rupees Three Thousand Five Hundred Crore only) at prevailing market prices. The proposed divestment is reportedly linked to Fairfax’s plans to acquire a controlling stake in IDBI Bank Limited, with the sale expected to assist in meeting regulatory requirements and partially funding the transaction. Market reports indicate that several global investors have expressed interest in the stake, reflecting continued investor appetite for India’s financial services sector.
5.2. J.P. Morgan Payments and Mindgate expand collaboration for next-generation UPI infrastructure
J.P. Morgan Payments and Mindgate Solutions have announced the successful deployment of a next-generation Unified Payments Interface ("UPI") infrastructure to support real-time collections and payouts for corporate and merchant clients in India. The platform builds on their existing collaboration for Immediate Payment Service (IMPS) and operates on Mindgate’s cloud-based Unified Digital Payment Hub (UDPH), designed to support high-volume, real-time payment processing. The infrastructure will enable a range of UPI-based use cases, including Quick Response (QR) payments, intent-based transactions and UPI AutoPay, while integrating India’s domestic payment rails with J.P. Morgan’s global payments network. The initiative is aimed at enhancing scalability, resilience and efficiency in India’s digital payments ecosystem and supporting seamless cash management and cross-border payment solutions for businesses.
5.3. NSE IPO attracts strong Anchor Investor interest ahead of listing
The proposed Initial Public Offering ("IPO") of National Stock Exchange of India Limited ("NSE") is expected to witness strong participation from anchor investors, with Life Insurance Corporation of India (LIC) emerging as a potential leading investor. Reports indicate that global investors, including Abu Dhabi Investment Authority (ADIA) and Carmignac, may also participate significantly in the anchor book. The strong investor interest reflects confidence in NSE’s market position, profitability and long-term growth prospects, with the IPO expected to be one of the largest and most closely watched capital market offerings 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
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