AKP Banking & Finance Digest January 27, 2026

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1. Regulatory Updates

1.1. India

Reserve Bank of India (RBI)

1.1.1. RBI issues Reserve Bank of India (RBI) issued the Reserve Bank of India (Priority Sector Lending – Targets and Classification) (Amendment) Directions, 2026

Reserve Bank of India ("RBI") issued the Reserve Bank of India (Priority Sector Lending – Targets and Classification) (Amendment) Directions, 2026 to amend the Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025, with immediate effect, mainly to align cross-references with newer regulatory directions and clarify certain computation and reporting mechanics for Priority Sector Lending ("PSL") targets. A key change is allowing bank loans to National Co-operative Development Corporation for on-lending to co-operative societies to qualify as PSL (for loans sanctioned after January 19, 2026), subject to conditions including quarterly certificates from a Comptroller and Auditor General of India-empanelled chartered accountant firm confirming utilisation for PSL-eligible purposes and that on-lending benefit has not been claimed from any other bank, and within an overall on-lending cap of 5 per cent (five per cent) of a bank's previous year PSL achievement. The RBI also inserted a new Annex IIIA on Priority Sector Lending Certificates ("PSLCs"), enabling banks to buy or sell fulfilment of PSL obligations on the RBI's e-Kuber platform without transferring the underlying loan assets or credit risk, with PSLCs expiring on March 31 each year and a standard lot size of INR 25,00,000 (Indian Rupees Twenty-Five Lakhs only). Other changes include updated references for export credit, microfinance, securitisation and loan transfer frameworks, revisions relevant to treatment of certain grandfathered loans for Small Finance Banks, updated limits (including loans up to INR 12,00,00,000 (Indian Rupees Twelve Crore only) per borrower for building healthcare facilities in specified centres), confirmation that no loan-related charges are to be levied on priority sector loans up to INR 50,000 (Indian Rupees Fifty Thousand only), and updates to reporting formats and certain annexed district lists.

1.1.2. RBI issues RBI (Cash Reserve Ratio and Statutory Liquidity Ratio) Amendment Directions, 2026

RBI issued multiple amendment directions to update the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) Directions, 2025 applicable to commercial banks, small finance banks, payments banks, regional rural banks, local area banks, urban co-operative banks and rural co-operative banks, with immediate effect, to align references and reporting formats with the Banking Laws (Amendment) Act, 2025 and related subordinate legislation. Across the frameworks, RBI has, among other changes, expanded references to include "other development financial institutions" as defined in the Reserve Bank of India Act, 1934, updated annexed reporting forms to replace earlier institution lists with a revised set (including Exim Bank, National Housing Bank, Small Industries Bank, National Bank for Financing Infrastructure and Development and other development financial institutions), and inserted a new reporting line item for "Amount deposited with the Reserve Bank, under Standing Deposit Facility Scheme", with additional form changes for co-operative banks.

1.1.3. RBI Announces Measures to Manage Liquidity Conditions

RBI announced a set of operations to inject liquidity into the banking system after reviewing prevailing liquidity and financial conditions. The RBI will conduct a 90 (ninety)-day Variable Rate Repo (VRR) operation of INR 25,000 crore (Indian Rupees Twenty-Five Thousand Crore only) on January 30, 2026, a USD/INR Buy/Sell Swap auction of USD 10,000,000,000 (United States Dollar Ten Billion only) for a tenor of 3 (three) years on February 4, 2026, and Open Market Operation (OMO) purchase auctions of Government of India securities totalling INR 1,00,000 crore (Indian Rupees One Lakh Crore only) in 2 (two) tranches of INR 50,000 crore (Indian Rupees Fifty Thousand Crore only) each on February 5, 2026 and February 12, 2026, with detailed instructions for each operation to be issued separately. [RBI]

1.1.4. RBI operationalises GoI pilot interest subvention scheme for export credit under EPM

RBI issued instructions to scheduled commercial banks (excluding Regional Rural Banks), primary (urban) co-operative banks, state co-operative banks and all-India financial institutions on implementing the Government of India's pilot "Interest Subvention for Pre- and Post-Shipment Export Credit" scheme under the Export Promotion Mission (EPM) – Niryat Prothsahan. RBI enclosed the operational instructions notified by the Directorate General of Foreign Trade (DGFT) through Trade Notice No. 20/2025-26 dated January 2, 2026 read with Trade Notice No. 22/2025-26 dated January 16, 2026, and directed eligible lending institutions to extend interest subvention strictly in accordance with the scheme provisions while ensuring compliance with extant RBI regulatory instructions, including limiting benefits to eligible export credit and submitting claims as per the prescribed procedures.

Securities and Exchange Board of India (SEBI)

1.1.5. SEBI issues Master Circular for Framework on Social Stock Exchange

Securities and Exchange Board of India ("SEBI") on January 19, 2026 issued a master circular consolidating the framework for the Social Stock Exchange ("SSE") under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and rescinded the earlier SSE circulars listed in its appendix to the extent they relate to the SSE framework, while preserving prior actions and pending applications. The circular sets out minimum registration criteria for a Not for Profit Organisation (NPO), including eligible legal forms, valid tax registrations, a minimum age of 3 (three) years, and minimum fund flows such as annual spending of at least INR 50,00,000 (Indian Rupees Fifty Lakhs only) and funding of at least INR 10,00,000 (Indian Rupees Ten Lakhs only) in the past financial year. It also details the process for public issuance of Zero Coupon Zero Principal Instruments (ZCZP), including public comments for at least 21 (twenty-one) days, SSE observations within 30 (thirty) days, dematerialised issuance and non-transferability, a minimum issue size of INR 50,00,000 (Indian Rupees Fifty Lakhs only), a minimum application size of INR 1,000 (Indian Rupees One Thousand only), and a minimum subscription of 75 per cent (seventy-five per cent), failing which funds must be refunded. The master circular further prescribes annual disclosures timelines (including within 60 (sixty) days from year-end for specified disclosures and by October 31 each year, or the Income-tax return due date if later, for others), requires Annual Impact Reports (AIR) for eligible social enterprises, mandates quarterly utilisation statements within 45 (forty-five) days, recognises additional self-regulatory organisations for social impact assessors under the Institute of Chartered Accountants of India, the Institute of Cost Accountants of India and the Institute of Company Secretaries of India, and requires each SSE to constitute a governing council with at least 7 (seven) members and at least 4 (four) meetings per financial year.

1.1.6. SEBI issues SEBI (Issue and Listing of Non-Convertible Securities) (Amendment) Regulations, 2026

SEBI notified the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) (Amendment) Regulations, 2026 to amend the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021, with effect from the date of publication in the Official Gazette. The amendments introduce a definition of "retail individual investor" as an individual investor who applies or bids for debt securities for a value of not more than INR 2,00,000 (Indian Rupees Two Lakhs only). SEBI also inserted provisos in Regulation 31 to clarify that issuers may offer incentives (such as additional interest or a discount to the issue price) to specified investor categories including senior citizens, women, serving and retired defence personnel, widows and widowers of defence personnel, and retail individual investors, but such incentives are available only to the initial allottee and not where the debt securities are transferred or transmitted after allotment.

1.1.7. SEBI issues Consultation Paper on Circular under SEBI (Index Providers) Regulations, 2024

SEBI issued a consultation paper proposing a draft circular under the SEBI (Index Providers) Regulations, 2024 to operationalise the definition of "Significant Indices" and the manner of computing the threshold for indices tracked or benchmarked by domestic mutual fund schemes. SEBI has proposed that an index (including an index of indices) will be treated as a "Significant Index" if the cumulative assets under management ("AUM") of domestic mutual fund schemes tracking or benchmarking it exceeds INR 20,000 crore (Indian Rupees Twenty Thousand Crore only), with cumulative AUM to be computed using the daily average AUM for each month over the past 6 (six) months ending June 30 and December 31 each year, including proportionate attribution where a scheme tracks multiple indices and weight-based attribution for indices of indices. SEBI has also annexed an illustrative list of such significant indices for the period January 1, 2025 to June 30, 2025 and proposed that Index Providers ("IPs") administering significant indices must apply for registration within 6 (six) months of the circular, with an exclusion where the significant index is regulated by the RBI, including "Significant Benchmarks" notified under Section 45W of the Reserve Bank of India Act, 1934. SEBI has invited public comments by February 10, 2026, and clarified that the grievance redressal mechanism under the SEBI (Index Providers) Regulations, 2024 would apply only to significant indices provided by SEBI-registered IPs.

International Financial Services Centres Authority (IFSCA)

1.1.8. IFSCA issues Consultation paper on Guidance Framework on Sustainable Deposits and Sustainable Lending and Investments

International Financial Services Centres Authority ("IFSCA") has issued a consultation paper proposing to replace its April 26, 2022 guidance on sustainable and sustainability-linked lending with a broader "Framework for sustainable deposits and sustainable lending and investments" for the International Financial Services Centre ("IFSC"), covering IFSC Banking Units ("IBUs") and, on a voluntary basis, eligible Finance Company / Finance Units (FC/FUs) (with deposit-related provisions applicable only to IBUs). The draft would allow IBUs to offer "sustainable deposits" as a distinct term-deposit product and deploy proceeds into eligible green or social lending and sustainable investments, with temporary parking in liquid instruments for up to 1 (one) year pending deployment, supported by a governing-body-approved allocation policy. It also sets principles-based expectations for green/social loans and sustainability-linked loans aligned to recognised market principles, introduces guidance for sustainable trade finance aligned with International Chamber of Commerce (ICC) principles, and permits sustainable investments in products such as Environmental, Social, and Governance ("ESG") labelled debt securities, transition bonds and ESG schemes of fund management entities, backed by board-approved policies, external review, annual independent third-party verification/assurance of allocations, and annual impact assessment. A key operational requirement proposed for IBUs is a minimum deployment target of 5 per cent (five per cent) of the immediately preceding financial year's aggregate loans disbursed and investments made (in debt securities and funds) towards sustainable lending and/or sustainable investments, alongside specified reporting and website disclosures, with the framework proposed to come into force from April 1, 2026 and public comments invited by February 10, 2026.

1.1.9. IFSCA issues Draft circular on Participation of IBUs in RBAs

IFSCA issued a public consultation on draft directions for participation of IBUs in Remote Booking Arrangements ("RBA") of their parent banks, noting that remote booking can improve operational efficiency but can also add regulatory, governance and resilience risks due to cross-jurisdiction requirements, distance and time-zone challenges. The draft would allow an IBU to be part of an RBA for trading book transactions (cash and derivatives) and permitted banking book products but would prohibit IBUs from participating in RBAs involving banking book retail and corporate customer loans and deposits, while permitting centralised booking arrangements (CBA) without restriction. It requires governing body review and prior concurrence before inclusion of an IBU in an RBA, board-approved policy alignment, a documented rationale and approved control framework, disclosure to IFSCA of the responsible oversight official, assurance that the RBA does not impede recovery or resolution, prompt intimation of changes with supporting information, adequate resourcing and local risk capability at the IBU, and independent review by compliance, operational risk management and internal audit, with existing IBUs to comply within 3 (three) months. Comments are invited by February 13, 2026, via email in the prescribed format.

1.1.10. IFSCA issues Consultation Paper on Guidelines for Algorithmic Trading on the Stock Exchanges

IFSCA issued a consultation paper proposing "Guidelines for Algorithmic Trading on the Stock Exchanges" in the IFSC and invited public comments by February 11, 2026. The draft framework defines algorithmic trading and proposes stock exchange obligations to manage system load, synchronise system clocks with the atomic clock (including precision of at least 1 (one) microsecond and accuracy of at least plus or minus 1 (one) millisecond), require prior permission before any market participant deploys algorithmic trading, and conduct initial conformance testing (including completion within 3 (three) months for existing participants) and periodic simulated stress testing of trading algorithms. It also proposes minimum order-level controls at the exchange (price and quantity checks) and corresponding participant-side controls, including order value checks, client-level cumulative open order value checks, and automated execution checks with pre-defined stoppage parameters to address loops or runaway trading, alongside mandatory tagging of algorithmic orders with unique identifiers for audit trails. The draft permits exchanges to implement financial disincentives for high daily Order-to-Trade Ratio ("OTR"), including potential suspension of proprietary trading privileges for the opening hour of the next session if OTR penalties are incurred on more than 10 (ten) occasions in a rolling 30 (thirty)-day window, and requires surveillance mechanisms to detect dysfunctional algorithms and shut down terminals in exigencies. Market participants offering algorithmic trading would also be subject to annual system audits by specified qualified auditors, with reporting of deficiencies within 1 (one) month and closure within 2 (two) months, and stock exchanges would be required to implement the guidelines within 3 (three) months and amend bye-laws and rules accordingly, while superseding specified SEBI circulars dated March 30, 2012 and May 21, 2013, under powers exercised under the IFSCA Act, 2019 and the IFSCA (Market Infrastructure Institutions) Regulations, 2021.

Monetary Penalties

1.1.11. RBI imposes penalties on 5 banks for regulatory non-compliance

RBI has imposed monetary penalties on the following institutions:

2. Key Asian Markets - Philippines and Vietnam

2.1. Philippines

2.2.1. BSP reports balance of payments deficit and end-year reserve position

Bangko Sentral ng Pilipinas ("BSP") reported on January 18, 2026, that the Philippines' balance of payments ("BOP") posted a deficit of USD 827,000,000 (United States Dollar Eight Hundred Twenty-Seven Million only) in December 2025, bringing the full-year 2025 deficit to USD 5,700,000,000 (United States Dollar Five Billion Seven Hundred Million only). BSP also stated that gross international reserves (GIR) stood at USD 110,800,000,000 (United States Dollar One Hundred Ten Billion Eight Hundred Million only) as of end-December 2025, equivalent to 7.4 (seven point four) months' worth of imports of goods and payments of services and primary income, and about 3.9 (three point nine) times the country's short-term external debt based on residual maturity. BSP explained that BOP captures the country's transactions with the rest of the world, while GIR comprises foreign-denominated securities, foreign exchange and other assets (including gold) and serves as an external liquidity buffer to meet import and foreign debt needs and cushion external shocks.

2.3. Vietnam

2.3.1. State Bank of Vietnam reports December 2025 deposit and lending rate ranges

State Bank of Vietnam ("SBV") published an update on interest rate developments for customers in December 2025, stating that average VND deposit rates at domestic commercial banks were 0.1 per cent (zero point one per cent) to 0.2 per cent (zero point two per cent) per annum for demand deposits and tenors below 1 (one) month; 3.8 per cent (three point eight per cent) to 4.5 per cent (four point five per cent) for 1 (one) month to below 6 (six) months; 4.7 per cent (four point seven per cent) to 5.9 per cent (five point nine per cent) for 6 (six) months to 12 (twelve) months; 5.0 per cent (five point zero per cent) to 6.4 per cent (six point four per cent) for over 12 (twelve) months to 24 (twenty-four) months; and 6.8 per cent (six point eight per cent) for over 24 (twenty-four) months, while USD deposit rates at credit institutions were 0 per cent (zero per cent) per annum for both individuals and organisations. SBV also reported that average VND lending rates for new and outstanding loans at domestic commercial banks were 6.7 per cent (six point seven per cent) to 9.0 per cent (nine point zero per cent) per annum, with average short-term VND lending rates for priority sectors at around 3.9 per cent (three point nine per cent) per annum, below the SBV-prescribed maximum of 4.0 per cent (four point zero per cent) per annum, and that average USD lending rates were 4.0 per cent (four point zero per cent) to 5.0 per cent (five point zero per cent) per annum.

2.3.2. SBV revises credit programme and letter of credit circulars to reflect organisational restructuring

SBV issued a circular, amending multiple SBV circulars on housing-support refinancing, sectoral credit programmes and letters of credit to reflect changes in SBV's organisational structure and related government nomenclature. Key updates include replacing references to SBV internal units (for example, updating the responsible credit department name), replacing "provincial branches" with SBV regional branches, updating certain supervisory unit references, and updating the relevant line ministry name in an agriculture-linked credit circular. For the housing-support refinance programme, the circular also sets out revised procedural timelines for inter-department processing (including 1 (one) working day, 2 (two) working days, 3 (three) working days and 4 (four) working days steps), adds standardised appendices and reporting templates, and reiterates that full principal and interest must be repaid by June 1, 2031. For letters of credit, the circular updates SBV oversight responsibilities and provides a transition that banks already licensed for domestic and international payment services before the earlier letters of credit circular took effect may continue the letters of credit business until June 30, 2026, without amending their licence, while also rescinding specified provisions in prior amending circulars and terminating a separate 2009 preferential interest lending policy circular.

3. Trends

3.1. Emirates NBD advances proposed majority acquisition of RBL Bank

The Competition Commission of India cleared Emirates NBD Bank's proposed acquisition of a 60 per cent (sixty per cent) stake in RBL Bank for USD 3,000,000,000 (United States Dollar Three Billion only). The clearance moves the cross-border transaction closer to completion, but the acquisition itself has not closed yet and remains subject to the remaining regulatory and transaction closing steps. The proposed deal reflects continued foreign interest in taking meaningful control positions in Indian banking assets.

3.2. IDBI Bank privatisation enters late-stage bidding phase

Government of India formally invited financial bids for the strategic disinvestment of IDBI Bank, after key regulatory and security clearances were completed. The reported transaction contemplates divestment of a combined 60.72 per cent (sixty and seventy-two hundredths per cent) stake, comprising 30.48 per cent (thirty and forty-eight hundredths per cent) by the Government of India and 30.24 per cent (thirty and twenty-four hundredths per cent) by Life Insurance Corporation of India (LIC), with the outcome expected around March 2026. Since bids were only invited in this window, the privatisation remains pending and is a forward-looking BFSI deal trend rather than a completed transaction.

4. Sector Overview

4.1. International Monetary Fund lifts India growth outlook for fiscal year 2025–26

The International Monetary Fund ("IMF") raised its India growth forecast for the fiscal year ending March 31, 2026, to 7.3 per cent (seven point three per cent), citing stronger-than-expected recent performance. The IMF also indicated that growth could slow to 6.4 per cent (six point four per cent) over the following 2 (two) years as temporary drivers fade. In the IMF's view inflation should remain within the Reserve Bank of India's tolerance band of 2 per cent (two per cent) to 6 per cent (six per cent) informs rate and liquidity expectations.

4.2. Rupee hits fresh record low amid strong dollar demand

Indian Rupee fell to a new all-time low of INR 91.77 (Indian Rupees Ninety-One and Seventy-Seven Paise only) per United States Dollar due to strong dollar demand from corporates and importers. Separately, the RBI conducted more than USD 2,000,000,000 (United States Dollar Two Billion only) in foreign exchange swaps over 2 (two) days to offset liquidity drain linked to spot dollar sales, signalling an attempt to manage currency pressure without tightening banking system liquidity.

5. Business Updates

5.1. Juspay closes USD 50 million funding round at unicorn valuation

Bengaluru-based payments infrastructure firm Juspay closed a USD 50,000,000 (United States Dollar Fifty Million only) funding round led by WestBridge Capital, valuing the company at about USD 1,200,000,000 (United States Dollar One Billion Two Hundred Million only). The round included primary and secondary components, with part of the transaction providing liquidity to early investors and employees through share sales. Juspay said it provides payments infrastructure and orchestration software used by banks and large merchants in India.

5.2. Cashfree Payments rolls out ESOP buyback for current and former employees

Cashfree Payments began implementing an employee stock ownership plan (ESOP) buyback programme covering over 400 (four hundred) current and former employees, including 175 (one hundred and seventy-five) former employees, allowing eligible staff to sell vested options back to the company for liquidity. The company also noted that it raised USD 53,000,000 (United States Dollar Fifty-Three Million only) in 2025 to expand its payments offerings and market reach.

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