Fintech Frontline Legal And Market Intelligence From India October 2025

October 2025 witnessed significant momentum across India's fintech ecosystem, driven by the twin forces of market innovation and regulatory oversight.

The highlight was the Global Fintech Fest, 2025 ("GFF"), which provided a platform for showcasing next generation financial products and policy directions. Of the many announcements that were made, the continuing proliferation and deepening capabilities of the National Payments Corporation of India's ("NPCI") Unified Payments Interface ("UPI") ecosystem was a key highlight. GFF saw a plethora of strategic launches by various fintech players, from new payment devices to complex payout solutions. The Governor of the Reserve Bank of India ("RBI") highlighted that integrating artificial intelligence ("AI") within the existing digital payments ecosystem could improve user experience and operational efficiency. For instance, introduction of features like conversational payments could make digital transactions more accessible. GFF also platformed foundational changes like the conceptualisation of the unified markets interface to enable asset tokenization using wholesale central bank digital currency.

Simultaneously, the fintech market demonstrated a noteworthy investment appetite with significant capital contributions into the sector. Indian startups raised a whopping USD 285 (two hundred and eighty-five) million in a single week. This robust funding activity, benefiting fintechs like Dhan, reaffirmed investor confidence in the sector's long-term potential.

This edition of the newsletter provides an overview of the critical developments of October 2025. In the first section, we examine various industry developments. The second and third sections highlight important market updates and major deals that have impacted the fintech industry. In the last section, we analyse some of the key regulatory updates by various authorities.

INDUSTRY PULSE

Non-Banking Financial Companies now have a recognised Self-Regulatory Organisation

The Finance Industry Development Council ("FIDC") has been recognised by RBI as the first Self-Regulatory Organization ("SRO") for Non-Banking Financial Companies ("NBFCs").ⁱ

This recognition, granted under the RBI's Omnibus Framework dated March 21, 2024ⁱⁱ, for recognition of SROs, will strengthen compliance and governance by NBFCs. FIDC will set industry standards, codes of conduct, and handle dispute resolution for its member NBFCs, and will bridge the gap between RBI and regulated entities by facilitating two-way communication and providing industry feedback to RBI. By uniting market participants, this recognition will enhance credibility, accountability, and transparency for the NBFC sector.

Unique Identification Authority of India Launches SITAA Scheme to combat deepfakes & strengthen Aadhaar security

The Unique Identification Authority of India ("UIDAI") has launched a new initiative called the 'Scheme for Innovation and Technology Association with Aadhaar' ("SITAA") to advance digital identity security and combat the growing threats of cyberfraud using AI.ⁱⁱⁱ

This initiative seeks to create AI-driven biometric authentication solutions capable of identifying deepfakes, mask attacks, and spoofing during Aadhaar face authentication.The SITAA pilot creates an opportunity for innovators to turn ideas into real-world solutions that strengthen the security, reliability, and efficiency of India's digital identity framework. It invites startups, academic institutions, and industry players to help shape a future-ready and self-reliant digital identity ecosystem. Applications for the challenges for the SITAA pilot are open till November 15, 2025.

Madras High Court recognises cryptocurrency as property under Indian law

The Madras High Court ("Court") recently held that cryptocurrency qualifies as 'property' under Indian law, capable of being owned, enjoyed, transferred, and held in trust.^iv The judgement came in light of a case involving Zanmai Labs Private Limited, the operator of crypto exchange WazirX. The case stems from the USD 235 (two hundred and thirty-five) million cyberattack on WazirX, allegedly perpetrated by North Korean hackers, which led to the freezing of multiple investor holdings.

The Court granted an interim protection to the investor, restraining WazirX and its directors from redistributing or reallocating the frozen tokens until the arbitral proceedings conclude. Emphasising the proprietary nature of virtual digital assets, the Court observed that cryptocurrency, though not legal tender, possesses the essential attributes of property being identifiable, exclusive, and transferable. Referring to Section 2(47A) of the Income Tax Act, 1961 which defines virtual digital assets, the judgement reaffirmed that cryptocurrencies can be taxed and treated as property despite not being tangible or a currency. The decision also clarifies that Indian courts have jurisdiction over disputes involving crypto assets, even when exchanges operate across borders.

Following the ruling, WazirX announced that it would issue recovery tokens proportional to investors' claims and has resumed operations as of October 24, 2025, with enhanced security measures in partnership with BitGo.^v

RBI issues draft circular on Guidelines for Faster Cross-Border Inward Payments

RBI has issued a draft circular on Guidelines to facilitate faster cross-border inward payments ("Cross-border Guidelines"), with the aim to align its Payments Vision 2025 with the G20 roadmap. The Cross-border Guidelines primarily focus on reducing delays at the beneficiary leg (from the beneficiary bank's receipt to account credit).

The key features of the proposed measures for banks include^vi:

• Obligation to inform the customer of the receipt of an inward transaction immediately upon receiving the inward message.
• Undertaking of reconciliation and confirmation of credit in the nostro account on a near real-time basis or at periodic intervals, with the reconciliation interval not normally exceeding 30 (thirty) minutes, to move away from reliance on end-of-day statements.
• Credit of inward payments received during foreign exchange market hours within the same business day, and payments received after market hours on the next business day, subject to regulatory compliance.
• Implementation of a 'Straight Through Process' for crediting inward payments to the account of individual residents based on their risk assessment and compliance with the Foreign Exchange Management Act, 1999.
• Provision of a digital interface to customers within a reasonable time frame to facilitate foreign exchange transactions, including document submission and transaction monitoring.

Once finalised, the Cross-border Guidelines will be effective 6 (six) months after the date of issuance of the final circular. At present, public comments are awaited on the draft Cross-border Guidelines.

MARKET WATCH

Zoho to enter consumer payments with Zoho Pay

Zoho, the Software-as-a-Service unicorn, is expanding into the consumer payments segment with the upcoming launch of 'Zoho Pay', after obtaining its payment aggregator license in February 2024. Zoho Pay is currently undergoing internal testing and will roll out in the coming months.

Zoho Pay will be available both as a standalone application and integrated directly within Zoho's messaging app, Arattai.^vii This will allow users to perform transactions without leaving the chat interface. This consumer push is part of Zoho's broader fintech strategy, which has recently included all-in-one point-of-sale devices and virtual accounts for businesses.

NPCI introduces new updates for the UPI framework

NPCI has, in light of its announcements at the GFF, released a series of circulars in early October 2025, introducing significant enhancements to the UPI platform, including:

• Introducing optional biometric methods for UPI for, inter alia, setting / resetting a UPI PIN and on-device biometric authentication for transaction authorisation up to INR 5,000 ( five thousand ).viii.
• Expanding UPI to enable transactions from multi-signatory accounts (e.g., joint accounts).ix .
• Enabling cash withdrawal through MicroATM using UPI at business correspondent touch points.x.
• Extending the UPI circle framework to Internet of things (IoT) devices and software profiles (e.g., smartwatches, AI profiles), allowing users to delegate payments under defined monthly limits.xi.
• Enhancing the UPI Autopay framework to allow users to view all active mandates in any app and to port mandates from one UPI app to another, thus improving user control.xii.
• Introducing 'UPI Reserve Pay' that allows customers to block funds for future multiple debits.xiii.
• Launching the pilot UPI HELP Assistant powered by a domain-specific language model to provide intelligent conversational support.^xiv .

DEAL DEBRIEF

We have set out in the table below some of the major deals for the month of October 2025:

REGULATORY ROUNDUP

Securities and Exchange Board of India Master Circular for issue of non-convertible securities, securitized debt instruments, security receipts, municipal debt securities and commercial paper 2025

The Securities and Exchange Board of India ("SEBI") has issued the Master Circular for issue of non-convertible securities, securitized debt instruments, security receipts, municipal debt securities and commercial paper dated October 15, 2025 ("Master Circular"), incorporating the provisions of various circulars issued from time to time until June 30, 2025.^xxvii

The Master Circular compiles the previous guidelines related to the issue and listing of various fixed-income securities, including (i) non-convertible securities; (ii) commercial paper; (iii) securitized debt instruments and security receipts; and (iv) municipal debt securities.

This will enable issuers of the aforementioned instruments and other market stakeholders to have access to all the applicable circulars / directions regarding the subject matter at one place. Companies seeking to raise large loans from the market no longer need to sift through multiple circulars to understand the procedure. All the requirements in relation to disclosure norms and bond listing timelines have been consolidated in one place. Notification of the Master Circular will streamline the process, making fundraising quicker, more cost-effective, and transparent, thereby encouraging more companies to tap into the bond market rather than depending only on banks.

Insurance Regulatory and Development Authority of India introduces a Fraud Monitoring Framework

The Insurance Regulatory and Development Authority of India ("IRDAI") has issued the Insurance Fraud Monitoring Framework Guidelines, 2025 ("Guidelines"). The Guidelines are applicable to all insurers and distribution channels.^xxviii

The Guidelines provide a classification for different types of insurance frauds and aim to establish a comprehensive framework to deter, prevent, detect, report, and remedy fraud risks effectively across the insurance industry, to protect policyholders' interests.

Key provisions of the Guidelines require insurers to:

• aim for zero tolerance and implement a board-approved Fraud Risk Management Framework ("FRMF") which is to be overseen by the risk management committee.
• establish a fraud monitoring committee and an independent fraud monitoring unit to operationalize the FRMF and conduct an annual comprehensive fraud risk assessment.
• continuously monitor and strengthen systems for fraud risk management, including databases, customer verification, and access control, particularly to guard against cyber or new age fraud.
• participate in the Insurance Information Bureau's ("IIB") Fraud Monitoring Technology Framework. Insurers must share details of blacklisted distribution channels, hospitals and vendors with the IIB.
• report all incidents of fraud to authorities and file annual fraud returns with the IRDAI.

The Guidelines also apply to reinsurance business and distribution channels, including intermediaries and insurance intermediaries. Distribution channels are required to establish an appropriate fraud risk management framework commensurate with their business size and risk profile. Distribution channels other than intermediaries and insurance intermediaries are required to comply with the insurer's anti-fraud policies, procedures and controls.

Relaxations to lending in Indian Rupees under foreign exchange regulations

With an objective to rationalize and simplify the regulations governing External Commercial Borrowings ("ECB") and as part of its continuous efforts towards facilitating external trade and payments, RBI has amended the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 and Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015.^xxix

Authorized Dealer banks in India and their overseas branches have been permitted to lend in Indian Rupees to (i) persons resident in Bhutan, Nepal, and Sri Lanka; and (ii) banks in these jurisdictions, to facilitate cross border trade transactions.

In January 2025, RBI had allowed Indian exporters to open foreign currency accounts ("FCA") with banks outside India to facilitate the realization of export proceeds. Previously, any unutilized funds in these FCAs had to be repatriated by end of the next month from the date of receipt of the funds. Exporters are now permitted to repatriate the unutilized funds within 3 (three) months for FCAs maintained with International Banking Units ("IBU") in the International Financial Services Centre ("IFSC") in India.

The revised framework expands the eligible borrower and recognizes lender base with respect to ECBs. Further, the extension of time period for repatriation from FCAs held in IFSC will encourage Indian exporters to open accounts with IFSC IBUs and also increase forex liquidity in IFSC. 

RBI releases revised FAQs on the Payment and Settlement Systems Act, 2007

RBI has released revised FAQs on the Payment and Settlement Systems Act, 2007, to clarify certain aspects in the framework.^xxx As part of this, RBI has clarified that it assesses applications for authorization for payment system operators, based on a variety of factors, including the need for the system, technical design, risk management, and the financial status of the applicant. Specifically, the application for authorization is assessed against the criteria specified for that particular type of payment system, such as the policy guidelines on issuance and operation of pre-paid payment instruments or the principles for financial market infrastructures for a central counter party. Additionally, RBI may also make inquiries, including calling for due diligence reports from other regulators if the applicant has group entities operating in foreign jurisdictions. Furthermore, it is clarified that the dishonour of an electronic fund transfer instruction due to insufficient funds will be treated as an offence, similar to that of a bounced cheque.

International Financial Services Centres Authority authorises the first Foreign Currency Settlement System for USD settlements

The International Financial Services Centres Authority ("IFSCA") has authorized CCIL IFSC Limited ("CIL") under the Payment and Settlement Systems Act, 2007, and the International Financial Services Centres Authority (Payment and Settlement Systems) Regulations, 2024, to operate the Foreign Currency Settlement System ("FCSS"), that was launched by IFSCA on October 7, 2025.^xxxi

IFSCA has also notified the bye-laws,^xxxii , the rules and regulations^xxxiii prepared by CIL as the regulations, guidelines, instructions or directions governing the operations of the FCSS. Initially, the FCSS can settle transactions undertaken only in United States Dollars. IBUs can apply to CIL to become members of FCSS as per the procedure laid down in the bye-laws, rules and regulations prepared by CIL and notified by IFSCA. The payment obligations and settlement instructions among the FCSS participants will be determined in accordance with the gross settlement procedure. ^xxxiv

SEBI rolls out "Validated UPI Handles" and "SEBI Check" for secure investor payments

SEBI vide press release dated October 1, 2025, announced that its initiatives on "Validated UPI Handles" and "SEBI Check" are now live and available for investors.^xxxv

To enable investors to easily identify legitimate entities, the UPI IDs of SEBI-registered investor-facing intermediaries will now carry the exclusive "@valid" handle issued by NPCI and will also include category-specific suffixes, like ".brk" for brokers and ".mf" for mutual funds, for easy identification of registered intermediary type. A visual verification functionality has also been introduced wherein a distinctive icon (i.e., a thumbs-up inside a green triangle - ) will appear at the time of making payments through the "@valid" UPI handle, confirming the authenticity of the transaction. Further, a specially designed QR code, featuring the "thumbs-up" logo at its centre, has been introduced for SEBI-registered intermediaries, to enable convenient and error-free transactions by investors.

SEBI has also introduced the "SEBI Check" platform through which investors can independently verify and confirm the authenticity of the bank account details and UPI IDs of SEBI registered intermediaries with the help of the bank account number and IFSC code or @valid UPI ID of an entity.

These functionalities reduce risks of fraud and misdirection, thereby providing investors with assured security regarding payments made by them and empowering investors to transact with confidence.

SEBI Guidelines on Transfer of PMS Business

SEBI has issued guidelines on the transfer of portfolios of clients ("PMS business") by portfolio managers ("PM Guidelines")^xxxvi. The objective of these PM Guidelines is to bring about ease of doing business by formally allowing the transfer of PMS business, subject to prior SEBI approval. The PM Guidelines prescribe separate processes for transfer between portfolio managers within the same group versus transfers to a portfolio manager not belonging to the same group.

Portfolio managers within the same group have the option to transfer select investment approach(es) or the complete PMS business. If the complete business is transferred, the transferor's registration must be surrendered within 45 (forty-five) working days.

Transfers to an unrelated portfolio manager must be made via a joint application and must comprise the complete PMS business. Transfer of select investment approach(es) is not permitted. Once the transfer is complete, the acts, deeds, pending actions / litigations, and other obligations against the transferor shall be the responsibility of the transferee. The transferee must submit an undertaking in this regard. The entire transfer process must be completed not later than 2 (two) months from the date of approval. During this period, the transferor shall continue to act as the portfolio manager but shall not onboard any new clients. The transferor must surrender its certificate at the end of 2 (two) months or upon completion of all formalities, whichever is earlier.

The provisions of the PM Guidelines shall come into force with immediate effect.

RBI has launched a Central Bank Digital Currency retail sandbox to allow fintechs and startups

The RBI has launched a Central Bank Digital Currency ("CBDC") retail sandbox to allow fintechs and startups to build products using the Digital Rupee which was previously, limited to pilot banks.^xxxvii A key enhancement rolled out is the offline functionality for the retail Digital Rupee, that allows users to make payments even without an internet connection, aiming to boost its adoption in remote areas and during network outages.^xxxviii The RBI also unveiled the Unified Markets Interface to enable the tokenisation and efficient settlement of financial assets using wholesale CBDC. Furthermore, a pilot for tokenized Certificates of Deposit was introduced to reduce friction in interbank markets.

SEBI introduces ease of doing business measures.

SEBI, with the aim to foster ease of doing business for Investment Advisors ("IA") and Research Analysts ("RA"), has issued circulars dated October 30, 2025, introducing the following measures:

• SEBI has permitted registered IAs to charge a fee for offering a second opinion on assets that a client already holds through a separate distribution channel. Previously, IAs were barred from including such assets in their Assets Under Advice ("AUA") fee calculation. The new measure allows IAs to charge an AUA-based fee, subject to a cap of 2.5% (two point five percent) of the asset value per annum. To ensure transparency, the IA must obtain explicit annual consent from and undertake disclosure to the client, confirming that they understand that the distributor's charges on those assets will continue to apply.xxxix
• SEBI has permitted IAs and RAs to share their past performance data, but only on a one-to-one basis upon a client's specific request. This data must be certified by a member of the Institute of Chartered Accountants of India or the Institute of Cost Accountants of India. This information cannot be made public through websites or other general media and IAs and RAs using this arrangement must enrol with Past Risk and Return Verification Agency ("PaRRVA") within 3 (three) months of its launch, after which only performance verified by PaRRVA can be used.xl

RBI circulates consolidated drafts of regulations for public comments

RBI has consolidated the regulatory instructions issued until October 9, 2025, into 238 (two hundred and thirty-eight) master directions ("Master Directions"), across 11 (eleven) types of regulated entities on up to 30 (thirty) functions / areas. Consequently, approximately 9000 (nine thousand) circulars (including master circulars and master directions) administered by the Department of Regulation of the RBI will be repealed.^xli

The Master Directions have been prepared separately for each type of regulated entity. For this purpose, 11 (eleven) types of regulated entities have been considered, including commercial banks, payments banks, regional rural banks, all India financial institutions, non-banking financial companies, asset reconstruction companies and credit information companies These have been further organised into 30 (thirty) functions / areas of regulatory instructions across these 11 (eleven) types of regulated entities.

There has been no review of the instructions, circulars or guidelines previously issued by RBI. This consolidation has been done on an 'as-is' basis, with only select editorial interventions to update terminologies or to remove ambiguities in the existing language.

RBI issues the draft Reserve Bank – Ombudsman Scheme, 2025

RBI released the draft Reserve Bank - Ombudsman Scheme, 2025 ("Scheme")^xlii and the draft Master Direction - Reserve Bank of India (Internal Ombudsman for Regulated Entities) Directions, 2025 ("Draft Master Direction")^xliii which seeks to repeal the existing Reserve Bank – Integrated Ombudsman Scheme, 2021, and the Master Direction - Reserve Bank of India (Internal Ombudsman for Regulated Entities) Directions, 2023, respectively. The Draft Scheme prescribes, inter alia, the requirement of appointing an internal ombudsman and deputy internal ombudsman by RBI, their roles and responsibilities, procedure for redressal of grievances, and grounds for maintainability of a complaint. A format of the complaint form has also been prescribed.

The Scheme and the Draft Master Direction have been introduced with a view to further strengthen the functioning of the Internal Ombudsman and to facilitate faster and meaningful resolution of customer grievances at the level of RBI regulated entities.

RBI invites comments on the Draft Reserve Bank of India (Lending to Related Parties) Directions, 2025

RBI issued a draft regulatory framework on lending to related parties by various regulated entities, for public comments. In this regard, RBI has introduced 8 (eight) draft directions ("Draft Directions")^xliv that propose a harmonized, principle-based framework for regulated entities to follow in relation to lending to related parties, while rationalizing the existing provisions. The key features of the Draft Directions include:

• Introduction of scale-based materiality thresholds, requiring board or committee approval for lending to related parties beyond specified limits.
• Exclusion of independent directors of other banks from the definition of 'related persons' for the purposes of the Draft Directions.
• A principle-based exemption from Section 20(1)(b) of the Banking Regulation Act, 1949, for certain categories of loans.
• Appropriate supervisory reporting and disclosure obligations for regulated entities concerning related party transactions.

Consultation Paper on Amendments to IFSCA (Fund Management) Regulations, 2025

The IFSCA has issued a consultation paper on Amendments to IFSCA (Fund Management) Regulations, 2025 ("FM Regulations"). The paper aims to further strengthen the regulatory framework at GIFT-IFSC for Fund Management Entities ("FMEs") by streamlining processes, enhancing the ease of doing business, and introducing necessary safeguards for investor protection.^xlv

The key proposed amendments include:

• Requirement of the board of directors or governing body of an FME to approve all internal policies, frameworks, and plans prior to implementation.
• Introduction of an alternative eligibility criterion for key management personnel that allows a lower threshold of work experience (at least 3 (three) years) in a financial institution if supplemented by a valid certification.
• Insertion of a clear provision for the winding-up of a scheme if it fails to achieve its minimum corpus and the FME does not file for an extension of the validity of the placement memorandum.

Consultation Paper on Regulatory Framework for differential distribution in Restricted Schemes and Venture Capital Schemes to facilitate blended finance and other fund structures

The IFSCA has issued a consultation paper on Regulatory Framework for differential distribution in Restricted Schemes ("RS") and Venture Capital Schemes ("VCS").^xlvi The objective of these proposals is to facilitate blended finance and other fund structures in the IFSC(s) by permitting differential distribution in the VCS and RS under the FM Regulations.

The key requirements and components of this proposed framework are:

• VCS and RS (referred to as 'eligible schemes') are permitted to issue multiple classes of units with differential distribution rights, such as senior units (superior rights) and junior / subordinate units (inferior rights).
• To ensure investor protection, the minimum investment for subscribing to the riskier junior/subordinate classes is set at USD 2 (two) million, though this is reduced to USD 1 (one) million for accredited investors.
• The FME must ensure that the amount invested by the scheme is not utilized by an investee company, directly or indirectly, to discharge any of its obligations or liabilities towards the investors of the schemes or their associates.
• The placement memorandum of the FMEs must adequately and prominently disclose details and risks of the multiple unit classes, including illustrations of the distribution waterfall under various loss scenarios.

SEBI Consultation Paper on amendments for High Value Debt Listed Entities

SEBI has released a consultation paper dated October 27, 2025, suggesting changes to the Corporate governance norms applicable to High Value Debt Listed Entities ("HVDLEs") under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("LODR Regulations").^xlvii The consultation paper provides three key proposals:

SEBI recommends enhancing the threshold for identifying HVDLEs from the existing INR1,000 (one thousand) crore to INR5,000 (five thousand) crore in outstanding listed non-convertible debt securities, thus reducing the ambit of applicability of the framework to smaller entities while maintaining compliance for larger entities.

The proposed framework sets out a series of alignment and streamlining measures under Chapter VA of the LODR Regulations. These include: (i) replacing 'income' with 'turnover' in defining material subsidiaries; (ii) requiring shareholder approval by special resolution for non-executive directors above 75 (seventy-five) years before attaining that age; (iii) providing a 3 (three) month period to fill board and key managerial vacancies; and (iv) standardising terminology across the framework. The proposal also introduces flexibility in compliance reporting timelines, exempts inter-subsidiary asset transfers within wholly owned groups from shareholder approval, and prescribes eligibility and tenure norms for secretarial auditors.

SEBI has also suggested aligning Related Part Transactions ("RPTs") provisions for HVDLEs under Regulation 62K with those applicable to equity-listed entities under Regulation 23. The amendments introduce exemptions for non-material remuneration and sitting fees, allow post-facto ratification of RPTs up to INR 1 (one) crore within the earlier of 3 (three) months or in the immediate next meeting of the audit committee, permit omnibus approvals for subsidiary RPTs, and establish scale-based materiality thresholds up to INR 5,000 (five thousand) crores.

SEBI proposes amendments for permitting debt issuers to offer incentives in public issues to certain category of investors.

SEBI has released a consultation paper dated October 27, 2025, proposing amendments to the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 ("NCS Regulations"), for permitting debt issuers to offer incentives in public issues to certain category of investors in order to encourage retail participation in debt securities, thereby promoting the development of the bond market.^xlviii

Regulation 31 of the NCS Regulations states that any person connected with a debt issue is prohibited from offering incentives, directly or indirectly, for making an application. SEBI proposes to insert a proviso allowing issuers to extend incentives such as higher coupon rate, or a discount to the issue price, to eligible categories. These eligible categories include senior citizens, women, armed forces personnel and retail subscribers.

The incentive may be offered at the sole discretion of the issuer and must be disclosed initially in the offer document. The benefit, however, would only be applicable to the original allottee belonging to the aforementioned categories and shall be cancelled upon a transfer of the same.

Public comments on the proposal are invited by SEBI until November 17, 2025, through its online consultation portal.

RBI's draft regulations on setting up a branch or office in India

RBI has issued a draft notification, the Foreign Exchange Management (Establishment in India of a branch or office) Regulations, 2025, which supersedes the 2016 regulations.^xlix The draft aims to strengthen the framework for regulating the establishment of a branch or office in India by an Entity Resident Outside India ("EROI") (a person resident outside India that is not a natural person).

The key requirements and restrictions under this draft regulation are:

• An EROI is generally prohibited from establishing a branch or office without the specific or general permission of the RBI. However, entities whose activities fall under another financial sector regulator must obtain that regulator's prior permission. Additionally, entities under the Special Economic Zones Act, 2005, or the Foreign Contribution (Regulation) Act 2010, must obtain permission under those respective acts.
• No EROI engaged in legal consultancy is permitted to establish an office or branch under these regulations. Furthermore, an office (other than a project office) is prohibited from undertaking any commercial activity.
• Prior approval from the Government of India is required in several sensitive cases, including for, inter alia: (i) EROIs resident in certain designated nations; (iii) EROIs that are non-profit organisations or Government-owned/controlled; (iv) EROIs whose business is in certain specified sectors like defence, telecom, or any sector where foreign direct investment is either prohibited or under the 'approval route'.
• All offices must submit an Annual Activity Certificate along with audited financials to the designated bank and the Director General of Income Tax within 6 (six) months of the financial statements date.

The regulation requires the designated bank to implement checks and balances, report the establishment and closure of every office / branch to the RBI, and ensure compliance with all provisions of the law.

SEBI Consultation Paper on the Comprehensive Review of SEBI (Mutual Funds) Regulations, 1996.

SEBI has issued a consultation paper on the Comprehensive Review of SEBI (Mutual Funds) Regulations, 1996 ("MF Regulations")^l. The objective of the review is to seek public comments/suggestions on the proposed amendments to the MF Regulations.

The key requirements and components of this proposed framework are:

• Removal of the additional 5 (five) bps expense charge that Asset Management Companies ("AMCs") were allowed to levy on the whole Asset Under Management rate of a scheme, to rationalize the cost for unitholders.
• Exclusion of all statutory levies such as Securities Transaction Tax, Goods and Services Tax, Commodities Transaction Tax and Stamp duty from the revised expense ratio limits are proposed to facilitate greater clarity and transparency for investors.
• Significant reduction on the limit on brokerage charges for cash market transactions from 12 bps to 2 bps and for derivative transactions from 5 bps to 1 bps, to ensure investors are not effectively paying twice for research and advisory services.
• AMCs may, themselves or through subsidiaries, undertake investment management and advisory services for non-pooled funds, provided they operate as a distinct business unit separated by chinese walls, wherein key employees are segregated, and report directly to the CEO.
• Reduction of the minimum required number of trustee meetings is proposed from at least 6 (six) meetings per year with one meeting every 2 (two) calendar months to a minimum of 4 (four) meetings per year with one meeting every 3 (three) calendar months.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.