AKP Banking & Finance Digest December 08, 2025

1. Regulatory Updates

1.1. India

Reserve Bank of India (RBI)

1.1.1. RBI releases National Strategy for Financial Inclusion 2025–30 Roadmap

Reserve Bank of India ("RBI") has released the National Strategy for Financial Inclusion 2025–30 ("NSFI"), a five-year roadmap approved by the Sub-Committee of the Financial Stability and Development Council (FSDC-SC) in its thirty-second meeting and unveiled on December 1, 2025. The strategy adopts a synergised ecosystem approach to improve last-mile access to formal financial services and their effective use, especially for vulnerable and marginalised households and micro enterprises. It is built around five strategic objectives, or Panch Jyoti, which focus on ensuring an equitable and affordable bouquet of financial services, promoting women-led and gender-sensitive financial inclusion, integrating livelihood and skill development with finance, using financial education to encourage prudent behaviour, and strengthening customer protection and grievance redress. NSFI 2025–30 translates these priorities into forty-seven concrete action points for financial sector regulators and institutions, including the Securities and Exchange Board of India ("SEBI"), Insurance Regulatory and Development Authority of India (IRDAI), Pension Fund Regulatory and Development Authority (PFRDA), National Bank for Agriculture and Rural Development (NABARD), National Skill Development Corporation (NSDC), and National Centre for Financial Education (NCFE), aiming to consolidate the gains of the previous strategy period and deepen sustainable financial inclusion.

1.1.2. RBI mandates direct LRS reporting on CIMS by AD Category-II banks and FFMCs

RBI has directed that, in addition to Authorised Dealer ("AD") Category-I banks, AD Category-II banks/entities and Full-Fledged Money Changers ("FFMCs") must also submit the 'Liberalised Remittance Scheme ("LRS") daily return' directly on the Centralised Information Management System ("CIMS") from January 1, 2026, including 'nil' reports where applicable. The change, notified through A.P. (DIR Series) Circular No. 17 dated December 3, 2025, will allow AD Category-II banks/entities and FFMCs to check the cumulative amount remitted by a resident individual on a Permanent Account Number basis in the current financial year before facilitating further LRS transactions and will remove the need to route their LRS data through AD Category-I banks. RBI has asked all authorised persons to follow the CIMS user manual and advised newly on-boarded AD Category-II banks/entities and FFMCs to approach the Foreign Exchange Department of the relevant Regional Office for any implementation issues, while noting that the Master Direction – Reporting under Foreign Exchange Management Act, 1999 (FEMA) will be updated.

1.1.3. RBI includes Model Co-op. Bank Ltd. in Second Schedule to RBI Act

RBI has announced that "Model Co-op. Bank Ltd." has been included in the Second Schedule to the Reserve Bank of India Act, 1934.

1.1.4. RBI issues updated list on Inclusion in / exclusion from the Second Schedule to the Reserve Bank of India Act, 1934 – RRBs

The names of the following eight Regional Rural Banks ("RRBs") have been included in the Second Schedule to the Reserve Bank of India Act, 1934:

The names of the following nineteen erstwhile RRBs have been excluded from the Second Schedule to the Reserve Bank of India Act, 1934:

1.1.5. RBI releases 2025 list of Domestic Systemically Important Banks

RBI has released its 2025 list of Domestic Systemically Important Banks ("D-SIBs"), confirming that State Bank of India ("SBI"), HDFC Bank and ICICI Bank remain designated as D-SIBs in the same buckets as in the 2024 list. The additional Common Equity Tier 1 ("CET1") capital requirement continues to be 0.80 per cent (zero point eight zero per cent) of risk-weighted assets for SBI, 0.40 per cent (zero point four zero per cent) for HDFC Bank and 0.20 per cent (zero point two zero per cent) for ICICI Bank, over and above the Capital Conservation Buffer. The update follows the Reserve Bank's framework for dealing with Domestic Systemically Important Banks, first issued on July 22, 2014 and last revised on December 28, 2023, which requires disclosure of D-SIB names, allocation to buckets based on Systemic Importance Scores, and imposition of corresponding CET1 surcharges, and the current list is based on data reported by banks as on March 31, 2025, while foreign banks that are assessed as Global Systemically Important Banks by their home regulators must separately hold a proportionate CET1 capital surcharge in India on their domestic risk-weighted assets.

1.1.6. RBI announces December liquidity injections via OMOs and USD/INR swap

RBI has announced a package of measures to manage banking system liquidity in December 2025, comprising Open Market Operation (OMO) purchase auctions of Government of India securities totalling INR 1,00,000 crore (Indian Rupees One Lakh Crore only) in two tranches of INR 50,000 crore (Indian Rupees Fifty Thousand Crore only) each on December 11, 2025 and December 18, 2025, and a USD/INR buy/sell swap auction for USD 5,000,000,000 (United States Dollars Five Billion only) with a tenor of 3 (three) years on December 16, 2025. RBI stated in its December 5, 2025, press release that detailed instructions for each operation will be issued separately and that it will continue to monitor evolving liquidity and market conditions and undertake further operations as necessary to ensure orderly liquidity conditions in financial markets.

1.1.7. RBI grants in-principle SFB licence to Fino Payments Bank

RBI has granted in-principle approval to Fino Payments Bank Limited for conversion into a Small Finance Bank, after assessing its application under the Guidelines for 'on tap' licensing of Small Finance Banks in the private sector, which permit resident-controlled payments banks with at least 5 (five) years of operations to seek such conversion.

1.1.8. RBI releases Annual Report on Integrated Ombudsman Scheme, 2024–25

RBI has released the Annual Report of the Ombudsman Scheme for financial year 2024–25, covering the functioning of the Reserve Bank – Integrated Ombudsman Scheme, 2021 and related consumer education and protection initiatives between April 1, 2024, and March 31, 2025. During the year, a total of 13.34 lakh (thirteen point three four lakh) complaints were received under this framework, an increase of 13.55 per cent (thirteen point five five per cent) over the previous year, with the Centralised Receipt and Processing Centre handling 9.11 lakh (nine point one one lakh) complaints, 2.96 lakh (two point nine six lakh) complaints reaching the 24 (twenty-four) Offices of RBI Ombudsman, complaints per lakh accounts declining to 7.7 (seven point seven) at the all-India level, and 91.22 per cent (ninety-one point two two per cent) of complaints lodged through digital channels. Banks accounted for 81.53 per cent (eighty-one point five three per cent) of complaints and non-banking financial companies for 14.80 per cent (fourteen point eight zero per cent), with loans and advances and credit cards forming the largest categories of grievances, while 93.07 per cent (ninety-three point zero seven per cent) of all complaints were disposed of and 51.91 per cent (fifty-one point nine one per cent) of maintainable cases were resolved through mutual settlement, conciliation or mediation.

Securities and Exchange Board of India (SEBI)

1.1.9. SEBI issues Securities and Exchange Board of India (Foreign Portfolio Investors) (Second Amendment) Regulations, 2025

SEBI has notified the SEBI (Foreign Portfolio Investors) (Second Amendment) Regulations, 2025, which amend the SEBI (Foreign Portfolio Investors) Regulations, 2019 to introduce the Single Window Automatic and Generalised Access for Trusted Foreign Investor ("SWAGAT-FI") framework and recalibrate eligibility and fee provisions. SWAGAT-FI will cover specified Government and Government-related investors and public retail funds, enjoy exemption from certain eligibility conditions that apply to other Foreign Portfolio Investors ("FPIs"), and pay registration fees in advance for each 10 (ten) year block for as long as registration remains valid. The amendments also permit mutual funds registered under the SEBI (Mutual Funds) Regulations, 1996 to be constituents of an FPI applicant, align the meaning of "fund management entity" and "associate" with the IFSCA (Fund Management) Regulations, 2025, and revise sponsor or associate contribution caps so that Alternative Investment Funds (AIFs) may have sponsor or associate investments up to 10 (ten) per cent of corpus and retail schemes up to 10 (ten) per cent of assets under management, replacing the earlier lower percentage and absolute United States Dollar limits. The regulations will come into force 180 (one hundred eighty) days from their publication in the Official Gazette, with specified provisions relating to the SWAGAT-FI definition taking effect immediately on publication on December 1, 2025.

1.1.10. SEBI issues Securities and Exchange Board of India (Foreign Venture Capital Investors) (Amendment) Regulations, 2025

SEBI has notified the SEBI (Foreign Venture Capital Investors) (Amendment) Regulations, 2025, amending the SEBI (Foreign Venture Capital Investors) Regulations, 2000 to incorporate the SWAGAT-FI framework by cross-reference to the SEBI (Foreign Portfolio Investors) Regulations, 2019 and granting SWAGAT-FI entities tailored exemptions. The changes, which come into force 180 (one hundred eighty) days from publication in the Official Gazette, provide that specified eligibility conditions in regulation 3(2) and the investment concentration caps of 66.67 (sixty-six point six seven) per cent and 33.33 (thirty-three point three three) per cent in regulation 11(c)(i) and (ii) will not apply to SWAGAT-FIs, while the Second Schedule is amended so that renewal fees for such entities are paid and collected in advance for each block of 10 (ten) years, starting from the beginning of the 11th (eleven) year after registration, thereby aligning the fee and investment regime for foreign venture capital investors with the new trusted-investor channel.

1.1.11. SEBI issues Consultation Paper on Review of Master Circular for FPIs and DDPs

SEBI has issued a consultation paper on an updated and simplified Master Circular for Foreign Portfolio Investors ("FPIs") and Designated Depository Participants (DDPs), consolidating all FPI-related circulars issued since the existing Master Circular dated May 30, 2024 and proposing clearer, principle-based rules on registration, post-registration changes, Know Your Client requirements, investment limits, additional disclosure obligations and the issuance of offshore instruments. The draft Master Circular reorganises the framework into parts covering FPI onboarding (including common application form, digital execution and Legal Entity Identifier use), ongoing compliance and material change reporting, monitoring of group-level and company-level foreign investment caps, risk management and debt investment conditions, granular beneficial ownership and concentration-based disclosure triggers, and a tighter regime for Offshore Derivative Instruments, while also formally rescinding a specified list of earlier SEBI circulars once the new framework comes into force. SEBI has invited public comments on the draft through its online portal up to December 26, 2025, positioning the exercise as a move to enhance ease of doing business and ease of compliance for global investors participating in Indian securities markets.

1.1.12. SEBI issues Consultation Paper on Review of existing position limits for Trading Members in Equity Derivatives Segment

SEBI has issued a consultation paper proposing to shift the position limits for Trading Members ("TMs") in index options from notional value to a Futures Equivalent ("FutEq") or delta-based metric, aligning TM-level monitoring with the revised client-level limits in the equity derivatives segment. The draft circular retains the existing limit framework for index futures, where delta is inherently one, but for index options it would cap TM positions at 15 (fifteen) per cent of market-wide FutEq Open Interest ("OI"), supplemented by a slab-based absolute limit structure calibrated to the average daily FutEq OI in each index so that no single TM can dominate low-liquidity products, while requiring stock exchanges and clearing corporations to provide daily FutEq OI data and option deltas to enable intraday monitoring and to publish a detailed standard operating procedure. Public comments on the proposals may be submitted through SEBI's online portal until December 26, 2025.

1.1.13. SEBI releases World Bank: India- Financial Sector Assessment Program, 2024

World Bank has released the India Financial Sector Assessment (FSA) under the joint Financial Sector Assessment Program (FSAP), noting that India's financial system has become more resilient, diversified and inclusive since the previous assessment, while emphasising that sustained reforms are needed to support the country's long-term growth ambitions. The assessment credits regulatory and supervisory reforms, including expanded powers over co-operative banks, tighter prudential rules and scale-based regulation of non-banking financial companies (NBFCs), with improving the robustness of the banking system, and recommends further strengthening of credit risk management frameworks. It finds oversight of securities markets to be sound, supported by reforms in collateral management, business continuity, sustainable investment frameworks, mutual fund liquidity requirements and the Corporate Debt Market Development Fund, and observes that insurance regulation shows a broadly sound level of observance of the Insurance Core Principles, with particular strengths in licensing, suitability, enforcement and disclosure. The report highlights India's digital public infrastructure and government programmes as key drivers of improved access to financial services for both men and women, but calls for deeper account usage and better access to a wider range of financial products, especially for micro, small and medium enterprises, alongside stronger credit infrastructure through the Insolvency and Bankruptcy Code, an out-of-court workout framework and platforms such as the Trade Receivables Discounting System and the Priority Sector Lending framework.

International Financial Services Centres Authority (IFSCA)

1.1.14. IFSCA extends timeline for feedback on Offshore Education Regulations

International Financial Services Centres Authority ("IFSCA") has extended the deadline for public and stakeholder comments on the existing IFSCA (Setting up and Operation of International Branch Campuses and Offshore Education Centres) Regulations, 2022, which were earlier opened for feedback via a public notice on November 14, 2025. The last date for submission of comments and suggestions on the regulatory framework governing international branch campuses and offshore education centres has now been moved to December 31, 2025, giving market participants and other interested parties additional time to provide their inputs.

Miscellaneous

Ministry of Corporate Affairs (MCA)

1.1.15. MCA amends the Companies (Specification of Definition Details) Rules, 2014

On December 1, 2025, the Ministry of Corporate Affairs (MCA) notified the Companies (Specification of definition details) Amendment Rules, 2025 under the Companies Act, 2013. The amendment provides that, for classification as a "small company", paid-up share capital and turnover shall not exceed INR 10,00,00,000 (Indian Rupees Ten Crores only) and INR 1,00,00,00,000 (Indian Rupees One Hundred Crores only) respectively.

Monetary Penalties

1.1.16. RBI imposes penalties on six banks for regulatory non-compliance

RBI has imposed monetary penalties on the following institutions:

2. Key Asian Markets - Vietnam and Indonesia

2.1. Vietnam

2.2.1. Vietnam foreign exchange and Interbank Markets report Higher Volumes

State Bank of Vietnam ("SBV") reported that during the week from November 24, 2025 to November 28, 2025, the buying and selling exchange rates of Vietnamese Dong against the United States Dollar at a major commercial bank moved only slightly.

1) Exchange Rates at a Major Commercial Bank (VND per USD)

2) Interbank Market Activity (Average Daily Turnover)

3) VND Interbank Interest Rates (Average)

4) USD Interbank Interest Rates (Average)

2.3. Indonesia

2.3.1. Bank Indonesia reserves rise on stronger external inflows

Bank Indonesia's ("BI") official reserve assets at the end of November 2025 stood at USD 150.1 billion (United States Dollars One Hundred Fifty Billion and One Hundred Million only), up from USD 149.9 billion (United States Dollars One Hundred Forty-Nine Billion and Nine Hundred Million only) at the end of October 2025, supported by tax and service receipts, government foreign loan withdrawals and rupiah stabilisation measures amid heightened global financial market uncertainty. The reserve stock was equivalent to financing 6.2 (six point two) months of imports, or 6.0 (six) months of imports and servicing government external debt, remaining well above the commonly used international adequacy benchmark of around 3 (three) months of imports and allowing BI to judge that reserves are sufficient to support external sector resilience while safeguarding macroeconomic and financial system stability. Looking ahead, BI expects external resilience to stay strong on the back of a solid export outlook and continued foreign investment inflows and plans to maintain close policy co-ordination with the Government to preserve economic stability and promote sustainable growth.

2.3.2. Indonesia's trade surplus driven by strong non-oil and gas exports

Based on data from BPS-Statistics Indonesia (BPS), Indonesia recorded a trade surplus of USD 2.39 billion (United States Dollars Two Billion Three Hundred Ninety Million only) in October 2025, after a surplus of USD 4.34 billion (United States Dollars Four Billion Three Hundred Forty Million only) in September 2025, which BI views as strengthening the country's external economic resilience. The October surplus was sustained mainly by a robust non-oil and gas trade surplus of USD 4.31 billion (United States Dollars Four Billion Three Hundred Ten Million only), supported by exports of resource-based commodities such as fixed animal and vegetable fats and oils and mineral fuels, along with manufactured products including electrical machinery, equipment and chemical products, while non-oil and gas exports to China, the United States and India remained key contributors to overall export performance. In contrast, the oil and gas trade deficit widened to USD 1.92 billion (United States Dollars One Billion Nine Hundred Twenty Million only) due to higher oil and gas imports and lower exports, even as BI committed to continued policy coordination with the Government and other authorities to reinforce external resilience and support sustainable economic growth.

3. Trends

3.1. Insurance FDI liberalisation and composite licences seen as likely

The expected Insurance Laws (Amendment) Bill, 2025 is being seen as a potential inflection point for India's insurance sector, with the draft framework aiming to raise foreign direct investment (FDI) limits in insurers from 74 per cent (seventy-four per cent) to 100 per cent (one hundred per cent), ease capital norms and permit composite licences so that one insurer can write both life and non-life business. The Bill would amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the Insurance Regulatory and Development Authority Act, 1999, and is expected to be taken up in the current Winter Session of Parliament, but neither its exact drafting nor its passage is guaranteed. Analysts are therefore treating "full foreign ownership", composite licensing and lower entry barriers as a forward-looking trend that may draw in global insurers and reshape existing joint ventures if it goes through, rather than as a settled reality.

3.2. Post-cut commentary now bets on one more RBI rate reduction

Following the RBI December decision to cut the policy repo rate by 25 (twenty-five) basis points to 5.25 per cent (five point two five per cent), economists increasingly describe the move as part of an ongoing easing cycle and peg a "terminal" repo rate near 5 per cent (five per cent), implying expectations of at least one more 25 (twenty-five) basis point cut if growth softens. Commentators point to very low current inflation and upgraded gross domestic product (GDP) growth forecasts as giving the Monetary Policy Committee room either to deliver another reduction as early as the April 2026 policy meeting or to pause if external risks intensify, leading to divergent house views on timing.

4. Sector Overview

4.1. Fitch upgrades India's growth outlook on stronger consumption

Fitch Ratings revised India's gross domestic product (GDP) growth forecast for financial year 2025–26 (two thousand twenty-five–twenty-six) to 7.4 (seven point four) per cent from 6.9 (six point nine) per cent, pointing to stronger private consumption, the boost to real incomes from goods and services tax (GST) rate cuts, and easing inflation as key drivers. The rating agency notes that domestic demand is expected to remain the main engine of growth even as external conditions stay challenging, and it flags that earlier monetary easing by the RBI has helped support activity. For banks, non-banking financial companies and capital markets, a higher medium-term growth track usually underpins loan demand, improves asset quality expectations and can support valuations, while also shaping expectations around future interest-rate paths and sovereign risk pricing.

4.2. Rupee's slide to record lows adds external and inflation risks

The Indian rupee hit successive record lows in early December 2025, first falling to an all-time closing low of about 89.85 (eighty-nine point eight five) against the United States dollar (USD) on December 2, 2025 (two thousand twenty-five), and then briefly breaching the 90 (ninety) per USD level in intraday trade on December 3, 2025 (two thousand twenty-five), before partially recovering. Media reports attribute the weakness to strong USD demand from importers and foreign portfolio investors, higher crude oil prices, delays in a United States–India trade deal and expectations of lower domestic interest rates, with the currency now down almost 5 (five) per cent in 2025 (two thousand twenty-five). The move raises concerns about imported inflation and current account pressures and increases the likelihood of more active RBI foreign-exchange operations, making exchange-rate risk, external commercial borrowing costs and hedging strategies more central to balance-sheet planning for banks, non-bank lenders and other financial institutions.

5. Business Updates

5.1. GoI stake sale in Bank of Maharashtra via OFS draws heavy demand

The Government of India (GoI) has launched a divestment of up to 6 per cent (six per cent) in Bank of Maharashtra (BoM) through an Offer for Sale (OFS), comprising a base 5 per cent (five per cent) equity tranche and a 1 per cent (one per cent) green-shoe option at a floor price of INR 54 (Indian Rupees Fifty Four only) per share, with 10 per cent (ten per cent) of the offer reserved for retail investors. On December 2, 2025, the non-retail portion was subscribed about 4.07 (four point zero seven) times the base size, prompting the Government to exercise the full green-shoe option and take the total proposed divestment to 6 per cent (six per cent) of BoM's paid-up capital, helping the bank move towards Minimum Public Shareholding (MPS) requirements.

5.2. Razorpay obtains RBI PA-CB licence to scale cross-border payments

Payments and banking platform Razorpay has secured the Payment Aggregator – Cross Border (PA-CB) licence from the RBI, formally authorising it to facilitate both inward and outward cross-border payments for Indian and global businesses operating in India. The company has stated that this licence places it among a limited group of fintechs able to offer regulated international payment services, enabling Indian merchants to accept customer payments in over 130 (one hundred and thirty) currencies and helping global platforms access Indian customers through unified integrations across cards, wallets and local methods.

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