Banking & Finance Digest March 16, 2026

1. Regulatory Updates

1.1. India

Reserve Bank of India (RBI)

1.1.1. RBI flags FATF updates on high-risk and monitored jurisdictions

Reserve Bank of India (“RBI”) issued a press release informing regulated entities of the Financial Action Task Force (“FATF”) updates released on February 13, 2026, regarding jurisdictions with strategic deficiencies in anti-money laundering and counter-terrorist financing frameworks. RBI noted that the FATF’s statement on the Democratic People’s Republic of Korea and Iran adopted in February 2020 remains in effect, while Myanmar continues to remain on the list of high-risk jurisdictions subject to a call for action, with FATF requiring enhanced due diligence measures proportionate to the risk, while ensuring that humanitarian assistance, legitimate non-profit organisation activity and remittances are not disrupted. RBI also highlighted that Kuwait and Papua New Guinea have now been added to the list of jurisdictions under increased monitoring, joining other jurisdictions already identified by FATF as having strategic deficiencies.

1.1.2. RBI Issues Amendment Directions on ‘Clarification on Owned Fund / Tier 1 Capital computation for NBFCs / ARCs and applicability to Credit / Investment Concentration Norms’

RBI issued the final amendment directions on clarification of owned fund and Tier 1 capital computation for non-banking financial companies (“NBFCs”) and asset reconstruction companies (“ARCs”), and on the applicability of credit and investment concentration norms. RBI noted that, at present, NBFCs other than NBFC-Upper Layer and ARCs reckon Tier 1 capital as on March 31 of the previous year for compliance with such concentration norms and stated that the final directions cover prudential norms on capital adequacy, concentration risk management, housing finance companies, core investment companies, mortgage guarantee companies, ARCs and standalone primary dealers.

1.1.3. RBI issues Amendment Directions on ‘Counterparty Credit Risk - Add-on factors for computation of Potential Future Exposure’

RBI issued Amendment Directions revising the framework on Counterparty Credit Risk (“CCR”) add-on factors for computation of Potential Future Exposure (PFE), after considering feedback on the draft circular released on August 20, 2025. RBI stated that the amendments are intended to provide greater clarity on certain aspects of the CCR framework and to largely align the Current Exposure Method (CEM) with international standards issued by the Basel Committee on Banking Supervision. In particular, the revised instructions clarify that banks acting as clearing members of Securities and Exchange Board of India (“SEBI”) recognised stock exchanges in the equity derivatives and commodity derivatives segments must maintain capital charge for CCR and also revise the add-on factors applicable to interest rate contracts and exchange rate contracts and gold. The amendments have been issued for commercial banks, small finance banks, payments banks and All India Financial Institutions.

1.1.4. RBI cancels Certificate of Registration of 36 NBFCs

The Reserve Bank of India, in exercise of powers conferred on it under the Reserve Bank of India Act, 1934, has cancelled the Certificate of Registration (“CoR”) of 36 (thirty-six) NBFCs from these states:

1.1.5. Nine NBFCs surrender their Certificate of Registration to the RBI

The following Nine NBFCs have surrendered the CoR granted to them by the RBI:

i) Cancellation of CoR due to exit from Non-Banking Financial Institution (NBFI) business

ii) Cancellation of CoR due to meeting the criteria prescribed for unregistered Core Investment Company (CIC) that do not require registration

iii) Cancellation of CoR due to NBFC ceasing to be a legal entity due to amalgamation/ merger/dissolution/ voluntary strike-off, etc.

1.1.6. RBI directs regulated entities to update screening for amended Taliban sanctions list

RBI issued a circular to banks, non-banking financial companies, asset reconstruction companies and other regulated entities regarding implementation of the Unlawful Activities (Prevention) Act, 1967, following a March 10, 2026, United Nations Security Council (UNSC) press release amending 22 (twenty-two) entries in the Taliban Sanctions List maintained under Resolution 1988 (2011). RBI has directed regulated entities to take appropriate action under the Reserve Bank of India - Know Your Customer Directions, 2025 and to strictly follow the procedure prescribed in the Unlawful Activities (Prevention) Act, 1967. The circular also notes that any de-listing request received by specified intermediaries must be forwarded electronically to the Joint Secretary (Counter Terrorism and Counter Radicalisation), Ministry of Home Affairs, while persons or entities seeking removal from the Taliban Sanctions List may apply either directly to the Focal Point for Delisting or through their State of residence or nationality.

1.1.7. RBI issues Directions on Prudential Norms on Declaration of Dividend and Remittance of Profit by Regulated Entities

RBI issued final directions revising the prudential framework governing declaration of dividend and, for commercial banks, remittance of profits, after examining stakeholder feedback received on the draft directions released on January 6, 2026. The final package comprises 5 (five) Master Directions, 4 (four) Repeal Directions and 1 (one) amendment guideline, and covers commercial banks, small finance banks, payment banks, local area banks and regional rural banks. RBI has stated that the new framework will come into effect from Financial Year 2026-27, while the existing prudential norms will continue to apply up to Financial Year 2025-26. RBI has also issued an amendment to the guidelines on setting up wholly owned subsidiaries by foreign banks.

Securities and Exchange Board of India (SEBI)

1.1.8. SEBI issues circular on UNSC sanctions list update under Section 51A of UAPA

The Securities and Exchange Board of India (“SEBI”) has reiterated market intermediaries of their obligations under Section 51A of the Unlawful Activities (Prevention) Act, 1967 (“UAPA”) and Clause 54 of the SEBI Anti‑Money Laundering–Combating the Financing of Terrorism (“AML–CFT”) Master Circular, which prohibit maintaining accounts for individuals or entities appearing on United Nations Security Council (“UNSC”) terrorist sanctions lists. The update records that the UNSC Committee concerning Islamic State of Iraq and the Levant (“ISIL/Da’esh”), Al‑Qaida and associated entities has amended 22 (twenty two) entries on its 1988 (2011) Sanctions List and provides links to the consolidated United Nations (UN) sanctions lists and the ISIL and Al‑Qaida sanctions list. Any delisting requests received by regulated entities must be forwarded electronically to the Ministry of Home Affairs – Counter Terrorism and Counter Radicalisation (CTCR) Division – with a copy to the Ministry of External Affairs – United Nations Political (UNP) Division, while listed individuals and entities may also approach the UN Ombudsperson directly for removal from the ISIL and Al‑Qaida list.

1.1.9. SEBI issues consultation paper on Ease of Investing: Simplified Transmission and Higher Thresholds

The SEBI has issued consultation paper proposing to simplify documentation for transmission of securities and to significantly raise monetary thresholds for “simplified” and straight‑through processing (“STP”) claims, through amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) and the Master Circular for Registrars to an Issue and Share Transfer Agents (“RTAs”). The paper responds to feedback from investors and intermediaries on low existing thresholds, divergent practices, insistence on probated wills, and practical hurdles in obtaining death and heirship documents, especially following the abolition of mandatory probate under Section 213 of the Indian Succession Act, 1925 with effect from 20 December 2025. The proposed framework, applicable to listed companies, RTAs, depositories, depository participants (“DPs”) and asset management companies (“AMCs”).

1.1.10. SEBI issues circular on borrowing framework for mutual funds

The SEBI has specified conditions for intraday borrowing by mutual funds, linking such borrowing to guaranteed same‑day receivables and requiring all related costs and losses to be borne by the AMC, and has clarified that borrowing by equity‑oriented index funds and equity‑oriented exchange traded funds (ETFs) on account of under‑execution of sell trades is permitted only to facilitate participation in the equity cash segment Closing Auction Session under the SEBI (Mutual Funds) Regulations, 2026.

International Financial Services Centres Authority (IFSCA)

1.1.11. IFSCA issues consultation paper on proposed Managing General Agents Regulations

IFSCA has released a consultation paper seeking public comments on the proposed IFSCA (Managing General Agents) Regulations, 2026, which aim to establish a comprehensive regulatory framework for the registration, operation, and supervision of Managing General Agents (MGAs) in IFSCs. The proposed framework recognises MGAs as a standalone intermediary category with delegated underwriting and claims authority from insurers, and is intended to align the IFSC insurance ecosystem with international best practices. The draft regulations set out eligibility criteria, capital requirements, fit-and-proper standards, and governance and compliance obligations, and outline the scope of delegated functions including underwriting, premium collection, and claims settlement. The proposal also seeks to supersede the joint-registration framework and provisions relating to MGAs under the Third Schedule of the IFSCA (Registration of Insurance Business) Regulations, 2021. Public comments on the consultation paper have been invited until 02 April 2026.

1.1.12. IFSCA issues consultation paper on proposed guidelines for capital relief in factoring transactions

IFSCA has released a consultation paper seeking public comments on proposed Guidelines on capital relief and prudential requirements for factoring transactions applicable to Finance Companies (FCs) and Finance Units (FUs) operating in IFSCs. The proposed framework aims to recognise credit risk mitigation techniques for providing capital relief in factoring transactions, aligned with the Basel III framework and global best practices, and supplements the existing framework on computation of regulatory capital issued in April 2021. The draft guidelines also introduce prudential requirements for finance companies engaged in factoring activities, including provisions relating to exposure norms and non-performing asset (NPA) recognition, following the repeal of the earlier circular on factoring dated 17 August 2021. Public comments on the draft guidelines have been invited until 31 March 2026.

1.1.13. IFSCA Working Group releases report on regulatory framework for Independent Financial Advisers at GIFT IFSC

IFSCA has published the Report of the Internal Working Group on Creation of a Regulatory Ecosystem for Independent Financial Advisers (IFAs) at GIFT-IFSC, which examines global practices and proposes a framework for recognising and regulating independent financial advisory activities within the IFSC ecosystem. The report notes that the existing regulatory architecture primarily operates through regulated entity-based models, with limited participation by individual advisers, and identifies the need for a dedicated framework to support advisory services for retail and NRI client segments. The Working Group recommends establishing a regulatory framework for GIFT IFSC Financial Advisors (GIFAs) under the IFSCA Act, 2019, based on a Qualified Financial Entity-anchored supervision model, a central registration system with unique registration numbers, and uniform conduct, disclosure, and investor protection standards. The framework also proposes cross-product advisory permissions, global participation with institutional affiliation in GIFT-IFSC, and phased implementation with potential future self-regulatory organisations, with the objective of strengthening investor protection and expanding the advisory ecosystem in IFSC markets.

1.1.14. IFSCA amends Cyber Security and Cyber Resilience Guidelines for Regulated Entities in IFSCs

IFSCA has issued an amendment to its circular on “Guidelines on Cyber Security and Cyber Resilience for Regulated Entities in IFSCs” dated March 10, 2025, providing certain temporary exemptions from compliance requirements for specified categories of regulated entities (REs). Under the amendment, REs operating as branches of regulated Indian or foreign entities, REs providing services only to group entities such as Global In-House Centres, and REs with fewer than 10 employees have been granted an exemption for a period of three (3) years from the date of issuance of the original circular, subject to conditions including adoption of the cyber security framework of the parent entity, designation of the parent entity’s CISO as the responsible officer, and annual certification and audit reporting to IFSCA. The amendment also extends a similar three-year exemption to foreign universities in IFSCs, newly incorporated standalone REs without a parent entity, and credit rating agencies, subject to certification that adequate cybersecurity measures proportionate to risk exposure have been implemented.

Insurance Regulatory and Development Authority of India (IRDAI)

1.1.15. IRDAI engages with US-India Strategic Partnership Forum on developments in the insurance sector

IRDAI, in collaboration with the US-India Strategic Partnership Forum (USISPF), held a virtual engagement with US-based stakeholders on 9 March 2026 to exchange perspectives on developments in India’s insurance sector. The discussion highlighted opportunities in the Indian insurance market and recent regulatory developments, including the Sabka Bima Sabki Raksha Act, 2025 and ongoing reforms such as implementation of Ind-AS, which are expected to strengthen industry standards, transparency and market integrity. The interaction formed part of IRDAI’s broader effort to enhance international engagement and dialogue with global stakeholders on evolving regulatory practices and market trends in the insurance and financial services sector.

Monetary Penalties

1.1.16. RBI imposes penalties on 3 banks for regulatory non-compliance

RBI has imposed monetary penalties on the following institutions:

2. Key Asian Markets - Philippines and Bangladesh

2.1. Philippines

2.2.1. Philippines records USD 560 million FDI net inflows in December 2025

Foreign direct investment (FDI) into the Philippines recorded net inflows of USD 560 Million (United States Dollars Five Hundred Sixty Million only) in December 2025, with Japan emerging as the leading source of investments during the month. The inflows were primarily directed towards the financial and insurance activities sector. On a cumulative basis, FDI net inflows reached USD 7.8 Billion (United States Seven Billion Eight Hundred Million only) Dollars for the period January–December 2025. Equity capital placements during the year were sourced mainly from Japan, the United States, Singapore and South Korea, and were largely channelled into the manufacturing, wholesale and retail trade, and financial and insurance sectors.

2.2.2. Philippines’ External Debt declines in Q4 2025, Debt Manageability Indicators improve

The Philippines’ outstanding external debt declined by 1.0 per cent (one point zero per cent) in the fourth quarter of 2025, falling to USD 147.65 Billion (United States Dollars One Hundred Forty-Seven Billion Six Hundred Fifty Million only) in December 2025 from USD 149.09 Billion (United States Dollars One Hundred Forty-Nine Billion Ninety Million only) in September 2025. The decline was primarily driven by net sales of Philippine debt securities by non-residents amounting to USD 2.28 Billion (United States Dollars Two Billion Two Hundred Eighty Million only) and valuation adjustments of USD 659.38 Million (United States Dollars Six Hundred Fifty-Nine Million Three Hundred Eighty Thousand only), which partly offset net availments of USD 1.44 Billion (United States Dollars One Billion Four Hundred Forty Million only) during the quarter. External debt as a percentage of GDP improved to 30.3 per cent (Thirty point Three per cent) from 30.9 per cent (Thirty point Nine per cent) in the previous quarter, while the debt service ratio improved to 8.3 per cent (Eight point Three per cent) from 11.5 per cent (Eleven point Five per cent) a year earlier.

2.2.3. Philippines’ balance of payments records deficit in 2025

The Philippines’ balance of payments (BOP) recorded a deficit of USD 1.44 Billion (United States Dollars One Billion Four Hundred Forty Million only) in 2025, equivalent to USD 1.44 Billion (United States Dollars One Billion Four Hundred Forty Million only) of GDP, reversing the surplus of USD 1.44 Billion (United States Dollars One Billion Four Hundred Forty Million only), equivalent to USD 1.44 Billion (United States Dollars One Billion Four Hundred Forty Million only) of GDP, recorded in 2024. The outcome was attributed to softer financial account inflows amid tighter global financial conditions, including increased investments by residents in foreign-issued debt securities and moderated foreign loan availments and foreign direct investment inflows.

2.2. Bangladesh

2.2.1. Bangladesh Bank issues updated Guidelines on Electronic Know-Your-Customer (e-KYC)

Bangladesh Bank has issued updated Guidelines on Electronic Know-Your-Customer (e-KYC) applicable to Scheduled Banks, Finance Companies, Mobile Financial Service (MFS) Providers, Payment Service Providers (PSPs), Payment Systems Operators (PSOs), and other payment service providers. The revised framework seeks to support technology-based banking services and digital payment instruments while strengthening safeguards against fraud and identity-related risks and promoting efficient and risk-mitigated delivery channels for financial services. The circular also requires regulated entities to submit quarterly updates on implementation progress of the e-KYC Guidelines in the prescribed format, and has been issued under Section 45 of the Bank Company Act, 1991; Section 41 of the Finance Companies Act, 2023; and Section 8 of the Payment and Settlement System Act, 2024. The circular will come into force on 01 September 2026, replacing earlier instructions on the subject.

2.2.2. Bangladesh Bank issues directions on loan facilities against Treasury Bonds

Bangladesh Bank has issued directions permitting banks to extend overdraft or term loan facilities against Treasury Bonds held under lien, in reference to its earlier circular on loan classification and provisioning. The circular requires that the Treasury Bond be marked as ‘lien’ in the Financial Market Infrastructure (FMI) system prior to disbursement, and permits banks to finance up to 75 per cent (Seventy Five per cent) of the face value of the bond, subject to the condition that the outstanding loan amount shall not exceed the face value of the bond. The tenure of the loan facility must not exceed the maturity period of the bond, and banks are prohibited from extending finance for the purpose of purchasing Treasury Bonds. The directive has been issued under Section 45 of the Bank Company Act, 1991 (as amended up to 2023) and comes into force with immediate effect.

3. Trends

3.1. India bonds under pressure from oil surge; RBI likely anchoring 10-year yield amid Iran conflict

Indian government bonds faced heavy selling pressure this week as oil prices surged, though the benchmark 6.48 per cent (approx Six point Four Per Cent) 2035 bond showed resilience, ending at 6.6798 per cent (Approx. Six point Seven Per Cent) after closing at 6.6666 Per Cent (Approx. Six point Six Per Cent) on Thursday, supported by likely central bank purchases. Brent crude jumped 10 per cent (Ten Per Cent) to USD 100.30 (United States Dollar One Hundred and 30 Cents) per barrel amid deepening risk aversion as the Middle East war involving Iran, Israel and the US enters its third week, raising inflation concerns for India — the world's third-largest oil importer — and widening spreads across most maturities.

3.2. Muthoot FinCorp to raise up to INR 600 crore via retail bond issue

Gold-loan focused NBFC Muthoot FinCorp has launched a public issue of secured, redeemable non-convertible debentures to raise up to INR 600 Crore (Indian Rupees Six Hundred Crore only) from retail and other investors. The issue has a base size of INR 200 Crore (Indian Rupees Two Hundred Crore only) with a greenshoe option of up to INR 400 Crore (Indian National Rupees Four Hundred Crore only), and offers tenors of 24 (Twenty Four), 36 (Thirty-Six), 60 (Sixty) and 72 (Seventy Two) months with yields in the range of 8.70 per cent (Eight Point Seven Per Cent) –9.10 per cent (Nine point One Per Cent), and will remain open for subscription until 23 March. Proceeds will be used for onward lending and financing activities, repayment or prepayment of existing borrowings, and general corporate purposes, with the bonds rated ‘AA-/Positive’ by Crisil Ratings and ‘AA/Stable’ by Brickwork Ratings, indicating a high degree of safety for timely servicing of obligations.

4. Sector Overview

4.1. RBI injects INR 50,000 Crore durable liquidity via OMO purchases ahead of tax outflows

The Reserve Bank of India injected INR 50,000 crore (Indian Rupees Fifty Thousand Crore only) of durable liquidity into the banking system through an open market operation purchase auction, acquiring specific government securities including INR 13,507 Crore (Indian Rupees Thirteen Thousand Five Hundred and Seven Crore only) of 6.33 per cent (Six point Three Three per cent) GS 2035, INR 13,494 Crore (Indian Rupees Thirteen Thousand Four Hundred and Ninety-Four Crore only) of 6.01 per cent (Six point Zero One per cent) GS 2030, and smaller tranches of other bonds maturing between 2031 and 2053. (Link)

4.2. Bank credit and deposit growth accelerate in second half of February

Bank credit grew 14.5 per cent (Fourteen point Five Per Cent) year-on-year in the fortnight ended 28 February, up from 13.6 per cent (Thirteen Point Six Per Cent) in the previous 14-day period, while deposits rose 11.9 per cent (Eleven point Nine Per Cent) versus 11.2 per cent (Eleven point Two Per Cent) a fortnight earlier, according to Reserve Bank of India data. Scheduled commercial banks' deposits stood at approximately INR 251 lakh crore (Indian National Rupees Two Hundred Fifty-One Lakh Crores), with about 87 per cent (Eighty-Seven Per Cent) parked in fixed deposits, underscoring continued preference for term products amid elevated interest rates. Total bank credit reached around INR 207 lakh crore (Indian National Rupees Two Hundred Seven Lakh Crores) in the same period, with the system-wide credit–deposit ratio easing marginally to 82.39 per cent (Eighty Two point Three Nine Per Cent) from 82.47 per cent (Eighty Two point Four Seven Per Cent) a fortnight ago, indicating that deposit mobilisation is keeping pace with robust credit demand.

5. Business Updates

5.1. Vedanta Raises INR 2,575 Crore via 3-Year Bonds to Refinance Debt

India-listed mining giant Vedanta Limited has successfully secured INR 2,575 Crore (Indian Rupees Two Thousand Five Hundred Seventy-Five Crore only) through a three-year bond sale, primarily to restructure its existing liabilities and manage upcoming debt maturities. Arranged by Barclays and Citigroup, these non-convertible debentures were placed with institutional investors at a coupon rate of approximately 8.95 per cent (eight point nine five per cent) Although the company initially targeted a lower rate of 8.75 per cent (eight point seven five per cent), borrowing costs rose due to market volatility stemming from geopolitical tensions and fluctuations in government bond yields. Despite historically high leverage driven by dividend payouts to its UK-based parent, Vedanta Resources Ltd (VRL), the company's consolidated net leverage improved to 2.55 (two point five five) times in fiscal 2025, supported by stronger earnings and a reduction in net debt to 1.11 Lakh Crore (Indian Rupees One Lakh Eleven Thousand Crore only).

5.2. Generali JV Acquisition by Central Bank of India approved

The Competition Commission of India (CCI) provided its formal approval on March 10, 2026, for the Central Bank of India to increase its stake in both Generali Central Insurance and Generali Central Life Insurance to 26% (Twenty Six percent). This move marks the completion of the bank's strategy to move from a minority partner to a significant shareholder with greater say in product governance.