1. Regulatory Updates
1.1. India
Reserve Bank of India (RBI)
1.1.1. RBI amends regulation on manner of receipt and payment mechanisms
The Reserve Bank of India (“RBI”) has notified amendment to the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023. The new amendment clarifies that the payments between Asian Clearing Union (“ACU”) member countries (excluding Nepal and Bhutan) must be settled through the ACU mechanism or as per RBI directives. RBI
1.1.2. RBI Governor holds meeting with top NBFCs to discuss growth, stability, and financial inclusion
The RBI Governor held a meeting with the Managing Director (MD) & Chief Executive Officer (CEO) of select Non-Banking Finance Companies (“NBFCs”), including Housing Finance Companies and Micro-Finance Institutions, representing nearly 50 per cent (fifty per cent) of the sector’s total assets. Representatives from Self-Regulatory Organisations (SROs), Micro-Finance Institutions Network (MFIN), Sa-Dhan, and Finance Industry Development Council (FIDC) also attended. The Governor emphasised NBFCs' role in credit intermediation and stressed balancing growth with financial stability, customer protection, and grievance redress. He urged NBFCs to join the Unified Lending Interface (ULI) for financial inclusion. RBI
1.1.3. RBI lifts supervisory restrictions on Kotak Mahindra Bank
RBI has lifted the business restrictions imposed on Kotak Mahindra Bank Limited under Section 35A of the Banking Regulation Act, 1949. The restrictions, placed on April 24, 2024, barred the bank from onboarding new customers via online and mobile banking channels and issuing fresh credit cards. Following remedial measures, compliance submissions, and an external audit approved by RBI, the regulator has deemed the bank’s corrective actions satisfactory. RBI
1.1.4. RBI cancels certificate of registration of 17 NBFCs
RBI, in the exercise of powers conferred on it under Section 45-IA (6) of the Reserve Bank of India Act, 1934, has cancelled the Certificate of Registration of Zion Financial Services Pvt Ltd, Namokar Consultants Pvt. Ltd., Salasarji Merchant Pvt. Ltd., Ortem Estates Pvt Ltd, Tanwi Viniyog Pvt Ltd, Peekay Mercantiles Pvt Ltd, Panorama Financial Services Pvt. Ltd., Prashant Impex Private Limited, Ramuka Commercial Pvt. Ltd., Pratius Merchants Pvt. Ltd., Castle Fincon Pvt Ltd, Kishorrai Trading & Holding Pvt Ltd, Gama Commerce Pvt Ltd, Itameri Commerce Pvt. Ltd., Divya Dealers Ltd, Preference Technologies Private Limited, and STIC Marketing Pvt. Ltd, effective January 15, 2025. RBI
1.1.5. 20 NBFCs surrender their Certificate of Registration to RBI
The following 20 Non-Banking Financial Companies (NBFC) have surrendered the Certificate of Registration (CoR) granted to them by the Reserve Bank of India (RBI). The cancellations are based on the NBFCs surrendering their CoRs for two key reasons: (i) exit from the Non-Banking Financial Institution (NBFI) business for Manoway Investments Private Limited and Reliance Commercial Finance Limited, and (ii) cessation of the NBFCs as legal entities due to amalgamation, merger, dissolution, or voluntary strike-off for the remaining companies. The companies affected are as follows. RBI
Sr. No. | Name of the Company | Date of Cancellation of CoR |
1. | Manoway Investments Private Limited | January 13, 2025 |
2. | Reliance Commercial Finance Limited | January 24, 2025 |
3. | Quadrillion Finance Private Limited | January 03, 2025 |
4. | RGVN (North East) Microfinance Limited | January 03, 2025 |
5. | S R B Agencies Pvt Ltd | January 06, 2025 |
6. | Agarwal Iron and Steel Company Pvt Ltd | January 06, 2025 |
7. | Akashganga Suppliers Private Limited | January 06, 2025 |
8. | Braintrust Securities Pvt. Ltd. | January 06, 2025 |
9. | Chaplin Securities Pvt. Ltd. | January 06, 2025 |
10. | Esquire Projects Pvt Ltd | January 06, 2025 |
11. | Goodworth Suppliers Pvt Ltd | January 06, 2025 |
12. | Interface Vanijya Pvt Ltd | January 06, 2025 |
13. | Linear Dealers Pvt Ltd | January 06, 2025 |
14. | Mecons Commotrade Pvt Ltd | January 06, 2025 |
15. | IDFC Financial Holding Company Limited | January 10, 2025 |
16. | IDFC Limited | January 10, 2025 |
17. | India General Trading Co Ltd | January 13, 2025 |
18. | Birla Family Investments Private Limited | January 22, 2025 |
19. | Birla TMT Holdings Private Limited | January 22, 2025 |
20. | Supreet Vyapaar Pvt Ltd | January 29, 2025 |
International Financial Services Centres Authority (IFSCA)
1.1.6. IFSCA updates eligibility for remote trading participants on Stock Exchanges
The International Financial Services Centres Authority (“IFSCA”) has revised the eligibility criteria for Remote Trading Participants (RTPs) on IFSC stock exchanges. The updated framework permits foreign entities regulated by securities regulators from IOSCO-MMoU signatory nations or those with bilateral MoUs with IFSCA. IFSCA
National Payment Corporation of India (NPCI)
1.1.7. NPCI introduces an automated UPI chargeback process to enhance efficiency
The National Payments Corporation of India (“NPCI”) has announced an update to the Unified Payments Interface (“UPI”) chargeback process, enabling automated acceptance and rejection of chargeback amounts. The update, detailed in an NPCI Circular dated February 10, 2025, addresses recurring inconsistencies between remitting and beneficiary banks. NPCI's new guidelines about auto acceptance or rejection of chargeback will become effective from February 15, 2025. NPCI
Other Developments
1.1.8. MeitY extends the deadline for draft DPDP Rules feedback
The Ministry of Electronics and Information Technology (“MeitY”) has extended the deadline for stakeholder feedback on the Draft Digital Personal Data Protection (“DPDP”) Rules, 2025, to March 5, 2025. Initially, feedback was due by February 18, 2025, but multiple representations from stakeholders led to the extension. MeitY
1.1.9. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
Name of the Financial Institution | Penalty Imposed | Reasons |
INR 2,00,000/- (Indian Rupees Two Lakh only) | Contravention of/ non-compliance with directions issued by RBI on ‘Placement of Deposits with Other Banks by Primary Urban Co-operative Banks (UCBs) and ‘Interest Rate on Deposits’. | |
INR 50,000/- (Indian Rupees Fifty Thousand only) | Contravention of/non-compliance with directions issued by RBI on ‘Know Your Customer (“KYC”)’. | |
INR 1,75,000/- (Indian Rupees One Lakh Seventy Five Thousand only) | Contravention of/non-compliance with directions issued by RBI on ‘Loans and Advances to Directors, their Relatives, and Firms / Concerns in which they are interested’, ‘Exposure Norms and Statutory / Other Restrictions – (UCBs), and KYC’. | |
INR 50,000/- (Indian Rupees Fifty Thousand only) | Contravention of/non-compliance with directions issued by RBI on KYC. | |
INR 1,50,000/- (Indian Rupees One Lakh Fifty Thousand only) | Contravention of/non-compliance with directions issued by RBI on ‘Exposure Norms and Statutory / Other Restrictions – UCBs’ and KYC’ | |
INR 61,40,000/- (Indian Rupees Sixty-One Lakh Forty Thousand only) | Contravention of/non-compliance with certain directions issued by RBI on ‘Interest Rate on Advances’ and ‘Customer Service in Banks’. | |
INR 6,70,000/- (Indian Rupees Six Lakh Seventy Thousand only) | Contravention of/non-compliance with certain directions issued by RBI on ‘Loans and Advances - Statutory and Other Restrictions’. | |
INR 5,80,000/- (Indian Rupees Five Lakh Eighty Thousand only) | Contravention of/non-compliance with certain provisions of the ‘KYC Directions, 2016’, ‘Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016’ and directions on ‘Data Format for Furnishing of Credit Information to Credit Information Companies’ issued by RBI. |
1.2. Philippines
1.2.1. Philippine Bank loans surge amid strong growth in key sectors and consumer lending
In December 2024, outstanding loans of universal and commercial banks in the Philippines increased by 12.2 per cent (twelve point two per cent) year-on-year, up from 11.1 per cent (eleven point one per cent) in November 2024. Loans to residents grew by 12.4 per cent (twelve point four per cent), and loans to non-residents rose by 5.7 per cent (five point seven per cent). Loans for production activities increased by 10.8 per cent (ten point eight per cent), driven by lending to key industries. Bangko Sentral Ng Pilipinas
1.2.2. BSP maintains policy rate amid balanced inflation risks and global uncertainty
The Monetary Board decided to maintain the Bangko Sentral Ng Pilipinas (“BSP's”) Target Reverse Repurchase Rate at 5.75 per cent (five point seven five per cent), with overnight deposit and lending rates at 5.25 per cent (five point two five per cent) and 6.25 per cent (six point two five per cent). Inflation forecasts for 2025 and 2026 remain stable at 3.5 per cent (three point five per cent) and 3.7 per cent (three point seven per cent), respectively, with risks balanced but potential pressures from utilities and lower import tariffs on rice. Bangko Sentral Ng Pilipinas
1.3. Bangladesh
1.3.1. BB allows continuous applications for wage remittance services
Bangladesh Bank (“BB”), through FE Circular Letter No. 09 (dated February 10, 2025), has revoked the deadline for applications by licensed Mobile Financial Service Providers (MFSPs) and Payment Service Providers (PSPs) to offer wage remittance repatriation services. These entities can now apply to the Foreign Exchange Policy Department (FEPD) at any time. Other provisions under FE Circular No. 34 (November 29, 2022) and FE Circular Letter No. 11 (September 19, 2023) remain unchanged. BB
1.3.2. BB increases cash margin requirement for external borrowing commitments
BB, through FE Circular Letter No. 10 (dated February 12, 2025), has raised the cash margin requirement for repayment commitments issued by ADs on behalf of resident borrowers from 5 per cent to 25 per cent. Additionally, borrowers must now maintain adequate funded credit line with their respective banks. Other provisions under FE Circular No. 23 (June 21, 2021) remain unchanged. BB
2. Trends
2.1. India offers to host the next AI Action Summit
At the Artificial Intelligence (“AI”) Action Summit 2025, PM Modi proposed that India should host the next edition of the summit, reinforcing the global and inclusive nature of AI partnerships. The summit was co-chaired by PM Modi and President Macron, with France hosting this inaugural edition. The Economic Times
2.2. India is unlikely to lift the ban on Chinese investments soon
India’s Chief Economic Adviser, V. Anantha Nageswaran, stated that the country is not expected to lift restrictions on Chinese investments soon. He emphasised the need for mutual understanding, citing ongoing economic and security concerns. India has maintained strict scrutiny of Chinese investments since 2020, following border clashes. Reuters
3. Sector Overview
3.1. SEBI seeks greater access to social media to curb unauthorised financial advice
Securities and Exchange Board of India (“SEBI”) has requested expanded powers to remove unauthorised financial advice from social media platforms like WhatsApp and Telegram. This move comes as SEBI intensifies its crackdown on unregulated market activities. SEBI has also sought access to call records for investigations, but social media firms have denied compliance, citing legal limitations. Moneycontrol
3.2. NBFCs seek new funding as RBI tightens bank credit
At a recent RBI–NBFC meeting, shadow banks urged the regulator to ease funding constraints amid tightened bank credit. Suggestions included raising External Commercial Borrowing (ECB) limits, establishing a National Housing Bank-like entity for NBFCs, and reclassifying gold loan NBFCs similarly to housing finance and microfinance companies. Business Standard
3.3. India plans tariff cuts to strengthen US trade ties
India is considering lowering tariffs on over 30 (thirty) products, including luxury cars, solar cells, and chemicals, to avoid higher reciprocal duties from the US. This move follows the reduction of import duties on electronics, textiles, and motorcycles in the Union Budget. With a growing trade surplus of USD 38 billion (United States Dollar Thirty-Eight Billion Dollars only), India seeks to ease trade tensions and attract US supply chains. Business Standard
3.4. Government to replace 1961 income tax law with a new tax bill from April 2026
The Income Tax Bill 2025, is set to replace the Income Tax Act, 1961. The new bill introduces a streamlined tax structure, mandatory e-filing, and a faceless assessment system to improve compliance. Key changes include making the new tax regime the default, while taxpayers can still opt for the old one. The Bill also strengthens the General Anti-Avoidance Rule (GAAR) and transfer pricing regulations to prevent tax avoidance. If passed, it will take effect from April 1, 2026. Business Today
4. Business Updates
4.1. PhonePe exits the account aggregator sector and returns the NBFC-AA licence to RBI
PhonePe group has decided to exit the Account Aggregator (“AA”) sector and will collaborate with other AAs to further promote financial inclusion. The company has begun the process of surrendering its NBFC-AA licence to the RBI and will gradually shut down its AA operations. PhonePe's AA platform enabled users to securely share their financial data with regulated Financial Information Users (FIUs). The PAYPERS
4.2. PhonePe leads UPI transactions with a record 8.1 billion in January 2025, NPCI report
NPCI reported that PhonePe processed a record 8.1 (eight point one) billion transactions on the UPI in January 2025, securing a 47.67 per cent (forty-seven point six seven per cent) market share. Business Standard
4.3. Infibeam Avenues secures TPAP licence for RediffPay
Infibeam Avenues Limited (Infibeam) has announced that its subsidiary, Rediff.Com India Limited (Rediff), has been granted a Third-Party Application Provider (“TPAP”) licence by the NPCI, enabling it to offer UPI services through its digital payments platform, RediffPay. Yahoo! finance
4.4. Paytm Money pays INR 45.50 Lakh fine for violating SEBI norm
Paytm Money has settled a case with SEBI by paying INR 45.50 Lakh (Indian Rupees Forty-Five Lakhs Fifty Thousand only), following alleged violations of the regulator’s technical glitch framework. SEBI had issued a show-cause notice citing breaches of the SEBI Act, 1992. This comes weeks after Paytm and its officials collectively paid INR 3.32 crore (Indian Rupees Three Crore Thirty-Two Lakh only) to settle a separate case with SEBI. The Hindu
Disclaimer
The note is prepared for knowledge dissemination and does not constitute legal, financial or commercial advice. AK & Partners or its associates are not responsible for any action taken based on its contents.
For further queries or details, you may contact:
Mr Anuroop Omkar
Partner, AK & Partners
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