1. Regulatory Updates
1.1. India
Reserve Bank of India (RBI)
1.1.1. RBI releases handbook on regulations for quick reference
The Reserve Bank of India (“RBI”) has launched a handbook titled "Regulations at a Glance", compiling key regulatory instructions for ease of reference. This initiative follows RRA 2.0’s recommendation to create regulatory handbooks for better accessibility. The Department of Regulation (DoR) has structured the handbook into six chapters, summarizing major regulations across various regulated entities (REs) and activities. The handbook is intended primarily for ease of reference and to provide a high-level overview of the regulations for general understanding. RBI
1.1.2. RBI proposes a ban on foreclosure charges for floating rate loans
RBI has issued a draft circular (‘Responsible Lending Conduct—Levy of Foreclosure Charges/ Pre-payment Penalties on Loans’) on foreclosure charges and pre-payment penalties, aiming to promote fair lending practices. The proposal bans foreclosure charges on floating-rate loans taken by individuals for non-business purposes and restricts penalties on business loans. Lenders must clearly disclose charges, cannot impose a lock-in period, and cannot penalize early repayment from any source. RBI
1.1.3. RBI restores risk weights on SCB exposures to NBFCs
RBI has revised its stance on risk weights for Scheduled Commercial Banks (“SCBs”) lending to Non-Banking Financial Companies (“NBFCs”). Previously, the risk weight was increased by 25 per cent (twenty-five per cent) points where the existing weight (as per external rating) was below 100 per cent (hundred per cent). Effective April 1, 2025, risk weights will now align with the external rating, as per the Master Circular – Basel III Capital Regulations. Other provisions remain unchanged. RBI
1.1.4. RBI revises risk weights on microfinance loans
The RBI has revised risk weights on microfinance loans. Loans classified as Regulatory Retail Portfolio (RRP) will attract a 75 per cent (seventy-five per cent) risk weight, while microfinance loans in consumer credit will be subject to a 100 per cent (hundred per cent) risk weight. Regional Rural Banks (RRBs) and Local Area Banks (LABs) must apply 100 per cent (hundred per cent) risk weight to all microfinance loans. RBI
1.1.5. RBI revises prudential norms for UCBs
The RBI has reviewed prudential norms for Urban Co-Operative Banks (“UCBs”) to enhance flexibility while maintaining regulatory objectives. The key changes include revised small-value loan limits, increased caps on housing loans, and revised real estate exposure norms. Additionally, the glide path for provisioning security receipts has been extended until the Financial Year (“FY”) 2027-28. These changes take effect immediately and replace previous circulars. RBI
1.1.6. RBI issues final directions on forward contracts in government securities
The RBI has issued the Reserve Bank of India (Forward Contracts in Government Securities) Directions, 2025, finalising the draft released in December 2023. Amendments have been notified in the Official Gazette, and relevant Master Directions on Over the Counter (OTC) derivatives and margining have been updated to enable such transactions. These Directions, issued under Section 45W of the RBI Act, 1934, take immediate effect. RBI
National Payments Corporation of India (NPCI)
1.1.7. IFSCA revises interest on late fee payments
International Financial Services Centres Authority (“IFSCA”) has revised its late payment interest structure, effective March 1, 2025. Previously, entities paid 15 per cent (fifteen per cent) per month on the late fee (20 per cent of the original fee). The new structure reduces this to 0.75 per cent (zero point seven five per cent) per month on the unpaid or short-paid fee amount, easing penalties while encouraging timely payments. The revision enhances transparency and reduces financial strain on regulated entities. IFSCA
International Financial Services Centres Authority (IFSCA)
1.1.8. IFSCA revises interest on late fee payments
International Financial Services Centres Authority (“IFSCA”) has revised its late payment interest structure, effective March 1, 2025. Previously, entities paid 15 per cent (fifteen per cent) per month on the late fee (20 per cent of the original fee). The new structure reduces this to 0.75 per cent (zero point seven five per cent) per month on the unpaid or short-paid fee amount, easing penalties while encouraging timely payments. The revision enhances transparency and reduces financial strain on regulated entities. IFSCA
1.1.9. Mandatory FIU-IND registration for IFSC entities
IFSCA has mandated regulated entities to complete registration on the FIU-IND FINGate 2.0 portal (”FIU-IND Portal”) before commencing business. In urgent cases, registration must be completed within 30 days. Entities facing technical issues must notify the Financial Intelligence Unit (“FIU-IND”) and IFSCA weekly. Additionally, business modifications must be updated within 30 (thirty) days. If registration is delayed, entities must report filings under the Prevention of Money Laundering Act, 2002 via email. IFSCA
1.1.10. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
Name of the Financial Institution | Penalty Imposed | Reasons |
INR 6,20,000/- (Indian Rupees Six Lakh Twenty Thousand only) | Contravention of/ non-compliance with directions issued by RBI on ‘Master Direction - Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022’ and ‘Appointment of Internal Ombudsman by NBFC’. | |
INR 1,50,000/- (Indian Rupees One Lakh Fifty Thousand only) | Contravention of/ non-compliance with directions issued by RBI on ‘NBFC - Housing Finance Company (HFC) (Reserve Bank) Directions, 2021’. | |
INR 39,00,000/- (Indian Rupees Thirty-Nine Lakh only) | Contravention of/ non-compliance with directions issued by RBI on ‘Large Exposures Framework’ and ‘Furnishing of Credit Information to Credit Information Companies (CICs)’. | |
INR 25,000/- (Indian Rupees Twenty-Five Thousand only) | Contravention of/ non-compliance with directions issued by RBI on ‘Know Your Customer (“KYC”)’. | |
INR 50,000/- (Indian Rupees Fifty Thousand only) | Contravention of/ non-compliance with provisions of Section 31 read with Section 56 of the Banking Regulation Act, 1949. | |
INR 50,000/- thousand (Indian Rupees Fifty Thousand only) | Contravention of/ non-compliance with directions issued by the National Bank for Agriculture and Rural Development (NABARD) on ‘Offsite Surveillance System-Revision of Due Dates for Submission of Offsite Surveillance System (OSS)/ Fraud Monitoring System (FMS) Returns’. | |
INR 33,30,000/- (Indian Rupees Thirty-Three Lakh Thirty Thousand only) | Contravention of/ non-compliance with provisions of Section 6(2) read with Section 56 of the Banking Regulation Act, 1949. | |
INR 1,00,000/- (Indian Rupees One Lakh only) | Contravention of/ non-compliance with directions issued by RBI on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – Urban Cooperative Banks (UCBs)’. | |
INR 1,00,000/- (Indian Rupees One Lakh only) | Contravention of/ non-compliance with provisions of Section 26A read with Section 56 of the Banking Regulation Act, 1949. | |
INR 66,60,000/- (Indian Rupees Sixty Six Lakh Sixty Thousand only) | Contravention of/ non-compliance with provisions of Section 47 A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949 and Section 25 (1)(iii) read with Section 23(4) of The Credit Information Companies (Regulation) Act, 2005. | |
INR 33,10,000/- (Indian Rupees Thirty-Three Lakh Ten Thousand only) | Contravention of/ non-compliance with provisions of NBFC - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016' and 'Reserve Bank of India KYC Directions, 2016. |
1.2. Philippines
1.2.1 BSP reduces reserve requirement ratios for banks to boost financial intermediation
The Bangko Sentral ng Pilipinas (“BSP“) will reduce Reserve Requirement Ratios (RRRs) by 200 (two hundred) basis points for universal and commercial banks (U/KBs) and Non-Banking Financial Institutions with Quasi-Banking functions (NBQBs) and 150 (one fifty) basis points for digital banks. Bangko Sentral ng Pilipinas
1.2.2. BSP reminds banks to accept and exchange unfit or mutilated currency
BSP reminds banks to accept unfit or mutilated Philippine banknotes and coins from the public, free of charge. Under BSP Circular No. 829 and the Manual of Regulations for Banks (MORB), banks must process and submit such currency to the BSP for examination. Bangko Sentral ng Pilipinas
1.2.3. Philippines exits FATF's grey list, strengthens AML/CFT regime
BSP welcomes the Philippines' exit from the Financial Action Task Force's (“FATF”) grey list. The FATF acknowledged the country's improved Anti-Money Laundering (“AML”) and countering the financing of terrorism (“CFT”) regime. Bangko Sentral ng Pilipinas
1.3. Vietnam
1.3.1. SBV reviews 2024 achievements and future management orientation
The Deputy Governor of the State Bank of Vietnam (“SBV”) reviewed the banking sector's 2024 results: flexible monetary policy control, a 7.09 per cent (seven point zero nine per cent) Gross Domestic Product (GDP) increase, and 3.63 per cent (three point six three per cent) inflation. Credit growth reached VND 15,600 trillion (Vietnamese Dong Fifteen Trillion Six Hundred Billion only), a 15.09 per cent (fifteen point zero nine per cent) rise from 2023. The State Bank of Vietnam
1.3.2. SBV's strategies to manage interest rates and support economic growth
Deputy Governor Pham Thanh Ha emphasised SBV's initiatives to stabilise deposit rates and reduce lending rates. Measures include cost-cutting, Information Technology (IT) enhancement, and profit-sharing to support credit access. However, some banks have raised deposit rates, risking their efforts. SBV set a 2025 credit growth target of 16 per cent (sixteen per cent), with 2024 credit reaching VND 15,620 trillion (Vietnamese Dong Fifteen Trillion Six Hundred Twenty Billion only), up 16.35 per cent Year on Year (YoY). The State Bank of Vietnam
2. Trends
2.1 EPFO to enable EPF withdrawals via UPI
The Employees’ Provident Fund Organisation (“EPFO”) is in discussions with NPCI to introduce Employees' Provident Fund (“EPF”) withdrawals via UPI within the next 2-3 months. This move aims to provide instant fund transfers to members' UPI-linked accounts, eliminating delays in bank transfers. Currently, EPF withdrawals take 2-3 days, but UPI integration will enable faster access to funds, particularly during emergencies. Mint
2.2. SEBI proposes reforms to boost angel funds
SEBI plans to include Accredited Investors (AIs) as Qualified Institutional Buyers (QIBs) for Angel Funds, expanding investor participation. The 200 (two hundred)-investor limit on private placements may also be removed, enabling more capital flow to start-ups. These reforms aim to enhance risk management and align regulatory objectives, fostering a more robust start-up funding ecosystem. Angel One
3. Sector Overview
3.1. RBI to leverage AI and ML for market prediction
The RBI plans to deploy Artificial Intelligence (“AI”) and Machine Learning (“ML”) tools to predict market trends and detect anomalies. These models will help identify asset bubbles, market disruptions, and conduct stress testing for banks, ensuring financial stability. By analysing historical and macroeconomic data, the RBI aims to enhance risk management and regulatory oversight Inc42
3.2. SEBI plans stricter IPO disclosure norms
SEBI is considering stricter Initial Public Offer (“IPO”) regulations, including a three-year disclosure period for past transactions and enhanced financial reporting. The proposed norms will require Key Performance Indicators (KPIs) to be vetted by both the company’s audit committee and an independent certifying professional. These changes aim to improve transparency, financial clarity, and investor protection as India witnesses a surge in tech-driven IPOs. Outlook Business
4. Business Updates
4.1. Paytm and Perplexity AI join hands for smarter financial assistance
Paytm has partnered with Perplexity to integrate AI-powered search into its app, enabling crores of Indian consumers to access real-time financial assistance. This move enhances digital literacy, providing users with instant, reliable information for managing finances and market trends. Paytm
4.2. BoAt secures shareholder approval for its IPO
BoAt, has received shareholder approval to proceed with its IPO. The company is set to file its draft prospectus with the Securities and Exchange Board of India (“SEBI”) through the confidential filing route, marking its second attempt at going public after scrapping its 2022 IPO plans. Inc42
4.3. Paytm signs MoU with DPIIT to support fintech startups
Paytm has signed a Memorandum of Understanding (“MoU”) with the Department for Promotion of Industry and Internal Trade (“DPIIT”) to accelerate fintech and manufacturing startups in India. Under the Paytm for Startups program, it will offer mentorship, funding, regulatory support, and market access to fintech hardware manufacturers. The Paytm Foundation will also support deep-tech startups in Climate Tech, Web3, Agritech, and Mobility. This collaboration aims to empower entrepreneurs and drive innovation in India’s fintech ecosystem. Angel One
4.4. PhonePe appoints four banks for IPO
Capital, Morgan Stanley, and Citi to advise on its IPO, seeking a USD 15 Billion (United States Dollar Fifteen Billion only) valuation. The fintech firm, backed by Walmart, reported a 73.78 per cent (seventy-three point seven-eight per cent) revenue growth in FY24. Upstox
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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