We are delighted to share this week's AKP Banking & Finance Weekly Digest. Please feel free to write to us with your feedback at info@akandpartners.in. We shall now be hosting our weekly updates at Spotify!
Subscribe here:Lexpresso by AK & Partners – Legal Shots on Banking, Fintech & Financial Regulation
1. Regulatory Updates
1.1. India
Reserve Bank of India (RBI)
1.1.1. RBI issues draft directions on RE investments in AIFs to tighten exposure norms
The Reserve Bank of India ("RBI") has released revised draft directions for Regulated Entities ("REs") investing in Alternative Investment Funds ("AIFs"), following its December 2023 guidelines and March 2024 clarifications. Key proposals collectively include a 10 per cent (ten per cent) cap per RE and a 15 per cent (fifteen per cent) cap for REs in an AIF scheme. Exposures above 5 per cent (five per cent) with downstream debt investments in debtor companies must carry 100 per cent (one hundred per cent) provisioning. Comments can be submitted by the stakeholders till June 8, 2025, via the RBI website.
1.1.2. RBI notifies Payments Regulatory Board Regulations, 2025
RBI, under the Payment and Settlement Systems Act, 2007, has notified the Payments Regulatory Board Regulations, 2025, effective from May 20, 2025. Replacing the 2008 framework, the new regulations set standards for Board composition, tenure, conflict checks, and decision-making, with an emphasis on cybersecurity, transparency, and confidentiality. The Department of Payment and Settlement Systems will support the Board, which may delegate powers to sub-committees or RBI officers for operational agility.
1.1.3. RBI invites public comments on the draft circular on 'Updation/ Periodic Updation of KYC– Revised Instructions'
RBI on May 23, 2025 has invited public comments on the draft circular Reserve Bank of India KYC (Amendment) Directions, 2025 (on 'Updation/ Periodic Updation of KYC– Revised Instructions'. This constitutes a strategic recalibration of the existing Master Direction – Know Your Customer (KYC) Directions, 2016, with the express purpose of streamlining periodic KYC updation and reducing operational friction for low-risk retail customers. Further, by extending compliance timelines, empowering Business Correspondents (BCs), mandating robust communication cadences and enshrining customer-centric initiatives, the amendments seek to strike an optimal balance between regulatory rigour and service efficiency. This targeted intervention aligns with the broader objectives of financial inclusion, risk-based supervision, and technological enablement, thereby enhancing the overall integrity of India's Anti-Money Laundering (AML) framework.
1.1.4. RBI invites public comments on draft circular on Inoperative Accounts/Unclaimed Deposits – Amendment 2025
RBI has released the draft circular titled Inoperative Accounts/ Unclaimed Deposits in Banks – Revised Instructions (Amendment) 2025, modifying paragraph 6.1 of the January 1, 2024 circular. Public and stakeholder comments are invited until June 6, 2025, via the 'Connect 2 Regulate' section on the RBI website or through alternative submission methods.
Unique Identification Authority of India (UIDAI)
1.1.5. UIDAI shares anonymised Aadhaar data to boost open governance
The Unique Identification Authority of India ("UIDAI") has started publishing non-personal, anonymised data from its Aadhaar Dashboard on the open government platform (data.gov.in). This initiative, led by UIDAI's Chief Data Officer, includes aggregated insights on enrolments, updates, and authentications segmented by geography and age. The release promotes transparency, data-driven policy-making, and academic research. It aligns with India's push for evidence-based policy, fostering digital innovation and public-good governance. UIDAI's move aims to deepen digital inclusion and support research and innovation while upholding data security and open access principles.
Department of Economic Affairs (DEA)
1.1.6. DEA amends Rule 8 of SCRR to boost broker compliance and ease of business
The Department of Economic Affairs ("DEA") has amended Rule 8 of the Securities Contracts (Regulation) Rules, 1957 ("SCRR") via Gazette Notification G.S.R. 318(E) to enhance regulatory clarity for brokers. The move follows a September 2024 Consultation Paper and stakeholder feedback. The amendment responds to evolving broker business models and the increasing complexity of the financial sector. It aims to balance regulatory safeguards with operational flexibility, supporting ease of doing business and ensuring continued transparent growth of India's capital markets. The initiative reflects the Government's commitment to a progressive financial regulatory environment.
1.1.7. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
|
Name of the Financial Institution |
Penalty Imposed |
Reasons |
|---|---|---|
|
RBI imposes monetary penalty on The Aska Central Co-operative Bank Ltd., Aska, Odisha |
INR 10,000/- (Indian Rupees Ten Thousand only) |
Non-compliance with RBI directions on 'Membership of Credit Information Companies (CICs) by Co-operative Banks' |
|
RBI imposes monetary penalty on Transactree Technologies Private Limited ('Lendbox') |
INR 40,00,000/- (Indian Rupees Forty Lakh only) |
Non-compliance with the Non-Banking Financial Company - Peer to Peer Lending Platform (Reserve Bank) Directions, 2017 |
|
INR 63,60,000 lakh (Indian Rupees Sixty-Three Lakh Sixty Thousand only) |
Non-compliance with Section 26A of the Banking Regulation Act, 1949, and RBI directions on 'Credit Flow to Agriculture - Collateral free Agricultural Loans' |
2. Key Asian Markets – Srilanka & Philippines
2.1. Srilanka
2.1.1. The central bank of Sri Lanka further reduces the OPR
The Monetary Policy Board decided to reduce the Overnight Policy Rate ("OPR") by 25 (twenty-five) bps to 7.75 per cent (seven point seven five per cent) at its meeting held yesterday, thereby easing monetary policy further. The Board arrived at this decision after carefully considering the developments both domestically and globally. The Board is of the view that this measured easing of monetary policy stance will support steering inflation towards the target of 5 per cent (five per cent), amidst global uncertainties and current subdued inflationary pressures.
2.2. Philippines
2.2.1. Philippines' BOP posts USD 2.6 Billion deficit in April 2025
The Bangko Sentral Ng Pilipinas ("BSP") reported a Balance of Payments ("BOP") deficit of USD 2.6 Billion (United States Dollar Two Billion Six Hundred Million only) in April 2025, sharply higher than April 2024's. The deficit reflects the national government's foreign currency withdrawals and BSP's net forex operations.
3. Trends & Corporate Moves
3.1. Government may offer discounts on UPI payments
India is rapidly emerging as a global data centre hub, driven by surging internet use, Artificial Intelligence ("AI") integration, and digital demand. The sector grew to USD 1.2 Billion (United States Dollar One Billion Two Hundred Million only) in 2024 and is projected to exceed 9 Giga Watt ("GW") by 2030. Giants like Airtel, Reliance, and Adani are making multibillion-dollar bets, while global players expand across Tier-I and II cities.
3.2. India to lead global satcom rollout, says Telecom Minister Scindia
Telecom Minister Jyotiraditya Scindia announced that India will see the world's fastest satellite communication (satcom) rollout, with the market projected to grow from USD 2.3 Billion (United States Dollar Two Billion Three Hundred Million only) to USD 20 Billion (United States Dollar Twenty Billion only) by 2028. Speaking at TRAI, he highlighted regulatory progress on space spectrum allocation and urged telcos to prioritise quality of service.
4. Sector Overview
4.1. RBI grants "in-principle" approval to Emirates NBD Bank PJSC, UAE for WOS in India
RBI has granted "in-principle" approval to Emirates NBD Bank PJSC, UAE for establishing a Wholly Owned Subsidiary (WOS) in India under the "Scheme for Setting up of WOS by Foreign Banks in India". The bank, currently operating through branches in Chennai, Gurugram, and Mumbai, intends to convert these branches into a WOS. RBI will grant a licence for commencement of banking business under Section 22(1) of the Banking Regulation Act, 1949 upon fulfilment of the requisite conditions.
4.2. RBI cancels the licence of HCBL Co-operative Bank Ltd., Lucknow
RBI has cancelled the banking licence of HCBL Co-operative Bank Ltd., Lucknow with effect from May 19, 2025, due to its lack of adequate capital, earning prospects, and failure to comply with various provisions of the Banking Regulation Act, 1949. The bank is no longer permitted to carry on banking business, including acceptance and repayment of deposits. The Commissioner and Registrar of Cooperative, Uttar Pradesh, has been requested to initiate the bank's winding-up process. As per the bank's submissions, 98.69 per cent (ninety-eight point six nine per cent) of depositors are entitled to full reimbursement of deposits, with INR 21.24 crore (Indian Rupees Twenty-One Crore Twenty-Four Lakh only) already paid under the DICGC scheme.
5. Business Updates
5.1. Super.money targets top-5 neo-bank spot with Flipkart backing
Flipkart-backed fintech Super.money is positioning itself among India's top five neo-banks, leveraging 175 (one hundred seventy-five) million UPI transactions and expanding into fixed deposits, personal loans, and secured credit cards through partner banks.
5.2. Pine Labs converts into public company ahead of USD 1 Billion IPO
Pine Labs, has transitioned into a public entity after receiving shareholder approval on May 16, 2025, changing its name from Pine Labs Private Limited to Pine Labs Limited. The move comes in preparation for a proposed USD 1 Billion (United States Dollar One Billion only) Initial Public Offering ("IPO") expected in the second half of 2025.
5.3. PaySprint raises USD 3 Million in Series A to scale digital banking stack
PaySprint Private Limited, a Delhi-based fintech and regtech startup, has raised USD 3 Million (United States Dollar Three Million only) in Series A funding to expand its flagship platforms — SprintNXT, SprintVerify, and the newly launched SprintEXcrow and SprintEX-code. The funding will deepen adoption, boost Artificial Intelligence ("AI") led onboarding and fraud detection, strengthen bank-enterprise partnerships, and scale product teams.
5.4. Getepay receives RBI approval to operate as online payment aggregator
On 22 May 2025, Getepay, a fintech startup, secured final authorisation from the RBI to function as an online payment aggregator. The approval will allow Getepay to scale operations, enhance merchant-centric services, and broaden access for small businesses. The company has raised approximately USD 4 Million (United States Dollar Four Million only) since inception and aims to expand its digital payment footprint and solution stack across the Indian financial services ecosystem.
5.5. SC flags Flipkart's alleged monopoly in ongoing antitrust case
The Supreme Court ("SC") of India has expressed concern over Flipkart's market practices, remarking that the platform is "known for creating monopolies." The observation arose during proceedings linked to a National Company Law Appellate Tribunal (NCLAT) order directing the Competition Commission of India (CCI) to investigate alleged abuse of dominance. The Court stressed the need to balance foreign investment with protecting small traders and market integrity.
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.
