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!
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1. Regulatory Updates
1.1. India
Reserve Bank of India (RBI)
1.1.1. RBI lifts restrictions on Padmashri Dr. Vithalrao Vikhe Patil Co-operative Bank
RBI has lifted restrictions on Padmashri Dr. Vithalrao Vikhe Patil Co-operative Bank Ltd., Nashik, effective May 16, 2025. The Directions, first issued in May 2018 under the Banking Regulation Act, were extended multiple times. RBI withdrew them after reviewing the bank's financials and determining it was in the public interest.
Security Exchange Board of India (SEBI)
1.1.2. SEBI accepts Strata SM REIT's exit, cautions investors against misrepresentation
Security Exchange Board of India ("SEBI") has accepted the surrender of registration by Strata Small Medium ("SM") Real Estate Investment Trusts ("REIT") (Reg. No. IN/SM-REIT/24-25/0004) following media reports and legal proceedings involving its promoter. After discussions with the REIT's independent director, compliance officers, and trustee, SEBI confirmed that Strata SM REIT will no longer function or present itself as a SEBI-regulated entity.
1.1.3. SEBI extends AIF Managers' certification deadline to July 31, 2025
SEBI has extended the deadline for Alternate Investment Fund ("AIF") Managers' key investment team to obtain the mandatory 'National Institute of Securities Markets (NISM) Series-XIX-C' certification from May 9, 2025, to July 31, 2025. This extension applies to existing AIF schemes and those with pending applications as of May 10, 2024. The move aims to ease compliance and takes immediate effect.
1.1.4. SEBI issues revised investor charter for RTAs, mandates enhanced disclosures
SEBI has updated the Investor Charter for Registrars to an Issue and Share Transfer Agents ("RTAs") to align with developments like SCORES 2.0 and the ODR platform. RTAs must now prominently display the revised charter and continue monthly grievance disclosure.
1.1.5. SEBI allows EL-based rating scale for municipal bonds
SEBI now permits CRAs to use the Expected Loss (EL)-based Rating Scale, alongside standard and Probability of Default (PD) ratings, for municipal bonds financing infrastructure projects.
1.1.6. SEBI extends deadline for ODI and segregated portfolio disclosures to November 17, 2025
SEBI has extended the implementation timeline for certain provisions of its December 17, 2024, circular regarding Offshore Derivative Instruments (ODIs) and FPIs with segregated portfolios. The disclosure requirements under Paragraphs 2.2 to 2.7 must now be complied with by November 17, 2025.
1.1.7. SEBI simplifies yield computation and enhances cash flow disclosure for corporate bonds
SEBI has simplified the yield-to-price computation for non-convertible securities traded on the Request for Quote (RFQ) platform by using due dates from the cash flow schedule, disregarding day count conventions. It also mandates disclosure of cash flow schedules in the centralised bond database at International Securities Identification Number (ISIN) activation.
1.1.8. SEBI revises EBP platform norms to streamline private placements
SEBI has revised provisions under Chapters VI and VII of its 2024 Master Circular to enhance the efficacy of the Electronic Book Provider ("EBP") platform. Key changes include updated thresholds, timelines, anchor investor disclosures, and allotment norms.
1.1.8. Monetary Penalties by RBI: Over INR 1.72 Cr Penalised This Week
State Bank of India (SBI) tops the list with a penalty of INR 1.72 crore for non-compliance on customer protection and loan monitoring rules.
|
Name of the Financial Institution |
Penalty Imposed |
Reasons |
|
INR 50,000/- (Indian Rupees Fifty Thousand only) |
Contravention of provisions of Section 31 read with Section 56 of the BR Act for failure to submit accounts and balance sheet for FY 2023-24 along with auditor's report within the stipulated timeline. |
|
|
INR 1,00,000/- (Indian Rupees One Lakh only) |
Contravention of provisions of Section 20 of the Banking Regulation Act, 1949, relating to sanction of director related loans. |
|
|
INR 1,00,000/- (India Rupees One Lakh only) |
Non-compliance with certain directions issued by RBI on 'Loans and advances to directors, their relatives, and firms/concerns in which they are interested'. |
|
|
INR 2,00,000/- (Indian Rupees Two Lakh only) |
Contravention of provisions of Section 20 of the Banking Regulation Act, 1949, relating to sanctioning of loans and advances to directors, their relatives, and firms/concerns in which they are interested. |
|
|
INR 50,000/- (Indian Rupees Fifty Thousand only) |
Non-compliance with RBI's Scale-Based Regulation Directions, 2023, due to failure to obtain prior approval for change in management resulting in over 30 per cent (thirty per cent) change in directors (excluding independent directors). |
|
|
INR 29,60,000/- (Indian Rupees Twenty-Nine Lakh Sixty Thousand only) |
Non-compliance with RBI directions on 'Financial Statements Presentation and Disclosures' for failure to disclose correct and complete information about customer complaints in Annual Financial Statements for FY 2023-24. |
|
|
INR 50,00,000/- (Indian Rupees Fifty Lakh only) |
Non-compliance with RBI directions on 'Creation of a Central Repository of Large Common Exposures-Across Banks' and 'Central Repository of Information on Large Credits ("CRILC") – Revision in Reporting' for failure to report credit information of certain borrowers to CRILC. |
2. Key Asian Markets – Vietnam & Philippines
2.1 Vietnam:
2.1.1 NAPAS and Mastercard launch dual-chip card
National Payment Corporation of Vietnam ("NAPAS") and Mastercard, along with nine Vietnamese banks, launched a co-badged dual-chip card enabling seamless domestic and international payments. Combining NAPAS's local network with Mastercard's global reach, the card supports contact and contactless payments at 6,50,000+ (six lakh fifty thousand plus) domestic points and 150 (one hundred fifty) million global locations. It enhances cross-border transactions for shopping, travel, education, and business with robust security standards.
2.2. Philippines:
2.2.1. Philippines' FDI net inflows drop 61.9 per cent in February 2025 due to base effects
Foreign Direct Investment (FDI) net inflows to the Philippines dropped to USD 529 Million (United States Dollar Five Hundred Twenty-Nine Million only) in February 2025 a 61.9 per cent (sixty-one point nine per cent) decline from USD 1.4 Billion (United States Dollar One Billion Four Hundred Million only) a year earlier—mainly due to base effects. Equity capital investments contracted sharply by 85.9 per cent (eighty-five point nine per cent) to USD 108 Million (United States Dollar One Hundred Eight Million only), while investments in debt instruments and reinvested earnings also declined.
3. Trends & Corporate Moves
3.1. India's data centre boom, from outsourcing hub to global digital powerhouse
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.
4. Sector Overview
4.1 SIDBI report highlights credit gaps and digital growth in MSME sector
Small Industries Development Bank of India ("SIDBI's") report shows rising digital adoption among Micro, Small, and Medium Enterprises ("MSMEs"), but an INR 30 Lakh Crore (Indian Rupees Thirty Lakh Crore only) credit gap persists—worst for women-led 35 per cent (thirty-five per cent) and service sector MSMEs 27 per cent (twenty-seven per cent). While 18 per cent (eighteen per cent) use digital lending, the report urges targeted credit solutions and stronger digital infrastructure.
4.2. SBI plans to raise up to USD 3 Billion in FY26 amid mixed Q4 results
State Bank of India ("SBI") plans to raise up to USD 3 Billion (United States Dollar Three Billion only) in FY26 via foreign currency bonds, with details to be finalised on May 20. Despite strong interest income and improved asset quality in Q4 FY25, net profit dipped nearly 10 per cent (ten per cent).
4.3. IIFL Fintech fund exits Finarkein with 2X return
India Infoline Finance Limited ("IIFL") Fintech Fund exited Finarkein Analytics with over 2X return in three years, marking its second successful exit. With strong portfolio growth and a INR 200 Crore (Indian Rupees Two Hundred Crore only) Series II close, the fund aims to back India's next fintech wave.
5. Business Updates
5.1. SBFC finance retains 'IND AA-' rating with stable outlook
India Ratings has affirmed Small Business Fincredit India Private Limited ("SBFC") Finance's long-term issuer rating at 'IND AA-' with a stable outlook, citing expectations of steady franchise growth, focus on secured lending products, and sustained profitability. The rating reflects strong governance, pan-India presence, and stable asset quality," positioning the tool as a decisive shift in fraud defence for digital-native finance.
5.2. Capital India Finance sees trend shift amid weak quarterly performance
Capital India Finance's stock trend has shifted from mildly bullish to sideways, indicating consolidation. The company reported a 44.64 per cent (forty four point six four per cent) YoY decline in Profit After Tax (PAT) to INR 2.14 Crore (Indian Rupees Two Crore Fourteen Lakh only), with cash reserves dropping to INR 245.77 Crore (Indian Rupees Two Hundred Forty Five Crore Seventy Seven Lakh only) and net sales at INR 154.45 Crore (Indian Rupees One Hundred Fifty Four Crore Forty Five Lakh only).
5.3. JM Financial's model portfolio bets on economic revival, flags valuation risks
JM Financial launched its India Model Portfolio with overweight positions in banks, real estate, infrastructure, telecom, and defence, citing macro recovery and a dovish RBI under new Governor Malhotra. The brokerage remains underweight on internet platforms, utilities, cement, pharma, and staples amid earnings downgrades and high valuations. While capex-led growth and rural demand recovery drive optimism, stretched Price-to-Earnings (P/E) and Price/Earnings-to-Growth (PEG) ratios across market caps warrant caution
5.4. SMFG may merge India NBFC arm with YES Bank post 20 per cent stake acquisition
Sumitomo Mitsui Financial Group ("SMFG") is likely to merge its Indian Non-Banking Finance Company ("NBFC"), SMFG India Credit, with YES Bank after SMBC acquires a 20 per cent (twenty per cent) stake in the bank, per Business Line. The move aligns with RBI norms that restrict banks from owning lending subsidiaries in overlapping segments. SMFG India Credit's portfolio includes home, business, and personal loans, areas where YES Bank already operates.
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