1. Regulatory Updates
1.1. India
1.1.1. Non-Residents can invest in sovereign green bonds
The Reserve Bank of India (“RBI”) has announced that Sovereign Green Bonds with a 10 (ten) year tenor, issued in the second half of Financial Year 2024-25, will be included under the ‘Fully Accessible Route’ (“FAR”) for non-resident investments. This allows non-resident investors unrestricted access to these bonds, as with other eligible Government Securities specified under FAR since its initiation in 2020. The decision follows the issuance calendar for Sovereign Green Bonds outlined in September 2024, aiming to increase participation in sustainable financing. The directive takes effect immediately under Section 45W of the RBI Act, 1934. RBI
1.1.2. FATF revises high-risk jurisdictions list
The Financial Action Task Force (“FATF”) has updated its list of high-risk and other monitored jurisdictions as of October 25, 2024. Myanmar remains on the high-risk list, requiring enhanced due diligence, with recommendations to safeguard legitimate humanitarian and remittance flows. Additionally, Algeria, Angola, Côte d’Ivoire, and Lebanon have been added to the increased monitoring list, while Senegal has been removed following FATF’s review. The guidance emphasises strategic anti-money laundering (AML) and combating the financing of terrorism (CFT) actions, allowing regulated entities to continue legitimate transactions with the listed jurisdictions. RBI
1.1.3. RBI amends KYC master Direction 2016
RBI has revised its Master Direction on Know Your Customer (“KYC”) norms, aligning with recent updates in the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, and the Unlawful Activities (Prevention) Act, 1967. Key amendments include updated Customer Due Diligence (“CDD”) requirements, improved KYC data sharing with the Central KYC Records Registry, and streamlined procedures for existing clients seeking additional services. Effective immediately, the changes enhance regulatory compliance while reducing redundant CDD for clients with verified records. RBI
1.1.4. Expanded foreign exchange transaction reporting to trade repository
RBI has issued new directives for Authorised Dealers to enhance the reporting of foreign exchange transactions to the Clearing Corporation of India Ltd. (CCIL) Trade Repository. In case of, all inter-bank foreign exchange contracts (“FX contracts”) involving Indian Rupees (“INR”) must be reported in hourly batches, while non-INR contracts are to be submitted by the end of the business day. Additionally, FX contracts executed with clients will be reported in phases based on transaction thresholds, starting from May 12, 2025. RBI
1.1.5. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
| Name of the Financial Institution | Penalty Imposed | Reasons |
| Tura Urban Co-operative Bank Ltd., Tura, Meghalaya | INR 1,00,000/- (Indian Rupees One Lakh only) | Contravention of the specific directions issued by RBI under Supervisory Action Framework (SAF). |
| Sahyog Urban Co-operative Bank Ltd., Udgir, Maharashtra | INR 1,50,000/- (Indian Rupees One Lakh Fifty Thousand only) | Contravention of the provisions of section 26A read with section 56 of the Banking Regulation Act, 1949 (“BR Act”). |
| Mehmadabad Urban People’s Co-operative Bank Ltd., Mehmadabad, Dist. Kheda, Gujarat | INR 60,000/- (Indian Rupees Sixty Thousand only) | Contravention of/non-adherence with certain directions issued by RBI on ‘Membership of Credit Information Companies (CICs) by Co-operative Banks’ and ‘Know Your Customer (KYC)’. |
| The Rander People’s Co-operative Bank Ltd., Surat, Gujarat | INR 1,50,000/- (Indian Rupees One Lakh and Fifty Thousand only) | Contravention of provisions of section 26A read with section 56 of the Banking Regulation Act, 1949 (BR Act) and non-compliance with certain directions issued by RBI on ‘Know Your Customer (KYC)’. |
| The Jambusar People’s Co-operative Bank Ltd., Bharuch, Gujarat | INR 10,000/- (Indian Rupees Ten Thousand only) | Contravention of/non-adherence with certain directions issued by RBI on ‘Membership of Credit Information Companies (CICs) by Co-operative Banks’. |
| Shree Mahabaleshwar Co-operative Bank Ltd., Karnataka | INR 5,00,000/- (Indian Rupees Five Lakh only) | Contravention of/non-adherence with certain directions issued by RBI on ‘Loans and advances to directors, their relatives, and firms /concerns in which they are interested’. |
| Manvi Pattana Souharda Sahakari Bank Niyamitha, Manvi | INR 25,000/- (Indian Rupees Twenty Five Lakh only) | Contravention of/non-adherence with certain directions issued by RBI on Supervisory Action Framework (SAF). |
| The Nilambur Co-operative Urban Bank Ltd., Kerala | INR 50,000/- (Indian Rupees Fifty Thousand only) | Contravention of/non-adherence with certain directions issued by RBI on Supervisory Action Framework (SAF). |
| The Srirangam Co-operative Urban Bank Ltd., Tamil Nadu | INR 1,50,000/- (Indian Rupees One Lakh and Fifty Thousand only) | Contravention of/non-adherence with certain directions issued by RBI on ‘Loans and advances to directors, their relatives, and firms /concerns in which they are interested’ and specific directions issued under ‘Supervisory Action Framework’ (SAF). |
| Sree Charan Souhardha Co-operative Bank Ltd., Bengaluru | INR 2,00,000/- (Indian Rupees Two Lakh only) | Contravention of/non-adherence with certain directions issued by RBI on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’ and specific directions issued under ‘Supervisory Action Framework’ (SAF). |
| South Indian Bank Limited | INR 59,20,000/- (Indian Rupees Fifty-Nine Lakh and Twenty Thousand only) | Contravention of/non-adherence with certain directions issued by RBI on ‘Interest Rate on Deposits’ and ‘Customer Service in Banks’. |
1.2. Bangladesh
1.2.1. BB set to lift LC restrictions for struggling banks
Bangladesh Bank (“BB”) has agreed in principle to ease restrictions on opening letters of credit (“LCs”) for six financially challenged banks, originally imposed in August 2024. The restrictions had mandated a 100 per cent (one hundred per cent) margin for LC issuance. The banks requested faster access to liquidity support and a review of high profit rates charged on inter-bank loans. BB noted that profit rates would remain market-driven, despite banks’ concerns about elevated rates. The Daily Star
1.3. Indonesia
1.3.1. BI and MAS extend bilateral financial agreement
Bank Indonesia (“BI”) and the Monetary Authority of Singapore (“MAS”) have agreed to extend their bilateral financial arrangement until November 2027. This extension, now set for three years instead of the previous one-year term, highlights the strong cooperation between the two central banks in maintaining monetary stability amid global economic uncertainties. The arrangement includes a local currency bilateral swap facility, allowing up to SGD 9.5 billion (Singapore Dollar Nine Billion and Five Hundred Million only) or IDR 100 trillion (Indonesian Rupiah One Hundred Trillion only) in currency exchange, and a USD 3 billion (United States Dollar Three Billion only) bilateral repo agreement enabling repurchase transactions secured by government bonds. Bank Indonesia
2. Trends
2.1. WazirX maps recovery strategy
WazirX, the cryptocurrency exchange, is planning a significant recovery following a cyberattack that resulted in the theft of INR 2,000 crore (Indian Rupees Two Thousand Crore only) from its multi-sig wallet. As part of the recovery plan, WazirX will launch a new decentralised exchange (“DEX”) and restart its platform by February 2025, integrating new features such as crypto staking, Over-the-Counter (OTC) desks, and futures trading. The platform will issue “recovery tokens” to creditors, who can exchange them for DEX tokens, hoping to recover at least 57 per cent (fifty-seven per cent) of their lost funds. Money Control
3. Sector Overview
3.1. India’s GDP set to grow at 6.5 per cent in Q2FY25
State Bank of India (“SBI”) projects a 6.5 per cent (six point five per cent) growth in India’s Gross Domestic Product (“GDP”) for the second quarter of Fiscal Year (“FY”) 2025, citing rising rural demand as a key growth driver despite temporary dips. Rural consumer sentiment remains strong, consistently surpassing 100 (one hundred), and is nearing urban levels, which reflects improved income and economic conditions. SBI’s report anticipates growth could accelerate in the third and fourth quarter, potentially bringing the fiscal year’s GDP growth closer to 7 per cent (seven per cent). The Financial Express
4. Business Updates
4.1. SBI and APIX launch innovation hub
SBI has partnered with APIX to launch the SBI Innovation Hub, a dedicated platform aimed at fostering collaboration with FinTech startups and innovators. This initiative supports SBI’s digital transformation goals, providing participants with a secure sandbox environment and access to over 250 (two hundred and fifty) Application Programming Interface (APIs) to develop customer-centric solutions. Fintech Singapore
4.2. India’s shadow lenders scale back amidst rising bad loans and RBI intervention
The shadow banking sector in India, led by firms like Bajaj Finance, is reducing loan issuance in response to escalating defaults and regulatory pressure. Recent data reveals a surge in bad loans, compelling companies to allocate additional capital for provisions, with lower-than-expected profits. Bajaj Finance and other non-banking financial companies (“NBFCs”), such as Shriram Finance and Mahindra & Mahindra Financial Services, are now pulling back on personal loans, impacting sector growth projections. Business Standard
4.3. Centre targets unauthorised use of PAN data by tech firms
As India prepares to enforce the Digital Private Data Protection Act, 2023 (DPDP), the government intensifies its crackdown on technology companies exploiting Permanent Account Number (PAN) details without consent. The Ministry of Home Affairs, via the Indian Cybercrime Coordination Centre (I4C), is acting to halt these unauthorised “PAN enrichment” services—methods employed by fintech and consumer tech firms to profile users for targeted credit offerings. Reports reveal that many such services have been discontinued following government intervention, signalling a stricter regulatory environment for personal data usage. The Economic Times
4.4. Profectus Capital secures USD 25 million IFC Funding
Profectus Capital, a Micro, Small, and Medium Enterprises (“MSME”) focused NBFC, has raised USD 25 million (United States Dollar Twenty-Five Million only) through green-labelled non-convertible debentures (NCDs) issued to the International Finance Corporation (“IFC”). This marks IFC’s inaugural investment aimed at financing energy-efficient (“EE”) machinery for India’s MSMEs. Profectus has established a Green Bond Framework aligned with the International Capital Market Association’s principles, with IFC’s advisory support focused on portfolio development for EE assets, operational training, and a strategic growth plan. Inc42
4.5. TPG targets USD 1 billion green financing NBFC for India
TPG, a major private equity group, plans to establish a pioneering green financing NBFC in India, committing USD 1 billion (United States Dollar One Billion only) as the initial equity. This platform aims to bridge the financing gap in India’s shift from fossil fuel to renewable energy systems, with further plans to secure USD 2 billion (United States Dollar Two Billion only) to USD 3 billion (United States Dollar Three Billion only) in total capital through debt financing. TPG is reportedly in talks with private lenders like Kotak Mahindra Bank and ICICI Bank, with each bank limited to a 20 per cent (twenty per cent) ownership stake. The Economic Times
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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.
