1. Regulatory Updates
1.1. India
1.1.1 RBI Releases the Financial Stability Report
The Reserve Bank of India (“RBI”) released the financial stability report in December 2024, which indicates that loan growth for non-banking financial companies (“NBFCs”) moderated to 6.5 per cent (six points five per cent) in the first half of the financial year 2024–25. The slowdown is linked to RBI’s November 2023 increase in risk weights by 25 basis points for loans to NBFCs and certain consumer credit categories. Upper-layer NBFCs, with 63.8 per cent (sixty-three points eight per cent) of their loan portfolio in retail loans, faced higher impacts. Despite this, the sector maintained resilience, with a capital-to-risk-weighted assets ratio (CRAR) of 26.1 per cent (twenty-six point one per cent) as of September 2024, supported by a net interest margin of 5.1 per cent (five point one per cent) and a return on assets of 2.9 per cent (two point nine per cent). Gross non-performing assets (GNPA) stood at 3.4 per cent (three point four per cent), reflecting stable asset quality amid rising write-offs. RBI
1.1.2 Participation of NaBFID as an AIFI in financial markets
RBI has clarified that the National Bank for Financing Infrastructure and Development (“NaBFID”) is allowed to participate as an All-India Financial Institution (“AIFI”) in financial markets regulated by the RBI. NaBFID can engage in credit default swaps and repo transactions, as specified under the relevant RBI directions. These provisions are outlined in the updated Master Directions on Credit Derivatives and Repo Transactions. RBI
1.1.3 Introduction of beneficiary bank account name look-up facility for RTGS and NEFT
RBI is introducing a beneficiary account name look-up facility for Real Time Gross Settlement (“RTGS”) and National Electronic Funds Transfer (“NEFT”) systems, similar to Unified Payment Interface (“UPI”) and Immediate Payments Service (IMPS). This will allow remitters to verify the beneficiary’s account name before making a transaction. The National Payments Corporation of India (“NPCI”) will develop the facility and banks must offer it via internet banking, mobile banking, and branches by April 1, 2025. RBI
1.1.3 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 Kaithal Central Co-operative Bank Ltd., Haryana | INR 5,00,000/- (Indian Rupees Five Lakhs only) | Non-compliance with certain provisions of the Banking Regulation Act, of 1949. |
| RBI imposes monetary penalty on Punjab Gramin Bank, Kapurthala, Punjab | INR 36,40,000/- (Indian Rupees Thirty-Six Lakh and Forty Thousand only) | Non-compliance with certain provisions of the Banking Regulation Act, of 1949. |
| RBI imposes monetary penalty on the Yavatmal Urban Co-operative Bank Limited, Yavatmal, Maharashtra | INR 5,00,000/- (Indian Rupees Five Lakhs only) | Non-compliance with certain directions issued by RBI under ‘Supervisory Action Framework (SAF)’, and ‘Exposure Norms & Statutory/Other Restrictions – UCBs. |
| RBI imposes monetary penalty on the Kolikata Mahila Co-operative Bank Limited, West Bengal | INR 1,00,000/- (Indian Rupees One Lakh only) | Non-compliance with certain provisions of the Banking Regulation Act, of 1949. |
| RBI imposes monetary penalty on the Prime Co-operative Bank Ltd., Surat, Gujarat | INR 4,00,000/- (Indian Rupees Four Lakh only) | Non-compliance with certain directions issued by RBI on ‘Customer Protection – Limiting Liability of Customers of Co-operative Banks in Unauthorised Electronic Banking Transactions’ and ‘Basic Cyber Security Framework for Primary (Urban) Cooperative Banks (UCBs)’ read with ‘Comprehensive Cyber Security Framework for Primary (Urban) Cooperative Banks (UCBs) – A Graded Approach’. |
| RBI imposes monetary penalty on the Cosmos Co-operative Bank Ltd | INR 8,30,000/- (Indian Rupee Eight Lakh Thirty Thousand only) | Non-compliance with certain directions issued by RBI on ‘Management of Advances – UCBs’. |
| RBI imposes monetary penalty on Pune People’s Co-operative Bank Ltd., Pune, Maharashtra | INR 25,00,000/- (Indian Rupees Twenty-Five lakh only) | Non-compliance with certain directions issued by RBI on Public Sector Lending (PSL) and contributions to the Micro and Small Enterprises (MSE). |
| RBI imposes monetary penalty on Smriti Nagrik Sahakari Bank Maryadit, Mandsaur (MP) | INR 4,20,000/- (Indian Rupees Four Lakh Twenty Thousand only) | Non-compliance with certain directions issued by RBI on ‘Customer Service – UCBs’ and ‘Loans and advances to directors, their relatives, and firms/concerns in which they are interested’. |
1.2 Philippines
1.2.1 Government maintains inflation target at 2 – 4 per cent
At the Development Budget Coordination Committee (DBCC) meeting on December 2, 2024, it was decided to maintain the inflation target range of 2 per cent (two per cent) to 4 per cent (four per cent) for 2025-2026 and extend it through 2027-2028. This medium-term target aims to strengthen monetary policy and anchor inflation expectations. Despite some risks, the inflation outlook remains manageable, supported by an easing in monetary conditions and an improving labour market. Bangko Sentral Ng Pilipinas
1.3 Indonesia
1.3.1 Broad money growth accelerated in November 2024
In November 2024, Indonesia’s Broad Money (M2) growth rose to 7 per cent (seven per cent) year-on-year, up from 6.8 per cent (six-point eight per cent) in October, reaching Rp 9,175.8 trillion (Indonesian Rupiah Nine Thousand One Hundred Seventy-Five Billion and Eight Hundred Million only). This was driven by a 9.1 per cent (nine-point one per cent) increase in Narrow Money (M1) and a 2.3 per cent (two-point three per cent) rise in quasi-money. Key factors included stable 10.1 per cent (ten-point one per cent) growth in disbursed loans and a 1.1 per cent (one point one per cent) increase in net claims on the central government. Net foreign assets grew by 1 per cent (one per cent) down from 1.6 per cent (one point six per cent) in October. Bank Indonesia
2. Trends
2.1. Maharashtra government to draft its AI policy soon, says Minister Shelar
Maharashtra will draft an Artificial Intelligence (“AI”) policy to enhance its position as a technology leader. Information and Technology (IT) Minister Ashish Shelar emphasised using AI for industrial growth and job creation. The policy will align with the India AI Mission, which has a budget of INR 10,372 Crores (Indian Rupees Ten Thousand Three Hundred Seventy-Two Crores only) and from January 2025, the central government will collect non-personal datasets to support startups and researchers. Business Standard
3. Sector Overview
3.1. India eyes robust growth in 2025, tackling inflation and global headwinds
India’s economy faces challenges in 2025, including geopolitical tensions and inflation. After a seven-quarter low growth of 5.4 per cent (five-point four per cent) in Quarter 2 (Q2) 2024, recovery is expected due to strong festival activity and rural demand. RBI projects growth of 6.6 per cent (six-point six per cent) for FY 2024- 25 and 7 per cent (seven per cent) for FY 2025-26. The February monetary policy meeting may consider interest rate cuts, while the government aims to keep the fiscal deficit below 4.5 per cent (four-point five per cent) of Gross Domestic Product (GDP) by FY 2025-26. Business Standard
3.2. NBFC body seeks liquidity facility for priority sector lending
The Finance Industry Development Council (“FIDC”), representing NBFCs, has urged the government to establish a refinance or liquidity facility to enhance lending to priority sectors, including agriculture, medium and small enterprises, and renewable energy. In its pre-budget memorandum to Finance Minister Nirmala Sitharaman, the FIDC emphasized liquidity as a recurring challenge due to stagnant funding growth. It proposed utilizing institutions like SIDBI for refinance options and called for raising the current borrowing cap from 5 per cent (five per cent) to 10 per cent (ten per cent) of total priority sector lending by banks to improve credit flow. Additionally, the FIDC recommended creating a structured market-making mechanism to facilitate organised access to funds. Reuters
4. Business Updates
4.1. WhatsApp Pay can now extend UPI services to all users in India
The NPCI has lifted the user onboarding limit for WhatsApp Pay, allowing it to extend UPI services to its entire user base in India. Previously restricted to a phased rollout, this change enables WhatsApp Pay to fully utilise its potential while continuing to comply with existing UPI guidelines for third-party app providers. NPCI
4.2. Transforming transactions: India’s rise as a global leader in digital payments
India is becoming a global leader in digital payments, with transaction volumes growing 42 per cent (forty-two per cent) year-on-year in the Financial Year 2023-24, projected to reach 481 (four hundred eighty-one) billion by FY 2028-29. Key trends include the expansion of the Bharat Bill Payment System (BBPS), Business to Business (B2B) payments for Micro, Small, And Medium Enterprises (MSMEs), and enhanced fraud prevention through AI. UPI is reshaping payment interactions, while buy now, pay later services and Quick Response (QR) code payments are transforming consumer behaviour and small businesses. CNBC TV18
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.
