1. Regulatory Updates
1.1. India
1.1.1. RBI amends FEMA regulations for non-debt instrument investments
The Reserve Bank of India (“RBI”) has introduced the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) (Third Amendment) Regulations, 2025. Key highlights include updated payment and remittance rules across various investment categories: equity instruments, foreign portfolio investments, Limited Liability Partnerships (LLPs), and Indian depository receipts. Investments must comply with inward remittance or designated account requirements under the Foreign Exchange Management Act (“FEMA”) (Deposit) Regulations, 2016. RBI
1.1.2. RBI updates regulations for foreign currency accounts by Indian exporters
RBI has amended the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015. Exporters in India can now open foreign currency accounts with banks abroad to receive export proceeds and advance remittances. Funds in these accounts can be used for import payments or must be repatriated to India by the end of the following month, ensuring compliance with export realisation norms under FEMA. This amendment simplifies forex management for exporters. RBI
1.1.3. RBI unveils NBFC upper layer list for 2024-25
RBI has released the 2024-25 list of Non-Banking Financial Companies in the Upper Layer (“NBFC-UL”) under the Scale Based Regulation (SBR) framework. The framework categorises Non-Banking Financial Companies (“NBFCs”) into Base, Middle, Upper, and Top Layers, with NBFC-UL subject to enhanced regulatory requirements for five years. RBI
1.1.4. RBI eases FEMA rules to promote INR for cross-border transactions
RBI has liberalised FEMA regulations to encourage the use of the Indian Rupees (“INR”) and local currencies in global trade. Authorised Dealer bank’s overseas branches can now open INR accounts for non-residents to settle transactions with Indian residents. RBI
1.1.5. RBI notifies Foreign Exchange Management (Deposit) (Fifth Amendment) Regulations, 2025
RBI has permitted the transfer of funds for bona fide transactions between repatriable Rupee accounts under the amended Foreign Exchange Management (Deposit) Regulations, 2025. Non-residents with business interests in India can open Special Non-Resident Rupee (“SNRR”) accounts with authorised dealers for permissible current and capital account transactions with residents or non-residents. Additionally, units in International Financial Services Centres (“IFSCs”) can open SNRR accounts outside IFSCs for business-related transactions, further streamlining cross-border financial operations. RBI
1.1.6. RBI cancels certificates of registration of 10 NBFCs on supervisory ground
RBI exercising its authority under Section 45-IA (6) of the RBI Act, 1934, has cancelled the Certificates of Registration (CoR) of 10 NBFCs, including East India Leasing Company Ltd, Kakrania Trading Private (Pvt) Ltd, and others, effective January 9, 2025. Consequently, these companies are prohibited from conducting NBFC business as defined under Section 45-I(a) of the Act. RBI
1.1.7. Seven NBFCs surrender certificates of registration to RBI
RBI has cancelled the Certificates of Registration (CoR) of seven NBFCs following their voluntary surrender. This includes entities exiting the Non-Banking Financial Institution (NBFI) business, those meeting the criteria for unregistered Core Investment Companies (CICs), and companies ceasing to exist due to amalgamation, merger, or dissolution. These cancellations, executed under Section 45-IA (6) of the RBI Act, 1934, ensure these entities are no longer authorized to operate as NBFCs. RBI
1.1.8. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
| Name of the Financial Institution | Penalty Imposed | Reasons |
| RBI imposes monetary penalty on Parbhani District Central Co-operative Bank Ltd., Parbhani, Maharashtra | INR 5,00,000/- (Indian Rupees Five Lakh only) | Contravention of/non-adherence with certain directions issued by RBI on ‘Know Your Customer (KYC)’. |
| RBI imposes monetary penalty on the Kamaraj Co-operative Town Bank Limited, Tamil Nadu | INR 2,00,000/- (Indian Rupees Two Lakh only) | Contravention of/non-compliance with directions under the Supervisory Action Framework (SAF), Prudential Norms on Capital Adequacy – Urban Cooperative Bank (UCBs), and KYC directions. |
| RBI imposes monetary penalty on The Arcot Co-operative Urban Bank Limited, Tamil Nadu | INR 25,000/- (Indian Rupees Twenty-Five Thousand only) | Contravention of/non-compliance with directions on ‘Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs. |
| RBI imposes monetary penalty on The Cordite Factory Co-operative Bank Ltd., Aravankadu, Nilgiris, Tamil Nadu | INR 50,000/- (Indian Rupees Fifty Thousand only) | Contravention of/non-adherence with the directions issued by RBI on ‘Housing Finance’. |
| RBI imposes monetary penalty on The Tamil Nadu Circle Postal Co-operative Bank Limited, Tamil Nadu | INR 50,000/- (Indian Rupees Fifty Thousand only) | Contravention of/non-adherence with certain directions issued by RBI on ‘Know Your Customer (KYC)’. |
| RBI imposes monetary penalty on Mukkuperi Co-operative Urban Bank Limited, Tamil Nadu | INR 1,75,000/- (Indian Rupees One Lakh Seventy-Five Thousand only) | Contravention of/non-adherence with certain directions issued by RBI under the Supervisory Action Framework (SAF). |
1.2. Bangladesh
1.2.1. BB to release monetary policy for the second half of the financial year, 2025
Bangladesh Bank (‘‘BB”) will announce its monetary policy for the second half of fiscal 2024-25 by the end of January. Under Governor Dr. Ahsan H Mansur, the policy will focus on controlling inflation, which has remained above 9 per cent (nine per cent) since March 2023. Despite raising the policy rate to 10 per cent (ten per cent), inflation eased slightly to 10.89 per cent (ten-point eight nine per cent) in December 2024. The Business Standard
1.3. Philippines
1.3.1. Personal remittances increased by 3.5 per cent in November 2024
Personal remittances from Overseas Filipinos (OFs) rose 3.5 per cent (three point five per cent) to USD 3.12 billion (United States Dollar Three Billion One Hundred Twenty Million only) in November 2024. Cumulative remittances for January-November 2024 reached USD 34.61 billion (United States Dollar Thirty-Four Billion and Six Hundred Ten Million only), a 3 per cent (three per cent) increase. Cash remittances through banks grew 3.3 per cent (three point three per cent) to USD 2.81 billion (United States Dollar Two Billion Eight Hundred Ten Million only). Bangko Sentral Ng Pilipinas
1.3.2. Sorsogon City Implements Paleng-QR Ph
Sorsogon City launched “Paleng—Quick Response (“QR”) Ph Plus” on December 19, 2024, promoting digital payments via QR PH in markets, transport, and businesses. Bangko Sentral ng Pilipinas (“BSP”) officials and city representatives demonstrated by using QR PH for purchases. The BSP also held the “Piso Caravan” for residents to exchange damaged banknotes for fit currency or e-wallet credits. Bangko Sentral Ng Pilipinas
2. Trends
2.1. India-EU FTA talks hit roadblocks
Negotiations for the proposed India-European Union (“EU”) Free Trade Agreement (“FTA”) are at a standstill after nine rounds of talks over two-and-a-half years. Key issues like tariffs, intellectual property rights, labour standards, and market access remain unresolved. Business Standard
2.2. US-India Tax Forum proposes simplifying TDS and customs tariff structure
The United States (“US”)-India Tax Forum has proposed various reforms ahead of the 2025-2026 Union Budget, aiming to enhance India’s attractiveness as an investment destination. Key recommendations include simplifying the Tax Deducted at Source (“TDS”) structure to 2-3 (two to three) rates, aligning tax rates for foreign banks with domestic ones. Business Standard
3. Sector Overview
3.1. Fintech dominate personal loan market with 76 per cent share in H1 FY25
A recent report by the Fintech Association for Consumer Empowerment (FACE) highlights that fintech lenders captured 76 per cent (seventy-six per cent) of personal loan sanctions by volume during the first half of Financial Year (FY) 2025, reflecting a 9-percentage point increase year-on-year. Traditional banks, adopting a cautious stance amidst regulatory advisories, reported a 21 per cent (twenty-one per cent) decline in loan volume and a 30 per cent (thirty per cent) reduction in value compared to FY24. While fintechs prioritized small-ticket loans averaging INR 9,200 (Indian Rupees Nine Thousand Two Hundred only), banks maintained a higher average loan size of INR 4.40 lakh (Indian Rupees Four Lakh Forty Thousand only). Business Standard
3.2. Microfinance sector’s delinquencies jumps to over INR 28,000 crore in a year
India’s microfinance sector is facing rising delinquencies, with the Portfolio at Risk (“PAR”) for loans overdue by 31-180 days doubling to INR 28,154 crore (Indian Rupees Twenty-Eight Thousand One Hundred Fifty-Four Crore only), by September 2024, from INR 14,617 crore (Indian Rupee Fourteen Thousand Six Hundred Seventeen Lakh only) a year ago. The overdue loans now account for 6.8 per cent (six point eight per cent) of the total microfinance portfolio of INR 4.14 lakh crore (Indian Rupee Four Lakh Fourteen Thousand Crore only), up from 3.8 per cent (three point eight per cent) in September 2023. The incremental rise in PAR was Rs 13,468 crore (Indian Rupee Thirteen Thousand Four Hundred Sixty-Eight Crore only) in the 12 months ending September 2024, according to a Center for Research in International Finance (CRIF) High Mark report. Indian Express
4. Business Updates
4.1. MobiKwik partners with Piramal Finance to offer personal loans
MobiKwik has partnered with Piramal Finance to provide seamless personal loan services through its platform. The ZIP EMI loan amounts range from INR 50,000 (Indian Rupees Fifty Thousand only) to INR 2,00,000 (Indian Rupees Two Lakh only), with tenures between 6 (six)-24 (twenty-four) months. Eligibility requires an income above INR 25,000 (Indian Rupees Twenty-Five Thousand only) and ages 23 (twenty-three)-55 (fifty five). Business Standard
4.2. BharatPe secures INR 150 crore debt funding, targets profitability by FY25
BharatPe raised INR 150 crore in debt funding from Neo Wealth and Trifecta Capital, with INR 25 crore (Indian Rupees Twenty-Five Crore only) secured in January 2024 and INR 125 crore (Indian Rupees One Hundred Twenty Five Crore only) in November 2023. Inc 42
4.3. Amazon to acquire BNPL startup Axio
Amazon is set to acquire Axio, an Indian Buy Now Pay Later (“BNPL”) platform, pending regulatory approvals. Amazon, holding an 8 per cent (eight per cent) stake, first invested in Axio during its Series C funding. Axio, valued at USD 200 million (United States Dollar Two Hundred Million only), raised USD 232 million (United States Dollar Two Hundred Thirty-Two Million only) to date, backed by Peak XV, Light rock, and others. Economic Times
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.
