1. Regulatory Updates
1.1. India
Reserve Bank of India (RBI)
1.1.1. RBI Issues Premature Redemption Date and Price for Sovereign Gold Bonds (SGB) 2020-21 Series IV
The Reserve Bank of India (“RBI”) has announced that premature redemption of Sovereign Gold Bonds (“SGB”) issued under the 2020-21 Series IV tranche will be permitted from July 14, 2025, marking five years from the date of issue. The redemption price will be calculated based on the simple average of the closing gold prices 999 (nine hundred ninety-nine) purity over 3 (three) business days preceding the redemption date, as published by the India Bullion and Jewellers Association Ltd (IBJA). For the July 14, 2025, redemption, the price has been fixed at INR 9,688 (Indian Rupees Nine Thousand Six Hundred Eighty-Eight only) per unit.
1.1.2. RBI eases collateral rules for Agriculture and MSME loans with voluntary Gold/Silver pledge
RBI through its notification dated July 11, 2025, has clarified that when borrowers voluntarily pledge gold and silver as collateral for agriculture and MSME loans, banks can sanction such loans up to the collateral-free limit without it being considered as a violation of existing guidelines on collateral-free lending. This clarification applies to all scheduled commercial banks (including regional rural banks and small finance banks) as well as state and district central co-operative banks.
1.1.3. RBI releases Draft Reserve Bank of India (Novation of OTC Derivative Contracts) Directions
RBI has released the Draft Reserve Bank of India (Novation of OTC Derivative Contracts) Directions, 2025 (“Draft Directions”) under Section 45W of the Reserve Bank of India Act, 1934. Novation involves substituting one counterparty in a derivative contract with another, with the consent of all parties. The proposed framework requires a tripartite agreement at market rates, full transfer of rights and obligations, and compliance with RBI rules. Standardised templates will be developed, and all novated contracts must be reported to the Clearing Corporation of India. The Draft Directions aim to ensure legal clarity, risk mitigation and harmonised practices, replacing earlier RBI circulars. Feedback is invited until August 01, 2025.
Securities And Exchange Board of India (SEBI)
1.1.4. SEBI releases consultation paper on measures for regulation of activities of Credit Rating Agencies
The Securities and Exchange Board of India (“SEBI”) has issued a consultation paper inviting public comments on proposed measures for the regulation of activities of Credit Rating Agencies (“CRA”). SEBI has proposed allowing CRAs to rate financial products regulated by other financial sector regulators, such as the RBI and IRDAI, as long as they comply with those regulators’ rules. These non-SEBI activities must be managed through separate business units, with strict segregation of staff, records, and grievance mechanisms. Comments are invited by July 30, 2025, through the online platform.
1.1.5. SEBI issues Master Circular for CRAs
SEBI released a Master Circular on July 11, 2025, consolidating all operational, procedural, and disclosure requirements for CRAs under the SEBI (Credit Rating Agencies) Regulations, 1999. This circular serves as a single reference point, streamlining compliance for CRAs, debenture trustees, and issuers of various listed securities. It covers the entire regulatory framework, including registration, governance, timelines for rating reviews and disclosures, conflict of interest management, and record-keeping requirements.
1.1.6. SEBI issues Master Circular for ESG Rating Providers
SEBI issued a Master Circular for Environmental, Social and Governance (“ESG”) Rating Providers (“ERPs”) on July 11, 2025, consolidating all existing regulatory guidelines and setting a unified framework for the ESG ecosystem in India. The circular introduces several key reforms, including mandatory 6 (six) score frameworks to ensure uniformity, promotion of climate-aligned metrics like transition scores, and a reduction of conflict of interest through business model segregation. It also standardises disclosures and governance frameworks for ERPs.
1.1.7. SEBI proposes NSEL Settlement Scheme for eligible brokers
On July 11, 2025, the SEBI has issued a public notice proposing a Settlement Scheme (“NSEL Settlement Scheme”) under Section 15JB of the Securities and Exchange Board of India Act, 1992, and Regulation 26 of the Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018. The scheme applies to brokers against whom SEBI has passed orders for trading or facilitating trading on the National Spot Exchange Limited (“NSEL”) platform and whose appeals against the said impugned orders are currently pending before the Securities Appellate Tribunal (SAT) or the Courts. The NSEL Settlement Scheme shall commence on August 25, 2025, and end on February 25, 2026, or such other date as approved by the Competent Authority.
1.1.8. SEBI proposes easing restrictions on the business activities of AMCs
SEBI has issued a consultation paper on review of the regulatory framework on permissible business activities for Asset Management Companies (“AMCs”) under Regulation 24 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. SEBI has proposed easing restrictions on mutual fund AMCs, allowing them to act as points of presence for pension funds, serve as global fund distributors, and offer management and advisory services to pooled funds like family offices and offshore funds, subject to safeguards. Proposals include easing broad-basing rules, regulating fees and governance, and protecting investor interests. Feedback on the consultation paper is open until July 28, 2025.
International Financial Services Centres Authority (IFSCA)
1.1.9. IFSCA Consultation Paper on V-CIP and Anti Money Laundering Guidelines, 2022
The International Financial Services Centres Authority (“IFSCA”) released a consultation paper on July 10, 2025, proposing modifications to Video-based Customer Identification Process (“V-CIP”) for Indian Nationals and Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer Guidelines, 2022 (“Guidelines”) to permit V-CIP onboarding of low-risk NRIs residing in select jurisdictions (e.g., USA, UAE, Japan). Regulated Entities (REs) must ensure geo-tagged video, AI-based liveness checks, encryption, and compliance with IFSCA’s cybersecurity and data localisation norms. IP addresses must match the customer’s declared jurisdiction; V-CIP infrastructure must pass vulnerability assessments and audits by CERT-In empanelled agencies.
1.1.10. IFSCA warns consumers against online scams and frauds
IFSCA has issued a public advisory urging financial consumers in GIFT IFSC to stay vigilant against rising online fraud via social media platforms. The regulator warns of fake investment offers, impersonation of officials, and deepfake content. Consumers are advised to verify entities on the IFSCA directory, scrutinise investment terms, and report suspicious activity.
1.1.11. IFSCA Consultation Paper on Master Circulars for Capital Market Intermediaries in IFSC
On July 11, 2025, IFSCA issued a consultation paper proposing the creation of Master Circulars for capital market intermediaries operating in International Financial Services Centres (IFSCs). The objective is to consolidate and streamline the regulatory framework, making compliance easier and more transparent for entities such as broker-dealers, clearing members, credit rating agencies, custodians, debenture trustees, and other intermediaries. IFSCA has invited public feedback on the proposal by July 21, 2025.
Miscellaneous
1.1.12. Ministry of Finance clarifies, no directions given to banks to close inactive PM Jan Dhan Yojana accounts
The Department of Financial Services (“DFS”), Ministry of Finance, has clarified that it has not directed banks to close inactive Pradhan Mantri Jan Dhan Yojana (“PMJDY”) accounts, countering recent media reports. Instead, DFS has launched a three-month nationwide campaign starting July 01, 2025, to deepen the adoption of PMJDY accounts and related welfare schemes like Jeevan Jyoti Bima and Atal Pension Yojana. Banks will also conduct re-KYC for due accounts and actively reach out to account holders to reactivate inactive accounts.
1.1.13. MCA notifies revised CSR-1 E-Form for CSR implementing agencies
On July 7, 2025, the Ministry of Corporate Affairs (“MCA”) notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2025, introducing a revised e-Form CSR-1 to be used by entities undertaking Corporate Social Responsibility (“CSR”) activities on behalf of companies. The revised form mandates enhanced disclosures, including the nature of the entity, registration status under the Income Tax Act Section 12A and Section 80G, incorporation details, PAN, and governance structure. The form requires submission of supporting documents digitally signed by authorised signatories and mandates certification by a practising professional such as CA/CS/CMA.
1.1.14. NPCI Rolls Out UPI Circle Feature for Secure Delegated Payments
On July 08, 2025, National Payments Corporation of India (“NPCI”) issued an addendum to its August 13, 2024, operating Unified Payment Interface (“UPI”) circular, introducing additional requirements for delegated payments under the “UPI Circle” feature. Under the Full Delegation Framework, Primary Users can authorise Secondary Users, such as family members or business employees, to initiate UPI transactions within pre-defined spend limits. During the linking process, Primary Payment Service Providers (“PSPs”) and Issuer Banks must verify the secondary user’s relationship, identity (name, mobile, ID), and document type as per the updated 2016 KYC Master Direction. PSPs must also obtain explicit consent from the Secondary User, including documentation type and number, before activating the delegation. Members live on UPI circle feature are mandated to make necessary changes by August 31, 2025.
Monetary Penalties
1.1.15. RBI imposes monetary penalty on Dr. Babasaheb Ambedkar Urban Co-operative Bank Limited, Nagpur, Maharashtra
RBI by an order dated July 10, 2025 imposed a monetary penalty of INR 1.50 Lakh (Indian Rupees One Lakh Fifty Thousand only) on Dr. Babasaheb Ambedkar Urban Co-operative Bank Limited (“UCBs”), Nagpur, Maharashtra for non-compliance with its directions on ‘Loans and advances to directors relatives and firms/ concerns in which they are interested-UCBs’, and directions under the Supervisory Action Framework (SAF). Pursuant to inspections conducted, RBI found that the bank had sanctioned a director-related loan and not reduced the single borrower exposure limit for fresh loans and advances by 50 per cent (fifty per cent) of the applicable regulatory limit.
1.1.16. RBI imposes monetary penalty on Mahesh Urban Cooperative Bank Limited, Parli Vaijnath, Maharashtra
RBI by an order dated July 10, 2025, imposed a monetary penalty of INR 50,000 (Indian Rupees Fifty Thousand only) on Mahesh Urban Cooperative Bank Limited, Parli Vaijnath, Maharashtra, for non-compliance with its directions on ‘Exposure Norms and Statutory / Other Restrictions – UCBs’ and directions under the SAF. Pursuant to inspection, RBI found that the bank had failed to reduce single borrower exposure limits and violated single counterparty exposure limits for non-SLR investments. The penalty was imposed under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
1.1.17. RBI imposes monetary penalty on Authorised Dealer Bank – HDFC Bank Ltd
RBI by an order dated July 11, 2025, imposed a monetary penalty of INR 4.88 Lakh (Indian Rupees Four Lakh Eighty-Eight Thousand only) on HDFC Bank Ltd for contravening Paragraph 9.3.6 of the Master Direction on Foreign Investment in India while granting a term loan to a client. The penalty was imposed under Section 11(3) of the Foreign Exchange Management Act, 1999. RBI clarified that the penalty relates to regulatory compliance deficiencies and does not question the validity of any transactions or agreements between the bank and its customers.
1.1.18. RBI imposes monetary penalty on Shriram Finance Limited
RBI by an order dated July 11, 2025, imposed a monetary penalty of INR 2.70 Lakh (Indian Rupees Two Lakh Seventy Thousand only) on Shriram Finance Limited (the company) for non-compliance with provisions of the Reserve Bank of India (Digital Lending) Directions, 2025. Pursuant to inspections, RBI found that the company routed loan repayments through a third-party account instead of directly crediting repayments to its own account, breaching regulatory norms. After considering the company’s responses and hearing.
1.1.19. RBI imposes monetary penalty on Solapur Janata Sahakari Bank Limited
RBI by an order dated July 10, 2025, imposed a monetary penalty of INR 15 lakh (Indian Rupees Fifteen Lakh only) on Solapur Janata Sahakari Bank Limited for non-compliance with Section 5(ccv)(iii) read with Section 56 of the Banking Regulation Act, 1949. Pursuant to inspection conducted, RBI found that the bank’s by-laws permitted admission of cooperative societies as members, contrary to the regulatory provisions. The penalty is for non-compliance and does not affect the validity of any customer transactions or agreements.
2. Key Asian Markets- Bangladesh and Sri Lanka
2.1. Bangladesh
2.1.1. Banks allowed to make equity investment in startups
Bangladesh Bank (“BB”) has introduced a new policy allowing banks to make equity investments in startups in addition to providing loans at a maximum interest rate of 4 per cent (four per cent). To facilitate this, a venture capital company will be established, funded by 1 per cent (one per cent) of all banks’ annual net profits. Banks can only invest equity from their own startup funds, and loans must be distributed using refinancing from Bangladesh Bank’s Tk 500 Crore (Taka Five Hundred Crore only) refinance fund.
2.1.2. Bangladesh Bank imposes stricter provisioning rules for NBFI Investment Losses
BB has introduced stricter provisioning requirements for Non-Banking Financial Institutions (“NBFIs”) to cover potential losses from investments in shares, bonds, debentures, mutual funds, commercial papers, and subsidiaries. Under the new rules, NBFIs must set aside provisions ranging from 25 per cent (twenty-five per cent) to 100 per cent (hundred per cent) of the loss, depending on the investment category, with the process starting from the September quarter and requiring quarterly reporting.
2.2. Sri Lanka
2.2.1. CBSL extends suspension of perpetual treasuries limited for six months
Central Bank of Sri Lanka (“CBSL”) has extended the suspension of Perpetual Treasuries Limited (“PTL”) from operating as a Primary Dealer for another six months, effective from 4:30 p.m. on July 05, 2025. This extension is to allow ongoing investigations by the Central Bank under the Registered Stock and Securities Ordinance and the Local Treasury Bills Ordinance. PTL remains barred from all primary dealer activities during this period. The decision aims to safeguard market integrity and maintain public confidence in the government securities market.
3. Trends
3.1. NPCI developing UPI payments via smart appliances
NPCI is developing an IoT-enabled UPI system to allow payments through smart appliances, wearables, and connected cars, without using a mobile app. The feature is expected to launch at the Global Fintech Fest 2025. It will support autopay for recurring expenses using a separate UPI ID. The feature may leverage UPI Circle for delegated payments. With UPI recording 18.4 (eighteen point four) billion transactions in June, NPCI aims to grow UPI tenfold from current levels.
3.2. Jio BlackRock plans to roll out new mutual funds
Jio BlackRock Asset Management Companies (AMC), a joint venture between Jio Financial Services and BlackRock, plans to roll out 8 (eight) new mutual fund schemes by year-end, focusing on low-cost, direct-to-investor models with a minimum investment of INR 500 (Indian Rupees Five Hundred only). By leveraging Jio’s 475 (four hundred seventy-five) million subscribers and BlackRock’s Aladdin platform, the firm aims to disrupt India’s INR 72.2 Trillion (Indian Rupees Seventy-Two Trillion Two Hundred Billion only) fund market by bypassing traditional distributors.
4. Sector Overview
4.1. IMF announces India makes faster payments than any other country
India has become the global leader in fast digital payments, largely due to the rapid adoption of the UPI, according to a recent International Monetary Fund (“IMF”) report. Since its launch in 2016, UPI has grown exponentially and now processes over 18 (eighteen) billion transactions monthly, surpassing all other electronic retail payment methods in India. The IMF highlights that UPI’s interoperable design, allowing seamless transactions across multiple apps and banks, has been key to its success, encouraging greater user adoption and reducing cash dependency.
4.2. Banking sector sees muted credit growth in June quarter
The banking sector saw a slowdown in the June quarter with muted credit growth after a strong March-end push. HDFC Bank’s average deposits rose 5.1 per cent (five point one per cent) while gross advances declined 0.4 per cent (zero point four per cent). Punjab National Bank (PNB) and UCO Bank reported marginal growth, whereas Bank of Baroda and Yes Bank saw sequential declines in deposits and loans. Year-on-year, deposits outpaced loans for many banks; HDFC Bank’s deposits rose 16.2 per cent (sixteen point two per cent) against 6.7 per cent (six point seven per cent) loan growth. Some PSU banks reported higher credit growth than deposits, while Yes Bank was an exception with stronger deposit growth.
5. Business Updates
5.1. IRDAI starts action on 8 insurers over health portfolio lapses
The Insurance Regulatory and Development Authority of India (“IRDAI”) has begun issuing show-cause notices to 8 (eight) insurers—including Niva Bupa, Star Health, Care Health, ManipalCigna, New India Assurance, Tata AIG, ICICI Lombard, and HDFC ERGO after inspections revealed significant lapses in their health insurance claim practices. The regulator flagged violations of its Health Insurance Master Circular, such as unnecessary claim deductions, improper rejections, delayed settlements, and inadequate customer disclosures.
5.2. India Ratings upgrades RInfra’s credit rating on non-fund based capital
India Ratings and Research has upgraded Reliance Infrastructure’s credit rating by 3 (three) notches—from ‘IND D’ to ‘IND B/Stable/IND A4’—on its non-fund-based working capital limits, citing the company’s substantial deleveraging efforts that resulted in net 0 (zero) debt with banks and financial institutions. Reflecting a significant improvement after 6 (six) years at the lowest rating level and follows timely debt servicing and one-time settlements with subsidiary lenders, supported by capital infusion through warrants.
5.3. Fintech startup ‘Belong’ raises USD 5 Million to launch NRI-focused investment
Fintech startup Belong has raised USD 5 Million (United States Dollar Five Million only) in seed funding led by Elevation Capital to expand its digital banking platform for NRIs. Belong, headquartered in GIFT City, offers US dollar-denominated fixed deposits and plans to add equity, insurance, and international card products. The platform aims to simplify cross-border banking for NRIs, starting in the UAE and expanding to Saudi Arabia, Qatar, the UK, and the US. The funds will be used for regulatory licenses, hiring, scaling operations, and positioning.
5.4. Kinara Capital reports first net loss in a decade in FY25
Bengaluru-based fintech Kinara Capital, focused on MSME lending, has reported a net loss of INR 351 Crore (Indian Rupees Three Hundred Fifty-One Crore only) in financial year 2025. The downturn stems from rising bad loans, unsecured credit recovery challenges, and a sharp spike in credit costs to 14.5 per cent (fourteen point five per cent). The Assets Under Management (AUM) fell 9.6 per cent (nine point six per cent) year-on-year to INR 2,841 Crore (Indian Rupees Two Thousand Eight Hundred Forty-One Crore only) as disbursements slowed.
5.5. Public Sector Banks Overtake Private Lenders with 43 per cent Market Share in Home Loans
Public sector banks (“PSBs”) have become the leading financiers of new home loans in India, raising their market share to 43 per cent (forty three per cent) in financial year 2025 from 34 per cent (thirty-four per cent) in financial 2022, while private banks’ share dropped to 29.8 per cent (twenty-nine point eight per cent) from 42.6 per cent (forty-two point six per cent) during the same period. This shift is driven by competitive interest rates and government initiatives promoting home ownership. According to the RBI’s June 2025 Financial Stability Report, PSU banks’ overall credit growth has outpaced private banks for the first time in over a decade, with home loans being a primary growth driver in retail lending.
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.
