Banking & Finance Digest February 23, 2026

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1. Regulatory Updates

1.1. India

Reserve Bank of India (RBI)

1.1.1. RBI releases Draft Directions on Reporting Instructions for Authorised Dealer Category – I Banks

The Reserve Bank of India (“RBI”) has issued draft Directions on Reporting Instructions for Authorised Dealer Category – I Banks (“AD Category – I Banks”) to enhance transparency in over the counter (“OTC”) derivative markets. The proposed framework mandates AD Category – I Banks to report foreign exchange derivative transactions involving Indian Rupee (“INR”) undertaken globally by their related parties, building upon earlier reporting requirements applicable to primary dealers and banks. The measure is intended to improve market visibility, strengthen price discovery and enable more informed pricing decisions by market participants. Comments on the draft Directions have been invited from stakeholders and may be submitted to the RBI until March 09, 2026.

1.1.2. RBI issues Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026

RBI has issued the Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026, rationalising the External Commercial Borrowing (“ECB”) framework through expansion of eligible borrowers and recognised lenders, relaxation of borrowing and maturity norms, removal of cost restrictions, review of end use conditions and simplification of reporting requirements. The amendments have been finalised after considering stakeholder feedback on the draft regulations released in October 2025.

1.1.3. RBI releases Draft Directions on Foreign Exchange Dealings of Authorised Persons

RBI has released draft Directions on Foreign Exchange Dealings of Authorised Persons to refine the regulatory framework governing foreign exchange market operations. The proposed Directions aim to provide Authorised Dealers with greater flexibility in foreign exchange products, risk management and trading platforms, while simplifying reporting requirements in line with evolving market practices and regulatory policy announced on February 06, 2026. Comments from market participants and stakeholders have been invited and may be submitted to the RBI until March 10, 2026.

1.1.4. RBI issues Final Directions on Unique Transaction Identifier for OTC Derivative Transactions

RBI has issued final Directions mandating the use of a Unique Transaction Identifier (“UTI”) for all over the counter derivative transactions to strengthen market transparency and enable comprehensive aggregation of transaction level data. The framework requires generation and reporting of a single unique identifier for eligible derivative contracts reported to the trade repository, with the directions set to come into effect from January 01, 2027.

Securities and Exchange Board of India (SEBI)

1.1.5. SEBI constitutes Working Group to review ESG Rating Providers regulatory framework

The Securities and Exchange Board of India (“SEBI”) has constituted a Working Group to review the regulatory framework governing ESG Rating Providers (“ERPs”) based on stakeholder feedback. The Group will examine existing regulations, assess market representations and recommend measures to enhance transparency, reliability and investor confidence in ESG ratings, along with alignment with global best practices.

National Payments Corporation of India (NPCI)

1.1.6. NPCI collaborates with NVIDIA to advance sovereign AI infrastructure for digital payments

The National Payments Corporation of India (“NPCI”) has announced a collaboration with NVIDIA to develop sovereign artificial intelligence infrastructure tailored for India's digital payments ecosystem. The initiative aims to strengthen trust, resilience and security in large scale real time payment systems by building a payments native AI foundation model, enhancing grievance redressal mechanisms and enabling AI driven innovation while maintaining data sovereignty and regulatory alignment.

1.1.7. NPCI introduces FiMI AI model to strengthen India's digital payments ecosystem

NPCI has announced the launch of FiMI (Finance Model for India), a domain specific artificial intelligence language model developed for India's payments ecosystem. Designed to support high volume and high trust payment workflows, FiMI currently powers the UPI Help Assistant and enables improved grievance redressal, transaction support and multilingual user interaction. The model has been trained on payments specific data to enhance accuracy and reliability in real time financial operations, with NPCI also releasing a technical paper outlining its development and evaluation.

Monetary Penalties

1.1.8. RBI imposes penalties on 2 banks for regulatory non-compliance

RBI has imposed monetary penalties on the following institutions: 

2. Key Asian Markets - Indonesia and Sri Lanka

2.1. Indonesia

2.1.1. Indonesia records Balance of Payments surplus in Q4 2025, external resilience remains stable

Indonesia's Balance of Payments (“BOP”) recorded a surplus of USD 6.1 billion (United States Dollars Six Billion One Hundred Million only) in the fourth quarter of 2025, reflecting improved external sector resilience. The current account posted a narrow deficit of USD 2.5 billion (United States Dollars Two Billion Five Hundred Million only), supported by a continued surplus in the goods trade balance despite higher deficits in services and primary income accounts. Meanwhile, the capital and financial account registered a surplus driven by sustained direct investment inflows, improved portfolio investments and higher foreign borrowing. Overall, BOP performance in 2025 indicated stable external fundamentals, supported by stronger exports, resilient remittance inflows and adequate foreign exchange reserves, with Bank Indonesia expecting external stability to remain sound in 2026.

2.1.2. Bank Indonesia holds BI-Rate at 4.75 per cent to maintain stability and support growth

Bank Indonesia has decided to maintain the BI-Rate at 4.75 per cent (four point seven five per cent), while keeping the Deposit Facility rate at 3.75 per cent (three point seven five per cent) and the Lending Facility rate at 5.50 per cent (five point five zero per cent). The decision reflects the central bank's policy focus on stabilising the Rupiah amid global financial market uncertainty while supporting economic growth and maintaining inflation within the 2.5 per cent ±1 per cent target corridor for 2026–2027. Bank Indonesia will continue strengthening accommodative monetary, macroprudential and payment system policies, alongside exchange rate stabilisation measures and liquidity support, to sustain economic resilience and encourage higher credit growth.

2.1.3. Indonesia's external debt remains manageable in Q4 2025

Indonesia's external debt remained manageable in the fourth quarter of 2025, reaching USD 431.7 billion (United States Dollars Four Hundred Thirty One Billion Seven Hundred Million only), compared to USD 427.6 billion (United States Dollars Four Hundred Twenty Seven Billion Six Hundred Million only) in the previous quarter. The increase was primarily driven by public sector borrowing, while government debt continued to be prudently managed and largely long term in nature. Private external debt declined during the period, reflecting lower borrowing by non financial corporations. Overall, Indonesia's external debt structure remained sound, supported by a debt to GDP ratio of 29.9 per cent (twenty nine point nine per cent) and continued coordination between Bank Indonesia and the Government to safeguard economic stability and sustainable growth.

2.2. Sri Lanka

2.2.3. Sri Lanka PMI indicates continued expansion in manufacturing and services in January 2026

Sri Lanka's Purchasing Managers' Index (“PMI”) signalled continued expansion in both manufacturing and services activities in January 2026. PMI Manufacturing recorded an index value of 56.1, indicating growth at a slower pace compared to the previous month, supported by increases in new orders, production and employment. PMI Services recorded an index value of 64.5, reflecting sustained expansion driven by improvements in trade, accommodation, financial services and rising new business activity, with overall business expectations remaining positive for the coming months.

3. Trends

3.1. IBA to launch unified co-lending platform for banks and NBFCs

The Indian Banks' Association (“IBA”) is developing a unified digital platform to streamline co-lending arrangements between banks and non-banking financial companies (“NBFCs”), aimed at standardising settlement, documentation and operational processes. The proposed platform is expected to function as a marketplace to improve access to quality lending opportunities while addressing complexities in accounting and inter-institution settlements. The initiative, supported by the Department of Financial Services, is intended to enhance scalability, efficiency and collaboration within India's co-lending ecosystem.

3.2. FTAs expected to enhance market access and export competitiveness

RBI in its February 2026 Bulletin, observed that recently concluded and ongoing Free Trade Agreements (“FTAs”), particularly the India–EU trade deal and the interim trade pact with the United States, are expected to play a significant role in the coming years by improving market access, strengthening export competitiveness and integrating Indian firms more deeply into global value chains. The Bulletin highlighted that these developments have already improved investor sentiment, with foreign portfolio investment flows returning amid a favourable growth outlook supported by consumption, investment and productivity-enhancing reforms.

4. Sector Overview

4.1. India's forex reserves surge to record USD 725.7 billion

India's foreign exchange reserves increased by USD 8.663 billion (United States Dollars Eight Billion Six Hundred Sixty Three Million only) to reach an all-time high of USD 725.727 billion (United States Dollars Seven Hundred Twenty Five Billion Seven Hundred Twenty Seven Million only) for the week ended February 13, 2026, according to RBI data. The rise was primarily driven by gains in foreign currency assets and gold reserves, reflecting strong external sector fundamentals and valuation gains amid global market movements. The record reserve level strengthens India's external stability buffer and enhances its ability to manage currency volatility and external shocks.

4.2. RBI MPC minutes reflect confidence in growth outlook with no overheating concerns

Minutes of the RBI Monetary Policy Committee (“MPC”) meeting indicated strong confidence in India's growth momentum, supported by benign inflation and improving external conditions. The Committee unanimously decided to keep the repo rate unchanged, noting that cumulative rate cuts delivered earlier continue to transmit through the economy. Members observed that inflation remains contained with no signs of economic overheating, while policy decisions going forward will remain data dependent amid evolving growth and inflation dynamics.

5. Business Updates

5.1. Peak XV raises USD 1.3 billion for first independent fund post Sequoia split

Peak XV Partners has raised USD 1.3 billion through its first independent fund following its separation from Sequoia Capital in 2023. The fund will be deployed across three investment vehicles, including two focused on seed and early-stage startups in India and another targeting opportunities across the Asia-Pacific region. The fundraising marks a significant milestone in the firm's transition to an independent platform and reflects continued investor confidence in India and regional technology ecosystems, with capital expected to support innovation-driven and growth-stage companies.

5.2. NARCL places INR 285 crore anchor bid for BLA Power's stressed debt

National Asset Reconstruction Company Limited (“NARCL”) has emerged as the anchor bidder for the stressed debt of BLA Power with an offer of INR 285 crore (Indian Rupees Two Hundred Eighty Five Crore only). The bid has triggered a Swiss Challenge auction process through which lenders aim to maximise recovery by inviting competing offers against the anchor bid. The development forms part of ongoing efforts to resolve non-performing assets in the power sector and strengthen balance sheets within the banking system through structured distressed asset resolution mechanisms.

5.3. EV charging startup Statiq secures USD 18 million funding led by Tenacity Ventures

EV charging infrastructure startup Statiq has raised USD 18 million in a fresh funding round led by Tenacity Ventures, with participation from existing investors including Y Combinator, Shell Ventures and RCD Holdings. The funding, structured as a mix of equity and debt, will be utilised to expand the company's EV charging network, deploy additional DC fast chargers across highways and strengthen technology and operational capabilities. The investment reflects continued investor interest in India's electric mobility ecosystem and is expected to support Statiq's expansion across Tier-1 and Tier-2 cities while enhancing charging reliability and network scale.

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