Reports

The global financial system is grappling with geopolitical uncertainties. Against this backdrop, regulators worldwide are striving to build systemic resilience through enhanced implementation of Basel standards, monitoring of growing interconnectedness between banks and NBFIs through SRTs, repo and private credit markets, analysing developments in tokenisation and developing operational supervisory frameworks, and incorporating climate risks into macro-financial surveillance frameworks. Domestically, regulators are aligned with these efforts, focusing on amendments to frameworks, enhancing customer and investor protection, and improving the ease of doing business.

Introduction

3.1 Amid global uncertainties and their implications on trade flows, energy markets, and capital movements, regulators worldwide are deploying a range of measures to safeguard financial systems and maintain financial stability in international markets. Since December 2025, significant regulatory initiatives have been implemented with the objective of strengthening financial stability, streamlining regulatory frameworks, and improving risk management systems across entities.

3.2 Against this backdrop, this chapter reviews recent major regulatory or review-related initiatives, both global and domestic, aimed at enhancing resilience of the financial system.

III.1 Global Regulatory Developments

III.1.1 Banking

3.3 The Basel Committee on Banking Supervision (BCBS) released the Basel III Monitoring Report¹, presenting the highlights of the Basel III monitoring exercise. The report indicated that the risk-based capital and leverage ratios are stable while liquidity indicators increased slightly for large internationally active banks. The monitoring exercise pointed out that average LCR for Group 1 banks increased slightly. Globally, continued progress is being made in the phased implementation of the “output floor” of banks’ capital, a safety net for banks intended to avoid using internally modelled risk-weighted assets for holding capital and to reach a calibration of 72.5 per cent by January 2028² as per the fully phased-in final Basel III framework.

3.4 In a related development, the BCBS released a final technical amendment³ on the standardised approach for operational risk incorporating stakeholder feedback⁴. The amendment clarified aspects of the business indicators used in calculating operational risk capital requirements and is expected to be implemented by Basel Committee member jurisdictions within three years⁵.

3.5 The BCBS published a report⁶ on synthetic risk transfers (SRT) reviewing the growing use of instruments like credit-linked notes and credit default swaps by banks to transfer credit risk and manage capital requirements. The report highlights the need for effective supervisory scrutiny of such instruments. Furthermore, increased interconnectedness of banks and NBFIs through the SRT also needed close cooperation and coordination between supervisors of banks and NBFIs for timely monitoring and addressing financial stability risks.

3.6 The Financial Stability Board (FSB) published its resolution report⁷, updating the resolution frameworks for banks, insurers, and financial market infrastructures, highlighting progress in operational planning, resolvability assessments and crisis management arrangements. The FSB finalised guidance on the scope of insurers subject to recovery and resolution planning requirements. The guidance document⁸ set out six criteria to help authorities determine which insurers should be subject to such requirements.

3.7 The FSB’s Annual Report⁹ highlighted that its strategic review of implementation monitoring would aim to focus on identifying the root causes of the observed slowdown in G20 financial reform implementation, thereby highlighting the importance of implementation of regulatory reforms in present global circumstances.

III.1.2 Non-Bank Financial Intermediation (NBFI)

3.8 The FSB published a report¹⁰ on vulnerabilities in government bond-backed repo markets as part of strengthening the resilience of NBFIs. Government bond-backed repo markets have played a critical role in supporting sovereign bond market liquidity and short-term funding. However, these instruments have also been central to recent episodes of NBFI-related market stress. Accordingly, the said report identified three key vulnerabilities: (a) leverage build-up through repo-funded positions; (b) demand-supply imbalances in episodes of asset-liability mismatches; and (c) high concentration in the repo market. The FSB has called on authorities to reduce data gaps, strengthen surveillance, and address leverage and liquidity vulnerabilities while preserving the core market-functioning role of repo markets.

3.9 In view of the rapid rise in private credit globally, the FSB published a report¹¹ highlighting four main vulnerabilities: (a) deepening interconnections between banks and private credit funds; (b) borrower credit quality concerns and valuation opacity in loans negotiated on a bilateral basis; (c) concentration, leverage, and liquidity issues — particularly where leverage is reflected in the presence of opaque, multi-layered structures; and (d) persistent data gaps that constrain effective oversight. Although direct bank exposures to private credit funds remained small globally, the FSB noted that indirect and complex linkages through financing, risk transfers, and Collateralized Loan Obligations (CLOs) require closer scrutiny.

3.10 According to the FSB’s Work Programme for 2026¹², regulatory design for NBFIs is transitioning towards implementation monitoring, assessment of vulnerabilities and policy evaluation. The work of the Non-bank Data Task Force¹³ — specifically through its diagnostic test case on leveraged trading strategies in sovereign bond markets — focuses directly on addressing data gaps in sovereign bond cash-futures basis trades. This initiative is part of a broader, systemic effort to capture leverage, liquidity risk, and interconnectedness that extends beyond the traditional banking system.

III.1.3 Financial Markets

3.11 The International Organization of Securities Commissions (IOSCO) published a consultation report¹⁴ on good practices concerning OTC commodity derivatives markets¹⁵. The consultation focuses on strengthening regulatory access to information, intervention powers, and market disruption response mechanisms, particularly under Principles 12, 15 and 16. The objective is to improve authorities’ ability to detect excessive speculation, monitor build-up of risks in OTC commodity derivatives markets, and respond more effectively to disorderly market conditions.

3.12 Stemming from the need for clearer information to market participants on central counterparties (CCP) risk management practices, the CPMI-IOSCO published consultations on updated guidance relating to CCPs¹⁶, which focused on initial margin proposals, public quantitative disclosures and guidance related to Principles for Financial Market Infrastructures. The IOSCO also published consultation papers/reports¹⁷ on the evolution of market liquidity during the trading day, and on extended trading hours in equity markets. These publications examined structural changes in trading behaviour, including the increasing concentration of liquidity around market closing, end-of-day auctions, post-close sessions, and proposals for longer trading hours.

3.13 The IOSCO further updated its statement¹⁸ on Non-GAAP Financial Measures, responding to concerns that the growing use of alternative performance measures could impact comparability across issuers and weaken investor understanding in the absence of adequate disclosures.

III.1.4 Decentralised Finance and Digital Assets

3.14 Stablecoins continued to garner close regulatory attention in view of their growing links with traditional financial markets, payment systems and safe-asset markets. The December 2025 FSR had noted that stablecoin issuers were becoming significant holders of traditional reserve assets — a trend that continues to warrant close monitoring. Since then, international policy work has increasingly focused on the implications of stablecoins for market functioning, monetary sovereignty, bank funding, and cross-border payments.

3.15 Analysis in the International Monetary Fund (IMF)’s Global Financial Stability Report (GFSR), 2026 points to a rapid expansion of cross-border stablecoin flows into emerging market economies. Stablecoin flows remain closely linked to broader crypto asset market activity, while also exhibiting an association with remittance and trade flows. Further, demand for stablecoins has often been stronger in economies with weaker institutional and political stability and limited access to short-term dollar-denominated assets, highlighting both their potential role in facilitating cross-border transactions and providing dollar exposure, as well as concerns relating to currency substitution and financial stability. Jurisdictional developments such as the United States’ GENIUS Act, the European Union’s MiCA framework, and the United Kingdom’s evolving stablecoin regime represent important steps towards clearer regulatory perimeters.

3.16 The IOSCO’s Work Programme for 2026¹⁹ has committed to finalising a formal methodology for crypto and digital asset assessments and initiating regular thematic reviews to promote consistent implementation across jurisdictions²⁰. The IOSCO aims to continue monitoring developments in tokenisation and other financial technology applications, while separately providing supervisory guidance on AI-related governance and financial market disclosures. The Bank for International Settlements’ Basel Committee work programme and strategic priorities for 2025-26 have also identified the digitalisation of finance as a key area of focus, including continued monitoring of crypto asset market developments and the implementation of its prudential standard and disclosure framework for crypto assets. Further, FSB’s Work Programme for 2026 has placed an emphasis on monitoring cross-border issues in digital assets, including critical cross-border risks.

III.1.5 Climate Finance

3.17 The IMF published a technical note and manual analysing the integration of climate-related risks into financial regulation and supervision²¹. This document assessed progress made by global standard-setting bodies, including the BCBS, NGFS, ISSB, and FSB, and highlighted supervisory expectations by integrating climate-related risks into the revised Basel Core Principles, the BCBS Pillar 3 climate disclosure framework, climate-risk governance expectations, scenario analysis, and supervisory review processes. The document concluded that climate risks should increasingly be treated as mainstream financial risks within prudential frameworks rather than as a separate policy objective.

III.1.6 Artificial Intelligence

3.18 In the FSB’s 2026 Work Programme, AI has been given a dedicated workstream. The FSB aims to work on developing sound practices for AI adoption, use, and innovation by financial institutions in coordination with global standard-setting bodies.²²

3.19 The International Organization of Securities Commissions (IOSCO) published an AI Supervisory Toolkit²³ designed to help securities regulators oversee the use of artificial intelligence (AI) by regulated entities. The toolkit provides practical supervisory approaches organised across four core areas of focus: (i) governance and risk management; (ii) third-party and outsourcing risk management; (iii) disclosure; and (iv) recordkeeping and reporting. This publication marks a definitive shift in international regulatory focus from high-level AI principles to the development of operational supervisory practices.

3.20 The OECD released a comprehensive report²⁴ examining how financial supervisors are adapting to AI adoption across banking, insurance, and capital markets. The report highlighted emerging supervisory challenges relating to model validation, data governance, concentration risk arising from common AI providers, and the need to strengthen supervisory capabilities.

3.21 Collectively, these initiatives indicate a shift in regulatory focus from understanding AI-related risks towards developing operational supervisory frameworks capable of addressing potential vulnerabilities arising from increasing reliance on common AI models, service providers, and data infrastructures.

III.2 Initiatives from Domestic Regulators/ Authorities

3.22 During the period under review, the financial regulators undertook several initiatives to improve the resilience of the Indian financial system (major measures are listed in Annex 2).

III.2.1 Directions on Lending to Related Parties

3.23 Lending to counterparties who are related or connected to regulated entities (RE) either through ownership stake or through their ability to control and influence the lending decisions raise concerns of conflicts with the interests of the bank and other stakeholders. Accordingly, Reserve Bank issued a principle-based related-party lending Directions on January 05, 2026.

III.2.2 Risk-Based Premium Framework for Deposit Insurance in India

3.24 The DICGC with the approval of the Reserve Bank has introduced a Risk-Based Premium (RBP) Framework for deposit insurance under Section 15(1) of the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961, which permits differential premium rates across categories of insured banks. The framework adopts a two-tier risk assessment methodology for Tier 1 banks (Scheduled Commercial Banks, excluding Regional Rural Banks) and Tier 2 banks (Regional Rural Banks, Rural Co-operative Banks and Urban Co-operative Banks).

3.25 The RBP Framework aligns deposit insurance premia more closely with the underlying risk profile of insured institutions, thereby strengthening incentives for sound governance and prudent risk management. The framework also incorporates a vintage discount mechanism, recognising banks with a sustained record of contributions to the deposit insurance fund (DIF) without insurance claim payouts. Consequently, better-managed banks would be eligible to pay lower premium rates than the current uniform premium of 12 paise per ₹100 of assessable deposits per annum. By linking premium rates of the insured banks to their risk and long-term contribution to the DIF without payout from DICGC, the framework promotes financial stability and significantly reduces the burden of premium on better rated banks.

III.2.3 Investments by Foreign Portfolio Investors in Debt Securities

3.26 With a view to ensuring predictability about the availability of investment limits under the Voluntary Retention Route (VRR) and to further increase ease of doing business, it was decided to reckon VRR investments in Central Government securities including T-bills, State Government Securities and corporate debt securities under the respective investment limit for the General Route with effect from April 01, 2026; and to permit FPIs that have availed retention periods longer than the minimum retention period stipulated for VRR to partially or fully liquidate their portfolio after the end of the minimum retention period.

3.27 Subsequently, with effect from June 5, 2026, to facilitate foreign investment in Government securities, the FPI investment framework was further simplified. The suite of specified securities under the Fully Accessible Route (FAR) was expanded to include all new issuances of Government securities in the 15-year, 30-year and 40-year tenors and all new issuances of Sovereign Green Bonds in FAR-eligible tenors of 5, 7, 10, 15, 30 and 40 years. Additionally, the requirement for FPIs to comply with the short-term investment limit, security-wise limit and concentration limit for investments in Government securities under the General Route were withdrawn. The separate sub-categories of investment limits, namely ‘general’ and ‘long-term’, were also merged into a single investment limit each for Central Government securities and State Government securities.

III.2.4 Swap Facility for Foreign Currency (Non-resident) Accounts (Banks) Deposits

3.28 The Reserve Bank of India introduced a US Dollar-Rupee Forex Swap Facility for AD Category-I banks on fresh FCNR (B) deposits (including renewals) with tenors between three to five years and a one-year lock-in period operational until October 16, 2026, for deposits mobilised by September 30, 2026. The facility allows banks to swap eligible deposits in USD only, once a week, at par rates via the Financial Markets Operations Department. Banks must maintain separate records, adhere to pricing ceilings, and submit a compliance declaration, while being exempted from ISDA agreements and specific credit facility directions. Premature withdrawal of deposits is permitted after one year, though the corresponding swaps with RBI cannot be cancelled.

III.2.5 Swap Facility for External Commercial Borrowings and Overseas Foreign Currency Borrowings

3.29 The Reserve Bank of India introduced a US Dollar-Rupee Forex Swap Facility for eligible External Commercial Borrowings (ECBs) by Public Sector Undertakings and Overseas Foreign Currency Borrowings (OFCBs) by AD Category-I banks, with maturities of three years or more drawn until December 31, 2026, operational until January 15, 2027. The facility allows banks to swap eligible inflows in USD only, up to the preceding week’s inflow volume, at a fixed premium of 1.5 per cent per annum compounded semi-annually for a maximum tenor of five years. Banks are advised to submit a compliance declaration to the Financial Markets Operations Department but are exempted from executing ISDA agreements. The swap involves selling USD to RBI at the FBIL Reference Rate on a spot basis and repurchasing them at maturity along with the premium.

III.2.6 Open Positions of Authorised Dealers

3.30 To curb undue volatility and ensure orderly market conditions in the foreign exchange market, on March 27, 2026, the Reserve Bank of India mandated Authorised Dealers to maintain their net open positions involving INR (NOP-INR) in the onshore deliverable market within US$ 100 million at the end of each business day, effective April 10, 2026.

3.31 Pursuant to the introduction of the ‘Swap Facility for FCNR (B) Deposits’ and ‘Swap Facility for External Commercial Borrowings and Overseas Foreign Currency Borrowings’ by the Reserve Bank of India on June 8, 2026, Authorised Dealer Category-I banks were permitted to exclude the swap positions arising from FCNR (B) deposits, External Commercial Borrowings (ECBs), and Overseas Foreign Currency Borrowings (OFCBs) raised under these facilities, while ensuring compliance with the directions on NOP-INR position of Authorised Dealers issued on March 27, 2026.

3.32 Subsequently, on June 23, 2026, the Reserve Bank further permitted Authorised Dealer Category-I banks to exclude positions arising from hedged transactions relating to FCNR (B) deposits, ECBs, and OFCBs raised under the aforesaid facilities, while ensuring compliance with the directions on NOP-INR position of Authorised Dealers issued on March 27, 2026, and for computing net overnight open position.

III.2.7 Unique Identifiers in Financial Markets - Directions

3.33 The Reserve Bank issued instructions on Unique Transaction Identifier for OTC derivative transactions. UTI is a unique identifier assigned to OTC derivative transactions and is conceived as one of the key data elements identified globally for reporting OTC derivative transactions to enable policymakers obtain a comprehensive view of the OTC derivatives market. This move by the Reserve Bank is expected to improve the quality and accuracy of financial data and strengthen systemic risk monitoring through entity-level and transaction-level traceability and monitoring. The instructions were subsequently consolidated in the Master Direction on Unique Identifiers in Financial Markets consolidating all existing circulars on the use of two global identifiers — the Legal Entity Identifier (LEI) and the Unique Transaction Identifier (UTI) — in to a single framework.

III.2.8 Reserve Bank of India (Cash Reserve Ratio and Statutory Liquidity Ratio) Second Amendment Directions, 2026

3.34 As part of the Reserve Bank’s measures to attract the foreign capital into India, fresh FCNR (B) deposits of minimum tenor of three years and maximum tenor of five years mobilised (including deposits that are renewed upon maturity) by the banks between June 8, 2026 and September 30, 2026 have been exempted from maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), from the reporting fortnight beginning July 1, 2026 (i.e., based on the NDTL computation as on June 15, 2026) and subsequent fortnights thereafter. Additionally, fresh Non-Resident (External) Rupee (NRE) term deposits of tenor of three years or more mobilised (including deposits that are renewed upon maturity) by the banks between June 19, 2026 and September 30, 2026 have also been exempted from maintenance of CRR and SLR from the reporting fortnight beginning July 16, 2026 (i.e., based on the NDTL computation as on June 30, 2026) and subsequent fortnights thereafter. The exemption on reserves maintenance is available for the original deposit amounts till such time the deposits are held in the bank books.

III.2.9 Risk Management and Inter-Bank Dealings

3.35 In view of the heightened volatility in the foreign exchange market, on April 01, 2026, the Reserve Bank of India restricted Authorised Dealers from offering non-deliverable derivative contracts involving INR to resident and non-resident users. Authorised Dealers were also restricted from allowing users to rebook any foreign exchange derivative contract involving INR, whether deliverable or non-deliverable, which was cancelled after the date of issuance of the instructions. Furthermore, Authorised Dealers were restricted from undertaking foreign exchange derivative contracts involving INR with their related parties. On April 20, 2026, the restrictions on offering non-deliverable derivative contracts involving INR and cancellation and rebooking of foreign exchange derivative contracts involving INR were withdrawn. Further, Authorised Dealers were permitted to undertake foreign exchange derivative contracts involving INR with their related parties for cancellation and rolling over of existing contracts as well as for back-to-back transactions with non-related non-resident users, in terms of the extant regulatory framework.

III.2.10 Reporting of related party transactions by Authorised Dealer Category–I Banks - Directions

3.36 With a view to engender greater transparency in the foreign exchange market, the Reserve Bank of India issued instructions requiring Authorised Dealer Category-I banks to report foreign exchange derivatives involving INR undertaken globally by their related parties to the Trade Repository of the Clearing Corporation of India Limited. The reporting requirement shall come into force in phases, commencing from July 1, 2027.

III.2.11 Directions on Asset Classification, Provisioning, and Income Recognition for Commercial Banks

3.37 The Reserve Bank has issued Directions on asset classification, provisioning, and income recognition effective from April 01, 2027, with an objective to further strengthen credit risk management practices, improve comparability across regulated entities, and align the regulatory framework more closely with internationally accepted financial reporting principles. These Directions repeal the existing Income Recognition, Asset Classification and Provisioning (IRACP) norms and introduce a forward-looking Expected Credit Loss (ECL) framework incorporating, inter alia, a three-stage provisioning approach and income recognition based on Effective Interest Rate methodology.

III.2.12 Consolidation of Supervisory Instructions

3.38 Last year, the Reserve Bank undertook a comprehensive consolidation exercise of regulatory instructions, on an ‘as is’ basis²⁵. This year, a similar exercise has been carried out for supervisory instructions. Accordingly, drafts of 64 Master Directions consolidating extant supervisory instructions on nine functional areas have been published on the RBI website for public comments.

III.2.13 Amendment Directions on ‘Investment Fluctuation Reserve’

3.39 The Reserve Bank of India comprehensively reviewed and amended the instructions on Investment Fluctuation Reserve (IFR) for various bank categories. With these amendments, RBI has discontinued the IFR requirement for commercial banks (excluding Small Finance Banks and Payments Banks) and Local Area Banks (LABs) considering the applicability of separate market risk capital charge and the revised norms on classification, valuation, and operation of investment portfolio on these banks. Banks falling under these categories are now permitted to transfer their existing IFR balances to specified Tier 1 capital components, which is expected to strengthen their Tier 1 capital ratios. For other bank categories, the instructions have been amended to improve regulatory clarity in IFR computation and to ensure harmonised instructions across bank categories.

III.2.14 Reserve Bank of India (Commercial Banks - Capital Charge for Credit Risk – Standardised Approach) Directions, 2026 issued on April 27, 2026

3.40 The Directions revise the existing Standardised Approach framework for calculating the capital charge for credit risk with the objective of enhancing its robustness, granularity, and risk sensitivity. The revised Directions, which are based on the Basel III standards, implement one of the key elements of the global post-crisis reforms, suitably tailored to the Indian context. The major changes vis-à-vis extant norms include: (i) more granular and risk-sensitive prescription for risk-weighting of credit exposures; (ii) external credit rating based approach for claims on counterparty banks; (iii) greater coverage of unrated MSMEs for relatively lower risk-weight; (iv) inclusion of ‘transactors²⁶’ under the regulatory retail category; (v) realignment of the credit conversion factors (CCFs) for non-market off-balance sheet exposures in line with the actual riskiness associated with such exposures; (vi) convergence of risk weights for domestic and foreign corporates; (vii) specific treatment for ‘equity investment in funds’; and (viii) adjustments to risk weights for corporate exposures based on Observed Default Rates of the ratings assigned by credit rating agencies. The revised instructions shall come into effect from April 1, 2027.

III.2.15 Quantum Technologies in the Financial Sector

3.41 Quantum computing (QC) leverages the principles of quantum mechanics namely superposition, entanglement and interference²⁷, to perform computations that are too complex to handle for classical computers. QC offers potential benefits across several areas of the financial sector like risk management, portfolio optimisation, macroeconomic modelling, quantum cryptography etc., primarily through its ability to perform complex computations at unprecedented speed. However, QC introduces practical challenges for the financial sector, particularly in the area of cryptography. Modern financial systems rely extensively on asymmetric encryption, such as Rivest-Shamir-Adleman (RSA) and elliptic-curve cryptography (ECC) to secure financial digital communication. A sufficiently advanced quantum computer, termed as cryptographically relevant quantum computer (CRQC), has the potential to break these widely used encryption algorithms.

3.42 To assess the opportunities, risks, preparedness, and adequacy of regulatory frameworks for quantum technologies for the financial sector and recommend a roadmap for achieving a quantum-secure Indian financial system, the RBI has set up an expert committee for a Quantum Secure and Adaptive Financial Ecosystem (Q-SAFE).

III.2.16 Amendment in KYC Directions, 2025

3.43 The KYC Directions, 2025 were amended to clearly delineate the responsibilities of regulated entities (REs) that have uploaded / updated their customers’ KYC records on the Central KYC Records Registry (CKYCR) vis-à-vis the REs that have downloaded such records from CKYCR. The RE that has last uploaded / updated the customer’s KYC records on the CKYCR shall be responsible for verifying the identity and / or address of the customer. Accordingly, any RE downloading and relying on such records from the CKYCR shall not be required to re-verify the authenticity of the customer’s identity and / or address, provided the KYC records downloaded from CKYCR are current and compliant with the PML Act, 2002 / PML Rules, 2005. The RE downloading and relying on KYC records downloaded from the CKYCR shall remain responsible for all aspects of CDD procedure and provisions of the Directions, except verification of identity and / or address of the customer.

III.2.17 Technology-enabled KYC: Balancing Customer Convenience and Risk Management

3.44 The Know Your Customer (KYC) processes have undergone a sea change in the last decade and a half, with the introduction of technology-based solutions for identification such as Aadhaar e-KYC authentication and Aadhaar Offline verification, equivalent e-documents including the documents issued in DigiLocker, Video KYC and the Central KYC Records Registry (CKYCR).

3.45 While technology helps in making the KYC processes convenient, the risks posed by money laundering (ML) and terrorist financing (TF) have to be identified and assessed before introduction of new technologies and products. As per Financial Action Task Force (FATF) recommendations, financial institutions are required to identify and assess the money laundering or terrorist financing risks that may arise in relation to the development of new products and new business practices, including new delivery mechanisms, and the use of new or developing technologies for both new and pre-existing products.

3.46 Accordingly, the RBI KYC Directions mandate regulated entities to identify and assess the ML / TF risks that may arise in relation to the development of new products and new business practices, including new delivery mechanisms, and the use of new or developing technologies for both new and existing products. Such risk assessment exercise shall be carried out annually and the outcome of the exercise to be put up to the Board of the regulated entity.

III.2.18 Financial Sector Cybersecurity Strategy-Progress Update

3.47 The Inter-Ministerial Group on the Financial Sector Cybersecurity Strategy (FSCSS), mandated by the FSDC in August 2025, has continued its deliberations across its constituent workstreams covering regulatory harmonization and unified cybersecurity standards across the financial sector risk management frameworks for emerging technologies such as artificial intelligence, cloud computing and quantum technologies; strengthening the resilience of third-party service providers and supply chains; enhancing consumer protection and the supporting legal architecture; improving cyber audits, incident reporting and information-sharing mechanisms; and addressing cyber risks arising from cross-sector dependencies and interconnected critical infrastructure. The draft FSCSS document is at an advanced stage of formulation. Upon adoption, the Strategy will establish the governance framework, accountability structures, and implementation timelines within which each financial sector regulator will operationalise its cross-regulatory cybersecurity obligations.

III.2.19 Single Window Automatic and Generalised Access for Trusted Foreign Investors (SWAGAT-FI) Framework for FPIs and FVCIs

3.48 SEBI issued two Circulars under the SWAGAT-FI framework for Foreign Portfolio Investors (FPIs) and Foreign Venture Capital Investor (FVCIs), granting key relaxations including seamless FPI-FVCI registration, exemption from certain investment and contribution limits, 10-year registration/KYC validity and unified depository-based accounting and investment experience. These relaxations can be availed by existing as well as new FPIs and FVCIs that meet the specified eligibility criteria. The framework would reduce regulatory complexity and enhance India’s global competitiveness as an investor-friendly destination.

III.2.20 Strengthening Governance of Market Infrastructure Institutions (MIIs)

3.49 To strengthen governance amid the Indian securities market’s rapid growth, SEBI has mandated MIIs to appoint two dedicated Executive Directors (EDs) to their Governing Boards: one for Critical Operations and another for Regulatory, Compliance, Risk Management, and Investor Grievances. The relevant statutory committees must conduct separate quarterly meetings with the EDs of the respective vertical without the MD’s presence and EDs must report directly to the Governing Board on their respective verticals.

III.2.21 Relaxation on Geo-tagging Requirement in India for NRIs while Undertaking re-KYC

3.50 As per the Prevention of Money Laundering (PML) Rules, 2005, only capturing of clients’ latitude and longitude during digital KYC was required, without mandating physical presence in India. Therefore, SEBI reviewed the framework and relaxed the requirement for NRIs to be physically present in India for re-KYC. This relaxation enables NRIs to complete re-KYC digitally in a seamless manner.

III.2.22 Ease of Doing Investment – Special Window for Transfer and Dematerialisation of Physical Securities

3.51 SEBI introduced a one-time special window to help investors holding physical share certificates, whose transfer requests were not processed earlier, to re-lodge transfer deeds of physical securities. Many such cases were stuck due to documentation issues after physical transfers were discontinued in 2019. SEBI has now allowed re-submission or fresh submission of old transfer requests (where documents were executed before April 1, 2019) during a special window, opened for a period of one year from February 05, 2026 to February 04, 2027. This initiative aims to resolve pending legacy cases, facilitate ease of investing for investors and secure their rights in the securities which were purchased by them.

III.2.23 Amendment to SEBI (Merchant Bankers) Regulations, 1992

3.52 The amendments, inter alia, introduced categorisation of Merchant Bankers, enhanced net worth and liquid net worth requirements, minimum revenue criteria, mandatory certification requirements for key employees and compliance officer, segregation of activities through Separate Business Units (SBUs), restrictions on outsourcing of core activities and enhanced provisions for avoidance of conflict of interests.

3.53 To bolster the regulatory framework for Merchant Bankers, the SEBI aims to enhance financial/operational capabilities, compliance, and investor protection while ensuring effective conflict management. The introduction of Separate Business Units (SBUs) seeks to ensure transparency and prevent risk contagion from different business lines of a merchant banker to SEBI-regulated activities.

III.2.24 Verified Label for stock trading apps of brokers registered with SEBI, on Google Play Store

3.54 The proliferation of fraudulent trading apps poses a serious threat to retail investors, with scammers impersonating genuine apps. SEBI, in collaboration with Google, has taken the initiative to implement a first-of-its-kind “Verified” badge on Google Play for all stock trading apps in India that are offered by entities that are registered with SEBI.

III.2.25 Project SUDARSAN-AI-Driven Fraud Detection

3.55 To combat rising finfluencers’ misconduct and digital fraud, SEBI operationalised Project SUDARSAN (Surveillance of Unauthorized Digital Activity via Real-time Scanner for Anti-fraud), an AI-powered RegTech platform enabling proactive, real-time surveillance of social media. Utilising advanced multimodal AI to analyse audio, visual and contextual cues (including regional languages), the system automates risk scoring and alert generation. It continuously scans public content across platforms to detect deceptive practices such as guaranteed return claims, fraudulent certifications, entity impersonation and unregistered investment advice, shifting monitoring from manual to automated.

III.2.26 Obligations on Credit Rating Agencies (CRAs) while Undertaking Rating of Financial Instruments Falling under the Purview of any Other Financial Sector Regulator

3.56 SEBI revised the regulatory framework governing the CRAs to permit them to rate financial products and instruments regulated by other Financial Sector Regulators (FSRs), even where no specific rating guidelines have been issued by the relevant FSR. Earlier, such activities were allowed only when supported by guidelines from the concerned FSR. To ensure regulatory clarity, the CRAs must segregate non-SEBI activities by maintaining separate grievance redressal email IDs and website sections for disclosures. Rating reports and marketing materials must clearly disclose the applicable regulator and state that SEBI’s investor protection framework does not apply to those specific instruments. SEBI’s minimum net worth requirements must remain unaffected; any additional capital requirements from other FSRs must be met independently. The framework enhances investor transparency and prevents jurisdictional overlap.

III.2.27 Implementation of Indian Accounting Standards (Ind AS) in the Insurance Sector

3.57 The IRDAI notified the IRDAI (Actuarial, Finance and Investment Functions of Insurers) (Amendment) Regulations, 2026, which establish the framework for preparing and presenting financial statements under Indian Accounting Standards (Ind AS). The Regulations provide a two-year parallel reporting period requiring insurers to submit both Ind AS and IGAAP-based information. A one-year forbearance is available for insurers unable to fully adopt Ind AS, subject to a Board-approved action plan and monthly progress reporting. To address implementation challenges, a Joint Expert Group comprising representatives from IRDAI, the Institute of Chartered Accountants of India (ICAI), the Institute of Actuaries of India (IAI), the Securities and Exchange Board of India (SEBI) and the National Financial Reporting Authority (NFRA) has been constituted. A circular on implementation was also issued, clarifying key operational, accounting and regulatory aspects, alongside further capacity-building measures to support consistent adoption across the sector.

III.2.28 Amendments to the Master Circular issued under IRDAI (Corporate Governance for Insurers) Regulations, 2024

3.58 IRDAI issued a circular revising the performance parameters for determining variable pay of Key Management Persons (KMPs) in insurance companies, with the objective of strengthening customer trust, transparency, accountability, and alignment of incentives with policyholder interests. Under the revised framework, 50 per cent of KMP performance assessment must be based on IRDAI-mandated parameters, including financial soundness, product performance, claims responsiveness, grievance redressal, implementation of Indian Accounting Standards (Ind AS), and elimination of dark patterns in customer interactions and distribution channels. The remaining 50 per cent may be determined by the insurer’s Nomination Remuneration Committee/ Board based on business-specific objectives.

3.59 The framework places greater emphasis on customer-centric outcomes, including customer satisfaction, timely claims and grievance resolution, reduction in repeat complaints and service failures, transparent and fair processes, and product performance indicators. It seeks to enhance transparency in claims handling and grievance management through more detailed disclosures. These disclosures would facilitate informed decision-making by policyholders and the public. Insurers are also required to disclose on their websites the parameters adopted for calculation of KMP remuneration along with corresponding information for the preceding three years, in an easily accessible and understandable format.

III.2.29 Setting up of Policyholders’ Education and Protection Fund

3.60 The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 (SBSR Act) has mandated the constitution of a Policyholders’ Education and Protection Fund (PEPF). Accordingly, the IRDAI constituted the fund with an initial contribution of ₹800 crore. The accrual on the fund shall be utilised for the purpose of policyholders’ education and protection.

3.61 The PEPF corpus shall be built through inflows including grants from the Authority, Central and State Governments, voluntary donations from insurers and other institutions, and recurring inflows from penalties. It will be administered and utilised by the IRDAI.

III.2.30 Transitional Arrangements for Payment of Annual Fee and Issuance of Certificate of Registration (Intermediaries)

3.62 The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 (SBSR Act) has amended Section 42D of the Insurance Act, 1938 to replace the three-year registration validity period for insurance intermediaries with a perpetual registration framework, subject to payment of an annual fee. To facilitate the transition, an interim arrangement has been introduced for insurance intermediaries for granting fresh registration or renewal of registration between February 5, 2026, and June 30, 2026.

III.2.31 Campaign on Motor Third Party (MTP) Insurance during Road Safety Week (January 11-17, 2026)

3.63 IRDAI directed general insurers (other than specialised insurers) to undertake a focused campaign on Motor Third Party (MTP) Insurance awareness during Road Safety Week (January 11–17, 2026), with the campaign continuing through January 31, 2026. The initiative was aimed to increase awareness of the mandatory nature and benefits of MTP insurance, address the high level of uninsured vehicles (over 50 per cent), and promote road safety. Insurers were advised to simplify policy purchase and renewal, undertake awareness activities through digital and physical channels, and continue the initiative in collaboration with State Governments under the State Insurance Plan while monitoring its impact on reducing uninsured vehicles, as an ongoing activity.

III.2.32 Measures to Address Systemic Issues in Health Insurance Landscape

3.64 To address rising policyholder complaints, improve trust, and enhance transparency and efficiency in the health insurance ecosystem, IRDAI, in collaboration with CII, is facilitating a structured engagement between health insurers and healthcare providers. As part of this initiative, 10 thematic groups have been agreed to be constituted to examine key industry issues and recommend actionable solutions relating to claims management, healthcare provider engagement, fraud mitigation, standardisation, transparency, and policyholder experience.

3.65 Under the first phase of the initiative spanning March to December 2026, five groups comprising representatives from insurers, hospitals, hospital associations, General Insurance Council, diagnostic centres, and academicians have been constituted to examine systemic issues and recommend specific solutions and strategies. Their progress and recommendations are being reviewed monthly through a joint coordination committee to drive implementation, provide guidance and convergence on key issues.

III.2.33 Regulatory Developments for Investments of Insurers

3.66 IRDAI allowed insurers to invest in Category I and II AIFs, however, insurers were not permitted to invest in AIFs having exposure outside India. To encourage further investments in AIFs and to improve the investment yields, IRDAI allowed insurers to invest in AIFs having Exposure outside India with “Excuse Rights” and the proceeds of the insurers’ investments not being invested outside India by such AIFs. Insurers are further required to have operational controls while investing in such AIFs.

III.2.34 Investments in Public Limited Special Purpose Vehicles (SPVs) Engaged in Infrastructure Sector

3.67 A consultation paper was issued in December 2025 seeking stakeholder comments on a proposal to simplify investment norms for debt instruments issued by Public Limited Infrastructure SPVs with operational projects and stable cash flows. The proposal aims to remove the existing requirements relating to parent company guarantees and net worth, subject to conditions that the issue proceeds are used to refinance existing SPV debt, the refinanced debt is classified as standard by the lender, and the issued debt carries a minimum credit rating of AA.

III.2.35 IFSCA (Fund Management) (Amendment) Regulations, 2026

3.68 The amendment relaxes the eligibility norms for the appointment of Key Managerial Personnel (KMPs), with respect to the work experience requirements, and in addition to the existing eligibility criteria, a certification-based alternative eligibility criterion with a reduced work experience requirement has been introduced.

3.69 The restriction of a one-time extension of validity of Private Placement Memorandum (PPM) has been dispensed with, and Fund Management entities (FMEs) are now permitted to avail multiple extensions of six months each for Venture Capital Schemes and Restricted Schemes. Further, specific provisions have been introduced in order to protect the interests of investors in such open-ended schemes that have started investing with US$ 1 million but fail to achieve the minimum corpus of US$ 3 million. A migration window of 24 months has been provided to the FMEs that are required to appoint a custodian based in IFSC to migrate from their existing custodians.

III.3 Other Developments

III.3.1 Evolution of Emerging Frontier AI Models

3.70 In India, especially within the financial sector, discussions and analyses of emerging frontier AI models are reshaping the Cybersecurity landscape and have significant implications for the resilience of Information Technology and Operational Technology (IT and OT) systems.

3.71 Due to increased automation of cyberattacks on financial infrastructure, the potential risks of such models are mainly operational risk for financial institutions, leading to service disruptions, financial losses, reputational damage, data breaches, potential misuse of confidential financial information, and reduced customer confidence. Apart from this, it may also lead to systemic risk with shared vulnerabilities and technology concentration risk where there is dependence on a small number of service providers or shared infrastructure is there.

3.72 These developments highlight the urgency of establishing comprehensive frameworks for cyber resilience, AI governance, and third-party risk management across the Indian financial sector. The Financial Sector Cybersecurity Strategy (FSCSS), being formulated by the FSDC mandated Inter-Ministerial Group, provides the policy vehicle for translating these imperatives into actionable, cross-regulatory standards. Close coordination between financial regulators, cybersecurity agencies (CERT-In, NCIIPC), and technology oversight bodies will be essential to ensure the FSCSS addresses both established and emerging technology risks, including those arising from frontier AI, quantum computing, and third-party concentration.

III.3.2 Customer Protection

3.73 The number of complaints received by the Offices of the Reserve Bank of India Ombudsman (ORBIOs) for the previous two quarters indicate that majority of the complaints related to loans/ advances and credit cards, constituting nearly 50 per cent of the complaints during Q3 and Q4 of 2025-26 (Table 3.1).

3.74 With respect to the Indian securities markets, the number of complaints received during Jan-Mar 2026 decreased by 5.8 per cent over the previous quarter. Complaints related to stockbrokers and registrar and share transfer agents accounted for 54.6 per cent of the total number of complaints received during the quarter (Table 3.2).

3.75 In July 2023, SEBI brought out a circular on Online Resolution of Disputes in the Indian securities market, under which the MIIs, in consultation with their empanelled ODR Institutions, are required to establish and operate a common Online Dispute Resolution Portal to harness online conciliation and online arbitration for resolution of disputes arising in the Indian securities market. The status of the disputes on the portal for H2:2025-26 is given in (Table 3.3).

3.76 During 2025-26, 2,97,468 grievances were received on Bima Bharosa out of which 1,19,027 were related to life insurance business and 1,78,441 were related to general insurance business, including Health business. Out of the total grievances reported under life insurance business, close to 46 per cent were related to unfair business practices and survival claims. Complaints for non-settlement of death claims, policy servicing and proposal form related issues constituted 6 per cent, 15 per cent and 5 per cent, respectively. Under the non-life insurance segment, the majority of the grievances were related to claims (69 per cent). The status of complaints in Bima Bharosa for H2:2025-26 is given in (Table 3.4).

3.77 During 2025-26, there was an increase of 11.15 per cent in the total number of complaints received by Insurance Ombudsmen across India as compared to 2024-25 (Refer Table 3.5). Of these complaints, the complaints pertaining to partial or total repudiation of claims continue to dominate the total number of complaints received in both years at around 72 per cent, followed by complaints on misrepresentation of the policy terms and conditions by insurers (Table 3.5).

3.78 Complaints classified under “repudiation of claims” primarily relate to the health insurance segment, followed by general insurance. Life insurance accounts for the largest share of complaints concerning misrepresentation of policy terms and conditions, with the health insurance segment ranking second.

III.3.3 Enforcement

3.79 The Reserve Bank undertook enforcement action against 99 REs (5 PSBs, 7 PVBs, one PB, one foreign bank, one RRB, 56 Co-operative banks, 21 NBFCs, 3 HFC and 4 PSOs) and imposed an aggregate penalty of ₹8.96 crore for non-compliance with / contravention of statutory provisions and / or directions issued by the Reserve Bank from December 2025 to May 2026.

3.80 During October 2025 – March 2026, prohibitive directions under Section 11 of the SEBI Act, 1992 were issued against 281 entities. Further, under SEBI (Intermediaries) Regulations, 2008, enforcement actions taken were cancellation of registration of two intermediaries, suspension of three intermediaries and warning issued against three intermediaries. A total of 36 prosecution cases were filed against 74 entities. Penalties under adjudication proceedings have been imposed against 340 entities amounting to ₹17.4 crore during this period.

3.81 During the period January 2026 to June 2026, the IRDAI initiated regulatory actions against two regulated entities, comprising one life insurer and one corporate agent. IRDAI issued an advisory to the life insurer and imposed a monetary penalty of ₹1 crore on the corporate agent for violation of the applicable regulatory provisions.

III.3.4 Deposit Insurance

3.82 The Deposit Insurance and Credit Guarantee Corporation (DICGC) extends insurance cover to depositors of all the banks operating in India. As on March 31, 2026, the number of banks registered with the DICGC was 1,950, comprising 124 commercial banks (including 11 small finance banks, 6 payment banks, 28 regional rural banks, 2 local area banks) and 1,826 co-operative banks.

3.83 With the present deposit insurance limit of ₹5 lakh, 97.4 per cent of the total number of deposit accounts (301.4 crore) were fully insured and 39.7 per cent of the total value of all assessable deposits (₹275 lakh crore) were insured as on March 31, 2026 (Table 3.6).

3.84 The insured deposits ratio (i.e., the ratio of insured deposits to assessable deposits) was higher for co-operative banks (60.1 per cent) followed by commercial banks (38.6 per cent) (Table 3.7). Within commercial banks, PSBs had higher insured deposit ratio vis-à-vis PVBs.

3.85 Deposit insurance premium received by the DICGC grew by 14.1 per cent (y-o-y) to ₹15,565 crore during H2:2025-26 (Table 3.8), of which, commercial banks had a share of 95.1 per cent.

3.86 The Deposit Insurance Fund (DIF) with the DICGC is primarily built out of the premium paid by insured banks, investment income and recoveries from settled claims, net of income tax. DIF recorded a 14.4 per cent y-o-y increase to reach ₹2.62 lakh crore as on March 31, 2026. The reserve ratio (i.e., ratio of DIF to insured deposits) increased to 2.39 per cent from 2.29 per cent a year ago (Table 3.9).

III.3.5 Corporate Insolvency Resolution Process

3.87 Since the provisions of corporate insolvency resolution process (CIRP) have come into force with effect from December 1, 2016, 8,987 CIRPs have been initiated till March 31, 2026 (Table 3.10). Out of them, 7,102 cases have been completed – 1,419 through resolution plans; 1,388 through appeal/ review/ settlement; 1,292 withdrawn under section 12A; and 3,003 have been referred for liquidation. A total of 1,885 CIRPs are ongoing. The sectoral distribution of corporate debtors (CDs) under CIRP is presented in (Table 3.11).

3.88 The outcome of CIRPs, initiated stakeholderwise, as on March 31, 2026, is presented in Table 3.12. Of the OC initiated CIRPs that were closed, around 51 per cent were closed on appeal, review, or withdrawal (Table 3.12). Such closures accounted for more than 66 per cent of all closures by appeal, review, or withdrawal.

3.89 The primary objective of the Insolvency and Bankruptcy Code (hereinafter referred to as “Code”) is rescuing CDs in distress. The Code has rescued 4,099 CDs (1,419 through resolution plans, 1,388 through appeal or review or settlement and 1,292 through withdrawal) as of March 2026. It has referred 3,003 CDs for liquidation. Cumulatively, till March 2026, the creditors have realised ₹4.32 lakh crore under the resolution plans. The creditors have realised 166.8 per cent of the liquidation value and 94.56 per cent of the fair value (based on 1,298 cases where fair value has been estimated). Furthermore, this realisation does not include the CIRP cost, and many probable future realisations.

3.90 About 42 per cent of the CIRPs (585 out of 1,391 for which data are available), which yielded resolution plans, were earlier with BIFR and/or defunct. In these CDs, the claimants have realised 17.49 per cent of their admitted claims and 174.03 per cent of liquidation value.

3.91 As of the end of March 2026, the total CIRPs ending in liquidation was 3003, of which, final reports have been submitted in 1692 cases. These 1692 CDs together had outstanding claims of ₹4.85 lakh crore, but their assets were valued at ₹0.21 lakh crore. The liquidation of these companies resulted in 86.34 per cent realisation as against the liquidation value.

3.92 The Code endeavours to close the various processes at the earliest. The 1,419 CIRPs, which have yielded resolution plans by the end of March 2026, took on average 621 days (after excluding the time excluded by the AA) for conclusion of process, while incurring an average cost of 1.3 per cent of liquidation value and 0.80 per cent of resolution value. Similarly, the 3,003 CIRPs, which ended up in orders for liquidation, took on average 531 days for conclusion. Further, 1,692 liquidation processes, which were closed by submission of final reports took on average 691 days for closure. Similarly, 2,022 voluntary liquidation processes, which were closed by submission of final reports, took on average 394 days for closure.

III.3.6 Developments in International Financial Services Centre (IFSC)

3.93 The International Financial Services Centres Authority (IFSCA), the unified regulator for all financial activities in IFSC, has notified more than 30 regulations and more than 15 frameworks since 2021. The number of registrations/ authorisations granted by IFSCA has grown from 94 in October 2020 to 1150 as of March 31, 2026.

3.94 The banking ecosystem at GIFT IFSC comprises branches (called IFSC Banking Units (IBUs)) of 37 banks, including 20 foreign banks and 17 domestic banks offering a wide spectrum of banking and financial services. In addition, Global Administrative Offices (GAOs) of 2 banks - SBI and FirstRand Bank are operational in IFSC. Total banking assets have grown from US$ 14 billion in September 2020 to US$ 111 billion in March 2026, while cumulative banking transactions have grown from US$ 53 billion to US$ 1,826.85 billion during the same period. A total of 21,449 retail deposit accounts have been opened with IBUs with a total deposit of US$ 1.72 billion.

3.95 As of March 31, 2026, the insurance ecosystem comprised 36 IFSC Insurance Offices (IIOs) of 22 foreign and 14 domestic firms and 34 IFSC Insurance Intermediary Offices (IIIOs). Total Gross Written Premium (GWP) booked by IIOs rose to US$ 648 million in FY2025-26 (US$ 40 million Direct and US$ 608 million Re-insurance) as against US$ 162 million in FY2024-25.

3.96 The fund management ecosystem witnessed substantial growth. As on March 31, 2026, 217 Fund Management Entities (FMEs) have been registered, which have launched 360 Funds (including AIFs and Retail Schemes) with a cumulative investment of US$ 19.7 billion. The number of FMEs has increased from 162 in March 2025 to 217 in March 2026, reflecting a year-on-year growth of 34.0 per cent. Similarly, the number of Funds has grown from 229 to 360 during the same period, marking a y-o-y increase of 57.2 per cent. Meanwhile, cumulative investments have surged from US$ 8.1 billion in March 2025 to US$ 19.7 billion in March 2026, representing a growth of 144.2 per cent.

3.97 This momentum was reflected in the capital markets ecosystem at GIFT IFSC. The monthly turnover on GIFT IFSC Exchanges in March 2026 stood at USD 130.10 billion, and the average daily turnover of NIFTY Derivative contracts on NSE IX in March 2026 was US$ 5.90 billion. Additionally, till March 31, 2026, a total of US$ 77 billion debt securities has been listed on the IFSC exchanges including US$ 17.5 billion of ESG labelled debt.

3.98 The India International Bullion Exchange (IIBX) has emerged as a key platform for bullion trading. Till 31st March 2026, 102.33 tonnes of gold (equivalent to US$ 8.6 billion) and 1,147.98 tonnes of silver (equivalent to US$ 927 million) have been transacted and imported through the IIBX. Three internationally recognised vault managers have established vaults in GIFT IFSC and SEZs in Chennai with a storage capacity of around 151 tonnes for Gold and around 930 tonnes for Silver. The registered aircraft leasing entities in GIFT-IFSC stood at 35, which have leased a total of 373 assets (aircraft – 203, engines – 84, aircraft auxiliary power units (APUs) – 85 and Aviation Simulation Training Devices - 1). At the same time, the number of total registered Ship leasing/ ship financing entities in GIFT IFSC has grown to 36 till March 2026. Additionally, a total of 9 entities have been registered with IFSCA as Global/ Regional Treasury Centre.

III.3.7 Pension Funds

3.99 This period was characterized by the expansion of the subscriber base to over 9.64 crore individuals and the AUM beyond the ₹16 lakh crore threshold. NPS and APY, both have witnessed a y-o-y growth in the number of subscribers at 14.7 per cent as well as in AUM at 14.1 per cent. The highest AUM is of the State Government (₹8.16 lakh crore) while the highest number of subscribers is under the APY (7.5 crore). Total enrolments under APY (Chart 3.1 a, b, c and d) stood at 8.96 crore with the maximum enrolments being under the age group of 21-25 years. The contribution is primarily invested in fixed income instruments (Chart 3.2). The highest enrolments were under the ₹1,000 pension slab at 86.91 per cent.

3.100 Recognising that rising healthcare costs are among the principal threats to the adequacy of accumulated retirement savings, the Authority approved the NPS Swasthya Pension Scheme as a proof-of-concept under its Regulatory Sandbox Framework. NPS Swasthya is a voluntary, contributory, sector-specific scheme established under the Multiple Scheme Framework. It is intended exclusively to help citizens meet outpatient and in-patient medical expenses, integrating health financing with long-term pension planning within a single, regulated architecture.

¹ BCBS (2026), “Basel III monitoring report”, March.

² The output floor has increased in a phased manner from 50 per cent (2023), increasing 5 per cent as of January 01 every year.

³ BCBS (2026), “Finalisation of technical amendment and FAQs”, March.

⁴ The amendment was originally published for consultation in June 2025.

⁵ Separately, the Committee launched a consolidated section of its website covering guidelines and sound practices for banks and supervisors, together with a consultative document.

⁶ BCBS (2026), “Synthetic risk transfers”, February.

⁷ FSB (2026), “From Plans to Practice: Operationalising Resolution”, January.

⁸ FSB (2026), “Scope of Insurers Subject to Recovery and Resolution Planning Requirements in the Key Attributes”, April.

⁹ FSB (2026), “Annual Report” (March).

¹⁰ FSB (2026), “Vulnerabilities in Government Bond-backed Repo Markets”, February.

¹¹ FSB (2026), “Report on Vulnerabilities in Private Credit”, May.

¹² FSB (2026), “Work Programme for 2026”, February.

¹³ FSB (2025), “Non-bank Data Task Force (NDTF)”, July.

¹⁴ IOSCO (2026), “Consultation Report on Good Practices concerning over-the-counter Commodities Derivatives Markets”, March.

¹⁵ This report was preceded by an earlier review of the Commodity Derivatives Principles, which had identified continuing gaps in OTC data collection, aggregation of positions, monitoring of large exposures, and timely regulatory intervention during periods of market stress.

¹⁶ CPMI-IOSCO (2026), “Consultation on updated guidance and public disclosures to implement initial margin proposals”, May.

¹⁷ IOSCO (2026), “Reports on the evolution of Market Liquidity during the Trading Day for equity markets and on Extended Trading Hours for equity venues”, May.

¹⁸ IOSCO (2026), “Statement on Non-GAAP Financial Measures”, March.

¹⁹ IOSCO (2026), “Work Programme for 2026”, February.

²⁰ As noted in the December 2025 FSR, IOSCO conducted a thematic review in October 2025 assessing the implementation of their recommendations for crypto and digital asset markets.

²¹ IMF (2026), “Climate Risks: The Role of Financial Regulators and Supervisors”, February.

²² This builds on its October 2025 monitoring report on AI-related vulnerabilities and signals a move toward internationally coordinated policy guidance.

²³ IOSCO (2026), “Supervisory Toolkit for AI Use in Capital Markets”, May

²⁴ OECD (2026). “Supervision of artificial intelligence in finance”, January

²⁵ This exercise involved consolidation of more than 9000 existing regulatory circular/ guidelines into 238 function-wise Master Directions (MDs), specific to each category of regulated entity.

²⁶ Transactors mean obligors in relation to facilities such as credit cards and charge cards where the balance has been repaid in full at each scheduled repayment date (including the grace period of three days) for the previous 12 months.

²⁷ Superposition refers to a state where the qubit is partly in the zero and partly in the one state, and therefore in both states simultaneously. Two qubits can be in Entanglement, meaning that they share a common quantum state. Quantum interference is the ability of quantum states to either reinforce (constructive interference) or cancel out (destructive interference) one another.