INDIAN BANKING RADAR (IBR) -BANKING & ECONOMY INTELLIGENCE BULLETIN

PLATINUM CURRENT-AFFAIRS EDITION | VOL. 174 -

21 SEPTEMBER 2026 | MONDAY

RBI • BANKING • LIQUIDITY • DIGITAL PAYMENTS • FINTECH • ECONOMY • IBC • COOPERATIVE BANKING

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TODAY'S BANKING RADAR

01 | RCB-KYC — FPI facility for overseas certified copies

02 | LIQUIDITY — OMO sales and VRRR absorption

03 | UPI — Specified MDR framework from 15 October

04 | ECONOMY — Software-services exports reach US$221.4 billion

05 | FINTECH — Demat 2.0 and tokenised corporate bonds

06 | IBC — IBBI strengthens due-diligence framework

07 | COOPERATIVES — NABARD capital-strengthening mechanism

08 | COOPERATION — Six strategic pillars for the cooperative sector

09 | PACS — Evolution towards diversified rural services

10 | BANKING RESILIENCE — Contingency planning for proposed strike

IBR INTELLIGENCE MODEL

NEWS → FACT → CONCEPT → IMPACT → EXAM APPLICATION

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01 | RBI RCB-KYC AMENDMENT

FPI FACILITY EXTENDED FOR OVERSEAS CERTIFIED COPIES

RBI's 18 September 2026 amendment to the Rural Co-operative Banks – KYC Directions, 2025 extends the overseas certified-copy facility to Foreign Portfolio Investors (FPIs).

The facility was earlier available to NRIs and PIOs. Eligible non-resident customers may alternatively provide an original certified copy authenticated by specified authorities abroad.

PERMITTED AUTHORITIES

Authorised officials of overseas branches of Scheduled Commercial Banks registered in India.

Branches of overseas banks having relationships with Indian banks.

Notary Public abroad.

Court Magistrate.

Judge.

Indian Embassy / Consulate General.

CONCEPT: Documentation facilitation does not mean dilution of KYC/AML/CFT requirements.

BANKING IMPACT: Reduces documentation-related operational difficulty for eligible non-resident customers of RCBs.

EXAM ANGLE: The amendment specifically concerns Rural Co-operative Banks.

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02 | RBI LIQUIDITY MANAGEMENT

OMO SALES + VRRR: TWO DIFFERENT ABSORPTION TOOLS

RBI's ₹1 lakh crore OMO sale programme includes:

• First tranche: ₹50,000 crore

• Bids received: ₹66,590 crore

• Accepted: ₹50,000 crore

• Settlement: 18 September 2026

Remaining tranches

• ₹25,000 crore — 21 September

• ₹25,000 crore — 28 September

RBI has also been using VRRR operations to absorb surplus liquidity.

KEY DISTINCTION

OMO Sale

RBI sells Government securities

→ Relatively durable liquidity absorption

VRRR

Banks place funds with RBI

→ Temporary liquidity absorption

EXAM TRAP:

OMO Sale ≠ liquidity injection

BANKING CONCEPT: The choice between durable and temporary operations depends on the nature and persistence of liquidity conditions.

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03 | UPI MERCHANT DISCOUNT RATE

SPECIFIED MDR FRAMEWORK FROM 15 OCTOBER 2026

The revised framework for specified merchant transactions is scheduled to commence from 15 October 2026.

Specified P2M transactions

Transaction above ₹2,000 → 0.4% MDR

For specified transactions of ₹75,000 and above:

Maximum MDR → ₹300

THREE KEY DISTINCTIONS

₹2,000 is an MDR applicability threshold, not a UPI transaction limit.

P2P transactions remain outside the merchant MDR framework.

MDR is a payment-ecosystem charge and is distinct from taxation.

MDR ≠ GST

MDR ≠ UPI tax

MDR ≠ automatic customer fee

EXAM FORMULA:

UPI transaction ≠ automatically chargeable transaction

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04 | INDIA'S SOFTWARE SERVICES EXPORTS

US$221.4 BILLION IN 2025–26

RBI's annual survey reported India's software-services exports at:

US$221.4 BILLION

Growth: 8.2% year-on-year

Other key indicators:

• Including commercial presence: US$239.3 billion • Computer services share: 69.3% • Off-site services: 91.7% • USA share: 54.1% • USD invoicing share: 72.6%

MAJOR COMPONENTS

IT services → US$147.0 billion

BPO services → US$56.0 billion

Engineering services → US$12.0 billion

ECONOMIC TRANSMISSION

Software exports

→ Services exports

→ Foreign-exchange earnings

→ External-sector strength

EXAM POINT: The United States remained the largest destination for India's software-services exports.

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05 | SEBI DEMAT 2.0

TOKENISED CORPORATE BONDS

The Demat 2.0 pilot involves tokenised corporate bonds using distributed-ledger technology and digital settlement infrastructure.

Reported pilot issuances:

• REC — ₹500 crore

• L&T — ₹500 crore

• IIFL Finance — ₹25 crore

Total → ₹1,025 crore

WHY IT MATTERS

Tokenisation can potentially improve:

• Securities issuance

• Ownership records

• Settlement processes

• Operational efficiency

• Market infrastructure

However, tokenisation does not eliminate:

• Credit risk

• Market risk

• Liquidity risk

• Operational risk

• Cyber risk

CORE CONCEPT:

Tokenisation changes infrastructure — not the fundamental existence of financial risk.

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06 | IBBI AND IBC

DUE DILIGENCE AGAINST POTENTIAL MISUSE

IBBI issued a circular dated 9 September 2026 on:

“Due diligence by Insolvency Professionals regarding misuse of IBC framework.”

The measure strengthens due-diligence expectations relating to possible misuse of insolvency proceedings.

EXAM CONNECT

IBC → Insolvency and Bankruptcy Code, 2016

Section 65 → Fraudulent or malicious initiation of insolvency proceedings.

CORE PRINCIPLE:

Due diligence + professional responsibility + regulatory safeguards → greater integrity of the insolvency process.

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07 | NABARD

CAPITAL STRENGTHENING OF COOPERATIVE CREDIT INSTITUTIONS

NABARD's operational framework under Section 27 of the NABARD Act, 1981 concerns long-term loans to State Governments for contribution to the share capital of eligible cooperative credit institutions.

COVERED INSTITUTIONS

• State Cooperative Banks

• DCCBs

• PACS / FSS / LAMPS

• SCARDBs

• PCARDBs

CAPITAL TRANSMISSION

Share-capital contribution

→ Owned funds ↑

→ Borrowing capacity ↑

→ Credit capacity ↑

→ Rural/agricultural finance

EXAM POINT:

Section 27 of the NABARD Act is the statutory link.

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08 | COOPERATIVE SECTOR

SIX STRATEGIC PILLARS

The cooperative transformation framework focuses on:

1. Strengthening the Foundation

Governance • legal reforms • finance • transparency

2. Promoting Vibrancy

Markets • business opportunities • income enhancement

3. Making Cooperatives Future-Ready

Technology • digitalisation • professional management

4. Promoting Inclusivity & Deepening Reach

Members • women • youth • wider participation

5. Entering New & Emerging Sectors

Clean energy • warehousing • healthcare • new activities

6. Shaping the Young Generation

Training • skills • employment • youth participation

MEMORY CODE: F – V – F – I – N – Y

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09 | PACS

FROM CREDIT SOCIETY TO MULTIPURPOSE RURAL INSTITUTION

PACS are increasingly being positioned to provide services beyond traditional agricultural credit.

TRADITIONAL ROLE

Agricultural credit

KCC-related services

Member services

EMERGING ACTIVITIES

Digital services

Storage

Procurement

Processing

Other rural economic activities

STRUCTURAL CONNECTION

PACS → DCCB → StCB

EXAM TRAP:

PACS are cooperative credit societies, not banks.

BANKING IMPACT: Diversification can expand rural economic activity while creating a greater need for governance, technology, internal controls and risk management.

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10 | BANKING RESILIENCE

CONTINGENCY PLANNING FOR PROPOSED SEPTEMBER STRIKE

Discussions have been scheduled with PSBs, RRBs and NABARD regarding continuity of banking services during the proposed three-day strike beginning 28 September 2026.

The timing is significant because September-end coincides with half-year closing.

CONTINUITY PRIORITIES

• Customer service

• Digital banking

• ATM availability

• Payment systems

• Clearing operations

• Half-year-end activities

BANKING CONCEPT:

Business continuity + contingency planning + digital resilience = operational resilience

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CIVIL SERVICES QUICK CONNECT

GS-II

Financial regulation • KYC/AML • Digital governance • Cooperatives • Financial inclusion • Consumer protection

GS-III

Monetary policy • Liquidity management • Digital payments • FinTech • Services exports • Capital markets • IBC • Cybersecurity

MAINS PRACTICE

Q1. How can KYC documentation be simplified without weakening AML/CFT safeguards?

Q2. Why may a central bank require both temporary and relatively durable instruments to manage surplus liquidity?

Q3. How can India balance UPI's inclusiveness with the sustainability of the digital-payment ecosystem?

Q4. “Tokenisation transforms financial-market infrastructure but does not eliminate financial risk.” Discuss.

Q5. How can capital strengthening, technology and diversification improve the resilience of cooperative credit institutions?

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PRELIMS RAPID REVISION

🔐 18 Sept 2026 — RCB KYC Amendment Directions

🌐 FPI — Added to overseas certified-copy facility

Six — Specified overseas certifying authorities

💧 ₹1 lakh crore — OMO sale programme

💰 ₹50,000 crore — First OMO tranche

💵 ₹66,590 crore — Bids received

💳 15 Oct 2026 — UPI MDR framework

0.4% — Specified P2M MDR above ₹2,000

₹300 — Cap for specified ₹75,000+ transactions

💻 US$221.4 bn — Software-services exports, 2025–26

📈 8.2% — Year-on-year growth

🇺🇸 54.1% — USA share

💵 72.6% — USD invoicing share

🔗 ₹1,025 crore — Reported Demat 2.0 pilot issuances

⚖️ 9 Sept 2026 — IBBI due-diligence circular

📜 Section 27 — NABARD Act capital-support link

🌱 Six — Cooperative strategic pillars

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IBR BANKER'S DESK

COMMERCIAL BANKERS

KYC • Liquidity • G-Secs • Forex • UPI • Digital Payments • Cybersecurity

DCCB / RURAL COOPERATIVE BANKERS

RCB-KYC • NABARD • Capital • Governance • Risk Management • Digital Banking

PACS

Computerisation • KCC • Digital Services • Storage • Procurement • Diversification

BANKING ASPIRANTS

RBI • KYC • Liquidity • UPI • FinTech • NBFCs • IBC • Cooperatives

CIVIL SERVICES ASPIRANTS

FACT → CONCEPT → CAUSE → IMPACT → POLICY → MAINS

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