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

🔥 CURRENT-AFFAIRS EDITION | VOL. 175

📅 22 SEPTEMBER 2026 | TUESDAY

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

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🎯 TODAY'S BANKING RADAR

01 | RBI — Basel III Market-Risk Capital Framework

02 | RBI — RCB-KYC: Overseas Certification Facility for FPIs

03 | LIQUIDITY — OMO Sales + VRRR Operations

04 | UPI — Selective MDR Framework from 15 October

05 | ECONOMY — Software-Services Exports at US$221.4 Billion

06 | FINTECH — Demat 2.0 & Tokenised Corporate Bonds

07 | IBC — Due Diligence Against Misuse

08 | NABARD — Supervision & Turnaround of Rural Cooperative Banks

09 | SAHAKAR SARATHI — Shared Digital Infrastructure for RCBs

IBR INTELLIGENCE MODEL

NEWS → FACT → CONCEPT → WHY IT MATTERS → IMPACT → EXAM APPLICATION

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01 | RBI — BASEL III MARKET RISK

NEW MARKET-RISK CAPITAL DIRECTIONS

RBI issued the Reserve Bank of India (Commercial Banks – Minimum Capital Requirements for Market Risk) Directions, 2026 on 21 September 2026.

The Directions align India's market-risk capital framework with the revised Basel III standards and take effect from 1 April 2027.

🔢 KEY FACTS

• Draft guidelines — 17 February 2023

• Final Directions — 21 September 2026

• Effective — 1 April 2027

• Transition scalars — applicable since 1 April 2024

• Approach — Simplified Standardised Approach

🔍 CONCEPT

Market Risk arises from adverse movements in market variables such as interest rates, equity prices and exchange rates.

WHY IT MATTERS

Banks with significant trading-book exposures need adequate capital to absorb potential losses arising from market movements.

KEY CHANGES

• Trading-book treatment linked to RBI Investment Directions.

• Revised Net Open Position and forex-risk capital treatment.

• Revised specific-risk treatment for interest-rate risk.

• Revised treatment of debt mutual funds and ETFs held in the trading book.

• Treatment of permitted total-return swaps incorporated for hedged positions.

🏦 BANKING IMPACT

Trading position → Market movement → Potential loss → Capital requirement → Resilience

🎯 UPSC ANGLE — GS-III

Basel III → Capital adequacy → Financial stability → Banking-sector resilience

⚡ PRELIMS TRAP

Market risk ≠ credit risk ≠ operational risk.

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02 | RBI — RCB-KYC

OVERSEAS CERTIFIED-COPY FACILITY EXTENDED TO FPIs

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 specified categories including NRIs and PIOs.

🔢 KEY FACT

Specified certification authorities include:

• Authorised officials of eligible overseas branches of Indian Scheduled Commercial Banks

• Eligible overseas banks

• Notary Public

• Court Magistrate

• Judge

• Indian Embassy / Consulate General

🔍 CONCEPT

KYC facilitation ≠ relaxation of AML/CFT obligations.

WHY IT MATTERS

Cross-border documentation can be operationally difficult; prescribed certification mechanisms can simplify compliance without removing customer-due-diligence requirements.

🏦 RCB IMPACT

Reduced documentation friction for eligible non-resident customers while retaining KYC safeguards.

🎯 UPSC ANGLE — GS-II / GS-III

KYC → AML/CFT → Financial integrity → Cross-border financial flows

⚡ PRELIMS TRAP

The amendment specifically relates to Rural Cooperative Banks.

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03 | RBI — LIQUIDITY MANAGEMENT

OMO + 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 each on 21 and 28 September

RBI has also used VRRR operations to absorb surplus liquidity.

🔍 CONCEPT

OMO SALE

RBI sells Government securities

→ relatively durable liquidity absorption

VRRR

Banks place funds with RBI

→ temporary liquidity absorption

WHY IT MATTERS

A central bank may require different instruments depending on whether liquidity conditions are temporary or more persistent.

🏦 BANKING IMPACT

Liquidity surplus → RBI absorption → Money-market conditions → Monetary transmission

🎯 UPSC ANGLE — GS-III

Liquidity management connects:

RBI → Monetary policy → Interest rates → Credit conditions → Inflation & growth

⚡ PRELIMS TRAP

OMO sale → liquidity absorption

OMO purchase → liquidity injection

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04 | UPI — SELECTIVE MDR

NEW FRAMEWORK FROM 15 OCTOBER 2026

A revised framework for specified Person-to-Merchant (P2M) UPI transactions is scheduled from 15 October 2026.

🔢 KEY FACTS

• 0.4% — specified MDR above ₹2,000

• ₹300 — maximum MDR for specified transactions of ₹75,000 and above

• P2P — outside the merchant MDR framework

• ₹2,000 — MDR threshold, not UPI transaction limit

🔍 CONCEPT

MDR = Merchant Discount Rate

It is a charge within the payment ecosystem and should not be confused with a Government tax.

VERY IMPORTANT

MDR ≠ GST

MDR ≠ UPI tax

MDR ≠ automatic customer charge

WHY IT MATTERS

Digital payments require a sustainable ecosystem involving banks, payment-service providers, networks, technology infrastructure and merchants.

🎯 UPSC ANGLE — GS-III

Digital Public Infrastructure → Financial inclusion → Payment sustainability → Consumer protection

🏦 BANKING IMPACT

Banks and payment participants must understand the distinction between transaction value, MDR, taxation and customer-facing charges.

⚡ PRELIMS TRAP

₹2,000 is not a UPI transaction ceiling.

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05 | ECONOMY — SOFTWARE SERVICES

US$221.4 BILLION IN FY2025-26

RBI's annual survey reported India's software-services exports at US$221.4 billion, up 8.2% year-on-year.

🔢 KEY FACTS

• Computer services — 69.3%

• IT services — US$147.0 bn

• BPO services — US$56.0 bn

• Engineering services — US$12.0 bn

• Off-site services — 91.7%

• USA share — 54.1%

• USD invoicing — 72.6%

🔍 CONCEPT

India's external sector is increasingly supported by services exports, in addition to merchandise exports.

WHY IT MATTERS

Software and IT-enabled services generate foreign-exchange earnings and contribute to India's services-led growth model.

🎯 UPSC ANGLE — GS-III

Services exports → Forex earnings → Current account → External-sector resilience

EXAM CONNECT

The USA remained the largest destination for India's software-services exports.

⚡ PRELIMS FACT

US$221.4 bn = software-services exports, FY2025-26.

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06 | FINTECH — DEMAT 2.0

TOKENISED CORPORATE BONDS

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

🔢 REPORTED PILOT ISSUANCES

• REC — ₹500 crore

• L&T — ₹500 crore

• IIFL Finance — ₹25 crore

• Total — ₹1,025 crore

🔍 CONCEPT

Tokenisation → Digital representation of financial assets → DLT-based records → Digital settlement

WHY IT MATTERS

Tokenisation can potentially improve issuance, record-keeping, settlement and market infrastructure.

But it does not eliminate:

Credit risk • Market risk • Liquidity risk • Operational risk • Cyber risk

🎯 UPSC ANGLE — GS-III

FinTech → Capital markets → Digital infrastructure → Innovation + risk management

⚡ PRELIMS TRAP

Technology changes the infrastructure; it does not eliminate financial risk.

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07 | IBBI — IBC

DUE DILIGENCE AGAINST MISUSE

IBBI issued a 9 September 2026 circular concerning due diligence by Insolvency Professionals regarding possible misuse of the IBC framework.

🔍 CONCEPT

IBC → Insolvency resolution framework → Professional responsibility → Regulatory safeguards

SECTION 65

Section 65 deals with fraudulent or malicious initiation of insolvency proceedings.

WHY IT MATTERS

The credibility of an insolvency framework depends not only on legal provisions but also on responsible use of the process.

🎯 UPSC ANGLE — GS-III

IBC → Ease of doing business → Credit discipline → Financial stability → Asset resolution

⚡ PRELIMS TRAP

IBC is broader than a conventional loan-recovery mechanism.

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08 | NABARD — RURAL COOPERATIVE BANKING

SUPERVISION + TURNAROUND + DIGITAL TRANSFORMATION

NABARD's FY2025-26 supervisory activities included:

• 34 StCB inspections

• 268 DCCB inspections

• 8 SCARDB inspections

• Turnaround initiatives covering 96 weak rural cooperative banks

🔍 CONCEPT

Supervision → Identification of weaknesses → Corrective action → Monitoring

WHY IT MATTERS

Rural cooperative banks are important channels for rural and agricultural credit; their institutional resilience affects financial inclusion and rural economic activity.

🏦 BANKER CONNECT

Inspection finding → Root-cause analysis → Corrective action → Accountability → Monitoring → Closure

🎯 UPSC ANGLE — GS-II / GS-III

Cooperative institutions → Rural credit → Financial inclusion → Governance → Rural development

⚡ EXAM TRAP

Supervision is not merely fault-finding; it also involves corrective and preventive strengthening.

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09 | SAHAKAR SARATHI

SHARED DIGITAL INFRASTRUCTURE FOR RCBs

Sahakar Sarathi Private Limited (SSPL) mobilised ₹803.18 crore equity by March 2026 and supported migration of 315 cooperative banks to the bank.in domain.

KEY AREAS

• Digital banking

• Cybersecurity

• IT governance

• bank.in migration

• Digital credit

• Payment infrastructure

• Reconciliation

• Generative-AI pilots

🔍 CONCEPT

Shared infrastructure → Economies of scale → Technology access → Digital capability

WHY IT MATTERS

Smaller cooperative banks can face high costs in independently developing sophisticated technology and cybersecurity infrastructure.

🎯 UPSC ANGLE — GS-II / GS-III

Cooperatives + Digital Public Infrastructure + Cybersecurity + Financial inclusion

🏦 RCB IMPACT

Shared services can help improve:

Technology → Security → Efficiency → Customer service → Compliance

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🎯 UPSC 30-SECOND TAKEAWAY

RBI: Basel III market risk → Financial stability

Liquidity: OMO + VRRR → Monetary operations

UPI: MDR → Digital-payment sustainability

Services: IT exports → Forex + external sector

FinTech: Tokenisation → DLT + capital markets

IBC: Due diligence → Credit discipline

Cooperatives: NABARD + technology → Rural financial resilience

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🧠 CIVIL SERVICES MAINS PRACTICE

Q1. Explain the significance of RBI's revised Basel III market-risk capital framework for the resilience of India's banking system.

Q2. “Liquidity management requires the central bank to balance monetary transmission with financial stability.” Discuss with reference to OMO and VRRR operations.

Q3. How can India preserve the inclusiveness of digital payments while ensuring the sustainability of the payment ecosystem?

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

Q5. Examine how supervision, technology and institutional strengthening can improve the resilience of rural cooperative banks.

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🏦 IBR BANKER'S DESK

COMMERCIAL BANKERS

Basel III • Market Risk • Treasury • G-Secs • Forex • Liquidity • UPI • Cybersecurity

DCCB / RURAL COOPERATIVE BANKERS

RCB-KYC • NABARD Supervision • Turnaround Plans • Digital Banking • Cybersecurity • Governance

PACS

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

BANKING ASPIRANTS

RBI • Basel III • KYC • Liquidity • UPI • FinTech • IBC • Cooperatives

CIVIL SERVICES ASPIRANTS

FACT → CONCEPT → WHY IT MATTERS → GS LINK → MAINS

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🎥 IBR YOUTUBE

RBI & Liquidity • KYC & Compliance • UPI • Banking Frauds • FinTech & AI • Cooperative Banking • DCCB/PACS • Economy Concepts

FOLLOW IBR FOR DAILY BANKING INTELLIGENCE

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🌾 IBR MASTER FORMULA

NEWS → FACT → CONCEPT → WHY IT MATTERS → IMPACT → POLICY → EXAM APPLICATION

DON'T JUST MEMORISE THE NEWS.

UNDERSTAND IT. CONNECT IT. APPLY IT.

🌾 INDIAN BANKING RADAR (IBR)