Source: BS Context: The SWIFT (Society for Worldwide Interbank Financial Telecommunication) network has announced a new framework to improve cross-border retail payments, aiming to make international transfers faster, cheaper, and more predictable. Major Indian banks such as State Bank of India (SBI), HDFC Bank, ICICI Bank, and Axis Bank are expected to roll out the system as part of the global transition. What is SWIFT? SWIFT is a global financial messaging network that enables banks and financial institutions to securely communicate payment instructions for international money transfers. Objectives of the New Framework The new system aims to: Key Features of the Framework These improvements will reduce delays and uncertainties often associated with international transfers. Importance for India India is expected to benefit significantly from the new framework because: Faster and cheaper payment systems will help:

Source: ET Context: The Government of India has expanded the financial account reporting framework to include crypto assets, Central Bank Digital Currencies (CBDCs), and certain electronic money products. The move aims to strengthen tax transparency and international information sharing. The changes were notified by the Central Board of Direct Taxes (CBDT) through the Income-tax (Amendment) Rules, 2026. Key Changes in the Rules The amendments modify Rules 114F, 114G, and 114H of the Income-tax Rules, which deal with due diligence and reporting requirements for financial institutions. New Financial Assets Included Financial institutions must now report accounts involving: These assets will now fall under the tax information-sharing framework. Definition of Relevant Crypto Assets The rules define a relevant crypto asset as: Examples may include cryptocurrencies used for trading, investment, or transactions. Specified Electronic Money Products The rules introduce a new category called specified electronic money products, defined as: This includes certain digital wallets or prepaid digital money instruments. Alignment with Global Tax Transparency Frameworks The amendments align India’s system with global standards such as: 1. FATCA (Foreign Account Tax Compliance Act) 2. CRS (Common Reporting Standard) 3. CARF (Crypto-Asset Reporting Framework) Exemptions for Low-Value Accounts Some low-value accounts are exempt from reporting requirements. Example:

Source: ET Context: The Reserve Bank of India (RBI) has proposed a new measure to provide quick financial relief to victims of small digital frauds. Under the proposal, customers who lose money in online frauds may receive compensation within five days of reporting the incident. Key Features of the Proposal 1. Compensation Limit 2. Time Limit for Reporting 3. One-Time Relief Measure Who Will Bear the Compensation Cost? The financial burden will be shared between banks and the RBI. This ensures that banks can quickly reimburse customers without facing the full financial burden. Objective of the Proposal The RBI aims to:

Source: ET Context: The Government of India has announced credit assistance for MSMEs involved in e-commerce exports under the ₹25,060 crore Export Promotion Mission (EPM). The initiative aims to boost small exporters’ participation in global online markets. The announcement was made through a trade notice issued by the Directorate General of Foreign Trade (DGFT). Eligibility Criteria for MSMEs MSMEs can avail the credit support if they meet the following conditions: 1. Existing Exporters via Postal or Courier Channels 2. New Exporters with Domestic E-Commerce Experience Objective of the Scheme The government aims to:

Source: Mint Context: India and the United Arab Emirates (UAE) are working on linking their Central Bank Digital Currencies (CBDCs) to enable instant cross-border money transfers between the two countries. The initiative involves collaboration between the Reserve Bank of India (RBI) and the Central Bank of the UAE. What Is the Proposed Digital Currency Link? The plan is to connect: Once linked, the system would allow direct wallet-to-wallet transfers, eliminating the need for traditional banking intermediaries. This means money could be transferred almost instantly across borders. Why the India–UAE Link Is Important 1. Large Indian Diaspora in the UAE 2. Major Remittance Corridor Faster digital transfers could significantly reduce cost and time for remittances. Types of CBDC Use Retail CBDC Wholesale CBDC Potential Uses of the CBDC Bridge The India–UAE CBDC linkage could enable: It could function as a parallel payment channel alongside traditional bank transfers.

Source: TH Why in News? The 16th Finance Commission of India has submitted its recommendations for the period 2026–31. It retained the States’ share in tax devolution at 41%, while introducing changes in the horizontal distribution formula and proposing reforms such as merging cesses and surcharges into the divisible pool. Constitutional Background The Finance Commission is constituted under Article 280 of the Constitution of India to recommend: The certification of the net proceeds of taxes is done by the Comptroller and Auditor General (CAG) under Article 279 of the Constitution of India. Key Recommendations of the 16th Finance Commission 1. Vertical Devolution The Commission retained the states’ share at 41% of the divisible pool, continuing the arrangement recommended by the 15th Finance Commission of India. Grand Bargain Proposal To address concerns about the rise of cesses and surcharges, the Commission proposed a “grand bargain”: This aims to expand the total pool of shareable taxes. Horizontal Devolution Formula The Commission introduced a revised formula to distribute funds among states. Criterion Weight Income Distance 42.5% Population (2011 Census) 17.5% Demographic Performance 10% Forest & Ecology 10% Area 10% Contribution to GDP 10% Key Changes This shift rewards economic performance while maintaining redistribution goals. Grants-in-Aid Total grants recommended: ₹9.47 lakh crore 1. Local Body Grants – ₹8 lakh crore Split between: Conditions include: New Initiatives 2. Disaster Management Grants – ₹2.04 lakh crore Funds allocated for State Disaster Relief and Management Funds. Cost sharing: Fiscal Roadmap and Reform Recommendations Fiscal Deficit Targets Off-Budget Borrowings The Commission recommended ending off-budget borrowings and including them in fiscal deficit calculations. Power Sector Reforms Encouraged privatisation of DISCOMs to improve efficiency. Subsidy Rationalisation Suggested rationalising subsidies, especially unconditional cash transfers enabled by the JAM Trinity (Jan Dhan–Aadhaar–Mobile). Unconditional cash transfers now account for 20.2% of subsidy spending, up from 3% in 2018–19. Public Sector Enterprise Reforms Recommended: Key Issues and Criticisms 1. Retaining 41% Devolution States had demanded 50% share in central taxes. Critics argue the recommendation: 2. Rising Cesses and Surcharges Cesses and surcharges: The Commission did not impose firm limits, which may weaken fiscal federalism. 3. Shift Toward Performance-Based Transfers The introduction of GDP contribution criterion benefits economically advanced states such as: This may reduce redistribution to poorer states. 4. Removal of Revenue Deficit Grants The Commission discontinued revenue deficit grants, affecting: 5. Fiscal Discipline Conditions Recommendations like: may limit fiscal flexibility of states. Impact on States Major Losing States Implication Reduced fiscal transfers could widen regional inequality, especially for states requiring higher public investment. Steps Needed to Strengthen Fiscal Federalism 1. Increase Vertical Transfers States’ share in tax revenue should be increased beyond 41%. 2. Limit Cesses and Surcharges A legal cap (e.g., 10% of gross tax revenue) could prevent excessive centralisation. 3. Ensure Floor Guarantee No state should receive less than its allocation under the 15th Finance Commission. 4. Strengthen Local Governments Empower Panchayats and Urban Local Bodies through: 5. Revive Federal Dialogue Regular meetings of the Inter-State Council of India under Article 263 of the Constitution of India can help resolve fiscal disputes.

Source: ET Context: The Insurance Regulatory and Development Authority of India (IRDAI) has issued a consultation paper proposing that insurance companies transition from Indian Generally Accepted Accounting Principles (IGAAP) to Indian Accounting Standards (Ind AS). The reform aims to align the financial reporting framework of Indian insurers with global standards under International Financial Reporting Standards (IFRS). Current Accounting System for Insurers At present, Indian insurers follow accounting rules based on: However, most listed companies and large NBFCs in India have already migrated to Ind AS, making the insurance sector one of the last major financial segments yet to transition. Objectives of the Ind AS Transition IRDAI believes adopting Ind AS will: 1. Improve Transparency Standardised reporting improves clarity in financial disclosures. 2. Increase Global Comparability Financial statements will become comparable with international insurers. 3. Attract Foreign Investment Global investors are more comfortable with IFRS-based reporting frameworks. 4. Improve Access to Global Capital Markets Better reporting standards may help insurers raise capital internationally. Transition Plan Proposed by IRDAI Parallel Reporting in the First Year During the first year of implementation: This dual reporting system will ensure a smoother transition. Additional Audit Requirement In the first year: Key Accounting Changes Entity-Level Financial Statements Under Ind AS, financial reporting will include: These will be prepared at the entity level, consistent with global accounting practices. Policyholder vs Shareholder Funds Under the Insurance Act, insurers must keep policyholder and shareholder funds separate. IRDAI’s proposed compromise: This maintains transparency while aligning with international standards. Ind AS 117 for Insurance Contracts The transition includes adoption of Ind AS 117, the accounting standard for insurance contracts aligned with IFRS 17. Key Feature: Annual Cohorting Insurance contracts must be grouped by year of issue to: Insurers requested exemption due to operational challenges, but IRDAI rejected this request. Gradual Retrospective Implementation To ease implementation, IRDAI proposed a phased retrospective approach: This allows insurers time to adjust systems and data structures. Rules for Participating Life Insurance Policies For participating life insurance business: This ensures policyholders continue receiving the majority of profits. Implications of the Reform If implemented, the transition to Ind AS will change how stakeholders evaluate insurance companies. Affected stakeholders

Source: Mint Background The Securities and Exchange Board of India (SEBI) has revised mutual fund categorization norms to ensure clear differentiation between schemes within the same category. Under the new rules: The move aims to prevent fund houses from launching multiple funds with similar portfolios under different themes. What Is Portfolio Overlap? Portfolio overlap refers to two mutual fund schemes holding many of the same stocks. Previously: Now: This makes it harder to run multiple active funds with similar investment universes. What Are Passive Funds? Passive funds track a market index instead of actively selecting stocks. Examples include: These funds follow rule-based investment strategies rather than active portfolio management. Advantages of Passive Funds Passive funds offer several benefits: Lower Costs Since they track an index, they require less active management, leading to lower expense ratios. Transparency Investors know exactly which index the fund tracks. Easier Product Differentiation Fund houses can launch different index-based products without violating overlap restrictions. Possible Innovations in Passive Products Experts expect greater innovation in passive investing due to the new rules. 1. Factor-Based Funds (Smart Beta) These track indices based on specific factors such as: These are called factor-based passive funds. 2. Thematic Index ETFs New ETFs may focus on emerging sectors such as: These could track small baskets of 10–20 specialized stocks. Growth of Passive Funds in India Passive investments have been growing rapidly in India. According to the Association of Mutual Funds in India (AMFI): Global Comparison In developed markets, passive investing dominates. For example: India may gradually move in the same direction, though growth may be slower.