This week in Indian law: The RBI raised the repo rate to 6.5 per cent in its sixth consecutive hike, while issuing FAQs clarifying the digital lending guidelines framework. The Supreme Court heard the Adani-Hindenburg petitions and directed SEBI to file a response on the status of its investigations. 3 significant legal developments this week across regulatory-updates and securities-market.
Top story
RBI Raises Repo Rate to 6.5% in Sixth Consecutive Hike
Category: regulatory-updates | Date: 8 February 2023 | Source: Reserve Bank of India
The Reserve Bank of India's Monetary Policy Committee raised the benchmark repo rate by 25 basis points to 6.5 per cent, marking the sixth consecutive rate increase since May 2022. The cumulative increase of 250 basis points brings the repo rate to its highest level since February 2019. The MPC voted 4-2 in favour of the hike, with two external members voting for a pause. The RBI retained its stance of 'withdrawal of accommodation' and projected CPI inflation at 5.3 per cent for FY2024.
Why it matters: The smaller quantum of the hike (25 bps versus 35 bps in December) and the split vote signal that the tightening cycle may be approaching its end, with implications for lending rates, bond markets, and real estate.
Read more: Veritect analysis
Regulatory updates
RBI Issues FAQs Clarifying Digital Lending Guidelines
Date: 14 February 2023
The RBI published comprehensive FAQs clarifying the digital lending guidelines framework issued in September 2022. The FAQs address ambiguities on First Loss Default Guarantee (FLDG) arrangements, co-lending model compliance, borrower consent requirements for data collection, and the obligations of Lending Service Providers and Digital Lending Apps.
Key point: Fintech companies and banks operating digital lending platforms must review their compliance frameworks against the clarified FAQs, particularly on FLDG structures and data handling consent.
Court judgments
SC Hears Adani-Hindenburg Petitions, Seeks SEBI Response
Court: Supreme Court of India | Date: 10 February 2023
The Supreme Court heard petitions seeking court-monitored investigation into the Hindenburg Research allegations against the Adani Group. The Bench sought a response from SEBI on the status of its investigations and indicated that it may constitute an expert committee to examine the regulatory framework for protection of investors. The hearing marked the judiciary's direct engagement with the securities market crisis.
Key point: The Supreme Court's active engagement signals that the Adani-Hindenburg matter will result in significant directions on securities market regulation and investor protection.
Also this week
- Budget session underway — Parliamentary debates on the Union Budget 2023-24 continue; Finance Bill under discussion in both Houses.
- No major court judgments — SC focused on Adani-Hindenburg hearings; no standalone landmark judgments this week.
Looking ahead
- Late February: Supreme Court expected to constitute expert committee on Adani-Hindenburg matter.
- March 2: SC Constitution Bench to deliver judgment in Anoop Baranwal (Election Commission appointments).
- March-April: RBI likely to pause rate hikes at next MPC meeting in April.
This is the Veritect Weekly Legal Roundup for Week 6 of 2023. For daily updates, visit our legal news page. Subscribe to receive this roundup every Monday morning.
Veritect provides this content for informational purposes and does not constitute legal advice.