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JSA successfully defends a listed NBFC – PTC India Financial Services Ltd. before the Hon’ble Supreme Court of India in a batch of connected Special Leave Petitions, upholding lenders’ right to enforce terms of the loan facility extended to borrowers.

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JSA has successfully advised and represented PTC India Financial Services Ltd. (“PFS”) before the Hon’ble Supreme Court of India in a batch of connected Special Leave Petitions filed by certain wind power companies from the State of Andhra Pradesh. These wind power companies (“Borrowers”) had availed credit facilities from PFS (and few other lenders) and had defaulted in their repayment obligations. To explain their defaults, the Borrowers took a plea that there are certain payment disputes between them and Discoms; that they should not be declared as Non-Performing Assets (“NPAs”) owing to such disputes; and that their defaults are justified. The decision of the Hon’ble Supreme Court of India upholds the lenders’ right to declare the defaulting borrowers/accounts as NPAs and to recover outstanding dues from such NPAs, irrespective of any disputes which such borrowers may have with third parties.

In 2019, the Petitioners (i.e., Borrowers) had filed a writ petition before the Hon’ble High Court of Andhra Pradesh (“High Court”) seeking, inter alia, payments under Power Purchase Agreements (“PPAs”) executed between them and Andhra Pradesh Power Distribution Company (“APSPDCL”).

In the said writ petition, interim orders were passed by a Ld. Single Judge restricting the lenders (of such power projects) from declaring the loan accounts of the Borrowers as NPAs. Additionally, the lenders were restrained from taking any coercive action against the Borrowers (collectively, “Interim Orders”).

Subsequently, at the behest of the lenders, the Interim Orders were successfully challenged and vacated by the Ld. Single Judge by an Order dated 2 July 2025. This Order vacating the Interim Orders was also upheld by an Hon’ble Division Bench of the High Court by a final Judgment and Order dated 11 July 2025 (“DB Order”). In doing so, the Hon’ble Division Bench permitted the lenders, being third parties to the PPAs, to recover their respective dues from the Borrowers. The Hon’ble Division Bench held that the lenders’ right to recover outstanding dues cannot be curtailed or made conditional upon recoveries from APSPDCL. Feeling aggrieved, the Borrowers challenged the DB Order before the Hon’ble Supreme Court of India in the present batch of Special Leave Petitions.

After a detailed hearing and upon review of the entire material on record, the Hon’ble Supreme Court of India refused to interfere with the DB Order. While affirming the DB Order, the Hon’ble Supreme Court of India has underscored the fundamental principle that the lenders cannot be made to suffer at the hands of the Borrowers – on account of disputes that such Borrowers may have with third parties. In effect, the Hon’ble Supreme Court of India has upheld the lenders’ right to recover outstanding dues from accounts declared as NPAs, which, cannot be curtailed or made conditional upon recoveries from third parties.

Our Disputes Team comprised Lead Partner – Sidharth Sethi, Partner – Shreya Sircar, Associate – Deepank Anand, and Junior Associate – Riya Singh. JSA Team had also represented PFS before the Hon’ble High Court of Andhra Pradesh (both Single Judge and Division Bench).

Tags Banking and Finance, Corporate Law, Debt Recovery, Dispute Resolution, Energy Sector, Financial Services, Insolvency, JSA, JSA Law, Legal Victory, Lenders Rights, Loan Enforcement, Nbfc, NPA, Power Projects, Renewable Energy, Supreme Court

JSA Prism | FinTech | September 2025

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Legal and regulatory analysis of the Reserve Bank of India’s Master Direction on Payment Aggregators

The Reserve Bank of India (“RBI”) released the new Master Directions on the Regulation of Payment Aggregators (“PAs”), effective September 15, 2025 (“New PA Directions”). This move, which follows public consultations on draft PA amendments released in April 2024 (“Draft PA Amendments”), aims to rationalise regulations and bring more clarity to the sector. The New PA Directions supersede previous guidelines (“2020 PA Directions”), including those for online PAs (“PA-O”) and Cross-Border PAs (“PA-CB”).

PA categories and definitions

New provision: The distinction between different types of PAs has been formalised. The New PA Directions introduce 3 (three) distinct categories of PAs, aiming to bring all modes of payment aggregation under a single regulatory umbrella.
- PA-Physical (“PA-P”): A PA that facilitates transactions where both the payment acceptance device and the payment instrument are physically present and in close proximity.
- PA-O: A PA that facilitates transactions where the acceptance device and payment instrument are not in close proximity.
- PA-CB: A PA that facilitates aggregation of cross-border payments for current account transactions for its onboarded merchants.
What has changed: The Draft PA Amendments first introduced the concepts of PA-P and PA-O to extend PA regulation to offline payments. The New PA Directions elaborate on this by clarifying that the ‘acceptance device’ and ‘instrument’ must be in close proximity for a transaction to be classified as physical. The definitions of PA-CB have also been clarified, with specific exclusions for AD Category-II non-banks and card network-settled transactions.
Practical implication: While this distinction clarifies the regulatory scope, it introduces a grey area in the context of mobile-based payments like UPI QR codes. For instance, a QR code displayed on a phone in a physical store would likely be considered a PA-P transaction, as the acceptance device (the merchant’s phone) and the instrument (the customer’s phone) are in close proximity. However, an SMS link with a QR code sent to a customer’s phone for payment later could be considered a PA-O transaction, as the proximity element is absent. The New PA Directions do not provide specific guidance on such hybrid use cases, leaving some room for interpretation.

Authorisation and capital requirements

New provision: All non-bank entities are required to apply for authorisation as a PA. For PAs who already have a Certificate of Authorisation (“COA”) from the RBI, must intimate RBI for the following:
- if the entity is already conducting PA-P business, it must formally intimate the RBI. The timeline for such intimation is not specified; and
- if the entity wishes to start a new type of PA business (e.g., PA-O or PA-CB), then it must intimate the RBI at least 30 (thirty) days before commencing the new business.If an entity’s application for a PA-O or PA-CB COA is currently under consideration by the RBI, it must inform the RBI about any existing PA-P business. This intimation must be done through the online portal by December 31, 2025.
Specifics for entities only in PA-P business: If the entity only performs PA-P business, it must apply for COA as a PA by December 31, 2025. Failure to apply by this deadline will result in a mandatory winding up of business. The entity must immediately inform its banker(s) and cease all business operations by February 28, 2026.
Practical implication: The lack of a specific timeline for existing PAs with a COA to intimate the RBI about their PA-P business could be a point of ambiguity, although the broader deadline of December 31, 2025, for authorisation applications likely applies. This move brings all PA activities, including physical payments, under a regulated and consistent capital framework.

Third-party payouts

New provision: A PA is permitted to make a payment to a third party at the specific direction of a merchant. This is only allowed if 2 (two) conditions are met:
- the merchant has a physical or online presence with an annual turnover of over INR 40,00,000 (Indian Rupees forty lakh) or an annual export turnover of more than INR 5,00,000 (Indian Rupees five lakh); and
- the third party is the actual “payee that interfaces with the payer for the underlying transaction”.
What has changed: The New PA Directions mark a significant shift in the RBI’s position in the Draft PA Amendments on third-party payouts, allowing them under specific, qualified conditions. The Draft PA Amendments had expressly banned third-party payouts. In response to specific stakeholder feedback, the RBI has decided to allow third-party payouts subject to certain restrictions.
Practical implications: This provision appears to permit specific use in cases where a merchant directs a PA to settle funds directly to a third party. The phrase “interfaces with the payer” is crucial, defining the scope of these settlements. This new rule seems to allow for settlements to entities that directly interact with the customer (the payer) for the delivery of goods or services. A classic example is a marketplace or travel aggregator model.
- Scenario: A customer pays an e-commerce platform (the merchant) for a product sold by a third-party seller. The PA, which has a contract with the e-commerce platform, can now settle the funds directly into the seller’s bank account.
- Key distinction: Previously, PAs could settle to any third party based on the merchant’s instructions. However, the New PA Directions impose a critical condition, wherein the third party must be the one who “interfaces with the payer”. This narrows the scope of permitted debits. Additionally, the instructing merchant must meet the specific annual turnover requirement.Importantly, other broader use cases, such as a merchant using a PA to pay its vendors or employees, are not permitted under New PA Directions. The phrase “interfaces with the payer” seems to explicitly exclude these scenarios.
  Notably, Chapter IV, Paragraph 13(g) of the New PA Directions states that funds due to a merchant should be credited only to the merchant’s own bank account. This appears to be a drafting oversight that directly contradicts the explicit permission for third-party payouts found under ‘permitted debits’ in Chapter V, Paragraph 16a of the New PA Directions. This contradiction could create confusion regarding the correct application of the rules.

PA partnering with another PA

The New PA Directions clarifies the regulatory position on PAs partnering with one another, a crucial development that validates and formalises certain industry practices.

New provision: The New PA Directions explicitly permit a PA to partner with another PA for specific functions, such as merchant due diligence and settlement. This provision introduces a clear framework for a PA contracting with another PA, which supports the industry practice of PA-to-PA arrangements.
What has changed: In the Draft Amendments, the RBI had stated that for a payment transaction facilitated by 2 (two) or more authorised PAs, all PAs in the transaction chain would be subject to the RBI’s instructions. This has been diluted in the New PA Directions, which now clearly delegates the due diligence and Know Your Customer (“KYC”) responsibility to the PA that directly onboards the merchant. The New PA Directions also explicitly list ‘Payment to another PA or PA-CB’ as a permitted debit from the escrow account, formal recognition of inter-PA fund flows.
Practical implications:
- KYC and due diligence: The New PA Directions clarify that the PA directly onboarding a merchant is solely responsible for its due diligence and KYC, even if the primary PA is the one managing the payment flow. This aligns with existing market practice where a primary PA receives the KYC records from a sub-aggregator.
- Formalised fund flow: The explicit inclusion of inter-PA payments as a permitted debit from the escrow account provides a formal regulatory basis for such arrangements. This addresses the practical need for fund flow between aggregators in complex transactions, such as when a domestic PA uses a cross-border PA to facilitate an international payment.
- No Dual KYC: As a result of this clarification, both PAs in a partnership do not need to perform due diligence and KYC on the same merchant, which reduces operational redundancy and cost. However, other compliances still apply to both PAs.

PA merchant agreement

New provision: The New PA Directions state that the agreement between a PA and its merchants must be ‘fair and equitable’ and transparently mention the settlement timelines.
What has changed: Earlier, settlement timelines were prescribed by the RBI. Now, while the RBI has specified a high-level framework, the exact timelines are to be determined and agreed upon in the merchant agreement itself.
Practical implications: This gives merchants a stronger position to negotiate better terms and settlement schedules with PAs, as the agreement is now legally required to be fair and equitable. This provides greater flexibility and control to the merchant over their cash flow.

Merchant due diligence and KYC

New provision: The New PA Directions mark a significant shift in merchant due diligence and KYC for PAs. The new rules are more uniform and robust, ending previous exemptions and introducing a mandatory, tiered approach that balances strict compliance with the needs of small businesses. A 2 (two) step approach to merchant verification has been introduced:
- Mandatory Central KYC Records Registry (“CKYCR”) integration: PAs are now required to retrieve merchant KYC records from the CKYCR. It appears that this step aims to streamline verification and ensure a centralised, consistent approach to identity management.
- Alternative verification: If a merchant’s records are not available in the CKYCR, PAs can conduct due diligence through alternative mechanisms outlined in the KYC Master Direction. This includes using e-KYC with Aadhaar, offline Aadhaar verification, or verifying Officially Valid Documents (“OVDs”) such as e-Permanent Account Number (“PAN”) or documents from DigiLocker.
  For smaller merchants, the New PA Directions provide a simplified KYC process, though its specific application is not entirely clear. A simplified Customer Due Diligence (“CDD”) process can be adopted for merchants with an annual turnover of up to INR 40,00,000 (Indian Rupees forty lakh) (or export turnover not exceeding INR 5,00,000 (Indian Rupees five lakh).
What has changed: Previously, PAs were exempt from performing mandatory CDD on merchants. This was due to the 2020 PA Directions, and the subsequent clarifications issued thereunder, which did not consider a PA-merchant relationship to be an ‘account-based’ relationship – one that would necessitate full CDD. The New PA Directions remove this exception and make CDD mandatory for all merchants, which in turn mandates PA’s integration with CKYCR. PAs must now CDD on their merchants in accordance with the KYC Master Direction.
For smaller merchants, while the Draft PA Amendments had different simplified KYC standards for ‘small’ (i.e. turnover of less than INR 5,00,000 (Indian Rupees five lakh) and ‘medium’ (i.e. turnover of less than INR 40,00,000 (Indian Rupees forty lakh) merchants, the New PA Directions appear to consolidate and toughen these requirements. Now, for all merchants under the INR 40,00,000 (Indian Rupees forty lakh) turnover threshold, the simplified KYC requires:
- contact point verification;
- Verification of an OVD; and
- PAN verification.
Practical implication: While the New Directions provide welcome thresholds for simplified KYC, they do not clarify the method of verification for a merchant’s turnover. The obvious question is whether PAs are expected to independently verify the turnover or if a declaration from the merchant would suffice. Furthermore, the New Directions do not address the scenario where a merchant’s turnover increases mid-way through the relationship, crossing the INR 40,00,000 (Indian Rupees forty lakh) or INR 5,00,000 (Indian Rupees five lakh) These ambiguities could impact a PA’s ability to manage its KYC compliance program effectively and may also have a direct bearing on the third-party payout rule for these merchants, which is also tied to turnover thresholds.

Oversight on merchant-displayed information

New provision: The New PA Directions state that a PA must ensure that any charges, other than the price of goods, services, or investment amount, charged by a merchant are distinctly displayed to the payer prior to the transaction.
Practical implication: This raises a crucial question as to the extent of a PA’s oversight. While this obligation can be factored into a merchant agreement, a PA’s control and visibility typically begin at the checkout page, after the merchant has already displayed the final price and any additional charges. This creates an operational challenge, as a PA cannot feasibly monitor every aspect of a merchant’s website or physical point of sale to ensure compliance with this provision. Without real-time pre-checkout monitoring capabilities, a PA’s ability to enforce this rule is limited.

PA-CB specific provisions

New provision: The New PA Directions consolidate previous circular on cross-border payments into a single document. They explicitly state that PA-CB funds for inward and outward transactions must be kept separate, with no co-mingling or netting off permitted. The maximum value per transaction for a PA-CB has been changed from ‘per unit of goods or services’ to a single limit of INR 25,00,000 (Indian Rupees twenty-five lakh) per transaction, which can be onerous for cross-border PAs.
What has changed: The explicit prohibition of co-mingling of funds and netting off for inward and outward transactions is a new provision that formalises a practice already understood and followed by the industry. The change in the transaction value limit from ‘per unit’ to ‘per transaction’ appears to be a significant change that could impact merchants selling multiple high-value items in a single transaction.
Practical implications: The New PA Directions further state that a “payment transaction shall be identified as a cross-border transaction”. This seems to suggest that the entire payment ecosystem, including the PA-CB, its acquiring bank, and the payment service providers, must be able to recognise and flag these transactions to ensure proper handling and reporting. While this is already an existing practice for Export Data Processing and Monitoring System/Import Data Processing and Monitoring System reporting, the provision’s inclusion in the New PA Directions makes it a formal regulatory requirement.

Conclusion

The New PA Direction is a significant step towards consolidating and standardising regulations for the growing payments industry. It addresses many of the ambiguities from the Draft PA amendments, particularly regarding third-party payouts, capital requirements, and due diligence for smaller merchants. While it provides welcome clarity and formalises existing market practices, certain areas, such as the classification of hybrid physical/online transactions and the wording around simplified KYC, still have elements of ambiguity that may require further clarification from the RBI or a test of time through industry practice.

This Prism is prepared by:

Probir Roy Choudhary
Partner

Yajas Setlur
Partner

Shivani Bhatnagar
Senior Associate

For more details, please contact [email protected]

Tags #FinancialRegulation, DigitalPayments, Fintech, IndiaLaw, JSA, Kyc, Leading Law Firm, Leading Lawyers, PaymentAggregators, RBI

JSA advises Grand Anicut Angel Fund and Grand Anicut Fund 3 on their investment in Unico Housing Finance Private Limited

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JSA advised Grand Anicut Angel Fund and Grand Anicut Fund 3 on their investment in Unico Housing Finance Private Limited.

Unico Housing Finance Private Limited, a Chennai-based RBI-registered housing finance company, is dedicated to offering affordable housing solutions to lower and middle-income customers. The company provides a diverse range of services catering to individuals in the affordable housing segment.

The transaction was led by Partner Siddharth Mody, with support from the Private Equity team comprising Partner Anurag Shrivastav, Senior Associate Tanmayee Sahoo, and Associate Vidushi Jain.

Tags Affordable Housing, Anurag Shrivastav, Grand Anicut Fund 3, Housing Finance, Investment, JSA, Private Equity, Siddharth Mody

JSA Prism | Securities Law | September 2025

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Streamlining of Qualified Institutions Placement disclosures: Key takeaways from the September 2025 amendments to the disclosure requirements

The Securities and Exchange Board of India (“SEBI”), on September 8, 2025, has notified the SEBI (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2025 (“Amendment Regulations”). The Amendment Regulations introduce substantive changes to the disclosure framework for Qualified Institutions Placements (“QIPs”) under Schedule VII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“SEBI ICDR Regulations”). The amendments are aimed at simplifying and streamlining the information included in placement documents for QIP (“Placement Documents”). The objective of these amendments are to eliminate the repetitive content and align the QIP disclosures with information already available through periodic filings under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR Regulations”). The revised approach marks a pivotal shift towards concise, issue-specific disclosures, recognising that Qualified Institutional Buyers (QIBs) are sophisticated investors with access to extensive public information on listed issuers.

The table below provides a comparison of the erstwhile provisions of Schedule VII of the SEBI ICDR Regulations, providing disclosures requirements for Placement Documents, with the updated provisions pursuant to Amendment Regulations with our analysis on their practical implications:

Sr. No.	Earlier provision	Amended provision	Analysis
1.	Glossary of terms/abbreviations	The existing Clause (2) is substituted as follows: (2) Definitions and abbreviations: 1. conventional or general terms; 2. issue related terms; 3. issuer and industry related terms; and 4. abbreviations.	The Clause has been updated to align with the disclosure requirement prescribed under Schedule VI of the SEBI ICDR Regulations for initial public offerings. While most issuers have already been adhering to this disclosure requirement in practice, its formalisation reduces interpretational ambiguity.
2.	Risk factors	The existing Clause (5), is substituted as follows: (5) Risk Factors: Risk factors will be in relation to the following: 1. issue and object of the issue; and 2. risk material to the issuer and its business. In each of the above, where applicable, along with the instances of occurrence of such risk in the past and financial or other impact thereof, if any, on the issuer and its business, the mitigation measures, if any, adopted to reduce or eliminate such risk will be disclosed.	The Amendment Regulations rationalise the disclosure requirements for risk factors, bifurcating them into 2categories: (a) risks associated with the business and the issuer company, and (b) risks associated with the QIP and its objects. Historically, Placement Documents mirrored the detailed risk disclosures made in IPO offer documents, typically covering; (a) business and operational risks; (b) financial risks; (c) legal and regulatory risks; (d) risks relating to the objects of the offer; (e) other internal risks of the company; and (f) external risk factors. Following this amendment, external risk factors, including generic industry-related risks, may now be excluded from Placement Documents. However, disclosures under the other categories will continue to be required to enable investors to make an informed investment decision. Further, since listed companies are already required to disclose all material business and operational risks along with mitigation measures and past instances in their annual reports, this amendment also serves to align disclosures made in the public domain with those provided in Placement Documents.
3.	Use of proceeds: 1. purpose of the placement; 2. break-up of the cost of the project for which the money is being raised; 3. means of financing for the project; and 4. proposed deployment status of the proceeds at each stage of the project.	In Clause (7), in the heading, the words “Use of proceed” will be substituted with the following: “Objects of issue and use of issue proceeds”	There are no specific action points arising from this change. Further, the guidance issued under NSE circular NSE/CML/2022/56 dated December 13, 2022, in relation to disclosures on the objects of the issue, will continue to remain applicable.
4.	Capitalisation statement	The existing Clause (8), is substituted with the following Clause: (8) Capitalisation statement: 1. Capitalisation statement showing total borrowings, total equity, and the borrowing/ equity ratios before and after the issue is made will be incorporated. It will be prepared on the basis of the Consolidated Financial Statement for the latest financial year or when applicable at the end of the stub period. In case of any change in the share capital since the date as of which the financial information has been disclosed in the placement document, a note explaining the nature of the change will be given. 2. Capital structure: a) Authorised, issued and subscribed capital, after suitable incorporation of the outstanding convertible securities (number of securities, description and aggregate nominal value); b) paid-up capital: i) before the issue; ii) after the issue; iii) after conversion of convertible instruments (if applicable); and iv) share premium account (before and after the offer).	The Amendment Regulations clarify the requirement for disclosure of a capitalisation statement, which mirrors the IPO disclosure format and, in practice, is already being included in Placement Documents. Accordingly, there are no specific action points arising from this clarification. Further, while the Amendment Regulations now require disclosure only of the authorised and subscribed capital in Placement Documents, the obligation to provide the share capital build-up since incorporation continues under Sections 42 and 62 of the Companies Act, 2013 read with Form PAS-4. Although the amendment simplifies the disclosure requirement relating to capital structure, a further alignment with Form PAS-4 may be necessary to fully achieve the objective of simplification and streamlining of Placement Documents.
5.	Selected financial and other information	The existing Clause (10) is omitted
6.	The audited consolidated or unconsolidated financial statements, as applicable prepared in accordance with applicable accounting standards for the last 3 financial years. The issuer company may voluntarily provide proforma financial statements for acquisitions or divestments, for such financial periods as determined by the issuer company, provided such proforma financial statements are prepared in accordance with any guidance note, standard on assurance engagement or guideline issued by the Institute of Chartered Accountants of India (“ICAI”) from time to time and certified by the statutory auditor or chartered accountants, who hold a valid certificate issued by the Peer Review Board of the ICAI. The issuer may also voluntarily include financial statements of the business or subsidiary acquired or divested, provided that such financial statements are certified by the auditor (of the business or subsidiary acquired or divested) or chartered accountants, who hold a valid certificate issued by the Peer Review Board of the ICAI. In addition, the latest reviewed financials (mentioned below) disclosed to the stock exchange: 1. report of statutory auditor’s on the financial statements included in the preliminary placement document/placement document; 2. balance sheets; 3. statements of income; 4. schedules to accounts; 5. statements of changes in stockholders’ equity; 6. statements of cash flows; 7. statement of accounting policies; and 8. notes to financial statements including the statement relating to subsidiary companies (in case of unconsolidated financial statements).	The existing Clause (11), is renumbered as Clause (10), and substituted with the following Clause: (10) Financial information of the issuer: A summary of the financial position of the company as in 3 audited balance sheets immediately preceding the QIP offer including the following items: 1. total income from operations; 2. net profit/loss before tax and extraordinary items; 3. net profit/loss after tax and extraordinary items; 4. equity share capital; 5. reserves and surplus; 6. net worth; 7. basic earnings per share; 8. diluted earnings per share; 9. return on net worth; 10. net asset value per share; and 11. cash flow statements.	The Amendment Regulations have eased disclosure norms for QIPs by doing away with the requirement to include 3 years of consolidated financial statements and the latest quarterly results filed with stock exchanges. Instead, issuers are now only required to present a summary of key balance sheet, profit and loss and cash flow line items for the last 3 audited financial years. The intent is to cut down repetitive disclosures for listed companies that are already subject to detailed, periodic reporting under the SEBI LODR Regulations. It is pertinent to note that quarterly financial results disclosed to stock exchanges are usually limitedly reviewed financials and not audited. Pursuant to this amendment, only the financial line items of the last 3 fiscals are required to be disclosed in the Placement Documents. However, in practice, to enable investors to form a well-informed opinion, financial and operational non-GAAP (Generally Accepted Accounting Principles) measures , along with reconciliation with GAAP measures, may be required to be included for the stub period in the Placement Documents. Therefore, while interim results (whether quarterly stock exchange filings or condensed consolidated financial statements under Ind-AS 34) are no longer mandatory, issuers could still choose to include them. This helps bridge the time gap between the last audited financials and the QIP launch, while also giving investors comfort through more current performance metrics.
7.	Management’s discussion and analysis of financial condition and results of operations	The existing Clause (12) is omitted	The omitted Clause, which previously provided a narrative explanation of financial performance and key business drivers, has been removed from Placement Documents. It is pertinent to note that a detailed analysis of the issuer’s financial and operational performance is disclosed in the annual reports, quarterly earning calls, and investor presentation. Accordingly, deletion of requirement to included MD&A section in the Placement Document will further simplify and streamline the disclosures in the Placement Documents. This omission is consistent with SEBI’s move towards simplified, no-duplicative disclosures, on the basis that QIBs already have access to such information through periodic filings under the SEBI LODR Regulations.
8.	Industry description	The existing Clauses (13) and (14) is renumbered as Clause (11), and substituted with the following Clause: (11) Business and Industry description: A summary of the primary business of the issuer and the industry in which it operates.	Pursuant to the Amendment Regulations, SEBI has clarified that Placement Documents are now required to include only a summary of the business and industry in which the company operates. This change eases the disclosure burden on issuers, who were earlier required to provide detailed descriptions of their business information that is, in any case, already available in the public domain, including annual reports. However, as part of the QIP process, issuers typically continue to obtain a third-party industry report. These reports serve multiple purposes: (a) providing peer comparisons; (b) framing positioning statements for the issuer; and (c) outlining industry outlook. They also remain an important basis for discussions with investors, and issuers may still rely on them for disclosures in the Placement Documents.
9.	Business description
10.	Board of directors and senior management	The existing Clause (16) is renumbered as Clause (13), and substituted with the following Clause: (13) Board of directors and senior management: Name, date of birth, age, director identification number, address, occupation and date of expiration of the current term of office of manager, managing director and other directors (including nominee directors and whole-time directors).	Pursuant to the Amendment Regulations, SEBI has clarified that only limited details of directors and senior management are required to be disclosed, and there is no mandatory requirement to provide detailed profiles such as their work experience, educational qualifications, or similar information.
11.	Legal proceedings to be disclosed in accordance with the materiality policy framed under the SEBI LODR Regulations	The existing Clause (19) is renumbered as Clause (16), and substituted with the following Clause: (16) Outstanding litigation and legal proceedings: 1. summary of outstanding litigation and legal proceedings in a tabular format along with the amount involved, wherever quantifiable for the pending matters which, if they result in an adverse outcome, would materially and adversely affect the operations or the financial position of the issuer; 2. pending matters as mentioned below: a) involving criminal liability on the part of the issuer; b) material violations of the statutory regulations by the issuer; and c) economic offences where proceedings have been initiated against the issuer; and 3. for the purpose of determining materiality, the threshold will be lower of the threshold criteria mentioned below: a) as per the policy of materiality defined by the board of directors of the issuer and disclosed in the placement document; and b) litigation where the value or expected impact in terms of value, exceeds the lower of the following: i) 2% of the turnover, as per the last audited consolidated financial statements of the issuer; ii) 2% of the net worth, as per the last audited consolidated financial statements of the issuer, except in case the arithmetic value of the net worth is negative; or iii) 5% of the average of absolute value of profit or loss after tax, as per the last 3 audited consolidated financial statements of the issuer.	Pursuant to the Amendment Regulations, the disclosure approach for legal proceedings in Placement Documents has been streamlined as follows: 1. all criminal, regulatory, statutory violations and economic offences involving the issuer entity are required to be disclosed; 2. tax or civil matters involving the issuer entity are to be disclosed only in a summary form (typically the number of cases and the aggregate amount involved is included); 3. Disclosure of criminal, civil, regulatory, statutory violations and economic offences involving directors, promoters, or subsidiaries is no longer mandatory (though these were previously included in Placement Documents). 4. In addition, a summary table must be included for all legal proceedings which, if decided adversely, would materially and adversely impact the operations or financial position of the issuer. This would include all such legal matters which have been disclosed by the issuer to stock exchanges under Regulation 30 of the SEBI LODR Regulations. While these amendments truncate disclosure of legal proceedings in Placement Documents, it is important to note that disclosure requirements under Form PAS-4 continue to apply. Accordingly, any litigation or legal action pending or instituted within the 3 years preceding the QIP by any Ministry, Department of the Government, or statutory authority against any promoter of the issuer company must still be included in the Placement Documents.
12.	–	After the Clause (20) so renumbered, the following new clause (21) is inserted: (21) The issuer may include additional details in the placement document wherever it may deem fit.	The intent behind the revised disclosure requirements under Schedule VII is to streamline the QIP document, offering qualified institutional buyers a more concise and focused overview, given that they are regarded as sophisticated investors. At the same time, the Amendment Regulations preserve flexibility by allowing issuers to include any additional disclosures they consider necessary.

Conclusion

Listed entities are subject to stringent and continual disclosure requirements pursuant to the SEBI regulations. The Amendment Regulations eliminates duplication of such information in the Placement Documents, allowing issuer entities to access capital markets in an efficient time-bound manner. Listed entities raising funds from QIPs are also subject to disclosure requirements under the Companies Act, 2013 (including form PAS-4), which may also require amendment to align with the intent and rationale of the Amendment Regulations.

This Prism has been prepared by:

Madhurima Mukherjee
Partner

Sagar Batra
Partner

Bhavini Mohan
Senior Associate

Nidhi Prakriti
Associate

Prachi Jain
Associate

For more details, please contact [email protected]

Tags Capital Markets, Compliance, Corporate Law, Disclosure Requirements, ICDR Regulations, JSA, Leading Law Firm, Leading Lawyers, QIP, Qualified Institutional Buyers, SEBI, Securities Law

JSA is advising on IPO of Glass Wall Systems (India) Limited

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JSA is advising IIFL Capital Services Limited (formerly known as IIFL Securities Limited) and Motilal Oswal Investment Advisors Limited in connection with the proposed initial public offering of equity shares of Glass Wall Systems (India) Limited.

The proposed IPO comprises a fresh issue of equity shares aggregating up to ₹600 million and an offer for sale of up to 40,234,552 equity shares by the selling shareholders. Glass Wall Systems (India) Limited filed its draft red herring prospectus with SEBI and the stock exchanges on September 6, 2025.

The transaction is being led by Partner Arka Mookerjee, with support from Partners Pracheta Bhattacharya and Anshu Bansal, along with the Equity Capital Markets team comprising Principal Associate Kairav Parikh, and Associates Vatsla Varandani, Palak Karundia, Aditi Khandal, Vaishnavi Kokkonda, Bhuvnesh Kumar, Sharad Panwar, and Sourav Jena.

Tags Capital Markets, Deal Alert, Equity Capital Markets, Glass Wall Systems, IIFL, India Markets, Indian Law Firm, Initial Public Offering, IPO, JSA, JSA Law, Motilal Oswal, SEBI

Finance and Insolvency Laws | Semi-Annual Compendium 2025

Stacked gold coins beside a calculator, symbolizing finance and insolvency laws for JSA’s semi-annual compendium.

This Compendium consolidates the key developments pertaining to the banking, finance and insolvency laws in India which were circulated as a part of the JSA Prisms and Newsletters during the calendar period from January 2025 till June 2025.

To read further details, click here or refer to the below document.

For more details, please contact [email protected]

*In case the document is not visible on the device you are using, please click the link above.

Tags JSA, Leading Law Firm, Leading Lawyers

JSA Advises on the proposed IPO of Shivalaya Construction Limited

Businessman pointing at the glowing letters "IPO" with stock market graphs in the background.

JSA is advising IIFL Capital Services Limited (formerly known as IIFL Securities Limited), Axis Capital Limited, and JM Financial Limited in connection in relation to the proposed initial public offering of equity shares (“IPO”) of Shivalaya Construction Limited.

The proposed IPO comprises of a fresh issue aggregating up to ₹4,500.00 million and an offer for sale of up to 24,861,900 equity shares by certain promoters and members of the promoter group.

Shivalaya Construction Limited filed its draft red herring prospectus dated September 5, 2025 with the Securities and Exchange Board of India (SEBI) on September 6, 2025.

The JSA team advising on this transaction was led by Partner Arka Mookerjee, with additional support from the Equity Capital Markets team including Partner Siddhartha Desai, Principal Associate Ananth Balaji, and Associates Vatsla Varandani, Aditya Shendye, Ayushi Pandit, Ishika Jain, Vaishnavi Kokkonda and Johann Duckworth.

Tags Arka Mookerjee, Capital Markets, Deal Alert, DRHP, Equity Capital Markets, Indian Law Firm, Initial Public Offering, IPO, JSA, SEBI

JSA Prism | Indirect Tax | 56th GST Council Meeting

Stacks of assorted coins in soft focus, symbolizing finance and investment.

Please click here to download the Prism as a PDF.

Key highlights of the 56^th Goods and Services Tax Council meeting

Based on the recommendations of the Prime Minister Shri Narendra Modi during his independence day address to the nation, the GST[1] Council, in its 56^th meeting, has recommended various changes focusing on rate rationalisation, correction of inverted duty structure, resolving classification issues, measures for facilitation of trade and streamlining GST compliances.

Key changes proposed to the GST laws

Operationalisation of GSTAT[2]: It is recommended that GSTAT will be operational for accepting appeals before end of September 2025 and will commence hearing appeals before end of December 2025. It is also recommended that such prior period appeals should be filed by June 30, 2026.The Principal Bench of GSTAT will also serve as National Appellate Authority for Advance Ruling. This will ensure consistency in advance rulings and offer greater certainty to taxpayers.
Amendment in place of supply provisions for intermediary services: The GST Council has recommended omission of clause (b) of Section 13(8) of the IGST Act[3], which prescribes the place of supply of intermediary services to be the location of the supplier of services. As per this recommendation, the place of supply of intermediary services will be the default rule i.e., place of supply will be the location of the service recipient (Section 13(2) of the IGST Act). This amendment aims to restore the export status for intermediary services when supplied to recipients located outside India, thereby facilitating the benefit of export to the Indian service providers.
Amendments in relation to post-sale discounts: Recommendation to omit Section 15(3)(b)(i) of the CGST Act[4], which provides the requirement to establish discount in terms of an agreement entered into before or at the time of such supply and specifically linking of the same with relevant invoices. The recommendation will grant discount basis a credit note issued under Section 34 of the CGST Act.The Government will issue circular clarifying various issues, such as:
- non-reversal of ITC[5] on account of post-sale discount through financial/commercial credit note;
- treatment of the post-sale discount provided by manufacturer to the dealer as additional consideration, in the transaction between dealer and end-customer; and
- treatment of post-sale discount as consideration in lieu of promotional activities etc. performed by the dealer.
Recommendations with respect to inverted duty structure: The proposed 2 (two) tier rate structure is likely to reduce the disparity between the rates applicable for outward and inward supplies for specific sectors (such as man-made textiles). This will help mitigate the issue of IDS[6] arising on account of unutilised ITC, thereby reducing dependence on refund claims (refer tariff recommendations below).The GST Council recommended amending Section 54(6) of the CGST Act, to provide for sanction of 90% of refund claimed on provisional basis, in cases arising out of IDS, on similar lines as is presently available for refund in respect of zero-rated supply. This will be operationalised from November 1, 2025.
Risk-based provisional sanction of refunds for zero rated supply: Recommendation to amend Rule 91(2) of the CGST Rules[7], to provide for sanction of 90% provisional refund based on identification and evaluation of risk by the system (except in situations where proper officer provides reasons in writing to initiate detailed scrutiny of refund claim). A separate notification should be issued for notifying certain category of registered persons who may not be granted refund on provisional basis. This provision will be operationalised from November 1, 2025.
Supply of local delivery services through ECO[8]: Local delivery services through an ECO to be notified under Section 9(5) of the CGST Act (for cases where the person supplying such services is not liable for registration under GST). The applicable rate of GST for such services will be 18%.
Introduction of simplified registration scheme for small suppliers supplying through ECOs: Concept of simplified GST registration mechanism proposed for small suppliers making supplies through ECOs across multiple States facing challenges in maintaining principal place of business in each State. Detailed modalities of the scheme to be placed before the GST Council.
Rate rationalisation: The GST Council has recommended a 2 (two) tier rate structure i.e., 5% and 18%, with specific rate of 40% for demerit/luxury goods. The key changes are as below:
- exemption from GST on all individual life and health insurance policies (whether term life, ULIP or endowment policies, family floater policies and policies for senior citizens and reinsurance thereof);
- reduction of GST from 18% or 12% to 5% for items such as, hair oil, toilet soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware and other household articles;
- reduction of GST from 12% or 18% to 5% on food items such as packaged namkeens, bhujia, sauces, pasta, instant noodles, chocolates, coffee, preserved meat, cornflakes, butter and ghee;
- reduction of GST from 28% to 18% on air-conditioning machines, television sets, small cars, motorcycles equal to or less than 350 CC; and
- uniform rate of 18% on all auto parts irrespective of their HS code.

The key rate changes are outlined in the tables below:

Key tariff changes proposed for supply of services (effective September 22, 2025)

Category – heading	Description of services	Existing rate	Revised rate
9965	Supply of transportation of goods by GTA[9]	5% without ITC (RCM/FCM) or 12% with ITC	5% without ITC (RCM/FCM) or 18% with ITC
9965	Supply of transportation of natural gas, petroleum crude, motor spirit, high speed diesel or ATF through pipeline	12 % with ITC	18% with ITC
9983	Other professional, technical and business services relating to exploration, mining or drilling of petroleum crude or natural gas or both	12% with ITC	18% with ITC
9986	Support services to exploration, mining or drilling of petroleum crude or natural gas or both	12% with ITC	18% with ITC
9954	Composite supply of works contract and associated services, in respect of offshore works contract relating to oil and gas exploration and production in offshore area	12% with ITC	18% with ITC
9963	Supply of ‘hotel accommodation’ having value of supply of a unit of accommodation less than or equal to INR 7,500 per unit per day or equivalent	12% with ITC	5% without ITC
9994	Services by way of treatment or disposal of biomedical waste or the processes incidental thereto by a common bio-medical waste treatment facility to a clinical establishment	12% with ITC	5% with ITC
99972	Beauty and physical well-being services	18% with ITC	5% without ITC
9988	Supply of job-work not elsewhere covered	12% with ITC	18% with ITC
Any chapter	Specified Actionable Claims[10]	28% with ITC	40% with ITC
9971	All individual health insurance, along with its reinsurance	18% with ITC	Nil
9971	All individual life insurance, along with its reinsurance	18% with ITC	Nil

Key tariff changes proposed for supply of goods (effective September 22, 2025)

Category – heading	Description of goods	Existing rate	Revised rate
Food and beverages sector
2201	Drinking water packed in 20 litre bottles	12%	5%
2202 9910	Soya milk drinks	12%	5%
2202 9920	Fruit pulp or fruit juice based drinks (other than carbonated beverages of fruit drink or carbonated beverages with fruit juice)	12%	5%
2202 9930	Beverages containing milk	12%	5%
2201	Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavoured	18%	5%
2202 9100, 2202 99	Other non-alcoholic beverages	18%	40%
220210	All goods (including aerated waters), containing added sugar or other sweetening matter or flavoured	28%	40%
22029990	Caffeinated beverages	28%	40%
2202	Carbonated beverages of fruit drink or carbonated beverages with fruit juice	28%	40%
2106	Paratha, Parotta and other Indian breads	18%	Nil
19059030	Extruded or expanded products, savoury or salted (other than un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion)	12%	5%
2007	Jams, fruit jellies, marmalades, fruit or nut purée and fruit or nut pastes, obtained by cooking, whether or not containing added sugar or other sweetening matter	12%	5%
2009	Fruit or nut juices (including grape must) and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter	12%	5%
2106	Food preparations not elsewhere specified or included other than roasted gram, sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods	18%	5%
210690	Namkeens, bhujia, mixture, chabena and similar edible preparations ready for consumption form (other than roasted gram), pre-packaged and labelled	12%	5%
1806	Chocolates and other food preparations containing cocoa	18%	5%
1901 (other than 1901 2000)	Malt extract, food preparations of flour, groats, meal, starch or malt extract, not containing cocoa or containing less than 40% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of heading 0401 to 0404, not containing cocoa or containing less than 5% by weight of cocoa calculated on a totally defatted basis not elsewhere specified or included	18%	5%
1904	All goods i.e. corn flakes, bulgar wheat, prepared foods obtained from cereal flakes, fortified rice kernel	18%	5%
1905	Pastry, cakes, biscuits and other bakers’ wares, whether or not containing cocoa; communion wafers, empty cachets of a kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products	18%	5%
210111, 21011200	Extracts, essences and concentrates of coffee, and preparations with a basis of these extracts, essences or concentrates or with a basis of coffee	18%	5%
210120	All goods i.e., extracts, essences and concentrates of tea or mate, and preparations with a basis of these extracts, essences or concentrates or with a basis of tea or mate	18%	5%
Renewable energy
841912	Solar water heater and system	12%	5%
84, 85 or 94	Following renewable energy devices and parts for their manufacture: (a) bio-gas plant; (b) solar power-based devices; (c) solar power generator; (d) wind mills, wind operated electricity generator (WOEG); (e) waste to energy plants/devices; (f) solar lantern/solar lamp; (g) ocean waves/tidal waves energy devices/plants; and (h) photo voltaic cells, whether or not assembled in modules or made up into panels	12%	5%
87	Fuel cell motor vehicles including hydrogen vehicles based on fuel cell technology	12%	5%
Coal
2701	Coal; briquettes, ovoids and similar solid fuels manufactured from coal	5%	18%
2702	Lignite, whether or not agglomerated, excluding jet	5%	18%
2703	Peat (including peat litter), whether or not agglomerated	5%	18%
Health sector
3004	Medicaments (excluding goods of heading 30.02, 30.05 or 30.06) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal administration systems) or in forms or packings for retail sale, including Ayurvedic, Unani, homoeopathic siddha or Bio-chemic systems medicaments, put up for retail sale	12%	5%
9018	Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scintigraphic apparatus, other electromedical apparatus and sight-testing instruments	12%	5%
9022	Apparatus based on the use of x-rays or of alpha, beta or gamma radiations, for medical, surgical, dental or veterinary uses, including radiography or radiotherapy apparatus, x-ray tubes and other x-ray generators, high tension generators, control panels and desks, screens, examinations or treatment tables, chairs and the light	12%	5%
9804	Other drugs and medicines intended for personal use	12%	5%
9027	Instruments and apparatus for medical, surgical, dental or veterinary uses for physical or chemical analysis	18%	5%
Consumer electronics
8415	Air-conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated	28%	18%
8528	Television sets (including LCD and LED television); monitors and projectors, not incorporating television reception apparatus; reception apparatus for television, whether or not incorporating radio-broadcast receiver or sound or video recording or reproducing apparatus, set top box for television and television set (including LCD and LED television)	28%	18%
Transportation sector
4011	New pneumatic tyres, of rubber (other than of a kind used on/in bicycles, cycle-rickshaws and 3 wheeled powered cycle rickshaws; rear tractor tyres; and of a kind used on aircraft)	28%	18%
8702	Motor vehicles for the transport of 10 or more persons, including the driver (other than buses for use in public transport, which exclusively run on Bio-fuels)	28%	18%
8703	Petrol, liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven motor vehicles of engine capacity not exceeding 1200cc and of length not exceeding 4000 mm	28%	18%
8703	Diesel driven motor vehicles of engine capacity not exceeding 1500 cc and of length not exceeding 4000 mm	28%	18%
8702 or 8703	Motor vehicles cleared as ambulances duly fitted with all the fitments, furniture and accessories necessary for an ambulance from the factory manufacturing such motor vehicles	28%	18%
8703 40, 8703 60	Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity not exceeding 1200cc and of length not exceeding 4000 mm	28%	18%
8703 50, 8703 70	Motor vehicles with both compression-ignition internal combustion piston engine (diesel-or semi diesel) and electric motor as motors for propulsion, of engine capacity not exceeding 1500 cc and of length not exceeding 4000 mm	28%	18%
8704	Motor vehicles for the transport of goods (other than refrigerated motor vehicles)	28%	18%
8708	Parts and accessories of the motor vehicles of headings 8701 to 8705 (other than specified parts of tractors)	28%	18%
8703	Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars, other than those mentioned above for which rate of GST has been reduced to 18%	28%	40%
8703 40, 8703 60	Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity exceeding 1200cc or of length exceeding 4000 mm	28%	40%
8703 50, 8703 70	Motor vehicles with both compression-ignition internal combustion piston engine (diesel-or semi diesel) and electric motor as motors for propulsion, of engine capacity exceeding 1500cc or of length exceeding 4000 mm	28%	40%
Construction sector
2523	Portland cement, aluminous cement, slag cement, super sulphate cement and similar hydraulic cements, whether or not coloured or in the form of clinkers	28%	18%
Dutiable articles for personal use (for imports)
9804	All dutiable articles intended for personal use	28%	18%
Miscellaneous items
8407	Spark-ignition reciprocating or rotary internal combustion piston engine (other than aircraft engines)	28%	18%
8408	Compression-ignition internal combustion piston engines (diesel or semi-diesel engines)	28%	18%
8409	Parts suitable for use solely or principally with the engines of heading 8407 or 8408	28%	18%
8507	Electric accumulators, including separators therefor, whether or not rectangular (including square) other than lithium-ion battery and other lithium-ion accumulators including lithium-ion power banks	28%	18%
8511	Electrical ignition or starting equipment of a kind used for spark-ignition or compression-ignition internal combustion engines (for example, ignition magnetos, magneto-dynamos, ignition coils, sparking plugs and glow plugs, starter motors); generators (for example, dynamos, alternators) and cut-outs of a kind used in conjunction with such engines	28%	18%

This Prism is prepared by:

Manish Mishra
Partner & Head of
Practice – Indirect Tax

Shareen Gupta
Partner

Shikha Parmar
Principal Associate

Ruchita Modi
Principal Associate

Tanay Vyas
Senior Associate

Dhwani Vyas
Associate

For more details, please contact [email protected].

[1] Goods and Services Tax

[2] Goods and Services Tax Appellate Tribunal

[3] Integrated Goods and Services Tax Act, 2017

[4] Central Goods and Services Tax Act, 2017

[5] Input Tax Credit

[6] Inverted Duty Structure

[7] Central Goods and Services Tax Rules, 2017

[8] Electronic Commerce Operator

[9] Goods Transportation Agency

[10] Betting, casinos, gambling, horse racing, lottery, online money gaming

Tags Finance Updates, GST Compliance, GST Council, GST Updates, India Law, Inverted Duty, JSA, JSA Legal, Leading Law Firm, Leading Lawyers, Legal Update, Legal Updates, Rate Rationalisation, Tax Reforms, Trade Facilitation

JSA advises LivWell in connection with its joint venture with Angel One to establish a digital-first life insurance company

JSA is advising LivWell in connection with LivWell’s joint venture with Angel One to establish a digital-first life insurance company and facilitate its entry into the Indian insurance market, subject to regulatory approvals.

LivWell is backed by Olympus Capital and global industry experts, including Wilf Blackburn, former regional CEO of Prudential Asia. The proposed joint venture will prioritise technology-driven automation and personalisation to deliver insurance solutions that are affordable, accessible, and aligned with real-world customer needs.

LivWell is a Singapore-based Insurtech platform that focuses on lifestyle and wellness, seamlessly integrating everyday health management with simple and accessible insurance solutions. With operations in Vietnam and India, LivWell empowers individuals to lead healthier lives while accessing protection through its tech-enabled ecosystem.

The deal was led by Sidharrth Shankar and Shivangi Sharma Talwar, Partners, and supported by Principal Associate Aditya Vardhan Dayal, Senior Associates Pallov Upadhay, Eksha Narayan, and Jatin Oberoi, and Associate Aashreya Kodesia.

Tags Corporate Law, Digital Insurance, Fdi, Fintech, India Law, Insurance Sector, Insurtech, Joint Venture, JSA, JSA Insights, JSA Law, Legal Advisory, Life Insurance

JSA Prism | Insurance | September 2025

Please click here to download the Prism as a PDF.

Liberalisation of the insurance sector

The Ministry of Finance (Department of Financial Services), vide notification dated August 29, 2025, has issued Draft Rules (“Draft Rules”) to the Indian Insurance Companies (Foreign Investment) Rules, 2015 (“Foreign Investment Rules”). The Draft Rules were published on August 29, 2025 and will be notified within a period of 15 (fifteen) days from the date of the Draft Rules. Any objections or suggestions received from persons affected by the matter during the aforesaid period will be considered by the Central Government.

Key proposals of the Draft Rules

Relaxation in compliance for insurance companies with foreign investment

Current Law: The Foreign Investment Rules prescribe that in an insurance company having foreign investment (which includes even 1% foreign investment) (a) the majority of its directors and Key Management Persons (“KMPs”), and (b) 1 (one) amongst the chairperson of the board of directors, its managing director/chief executive officer, in each case, will be resident Indian citizen.

Proposed Amendment: The Draft Rules propose to ease the compliance by removing the conditionality to appoint majority of the directors and KMPs as resident Indian citizens. The only requirement for insurance companies with foreign investment is to have 1 (one) amongst the chairperson of the board of directors, its managing director / chief executive officer as resident Indian citizen.

The proposal is a welcome move and aims to ease compliance for insurance companies with foreign investment. The aforesaid conditionality was imposed when the foreign investment limit was increased from 49% to 74% and the conditionality deterred many foreign investors from further investing in the Indian insurance sector. The proposal is in line with the directional guidance given by the Finance Minister, in her budget speech in February 2025, wherein she stated that the conditions in relation to the foreign investment will be simplified.

Additionally, the Draft Rules seem to indicate that the aforesaid proposal can be immediately enforced once the amendments are notified, thereby enabling the board of insurance companies to be revamped without a cooling off period.

Ease in compliance for insurance companies with more than 49% foreign investment

Current Law: In addition to the residency criteria set out above, the current law mandates insurance companies with more than 49% foreign investment to appoint 50% of its directors as independent directors. If, however, the chairman of the board is an independent director, one-third of the board is required to be independent directors.

Proposed Amendment: The Draft Rules propose to omit the conditionality with respect to 50% of the board of directors to be independent directors. The said condition, in addition to acting as a deterrent for further investment in an insurance company, imposed practical challenges to manage large-sized board and limited insurance companies from attracting global talent.

Current Law: Additionally, insurance company with more than 49% foreign investment must maintain at least 50% of the net profit for the financial year in the general reserve, if (a) dividend is paid; and (b) solvency margin is less than 1.2 times of the control level (150%) of solvency.

Proposed Amendment: The Draft Rules propose to omit the net profit requirement for insurance companies. The proposal is in line with the commitment of the Government to attract global investment and ensure ease of doing business.

Increase in foreign investment in insurance companies

Current Law: Any increase in foreign investment in insurance companies would require an amendment to the Insurance Act, 1938 (“Insurance Act”) and the Foreign Investment Rules. The Government had issued a proposal in November 2024, that envisaged revamping the legislative framework for the Indian insurance sector by introducing amendments to the existing regulatory framework including increasing foreign investment limit in insurance companies from 74% to 100%. This commitment was reiterated by the Finance Minister in her budget speech as well in the Parliament session in July 2025.

Proposed Amendment: The Draft Rules propose to omit provisions which limit the foreign investment in insurance companies to 74% and provide that the foreign investment proposals for insurance companies will be allowed for the paid up equity capital as stipulated under the Insurance Act, subject to the verification by the insurance regulator – the Insurance Regulatory and Development Authority of India (“IRDAI”). The proposal is a pre-cursor to amendment to the Insurance Act which would enable increase in foreign investment in insurance companies from 74% to 100%.

The Government in its proposal of November 2024 had proposed incorporating a new provision to the Insurance Act which proposed foreign investment upto 100% in an insurance company, subject to prescribed conditions. Further, it was proposed that the foreign investment in insurance co-operative society will be capped to 26%.

It is imperative to note, that the Finance Minister, in her budget speech had emphasised that 100% foreign investment limit will be available to companies that invest the entire premium in India. Given that insurance companies are already restricted from investing policyholders’ funds outside of India, it will be noteworthy to see if there are any amendments in this regard to the Insurance Act.

Relaxation for insurance intermediaries

Current Law: When the foreign investment limit was increased to 100% for insurance intermediaries in 2019, special conditions were imposed on intermediaries with majority foreign investment, which included certain stipulations including but not limited to following: (a) majority of directors and KMPs of the insurance intermediaries to be resident Indian citizens, (b) one amongst the chairman of the board of directors or principal officer or managing director or chief executive officer to be resident Indian citizens; (c) prior approval of IRDAI to repatriate the dividends; and (d) related party transactions to be capped to 10% of the total expenses in a financial year.

Proposed Amendment: The Draft Rules suggest omitting the requirement for an insurance intermediary with majority foreign investment to have majority of directors and KMPs and one amongst the chairman of the board of directors or principal officer or managing director or chief executive officer as resident Indian citizen. The proposal completely removes any restriction on the residency status and is more liberal than for insurance companies. An insurance company will still be required to appoint one amongst the chairperson of the board of directors, its managing director/chief executive officer as resident Indian citizen.

An insurance intermediary with majority investment will be able to appoint board of directors and KMPs which are not resident Indian citizens, however, pursuant to other laws, such as Companies Act, 2013, it may still be required that at least 1 (one) director is a resident Indian citizen. Further, to maneuver the Indian insurance market, investors may have to assess if they would like to retain certain key positions with resident Indians with qualified experience.

Additionally, it is also proposed that the requirement to obtain prior approval of the IRDAI for repatriation of dividend and cap on related party expenses in a financial year will be omitted, providing operational flexibility to foreign investors.

Ancillary amendments

In addition to the amendment to the Foreign Investment Rules and the Insurance Act (as applicable) to implement the proposals in the Draft Rules, the IRDAI will also be required to amend or repeal (as the case may be) certain regulations including but not limited to IRDAI (Insurance Brokers) Regulations, 2018, Guidelines on repatriation of dividends by insurance intermediaries having majority foreign investors issued on January 3, 2020, IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers) Regulations, 2024.

Conclusion

The Draft Rules continue to maintain the momentum of a fully liberalised Indian insurance sector and provide much awaited relief on compliance for foreign investors. While 100% foreign investment in insurance companies is eagerly anticipated and can only be implemented after amendment to the Insurance Act, the Draft Rules reflect the Government’s commitment to ease of doing business in India and truly set the stage to overhaul and completely liberalize the sector, while keeping national interests where required for a social welfare sector.

This Prism has been prepared by:

Sidharrth Shankar
Partner

Shivangi Sharma Talwar
Partner

For more details, please contact [email protected]

Tags Ease Of Doing Business, Fdi, Finance Updates, Foreign Investment, India Law, Insurance For All, Insurance Reforms, Insurance Sector, JSA, JSA Law, Leading Law Firm, Leading Lawyers

JSA Blog | Shifting Gears: Merger of Insurance Companies

Setting the stage for Labour Codes implementation

Mint BFSI Summit 2025 IPO Surge: Guardrails for Investors

Reforms to Rights Issues: A Major Highlight in SEBI’s September 2024 Board Meeting

SEBI Chairperson Outlines Key Initiatives to Boost and Expedite Capital Formation in India

New Filters: Banking and Finance (including Securities)

Legal and regulatory analysis of the Reserve Bank of India’s Master Direction on Payment Aggregators

PA categories and definitions

Authorisation and capital requirements

Third-party payouts

PA partnering with another PA

PA merchant agreement

Merchant due diligence and KYC

Oversight on merchant-displayed information

PA-CB specific provisions

Conclusion

Streamlining of Qualified Institutions Placement disclosures: Key takeaways from the September 2025 amendments to the disclosure requirements

Conclusion

Key highlights of the 56th Goods and Services Tax Council meeting

Key changes proposed to the GST laws

Key tariff changes proposed for supply of services (effective September 22, 2025)

Key tariff changes proposed for supply of goods (effective September 22, 2025)

Liberalisation of the insurance sector

Key proposals of the Draft Rules

Conclusion

Deals & Matter Corner

Articles & Publications

JSA Live

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Disclaimer & Confirmation

Key highlights of the 56^th Goods and Services Tax Council meeting