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JSA Newsletter | Finance | August 2025

Business professionals analyzing financial data and graphs using digital devices and printed charts.

Please click here to download the Newsletter as PDF.

Tracking key regulatory changes to the Reserve Bank of India co-lending arrangements

The Reserve Bank of India (“RBI”) has released the long-awaited RBI (Co-Lending Arrangements) Directions, 2025 (“Co-lending Directions, 2025”) on August 6, 2025. The Co-lending Directions will come into force on January 1, 2026, with an option for an earlier adoption by a regulated entity (“RE”) as per its internal policy.

The Co-lending Directions, 2025 are an attempt to regulate and streamline the extant Co-lending Arrangements (“CLAs”) being undertaken by banks and Non-Banking Financial Companies (“NBFCs”) in terms of the erstwhile circular on Co-Lending by Banks and NBFCs to Priority Sector (“Co-lending Circular, 2020”) which has now been repealed. The REs are not allowed to enter into any kind of co-lending arrangement other than as per Co-lending Directions, 2025.

For ease of reference, we have set out the key distinctions between the Co-lending Directions, 2025 and the Co-lending Circular, 2020 in a tabular format hereinbelow:

Co-lending Circular, 2020	Co-lending Directions, 2025	Points to note
1. Applicability
“All Scheduled Commercial Banks (Excluding SFBs, RRBs, UCBs and LABs), All Registered Non-Banking Financial Companies (including Housing Finance Companies).”	“These Directions shall be applicable to CLAs entered into by the following REs: a) Commercial Banks (excluding Small Finance Banks, Local Area Banks and Regional Rural Banks); b) All-India Financial Institutions; and c) Non-Banking Financial Companies (including Housing Finance Companies).”	All India Financial Institutions have been included as an RE. Under the erstwhile model, the same was restricted only to banks and NBFCs.
2. Scope of CLA
“Banks are permitted to co-lend with all registered NBFCs (including HFCs) based on a prior agreement. The co-lending banks will take their share of the individual loans on a back-to-back basis in their books. […]” “The banks can claim priority sector status in respect of their share of credit while engaging in the CLM (co lending model) adhering to the specified conditions.”	“CLA refers to an arrangement, formalised through an ex-ante agreement, between a RE which is originating the loans (‘originating RE’) and another RE which is co-lending (‘partner RE’), to jointly fund a portfolio of loans, comprising of either secured or unsecured loans, in a pre-agreed proportion, involving revenue and risk sharing.” “The credit policy of a RE shall suitably incorporate provisions relating to CLAs, including the internal limit for the proportion of their lending portfolio under CLAs; target borrower segments; due diligence of the partner entities; customer service and grievance redressal mechanism.” “REs engaging in the CLA for loans eligible to be classified under priority sector lending in terms of Master Directions – Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025 (as amended from time to time), can claim priority sector status in respect of their share of credit under CLA.”	The purpose of CLA is no longer restricted or linked only to priority sector lending targets and such arrangements can be pursued in accordance with the credit policy of the RE. Further, under the Co-lending Directions, 2025, a bank-to-bank or an NBFC-to-NBFC CLA is clearly specified. RE’s engaging in CLAs for loans eligible for priority lending status can claim priority sector status with respect to their share in the loan.
3. Minimum share
“The co-lending banks will take their share of the individual loans on a back-to-back basis in their books. However, NBFCs shall be required to retain a minimum of 20 per cent share of the individual loans on their books.”	“Each RE under a CLA shall be required to retain a minimum 10 per cent share of the individual loans in its books.”	The minimum share of a participating RE has been reduced from 20 % to 10 %.
4. Loan agreement requirements
“The NBFC shall be the single point of interface for the customers and shall enter into a loan agreement with the borrower, which shall clearly contain the features of the arrangement and the roles and responsibilities of NBFCs and banks.”	“The loan agreement signed with the borrower shall make an upfront disclosure regarding the segregation of the roles and responsibilities (such as sourcing, and servicing) of concerned REs, including clear identification of the entity being the single point of interface with the customer. Any subsequent change in customer interface shall only be done after prior intimation to the borrower. The loan-agreement shall also appropriately disclose suitable provisions related to customer protection, and grievance redressal mechanism.”	The loan agreements must contain disclosures regarding the roles and responsibilities of each of the RE. The loan agreements are also required to appropriately disclose suitable provisions related to customer protection, and grievance redressal mechanism. This is a notable change in position. The REs may have to reconsider the template of the loan agreements which are used for CLAs and incorporate requisite additions in line with this requirement.
5. Key Fact Statement requirements
–	“All required details of CLA shall be disclosed appropriately to the concerned borrower as laid down under RBI Circular on ‘Key Facts Statement (KFS) for Loans & Advances’ dated April 15, 2024, as amended from time to time.”	The Key Facts Statement (“KFS”) for Loans and Advances was passed subsequent to the Co-lending Circular, 2020. Therefore, there was no explicit reference to KFS in the Co-lending Circular, 2020. This has now been added to the Co-lending Directions, 2025 as a requisite update and the KFS will be provided to the borrower.
6. Interest rate
“The ultimate borrower may be charged an all-inclusive interest rate as may be agreed upon by both the lenders conforming to the extant guidelines applicable to both.”	“The interest rate and any other fees / charges on the underlying loans charged to the borrower shall be based on the contractual agreement, subject to the regulatory norms applicable to the REs. Specifically, the final interest rate charged to the borrower shall be the blended interest rate which is calculated as an average rate of interest derived from the interest rates charged by respective REs, as per their internal lending policies and risk profile of the same or similar borrower, weighted by the proportionate funding share of concerned REs under CLA.” “Any fees / charges payable by the borrower in addition to the blended interest rate shall be incorporated in computation of annual percentage rate (APR) and disclosed appropriately in the KFS as prescribed in the paragraph 14 of these Directions.”	The interest rate to be charged under the Co-lending Directions, 2025 is required to be in the form of a blended interest rate derived from the interest rate of the REs participating in the CLA. This is further required to be disclosed in the KFS. Additionally, any fees or charges payable by the borrower in relation to the loan will also be required to be disclosed in the KFS.
7. Process of accounting by the REs and transfer of loan exposures
“If the bank can exercise its discretion regarding taking into its books the loans originated by NBFC as per the Agreement, the arrangement will be akin to a direct assignment transaction. Accordingly, the taking over bank shall ensure compliance with all the requirements in terms of Guidelines on Transactions Involving Transfer of Assets through Direct Assignment of Cash Flows and the Underlying Securities issued vide RBI/2011-12/540 DBOD.No.BP.BC-103/21.04.177/2011-12 dated May 07, 2012 and RBI//2012-13/170 DNBS. PD. No. 301/3.10.01/2012-13 August 21, 2012 respectively, as updated from time to time, with the exception of Minimum Holding Period (MHP) which shall not be applicable in such transactions undertaken in terms of this CLM.”	“The CLA shall ensure that the respective shares of the REs are reflected in the books of both REs without delay after disbursement by the originating RE to the borrower, in any case not later than 15 calendar days from the date of disbursement.” “If the originating RE is unable to transfer the share of the exposure to the partner RE under CLA within 15 calendar days for any reason, then the loan/s shall remain on the books of the originating RE and can be transferred to other eligible lenders only under the provisions of Master Directions – Transfer of Loan Exposure, 2021 (MD-TLE).” “Any subsequent transfer of loan exposures originated under CLA to third parties, or any inter-se transfer of such loan exposures between REs, shall be strictly in compliance with the provisions of MD-TLE. Such transfers to a third party, however, can be done only with the mutual consent of both the originating and partner REs.”	The timeline for exposures to be reflected in the books of the respective REs has been crystallised. There was no similar timeline under the Co-lending Circular, 2020. In the event the originating RE is unable to ensure the above, then any subsequent transfer of the loan will be required to be done under the Master Directions – Transfer of Loan Exposure, 2021 (“MD-TLE”), and accordingly a minimum holding period as per the said directions will be required to be complied with by the originating RE. Separately, it may be noted that while the loans disbursed under the priority sector must comply with applicable guidelines (with the exception of the minimum holding period), there was an ambiguity in the Co-lending Circular, 2020 regarding assignment of the loans under the CLA (other than priority sector lending), as to whether the same should be carried out in compliance with the MD-TLE. Now, the Co-lending Directions, 2025, state that the MD-TLE would not be applicable at the time of disbursement for the loans disbursed under CLA. Having said that, subsequent assignment by a participating RE of its share of the loan will have to comply with MD-TLE.
8. Digital lending
–	“Digital lending arrangements shall continue to be governed by the Reserve Bank of India (Digital Lending) Directions, 2025 (“MD-DLD”) as amended from time to time. Any digital lending arrangement involving co-lending by the REs shall, without derogation to the MD-DLD, be guided by the provisions of these Directions”	In the event that a CLA covers a digital lending transaction, then the Co-lending Directions, 2025 will apply to the extent applicable but without derogation to the RBI (Digital Lending) Directions, 2025.
9. Default loss guarantee
–	“Originating RE may provide default loss guarantee up to five per cent of loans outstanding in respect of loans under CLA. Provision of such default loss guarantee shall be governed mutatis mutandis in terms of the MD-DLD as amended from time to time.”	There was no such provision under the Co-lending Circular, 2020. The inclusion of this provision affirms the view that partner RE may require the originating RE to provide a default loss guarantee to the partner RE to ensure that the originating RE continues to house the risk in relation to the loans originated by them (over and above 10 %).
10. ‘Know Your Customer’ requirements
“The bank shall also be required to comply with the Master Directions – Know Your Customer (KYC) Direction, 2016, issued vide RBI/DBR/2015-16/18 Master Direction DBR.AML.BC.No.81/14.01.001/2015-16 dated February 25, 2016 and updated from time to time, which already permit regulated entities, at their option, to rely on customer due diligence done by a third party, subject to specified conditions.”	“RE involved under CLA shall comply with the prescribed norms under the Master Direction – Know Your Customer (KYC) Direction, 2016 as amended from time to time. Partner RE may rely upon the originating RE for “Customer Identification Process” as per the provisions of the said Master Directions on KYC.”	The Co-lending Directions, 2025 have removed the ambiguity in relation to ‘know you customer’ requirements for CLAs under the Co-lending Circular, 2020 wherein it had created a system of ‘double KYC’, with the responsibility falling on both the bank and the NBFC.

This Prism has been prepared by:

Anish Mashruwala
Partner

Pratish Kumar
Partner

Srinjoy Bhattacherjee
Partner

Madhur Bhatt
Associate

For more details, please contact [email protected]

Tags Banking Regulations, Borrower Protection, Co-Lending, Financial inclusion, JSA, Leading Law Firm, Leading Lawyers, Nbfc, RBI 2025, RBI Notifications

JSA advised Truemeds on its Series C fundraises led by Accel and Peak XV Partners

Stacks of coins with chess pawns connected by arrows representing strategic investment and capital flow

JSA advised Intellihealth Solutions Private Limited (d/b/a Truemeds) and its Founders on its Series C fundraises. The round’s first close was led by Accel, followed by a second close led by Peak XV Partners, with significant participation from existing investors WestBridge and InfoEdge Ventures.

Truemeds is a leading telehealth platform which includes providing generic and substitute medicines,and is focused on enabling greater affordability in healthcare access.

The JSA transaction team was Rishabh Gupta (Partner), Akshath Mithal (Principal Associate), Tanmayee Shriprasad Apte (Associate), and Saurabh Chatterji (Associate).

Tags AffordableHealthcare, DigitalHealth, FundingRound, HealthcareInvestment, Healthtech, JSA, PharmaTech, SeriesCFunding, TelehealthIndia, VentureCapital, WestBridge

JSA Advises Steel Infra Solutions on INR 960 million IPO

JSA is advising Steel Infra Solutions Company Limited in relation to its proposed IPO of equity shares comprising of a fresh issue aggregating to INR 960 million and an offer for sale of up to 14,240,473 equity shares by certain selling shareholders. Steel Infra Solutions Company Limited filed its Draft Red Herring Prospectus (DRHP) with SEBI on July 29, 2025.

The JSA team that advised on the transaction was led by Arka Mookerjee (Lead Partner), alongside the Equity Capital Markets team, which included Siddhartha Desai (Partner), Arjun Rastogi (Principal Associate), Bhavna Sancheti(Associate), Anvita Sinha (Associate), Palak Karundia (Associate), and Aditi Khandal (Associate).

Tags Capital Markets India, Corporate Law, DRHP 2025, Equity Capital Markets, IPO India, JSA, JSA Law, Law Firm Deals, Legal Advisory, SEBI Update, Steel Infra Solutions IPO

JSA Advises on M & B Engineering Limited’s INR 6.50 billion IPO

JSA advised Equirus Capital Private Limited and DAM Capital Advisors Limited, the Book Running Lead Managers (BRLMs), on M & B Engineering Limited’s initial public offering (IPO) of equity shares, valued at up to INR 6.50 billion. The IPO comprised a fresh issue of up to INR 2.75 billion and an offer for sale of up to INR 3.75 billion by certain selling shareholders.

The JSA team that advised on the transaction was led by Arka Mookerjee (Lead Partner), alongside the Equity Capital Markets team, which included Siddhartha Desai (Partner), Govind Roy (Senior Associate), Ayushi Pandit (Associate), Prateek Khandelwal (Associate), Aditya Shendye (Associate), Anvita Sinha (Associate), Sharad Panwar (Associate) and Johann Duckworth (Junior Associate).

Tags Capital Markets, Corporate Law, Equity Capital Markets, Fresh Issue, Fundraising, India Business, Initial Public Offering, IPO, JSA, Legal Advisory, Offer For Sale, Public Issue, Stock Market Listing

JSA advises New Development Bank on ECB Financing to Shriram Finance for Sustainable Commercial Vehicles

A toy truck is parked next to tall stacks of shiny coins on a reflective surface, symbolizing commercial vehicle financing, with vibrant bokeh lights in the background.

JSA advised New Development Bank as their Indian law counsel on a secured external commercial borrowing (ECB) facility of USD 125,000,000 availed from NDB by Shriram Finance Limited.

The borrower, Shriram Finance Limited, is a public limited listed company engaged in financing of commercial vehicles and two wheelers. The facility provided will be utilised by Shriram Finance Limited towards on-lending for financing acquisition of sustainable commercial vehicles by its customers.

From JSA, lead partners – Soumitra Majumdar and Tirthankar Datta – alongside Abhishek Ray (Partner), Harvi Shah (Principal Associate), and Pankaj Agarwal (Associate) advised on this transaction.

Tags Clean Transportation, Commercial Vehicles, ECB, External Commercial Borrowing, Finance Deal, Green Financing, India Business, Indian law, JSA, Law Firm News, Legal Advisory, Sustainable Finance, Sustainable Vehicles

JSA Prism | India-UK CETA | August 2025

Two business professionals shaking hands over a cityscape with digital financial graphs overlayed.

Please click here to download the Prism as PDF.

Chapter 12 of the India–United Kingdom Comprehensive Economic and Trade Agreement: Framework for digital trade

On July 24, 2025, India and the United Kingdom (“UK”) signed the Comprehensive Economic and Trade Agreement (“CETA”). It’s a comprehensive trade agreement with 30 (thirty) chapters that covers products, services, investments, and collaboration. Chapter 12 of the CETA (“Chapter 12”) focuses exclusively on digital trade including information technology, e‑commerce, and data‑driven services to both economies.

Chapter 12 reflects an increasing importance of digital commerce in the bilateral trade relationship, where services trade and technology‑enabled sectors constitute a significant proportion of overall economic exchange.

Key takeaways

Legal recognition and trade facilitation

Chapter 12 requires the parties to accord legal recognition to electronic contracts, electronic authentication, and electronic signatures. It obligates the parties to maintain legal frameworks that do not deny validity solely on the basis that a transaction is conducted electronically. Chapter 12 also encourages the use of paperless trading systems in customs and trade administration and includes a commitment to accept electronic copies of trade administration documents. For consumers, it ensures smoother access to digital services, such as online banking, insurance claims, and e-commerce platforms.

Data flows and localisation

Chapter 12 requires that measures adopted for electronic invoicing be designed to facilitate the cross‑border exchange of usable information between the parties’ invoicing systems. At the same time, it recognises India’s regulatory space to maintain localisation obligations and data transfer restrictions, such as those reflected in the Reserve Bank of India’s payment data rules.

Chapter 12 provides that after the enforcement of CETA, where a party concludes a trade agreement with a third country with data protection provisions, cross-border data transfer, or data localisation provisions, the other party can request consultations to discuss a possible extension of similar provisions under this CETA. However, this does not affect the operation of each party’s domestic personal data protection laws, nor does it require the extension of benefits arising from regulatory cooperation measures, including those relating to authorisation, licensing, certification, or prudential rules in financial services.

Consumer protection and digital trust

The parties have agreed to adopt or maintain measures to protect consumers engaged in online commercial activities against fraudulent, misleading, or deceptive practices. Chapter 12 requires the establishment of transparent and effective measures to address unsolicited commercial electronic messages (spam), including providing consumers with the ability to prevent ongoing reception. The agreement also promotes fair competition by addressing exploitative business practices, such as misleading advertising or abuse of dominant positions in digital marketplaces.

Source code and intellectual property protection

Chapter 12 contains a provision prohibiting either party from requiring the transfer of, or access to, the source code of software owned by a person of the other party, as a condition for market access. This requirement is imposed on mass-market software but not on software developed for critical infrastructure or for public procurement. Moreover, Chapter 12 clarifies that the provision does not preclude a regulator or court from ordering access to source code for some investigations, law enforcement, or regulatory ends in conformity with domestic law.

Cooperation on standards and interoperability

Chapter 12 requires joint efforts by the parties towards making sure that international standards and guidelines are taken into account in their respective digital regulatory frameworks. The objective is to promote interoperability of digital systems and to avoid unnecessary barriers to digital trade. It includes provisions for mutual co-operation in the aspects of future technologies, digital identity systems, and electronic trust services by mutual consent.

Cybersecurity

Chapter 12 includes provisions recognising the importance of maintaining robust cybersecurity measures to support digital trade. The parties commit to cooperation on cybersecurity issues, including sharing best practices, strengthening the resilience of digital infrastructure, and fostering collaboration between their respective Computer Emergency Response Teams (CERT). The text also highlights the role of risk‑based approaches and voluntary frameworks in mitigating cyber threats, while ensuring that regulatory measures are consistent with international practices and do not create unnecessary barriers to trade.

General exceptions and safeguards

The obligations under Chapter 12 are subject to general exceptions similar to those in the World Trade Organization framework. Measures necessary to achieve objectives such as the protection of public morals, the maintenance of public order, or the protection of human, animal, or plant life or health are permitted. This ensures that commitments under the digital trade chapter do not prevent either country from pursuing legitimate domestic regulatory objectives.

Conclusion

Chapter 12 of the CETA represents a significant move forward in India’s strategy towards digital trade. It expresses the intent to comply with international standards while retaining the freedom to aim for domestic objectives. For Indian businesses, Chapter 12 has numerous benefits. information technology and information technology -enabled service firms can operate with more legal certainty. small and medium enterprises and exporters enjoy the less fragmented recognition of digital contracts and authentication. Startups involved in SaaS, artificial intelligence, and fintech gain from protection of proprietary code and potential access to the UK market under more straightforward rules. For regulators, this move raises significant questions about how best to balance obligations under the CETA with the requirements of domestic regulation, consumer protection, and cybersecurity.

The chapter will probably shape the drafting of the Digital India Act and could also be a precedent for India’s future trade negotiations with other partners, including the European Union and ASEAN. Its relevance thus goes well beyond the bilateral relationship with the UK.

This Prism has been prepared by:

Probir Roy Choudhary
Partner

Yajas Setlur
Partner

Hrishikesh Reddy Kothwal
Associate

For more details, please contact [email protected]

Tags CETA 2025, Cross Border Data, Cybersecurity, Digital Trade, Ecommerce Law, India UK CETA, JSA, JSA Legal, Leading Law Firm, Leading Lawyers, Legal Updates, Trade Policy

JSA Prism | Corporate | August 2025

Abstract 3D network of golden nodes connected by lines over a dark blue background.

Please click here to download the Prism as a PDF.

United States sanctions and implications for Indian companies

Overview of United States sanctions regime

Sanctions have emerged as strategic tools used by governments to advance their foreign policy objectives, enforce international law and norms, safeguard national security, and combat terrorism. By restricting trade, financial transactions, and technology transfers, sanctions apply economic pressure to influence the behaviour of targeted entities or nations.

Prior to 2001, sanctions were primarily imposed by the United Nations Security Council through a multilateral process and were aimed at maintaining international peace and addressing crimes against humanity. While unilateral sanctions did exist (such as those imposed by the United States (“US”) on Cuba (since the 1960s), Iran (from 1979), and North Korea (from the 1990s)), the use of such unilateral measures surged after the events of September 11, 2001. Since then, sanctions have become a central component of the US’ national security and foreign policy strategy.

The Office of Foreign Assets Control (“OFAC”), a division of the US Department of the Treasury, administers and enforces these sanctions.

US sanctions vary in scope and focus and generally fall into 2 (two) broad categories:

Comprehensive sanctions: These prohibit nearly all transactions with targeted countries such as Iran, North Korea, Cuba, and Russian occupied regions of Ukraine.
Targeted or list-based sanctions: These apply to individuals, companies, and entities designated on OFAC’s Specially Designated Nationals (SDN) List or Sectoral Sanctions Identification (SSI) List (which would include sectors such as defense, energy, and high-end technology).

Further, each of these sanctions contain both: (a) “Primary Sanctions” i.e. restrictions applicable to US persons including US citizens, permanent residents, entities organised under US laws, and anyone physically present in the US; and (b) ‘Secondary Sanctions’ which seek to penalise non-US persons and entities for engaging in transactions with sanctioned parties, even in the absence of a direct US connection. While under primary sanctions, US persons are prohibited from engaging in transactions with sanctioned parties unless specifically authorised by OFAC, secondary sanctions are aimed at deterring non-US persons from engaging in activities that threaten the effectiveness of US sanctions policy. Notably, a non-US person may also be held liable under primary sanctions if they ‘cause’ a US person, such as a US financial institution, to engage in a prohibited transaction. Secondary sanctions, on the other hand, are typically imposed when a non-US person is found to have “materially assisted, sponsored, or provided financial, material, or technological support”, to a person designated under a US sanctions program.

Secondary sanctions, in particular, have become a prominent feature of US enforcement action in recent years, expanding the global compliance burden.

Impact on Indian companies

India’s growing strategic relevance, as the fastest-growing major economy with surging energy demand and an expanding diplomatic footprint, has drawn increased attention from US regulators. Its principled stance of rejecting all unilateral sanctions further heightens the scrutiny for Indian companies operating globally. In recent years, several Indian entities have faced regulatory action stemming from inadvertent or indirect involvement in transactions that violated US sanctions.

As per OFAC’s public records, more than 80 (eighty) Indian entities are subject to US secondary sanctions, including 21 (twenty-one) designated in October 2024^[1] for transactions linked to Russia. Indicatively:

In 2023, Godfrey Phillips India Ltd., settled with OFAC for causing US banks to process dollar transactions related to supply of certain tobacco products to North Korea^[2].
In 2024, Shaurya Aeronautics Private Limited and other Indian firms were sanctioned for supplying high-priority microelectronics to Russia, thereby causing US correspondent banks to violate sanctions^[3].

The risk is further amplified for Indian companies with US subsidiaries or where Indian companies appoint US citizens or residents as directors, executives, secondees, or signatories, as those individuals bring a US nexus into play. If these individuals approve or facilitate prohibited transactions, both the individual and the company could be held liable under OFAC regulations.

It is also relevant to note that while secondary sanctions are predominately imposed on the basis of ‘materially’ assisting, sponsoring or providing support to a sanctioned party, ‘material’ support is not explicitly defined. OFAC evaluates it on a case-by-case basis and retains discretion to impose sanctions irrespective of the number/quantum of the dealings. Additionally, US authorities can designate entities without prior notice and without affording the affected party an opportunity to be heard.

In case an Indian entity is designated, it could, inter alia, lead to:

penalties and asset freezes;
loss of US Dollar clearing capabilities; and
severed access to US institutions (financial, insurance, shipping etc.).

Adding to the complexity for companies operating in multiple jurisdictions, countries such as the European Union and the United Kingdom have blocking statutes which prohibit local companies from complying with certain US sanctions (e.g., those related to Cuba or Iran), creating tension between competing legal regimes. Indian companies involved in cross-border transactions must, therefore, balance their domestic interests with varying international sanctions frameworks.

Conclusion

US sanctions, especially secondary sanctions, pose serious extraterritorial risks for Indian businesses. To mitigate these risks, Indian companies need to consider and implement a comprehensive sanction monitoring and compliance framework, including:

robust due diligence across supply chain;
regular screening of customers, suppliers, and third parties;
written sanctions policy supported by automated tools;
regular training for directors and key decision-makers;
strong contractual safeguards such as representations, warranties, and indemnities; and
periodic internal and external audits to assess controls and red flags proactively.

Given the evolving nature of sanctions and the severity of penalties, Indian companies need to consider deal-specific legal advice for cross-border transactions to tailor compliance protocols and reduce exposure in real time.

This Prism has been prepared by:

Venkatesh Raman Prasad
Partner

Shivani Chugh
Partner

Priyanka Priyadarshini
Associate

For more details, please contact [email protected]

^[1] U.S Sanctions on Indian Companies

^[2] OFAC Settles with Godfrey Phillips India Limited, Department of The Treasury, March 1, 2023.

^[3] Treasury Takes Aim at Third-Country Sanctions Evaders and Russian Producers Supporting Russia’s Military Industrial Base

Tags Compliance Risk, Cross Border Trade, Global Compliance, Indian Companies, JSA, JSA Legal, Leading Law Firm, Leading Lawyers, Legal Updates, OFAC, US Sanctions

Carried Interest — Identity Crisis or Identity in Abundance

This article discusses carried interest, a concept in Alternative Investment Funds where fund managers receive a share of profits as a return on their investment, rather than solely as consideration for services provided. The nature of carried interest is critical in determining its tax implications under the GST laws. According to SEBI regulations, AIF managers are required to hold an investment in the fund, aligning their interests with those of the investors. Carried interest is paid to managers after a hurdle rate is achieved by the fund and is considered a return on investment, rather than a service fee. The tax treatment of carried interest is complex, with potential implications under income tax laws as dividends or capital gains, and uncertain treatment under GST laws. The article argues that carried interest does not qualify as consideration for services under GST laws, and its tax treatment should be determined based on its true nature as a return on investment.

The article was authored by Shareen Gupta, Partner, and Rajan Mishra, Principal Associate, published in SCC Times.

Click here to read the full article.

Tags #AlternativeInvestmentFunds, AIFIndia, CarriedInterest, GSTLawIndia, JSA, JSALegal, RajanMishra, SCCInsights, SEBIRegulations, ShareenGupta, TaxOnInvestments

JSA advises Navalt Green Mobility in connection with its strategic investment from BanyanTree

Solar panels, wind turbines, and a power transmission tower generating renewable energy at sunrise

JSA represented Navalt Green Mobility Private Limited (“Navalt”) and its promoters in raising strategic investment from BanyanTree.

Navalt, led by Sandith Thandasherry, a naval architect, is India’s leader in electric boat design and manufacturing. The company pioneers solar-electric and hybrid ferries, offering sustainable and efficient alternatives to traditional diesel-powered vessels.

As part of the transaction, JSA provided end-to-end legal support, including negotiating and finalizing transaction documents, as well as assisting with closing and post-closing actions.

The transaction team comprised Partner, Archana Tewary and Principal Associate, Savio Tom.

Tags #JSADeals, #LegalAdvisory, #SolarEnergy, ArchanaTewary, BanyanTreeInvestment, ElectricBoats, GreenMarine, IndiaStartups, JSA, SavioTom, SolarFerries, SustainableMobility

JSA Corporate InVision | June 2025 Edition

Please click here to download the document as PDF.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

Investor charters for Investment Advisers and Research Analysts

SEBI, vide notifications dated June 2, 2025, has updated the investor charters for Investment Advisers (“IAs”) and Research Analysts (“RAs”). The revised charters are designed to enhance financial consumer protection alongside enhanced financial inclusion and financial literacy. RAs/IAs must bring the investor charter to the notice of their clients through their respective websites and mobile applications (if any), making them available at prominent places in the office, provide a copy of investor charter as a part of client on-boarding process. All RAs/IAs and registered RTAs must continue to disclose on their respective websites and mobile applications (if any), the data on complaints received against them or against issues dealt by them and redressal thereof, latest by 7th of succeeding month, as per the prescribed format.

Margin obligations to be given by way of pledge/re-pledge in the depository system

SEBI, vide circular dated June 3, 2025, has inserted clauses in the circular – Margin obligations to be given by way of Pledge/ Re-pledge in the Depository System, dated February 25, 2020, and Master Circular for Stock Brokers dated August 9, 2024, to make the invocation and sale of client’s securities pledged in favour of brokers as a combined automated process. These amendments will come to effect from September 5, 2025. Some of the key provisions are as follows:

under invocation of margin pledge, depositories will offer a streamlined process called ‘pledge release for early pay-in’, allowing the Trading Members (“TM”)/Clearing Members (“CM”) to initiate a single instruction that simultaneously releases the pledge and sets up an early pay-in block in the client’s demat account subject to pay in validation;
margin pledged securities (including pledged funded stock) of client (other than mutual fund units that are not traded on the exchanges), that are invoked or sold off by the TM, will be blocked for early pay-in in the client’s demat account with a trail being maintained in TM/CM’s ‘client securities margin pledge account’/‘client securities under margin funding account’;
in case of invocation of mutual fund units that are not traded on the exchange, the depository will provide a single instruction in the form of ‘invocation cum redemption’ and such mutual fund units will come to ‘client securities margin pledge account’ and go for auto redemption from the said account; and
where the client’s trading account is frozen or marked as ‘not permitted to trade’ or equivalent at the stock exchanges after the creation of pledge, the invoked securities will come to demat account of TM/CM and the same will be sold by TM/CM under the proprietary code. TM/CM must ensure that pay-in of securities is done on the same day of invocation, to prevent the accumulation of client securities in the demat account of TM/CM.

Limited relaxation from compliance with certain disclosure requirements

SEBI, vide circular dated June 5, 2025, has decided that no penal actions for any non-compliance (undertaken between the period October 1, 2024 to June 5, 2025) under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) will be taken against entities having listed non-convertible securities, who have complied with the conditions as specified in the Ministry of Corporate Affairs general circular dated September 19, 2024, and have not sent hard copy of statement containing the salient features of all the documents to the holders who have not registered their email address. Further, similar relaxations from the requirements of LODR Regulations are provided for entities having listed non-convertible securities (for the period June 6, 2025, to September 30, 2025), provided that advertisement will disclose the web-link to the statement containing the salient features of all the documents, so that the holder of non-convertible securities have access.

Framework for Environmental, Social, and Economic debt securities (other than green debt securities)

SEBI, vide circular dated June 5, 2025, has set out a regulatory framework to be complied with by issuers of Environmental, Social, and Economic (“ESG”) debt securities (except green debt securities) i.e., social bonds, sustainability bonds and sustainability-linked bonds. These ESG debt securities (except green debt securities) facilitate funding for projects involving affordable basic infrastructure, affordable housing, job creation, and similar social initiatives, alongside those focused on environmental sustainability.

For a detailed analysis, please refer to the JSA Prism of July 1, 2025.

Investor charter for Infrastructure Investment Trusts and Real Estate Investment Trusts

SEBI, vide circulars dated June 12, 2025, has decided to introduce the investor charters for Infrastructure Investment Trusts (“InvITs”) and Real Estate Investment Trusts (“REITs”), to enhance financial consumer protection alongside enhanced financial inclusion and financial literacy. Some of the key aspects are as follows:

the charter for InvITs aims to develop the Indian InvIT Industry and provide investors with transparent, efficient, and reliable investment opportunities in infrastructure assets by ensuring fair and robust regulatory mechanisms and enhance confidence among investors by protecting and promoting the interests of unitholders; and
the charter for REITs aims to commit to advancing the growth and development of REITs sector in India, with a focus on the growth of commercial real estate assets including other assets portfolio management. To advocate for both business and investor interests while adhering to regulations. To develop integrity and excellence, and foster industry best practices that are benchmarked to leading global REIT standards.

Some of the key rights of investors under the charter for InvITs are as follows:

right to receive timely distributions as per the declared schedule made by the InvIT and SEBI mandates at least half-yearly for publicly listed InvITs and at least annually for privately listed InvITs;
right to vote on significant matters, including the acquisition of new assets, borrowing, related party transactions, appointment or change of the investment manager, and induction or exit of a sponsor (with an exit option for dissenting voters) and such other matters which requires unitholders consent as per Regulation 22 of SEBI (InvIT) Regulations, 2014;
right to access a full valuation report of all InvIT assets at least annually for both publicly and privately listed InvITs;
right to receive annual and half-yearly report of the InvIT including financial information, auditors report and valuation report;
right to be informed of any disclosures that may materially impact investments in the InvIT; and
right to participate in meetings and vote on matters affecting the InvIT.

Some of the key rights of investors under the charter for REITs are as follows:

right to receive information and details about the REIT including about its investment philosophy, and such other information as may be required under SEBI regulations to enable investors to make an informed decision about investing in a REIT, prior to making any such investment;
right to timely receipt of distribution advices / interest / proceeds / refunds and evidencing a transaction as specified in the SEBI (REIT) Regulations, 2014, or to receive such statements on request;
right to receive annual report / half yearly report and valuation reports; and
right to be informed about such disclosures which may have a material bearing on their investments in REIT.

Mandated safeguards for investor payments via unified payment interface

On June 11, 2025, SEBI issued a circular[1] introducing a secured UPI mechanism, specifically for investor-facing intermediaries to receive/collect funds from their investors (“SEBI Circular”). The SEBI Circular seeks to create a more structured framework towards increasing investor confidence in such systems.

SEBI’s proactive efforts in introducing real-time verification tools and secure UPI payment mechanisms are aimed at reducing impersonation and increasing payment transparency. Given that existing systems of National Payment Corporation of India and banks are already in place to issue UPI handles, this provides an economical solution for an otherwise large issue. Further, the transition process is relatively straightforward for intermediaries, as it is routed through SEBI intermediary portal) and the new UPI handles will be linked to existing bank account of such intermediaries. As such, the framework under the SEBI Circular highlights SEBI’s commitment to provide a safe payment ecosystem for investors while promoting ease of investor participation in the securities market.

For a detailed analysis, please refer to the JSA Prism of June 23, 2025.

Notification under SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007

SEBI, vide notification dated June 25, 2025, has notified the following conditions/requirements relating to the certification to be obtained by associated persons under the SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007:

at least 1 (one) key personnel, amongst the associated persons functioning in the key investment team of the manager of Category I Alternative Investment Fund (“AIF”) or Category II AIF or Category I and II AIF, must obtain certification from the National Institute of Securities Market by passing either the NISM Series-XIX-C; and
at least 1 (one) key personnel, amongst the associated persons functioning in the key investment team of the manager of Category III AIF, must obtain certification from the National Institute of Securities Market by passing either the NISM Series-XIX-C.

AIFs, existing as on June 25, 2025, must obtain requisite certification on or before July 31, 2025.

Applicability of timelines for rebalancing of portfolios of mutual fund schemes in cases of all passive breaches

SEBI, vide circular dated June 26, 2025, has clarified that the provisions prescribed under paragraph 2.9 of the Master Circular for Mutual Funds (dealing with timelines for rebalancing of portfolios of mutual fund schemes in the event of deviation from mandated asset allocation mentioned in the scheme information document due to passive breaches) will be applicable for all types of passive breaches for the actively managed mutual fund schemes.

Increased disclosures to audit committees and shareholders for related party transactions

SEBI, vide circular dated June 26, 2025, has issued the revised Industry Standards on minimum information to be provided to the audit committee and shareholders for approval of Related Party Transactions (“RPTs”). The objective of these Industry Standards is to provide a standard format for minimum information to be provided to the audit committee and shareholders (as applicable) for approval of RPTs as required under the LODR Regulations. Some of the key modifications made to the Industry Standards are as follows:

the listed entity must provide the audit committee with the information as specified in the Industry Standards, while placing any proposal for review and approval of an RPT; and
the notice being sent to the shareholders seeking approval for any RPT must, in addition to the requirements under the Companies Act, 2013, include the information as part of the explanatory statement as specified in the Industry Standards.

This circular will come into effect from September 1, 2025.

RESERVE BANK OF INDIA (RBI)

Foreign Exchange Management (Export of Goods & Services) (Amendment) Regulations, 2025

RBI, vide notification dated June 24, 2025, has amended the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015, by inserting Regulation 4 (ca) which provides that the export of tugs, tugboats, dredgers and vessels used for providing offshore support services can be made without filing a declaration, provided they are re-imported into India.

RBI (Know Your Customer) (Amendment) Directions, 2025

RBI, vide circular dated June 12, 2025, has issued the RBI (Know Your Customer (KYC)) (Amendment) Directions, 2025, modifying the Master Direction – Know Your Customer (KYC) Direction, 2016 (“KYC Directions”) to enhance consumer protection and service. Some of the key amendments are as follows:

a clause has been added to para 38 of the KYC Directions, requiring that for individual customers categorised as low risk, the Regulated Entity (“RE”) must allow all transactions and ensure that the Know Your Customer (“KYC”) is updated within 1 (one) year from the date it becomes due or by June 30, 2026, whichever is later. The RE must also regularly monitor the accounts of such customers. This requirement applies even if the KYC update was already due before this amendment came into effect;
Banks may obtain self-declarations from customers, if there is no change in KYC details or only a change in address, through authorised Business Correspondent (“BCs”). These declarations and supporting documents must be captured electronically by the BC after biometric e-KYC authentication. Until this is enabled, physical submission is permitted. Banks must update the KYC records and inform the customer once the update is complete, as per Paragraph 38(c) of the KYC Directions. The bank remains ultimately responsible for ensuring periodic KYC updation; and
REs must inform their customers in advance to update their respective KYC information. Prior to the due date to update KYC, REs must give at least 3 (three) advance intimations at appropriate intervals, including at least 1 (one) intimation in writing, to their customers. Even after the due date, REs must give at least 3 (three) reminders at appropriate intervals, including at least 1 (one) reminder in writing, to such customers if they have still not complied. These communications must clearly outline instructions for updating KYC, escalation mechanisms, and potential consequences. REs must comply with this requirement by January 1, 2026.

MINISTRY OF COMMERCE AND INDUSTRY (MoCI)

Special Economic Zones (Amendment) Rules, 2025

MoCI, vide notification dated June 3, 2025, has amended the Special Economic Zones (“SEZ”) Rules, 2006. Some of the key amendments are as follows:

the minimum requirement for a SEZ exclusively set up for manufacturing of semiconductors or electronic components will be 10 (ten) hectares or more of contiguous land;
the condition of encumbrance free area for an SEZ may be relaxed, in case the area is already mortgaged or leased to the Central Government/State Government/their authorised agency, after the reasons are recorded in writing;
units may also be setup for providing services or manufacturing services to overseas entities if the finished goods are to be exported out of the country/transferred to the customs bonded warehouse to be maintained by the overseas entity/supplied to the domestic tariff area with payment of applicable duties/transferred to the free trade and warehousing zone unit to be maintained by the overseas entity in the same or different SEZ as per the instructions of the overseas entity; and
under the net foreign exchange earnings, units providing manufacturing services in the semiconductor sector, value of goods received as well as value of goods supplied on free of cost basis will be included in net foreign exchange calculations and such value will be determined in accordance with the customs valuation rules.

MINISTRY OF FINANCE (MoF)

Issuance of bonus shares to non-resident investors by companies engaged in sectors prohibited from receiving foreign direct investment

On June 11, 2025, the MoF has introduced amendments to Rule 7 of the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (“NDI Rules”) (“Amendment Notification”). The Amendment Notification allows resident companies (operating in sectors prohibited for Foreign Direct Investment (“FDI”) or undertaking activities prohibited from receiving FDI) to issue bonus shares to existing non-resident shareholders with the condition that such non-resident shareholders’ shareholding proportion does not change pursuant to such issuance. The Amendment Notification came into effect from June 11, 2025. The Amendment Notification is also retrospective in nature and applies to bonus issuance undertaken during the subsistence of the erstwhile Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 or the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017.

For a detailed analysis, please refer to the JSA Prism of July 1, 2025

MINISTRY OF CORPORATE AFFAIRS (MCA)

Corporate governance enhanced through mandatory workplace harassment disclosures under new company law amendments

On May 30, 2025, MCA notified the Companies (Accounts) Second Amendment Rules, 2025, revising Rule 8(5)(x) of the Companies (Accounts) Rules, 2014 (“Rules”). Effective July 14, 2025, these amendments expand the scope of mandatory disclosures in the annual board report, requiring companies to provide detailed data on sexual harassment complaints under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, including number of complaints received, disposed, and pending (beyond 90 (ninety) days) as well as gender-wise employee demographics. Further, a new Rule 8(5)(xiii) has been added to the Rules, requiring companies to now affirm compliance with the Maternity Benefit Act, 1961.

For a detailed analysis, please refer to the JSA Prism of June 20, 2025.

JSA UPDATES

Takedown or overreach: A legal analysis of X Corp’s challenge to government mandated digital censorship

The Hon’ble High Court of Karnataka (“Karnataka HC”) in X Corp. vs. Union of India (W.P. No. 7405 of 2025) raises a regulatory challenge within the domain of intermediary liability and content governance. The writ petition filed before the Karnataka HC raises foundational issues around statutory interpretation, executive accountability, and digital free speech under the Information Technology Act, 2000 (“IT Act”). The case squarely contests the Union Government’s alleged misuse of Section 79(3)(b) of the IT Act to compel content removal, a provision originally crafted to define the limits of intermediary protection, not to confer direct takedown authority.

For a detailed analysis, please refer to the JSA Prism of June 5, 2025.

Competition Commission of India holds that the other parallel data privacy regulations do not curtail its power over competition law related issues in data driven digital industries

The Competition Commission of India order against Meta Platforms, Inc. and WhatsApp LLC, assumes significance as it throws light on how the data-related practices of the digital platforms, including treatment of privacy rights, will be viewed from the competition law perspective in India. This order represents the continuous evolving nature of competition law jurisprudence in the digital space, particularly in the data driven economy. From a data privacy perspective, this order reinforces the growing trend among regulators, both in India and globally, of treating data collection, user autonomy, and consent mechanisms as central not only to privacy regulation but also to digital competition.

For a detailed analysis, please refer to the JSA Prism of June 4, 2025.

Government proposes draft registration bill for online registration of property documents

The Government of India has introduced the draft Registration Bill 2025 (“Bill”), marking a transformative shift in the country’s property registration framework by proposing to replace the 117 (one hundred and seventeen) year old Registration Act of 1908. This comprehensive reform aims to digitise the registration process, enhance transparency, and create a uniform, citizen-centric system for property and document registration across all States and Union Territories. The Bill introduces provisions including online registration capabilities, Aadhaar-based authentication systems, expanded scope of compulsory registration, and elimination of jurisdictional barriers through digital platforms.

For a detailed analysis, please refer to the JSA Prism of June 13, 2025.

Ministry of Electronics and Information Technology releases blueprint for consent management

As India moves toward implementing the Digital Personal Data Protection Act, 2023 (“DPDP Act”), a key focus area has been developing robust frameworks for user consent management. In this context, the National e-Governance Division under the Ministry of Electronics and Information Technology (“MeitY”), has published a Business Requirement Document (“BRD”) for consent management.

The BRD is a non-binding technical reference issued by MeitY’s Startup Hub and is not part of the DPDP Act. The BRD was published as part of an Innovation Challenge, inviting participants to build a prototype Consent Management System. It is accessible on the MeitY Startup Hub website here. While the document is not intended to serve as official guidance under the DPDP Act, it does, however, serve as an early indication of how the government may be thinking about consent architecture.

For a detailed analysis, please refer to the JSA Prism of June 17, 2025.

This Newsletter has been prepared by: