At the same time, the sector is being reshaped by payment modernisation, data-driven decision-making, capital market activity and technology-enabled risk management. Organisations across banking, insurance, capital markets, private equity and asset management are investing in digital capabilities, strengthening customer data protection frameworks and leveraging AI to improve efficiency, fraud detection and operational performance. As regulatory expectations increase and market dynamics evolve, agility, innovation and trust are becoming critical differentiators.
Financial transformation through trust and technology
India’s financial services sector is undergoing a period of significant transformation, driven by digital innovation, evolving regulatory expectations and changing customer behaviours. Financial institutions are increasingly focused on enhancing resilience, strengthening trust and delivering seamless customer experiences while navigating a rapidly evolving landscape shaped by AI, data, cyber security and emerging business models. As the sector continues to modernise, organisations are balancing growth ambitions with risk management, governance and long-term value creation.
Key trends shaping financial services landscape
How can KPMG in India help?
Strategy, Design, Build, Implement and Improve with our key tech alliances in areas of Cloud, IOT, RPA, Blockchain, AI/ML, BI & Analytics and digital platforms
Market entry, revenue growth, cost reduction, improve operational efficiency, enhance customer experience, digital operating models
Behavioural Change and Talent Management, HR Optimisation, Workforce intelligence, Organizational Development, Mergers and acquisitions
Oracle Financial Services Analytical Application (OFSAA) for Compliance, Regulatory reporting, Capital optimisation, Multi-dimensional profitability, Planning and Monitoring, Accounts Closing, Fraud Risk, Governance
Finance & Accounting, Tax, Talent & HR, Inside Sales, Procurement & Supply Chain, Technology, Network & Utilities, Fund Accounting, As a Service
Financial Reporting Services, Finance Process Transformation, Capital Market Readiness, Global business service and Upskilling programmes
e.g. Board Advisory, Corporate Governance, Agile Internal Audit, Management Audit, enterprise risk management and dynamic risk assessment, third party risk management, SOX, internal financial controls, revenue assurance, regulatory compliance
Risk Analytics, Capital Planning and Pillar II, Risk Strategies framework and policies, Global Finance Center, System Selection and implementation, valuation and validation, Treasury ALM and Liquidity Risk, Insurance and Actuarial Solutions
Investigations, Forensic Technology, Verification services, Corporate Intelligence on entities and individuals, Contract compliance services, Ethics hotline
One M&A Advisory, M&A Tax Structuring, Fund Raise, Due Diligence, Post Merger Integration and Separation, Valuation
NPA Advisory, Techno-Economic Viability (TEV), Lender Due Diligence, Independent Business Reviews, Cash Management, Turnaround Planning and Implementation
FIPB/RBI approvals / registrations for NBFC, PPI, Money Transfer business, Expat tax, advisory, liaising with the Regulators, advice on foreign exchange, corporate laws, trust laws and other business laws, advice on joint venture, licensing and other agreements, due diligence, Transfer Pricing
Why select KPMG in India?
India Union Budget 2026-27: Our Sector Insights
India Union Budget 2026-27 Financial Services PoV
Banking is key to ensure success of budget by ensuring credit in the right direction, should bring clarity on foreign investment
KPMG in India point of view 2026 - Public Finance
Union Budget 2026 adopts a measured, credible, and PFM-aligned strategy to place India’s public finances on a stronger and more sustainable trajectory
AI Frontiers
Watch KPMG’s leaders share their views on harnessing the power of AI to unlock unprecedented value and solve seemingly impenetrable problems in the latest episodes of AI Frontiers produced by Reuters Plus
Driving growth with Financial Services
- RBI advisory on AI-ACT&RS
- Implications of the RBI's ACPIR framework
- Navigating the next wave of financial reporting and transfer pricing developments
- Enabling future decisions with data-driven finance
- Disciplined deployment and long-term returns
- RBI Investment Portfolio Amendments, 2026
- RBI ACPIR and SA-CR Directions, 2026
- Regulations address systemic risk at the source
- The move to AI-first banking starts with steady steps
- Trends in financial reporting
- Reimagine: Securitites market through data synergy
- Digital transformation and scale in Indian banking
- Business Today Banking and Economy Summit
- CDSL's reimagine: Securities Market through data synergy
- Resilience in global uncertainty
- Embedded Finance, Powered by AI
- Microsoft AI and Cloud Innovation roundtable
- KPMG at The CFO Board
- ET NOW BFSI Leadership Summit 2025
- Bank CFO Meet
- KPMG in India at Shiprocket SHIVIR
- NBFC and HFCs: Collaboration models in a changing credit landscape
- Earth Summit
- RBI Eases FEMA Rules, Extends Export Credit Timelines
- Karnataka Annual CFO Conclave 2025
- The Innovation Edge: Driving the Next Wave of Banking with Agentic AI
- SAP Spend Connect 2025
- Global Fintech Fest 2025
- Kerala Banking & NBFC Summit 2025
- CFO Advisory breakfast session
- Recent accounting and finance developments
- Recent trends on Accounting and Financial Reporting matters-Q2
- Financial Services and its future readiness
- Digital Innovation in Financial Services
- Centre for Advance Financial Research and Learning (CAFRAL)
While, businesses are experiencing meaningful value from AI, most are concerned about data security, privacy and AI induced risks.
Recent RBI advisories rightly focuses on the two important aspects:
- Having strong governance for responsible and safe use of AI and
- Strengthening capabilities against AI accelerated cyberattacks.
- Rajosik Banerjee
- Amitava Mukherjee
- Somdeb Sengupta
- Venkateswaran Narayanan
The true impact of ECL goes far beyond finance and accounting. It will reshape business models, ICAAP, ALM, portfolio strategy, and regulatory compliance, compelling banks to embed risk thinking into every layer of decision-making.
The new regulations should not be looked as mere change in provisioning norms - it gives financial institutions a powerful tool for forward looking decision making. Making informed choices at every stage of customer lifecycle - origination to collections as well as nuanced portfolio strategy can give banks real competitive advantage.
Venkateswaran Narayanan
Partner, Finance Advisory
KPMG in India
After a decade of submitting proforma Ind AS financial statements to the Reserve Bank of India (RBI), banks in India are set to implement ECL & EIR from FY 2027-28. The implementation of ECL & EIR presents the opportunity to harmonise financial, risk & regulatory reporting in the areas of provisioning, credit risk management & periodic regulatory submissions. The implementation is expected to have a lot of rigor in the areas of data, process & governance as these will be subject to audit.
- Rahul Chandran
- Ratheen Baxi
Rahul Chandran
Partner, Finance Advisory
KPMG in India
As India prepares to align with the global reporting landscape through Ind AS 118, mirroring the principles of IFRS 18, finance leaders are gearing up for one of the most significant changes to financial reporting in recent years. It is imperative for organisations to revisit their chart of accounts, financial statement presentation, performance measures, and reporting governance frameworks.
It is also crucial to explore the impact on close, consolidation, planning, and external reporting processes, as well as the role of technology and data in enabling compliance. As organisations prepare for adoption, success will depend on collaboration across finance, business and technology functions.. The transition to IFRS 18 / Ind AS 118 is not just about compliance - it is an opportunity to enhance transparency, consistency, and the quality of financial reporting.
Ratheen Baxi
Partner, Finance Advisory
KPMG in India
As organisations adapt to changing regulatory requirements, the focus is not only on accounting and disclosures but also on the technology that enables effective financial reporting. This is a timely moment for organisations to evaluate dedicated financial statement preparation and reporting tools.
Some of the commonly used reporting solutions in India consist of features such as consolidation assistance, workflow management, audit trails, and seamless integration with source systems. These tools can reduce manual effort, strengthen governance, improve reporting accuracy, and accelerate the financial statement preparation process. As reporting requirements continue to evolve, technology is becoming a critical enabler of a more efficient controlled, and future-ready finance function.
The finance function is undergoing a fundamental shift from reporting past performance to enabling future decisions. Cloud platforms, AI, and data-driven insights are helping organisations accelerate financial close, strengthen governance, improve spend visibility, and support more informed decision-making. As businesses continue to navigate growth and market uncertainty, building an intelligent and connected finance organisation will be critical to driving agility, resilience, and long-term value creation.
In an environment marked by persistent uncertainty and heightened scrutiny on returns, private equity and asset management firms are increasingly focused on disciplined capital deployment and driving tangible value from existing portfolios tangible value from existing portfolios.
In India, strong underlying growth, deepening private markets and sustained investor interest continue to create opportunities, even as firms remain selective in their investment approach. The ability to combine sector expertise, operational transformation and AI-led insights will be critical to unlocking value, navigating market cycles and delivering consistent, long-term returns.
RBI has amended the Investment Portfolio Directions to align banks’ investment books with the new ECL & EIR framework, effective 1 April 2027.
Key shifts:
- HTM & AFS (debt) brought under Stage‑wise ECL provisioning
- Mandatory use of Effective Interest Rate (EIR) and amortised cost
- Fair value reset on 31‑Mar‑2027, with transition impact routed to reserves (not P&L)
- Stronger linkage between NPAs and NPIs and tighter income recognition for Stage 3
Key note: Entire investment will be carried on EIR effective April 2027, unlike in the case of existing loan portfolio, transition to EIR extended till Mar 2030. However new loans will be on EIR from April 2027
Net effect: A decisive move towards credit‑risk‑sensitive accounting, aligning loan and investment books under a common prudential framework.
Regulations address systemic risk at the source. For state government loans, norms hinge on exposure and capital adequacy. Guarantees ease exposure limits but still require capital. The NBFC draft is unlikely to change outcomes in the near to mid term.
The shift to AI-first banking will not happen overnight. It is a steady reimagining of how banks operate and create value.
We are already seeing banks move beyond basic automation toward enterprise-wide AI adoption.
But strategic judgement will remain firmly human. Wherever judgment, governance and compliance are involved, people will need to step in. Regulated environments demand accountability, and that responsibility cannot be handed over to machines
Good financial reporting is no longer about meeting deadlines at year end. It is about building discipline, trust and clear communication throughout the year.
Over the past few quarters, the themes for financial reporting have evolved - from Ind AS 118 and its impact on financial statements, to labour codes, and now to recent financial reporting trends, year‑end reminders, and regulatory expectations including Effective Communication Between Statutory Auditors and Those Charged with Governance (TCWG). What stood out in our breakfast session was how much the focus has shifted from just compliance to quality, clarity, and governance.
Financial reporting is moving rapidly. Expectations from boards, regulators, and stakeholders continue to rise. Timelines are getting tighter. Disclosures are getting deeper. And communication - especially between statutory auditors and TCWG - is becoming more important than ever with an objective to strengthen oversight and improve audit quality.
Human intelligence has driven modern economies; the next phase of growth will depend on how well we harness intelligent data. As this report suggests, data risk is market risk. Treating data as core market infrastructure is critical for India to sustain market leadership and investor confidence.
As global banking leaders respond to rising operational and regulatory costs by pursuing scale and strategic M&A, the same imperative is increasingly shaping the Indian banking sector. For India, scale is not just about size - it is a catalyst for expanding distribution, accelerating digital transformation and enhancing cost efficiency. As banks deepen their investments in technology and modernize their operating models, selective consolidation and partnership‑led growth can unlock new markets, strengthen value propositions and build long‑term competitive resilience in a fast‑evolving financial ecosystem.
- Manoj Kumar Vijai
- Sanjay Doshi
In today’s environment where innovation cycles compress faster than ever and market dynamics shift in real time, a few insights stood out unmistakably:
- Data is no longer a support function - it is the operating system of modern securities markets
- Velocity, reliability, and machine-scale decisioning now define competitive advantage
- Organisations that can break silos, reduce human latency, embed data into their cultural fabric are the ones that will lead the next decade and capture the market’s confidence with valuation premiums.
In times of global uncertainity, resilience becomes a true competitive advantage. As I reflect on the recent 5th Directors Meet in Mumbai, it’s clear that India is navigating global volatility with a steady hand and a long-term view. While our markets may have trailed some global indices during last year’s AI-driven surge, the underlying story is far more strategic.
When foreign capital redirected toward the global AI momentum, India's domestic investors demonstrated remarkable conviction, providing the stability our markets needed. Coupled with forward-looking reforms - from the new data protection framework to progressive labour code updates - India continues to strengthen its economic architecture for the future.
The Indian fintech sector has been a defining force in reshaping how financial services are accessed and consumed. Over the last decade, companies in fintech have solved critical issues in payments and lending, and financial inclusion.
However, the journey ahead demands a shift from addressing isolated challenges; it calls for building integrated value propositions that transcend silos. Embedded finance offers precisely this opportunity, enabling fintechs to weave financial services seamlessly into everyday user experiences, creating an enduring impact for the broader ecosystem. AI is increasingly becoming core to this movement, unlocking unprecedented potential to scale intelligence across operations.
Initial resistance to AI gave way to recognition that investigations and forensics now operate on an AI-plus-human model. AI strengthens detection and analysis but human judgement defines accountability and strategy.
- Jiten Chopra
- Gautam Bhattarcharya
Operational excellence is won in the middle office. This is where strategy becomes execution and where critical capabilities such as R&D, risk, data and compliance come together. When the middle office is weak, organisations face fragmentation and slow decision-making. When it is strong, it aligns core processes to business priorities and enables the organisation to move with speed and clarity.
Targeted investment in the middle office strengthens innovation, improves control and creates a stable platform for growth. It allows client-facing teams to perform at their best and operational teams to deliver with consistency. A disciplined, well-run middle office is not a support function. It is a competitive advantage.
We are moving from digital finance to autonomous finance enabled through Agentic AI, wherein a group of Agents in tandem with a human in the loop, would take decisions through collaboration, chasing a goal or an objective, leveraging self-correcting & evolutionary techniques.
- Manoj Kumar Vijai
- Sanjay Doshi
- Vishnu Pillai
- Rohan Rao
- Ankit Bheda
India is entering a phase of strong optimism and capital inflows, but true financial leadership lies in ensuring that this capital is not just fast-moving, but sustainable and stable. The next growth arc will be defined by how well we balance opportunity with resilience - making sure the funds we attract are sticky, long-term, and aligned with India’s strategic edge.
NBFCs have consistently stepped in where traditional banking hesitated — from financing used vehicles in the 1990s to housing and MSMEs today - and that willingness to serve emerging segments has made them indispensable to India’s growth story. With MSMEs now at the heart of economic expansion, the outlook for NBFC-led credit remains positive and structurally strong.
We are witnessing a fundamental shift where domestic family offices and Indian investors are increasingly driving the growth of private capital. With larger fund sizes and deeper institutional participation, the real question now is not whether domestic capital can lead India’s growth story, but how quickly we can build the scale and confidence to make it the primary engine of long-term economic development.
Ankit Bheda
Partner, TS-FDD
KPMG in India
We now stand at the next inflection point where smarter portfolio and sharper insights will define the who leads the next decade. At KPMG, we see the next phase of transformation for industry shall be driven by three forces:
- Technology as the core engine
- Data as the new competitive moat
- Evolving investor preferences
- Rajosik Banerjee
- Ritesh Goyal
Practical challenges and industry readiness
Embracing the new RBI directions for asset classification, provisioning, and income recognition is crucial for our financial stability.. By implementing forward-looking Expected Credit Loss (ECL), robust control frameworks, and mandatory disclosures, we are setting the stage for a resilient and transparent banking system. Emphasis lies in high quality granular data, consistent definitions, appropriate modeling, aligning relevant system and operations which will be key to the implementation.
Ritesh Goyal
Partner, Audit-FS
KPMG in India
Navigating RBI's ECL draft circular, insights, challenges and opportunities
RBI’s Expected Credit Loss (ECL) draft directions highlight a significant move from the incurred-loss model to a forward-looking provisioning framework.
Key takeaways:
- Regulatory intent – Strengthening credit risk management, aligning with global best practices, and driving greater transparency in financial reporting.
- Industry view – A welcome transition from delayed risk recognition under IRACP norms to predictive models leveraging PD, LGD, and EAD for early detection and resilience.
- Clarifications awaited – Treatment of comparative periods for disclosures, calibration of prudential floors and governance for model validation, to name a few.
Despite challenges in data readiness, model risk management, SICR assessment for legacy portfolios, and capital impact during transition confidence remains high as institutions gear up for this transformation. This shift also opens new opportunities: enhanced capital planning, improved risk sensitivity, and global comparability.
One clear takeaway is that ECL is not just about compliance—it’s a strategic evolution toward resilience and proactive risk management.
Amit Singh
Partner - CF
KPMG in India
The D2C scorecard: Metrics that make investors swipe right
Point to note for all D2C brands and founders is that investors look for clarity, customer obsession, strong retention that compounds. Metrices are as important as clarity in founders' mind about the purpose.
The collaboration models emerging between Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) are redefining how credit is delivered in India. Our discussion focused on several pivotal themes: how banks and NBFCs can jointly manage the borrower lifecycle, the importance of technology in making co-lending truly scalable, the growing alignment of NBFCs with India’s Sustainable Development Goal (SDG) priorities, and the need to strengthen domestic financing through a deeper bond market.
NBFCs remain essential to India's credit engine because they reach segments that are still outside the formal system. When they work in concert with banks, consumers gain broader access and greater flexibility across financial products. These partnerships are laying the foundation for a more inclusive and resilient credit ecosystem.
Sidharth Ravishankar
Partner, C&O-FS
KPMG in India
Rural Finance & Credit Acceleration
Access to timely and well-priced credit is critical to propel the rural economy. Despite lender availability, structural challenges to borrower data, simplified processes, and last-mile delivery are limiting granular credit growth. With strong policy intent, alternative data points (household score, image-based patterns, satellite information), and digital infrastructure, we are well poised to make transformative changes to boost rural credit and consequentially accelerate the rural growth engine.
The RBI’s measures give exporters timely breathing space at a moment when cash cycles are tightening due to tariffs and delayed realisations. Extending repayment timelines and easing credit terms will directly help companies manage working capital without disrupting production plans. It’s a practical intervention that stabilises sentiment in the near term, and the next thing industry is now watching closely is the tariff rationalisation announcement — because that will ultimately decide cost competitiveness and planning the future.
Over the past few decades, the finance function has undergone a profound transformation, evolving from a custodian of numbers to a strategic partner that drives growth, insight, and innovation. Gone are the days when finance merely reported the past; today, it is shaping the future.
AI is no longer just a tool for efficiency. It has become the engine powering this transformation. Indian enterprises are embedding AI into their core financial strategies by unifying data across ERP and CRM systems, applying advanced analytics, and fostering a culture of digital fluency. CFOs are using AI and machine learning to move from reactive reporting to predictive and prescriptive insights, from manual processes to intelligent automation, and from a focus on cost control to one on value creation.
As adoption scales responsibly, finance leaders are unlocking new sources of enterprise value while redefining the role of finance as a driver of business resilience and inclusive growth. This transformation is helping position India as a trusted global hub for AI-led financial innovation and progress.
Most banking institutions already have analytics and process automation. The next phase is decision autonomy, where systems learn, act, and adapt in real time.
Banks can consider three key models of AI adoption:
- Smart Overlays – deploying AI agents over existing systems to improve efficiency.
- Agents by Design – re-engineering processes and modernising legacy platforms.
- Autonomous Networks – enabling multiple agents to plan, reason, and act collaboratively.
Agentic AI demands observability. You must monitor how agents behave and make decisions. Decision intelligence must be built responsibly, with architecture, explainability, and ethics at its core.
Shreepati Shenoy
Partner TE-SAP
KPMG in India
Building a future-ready finance function is about creating value with purpose. It is not just digital adoption or analytics, it is about building trust through sharper insights and smarter decisions. Finance, at its best, becomes the compass that helps businesses stay resilient and forward-looking
- Vishnu Pillai
- Akhilesh Tuteja
- Kunal Pande
- Nitin Saxena
Digital credit infrastructure: Are we ready for the next 100 million borrowers?
A good credit system is more than finance; it’s a combination of technology, governance, ethics, and trust. Scale alone doesn’t matter. It’s the responsible, inclusive, and resilient design that determines long-term impact.
Guardrails for responsible implementation of AI in securities markets
Responsible AI must be anchored in governance by design, supported by strong capacity across data, models, technology, and people skills to manage risks.
Equally important is a balanced regulatory approach - targeting high-risk areas while enabling innovation to thrive responsibly in the evolving AI-driven securities market ecosystem.
Responsible and ethical data sourcing for AI deployment
With the IndiaAI Mission and the RBI's free AI framework, India has already laid the groundwork for governing ethical data sourcing at scale. Given our diversity and the remarkable pace of last-mile digital adoption, we are not just witnessing transformation — we are shaping it. India now stands uniquely positioned to lead the world in building AI that is both ethical and responsible by design.
- Amrish Chaudhary
- Rahul Chandran
As the regulatory and reporting landscape continues to evolve, it's essential for finance leaders to stay ahead of the curve. This quarter, we focused on the global adoption strategies for IFRS 18, SEBI’s enhanced framework on Related Party Transactions, and key tax updates including developments in the Direct Tax Code and GST.
Rahul Chandran
Partner, Finance Advisory
KPMG in India
IFRS 18 marks a significant shift in how financial performance is communicated. During the session, we explored practical challenges to this global adoption, key transition considerations, and how organisations can align their reporting frameworks to meet evolving stakeholder expectations.
Vinay Gulati
Partner, Finance Advisory
KPMG in India
With a rehash of the income statement and significant new disclosure requirements including MPMs (Management defined performance measures), IFRS 18 will be a strategic shift in how performance is communicated to the key stakeholders. Early planning could help in unlocking better insights.
Akash Loonia
Partner, Finance Advisory
KPMG in India
Whilst changes in financial statement presentation and disclosures as per Ind AS 118 would be effective 1 April 2027 onwards, starting early is critical to ensure appropriate changes are made in the accounting systems and processes. Companies should watch out for the consequential changes to Division II of Schedule III to the Companies Act 2013 and SEBI LODR formats alongside evolving interpretations on the topic.
Inspiring to see so many leaders from the financial services tech and digital world come together with clarity and purpose. Financial services is transforming fast, and future readiness will depend on how we continue to connect, collaborate, and lead with intent. True to its theme, the third edition of the huddle was more than an event; it was a step toward building institutions truly prepared for what lies ahead. We will aim to continue this journey together.
Had an enriching exchange with S. Ganeshkumar Sir on the evolution of India’s financial sector over the past three decades. We agreed that digital innovation must continue to enhance convenience and value, while keeping interoperability, customer-centricity, affordability, and resilience at the core. Regulatory initiatives - like sandboxes and directional guidance - play a pivotal role in balancing innovation with systemic safety and stability. Crucially, sustained collaboration among regulated entities, fintechs, regulators, and government is key to accelerating inclusive, well-calibrated financial transformation.
Crisis management: Business continuity management metrics and methodologies
An organisation’s ability to respond effectively to crises is not only dependent on up to date and tested capability but also people confidence on the same. The session focused on how institutions can move beyond documented business continuity plans and instead build a metrics-driven, leadership-enabled continuity framework. The discussion brought out how measurable metrics on
- IT setup health
- Disaster recovery and data availability
- Regular scenario-based drills, and
- Readiness of people, including leadership
go a long way in sustaining preparedness and building confidence towards prompt and effective response.
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