Issue: 1260
· BoB, BoI, PNB see 350 bps
credit-deposit gap widen.
· Moody’s report suggests
India’s private credit market could double by FY30.
· Banks bet on Gulf, Singapore
and Hong Kong to drive FCNR (B) flows.
· Ujjivan SFB raises FCNR(B)
deposit rate to 7.50% after RBI eases norms.
· Govt ramps up share sale plans
to cushion budget from oil price impact.
· Arattai to drop
username-based accounts after Centre halts WhatsApp username rollout.
Japan bets Rs.1 lakh crore
on India: Manufacturing, AI and semiconductors lead 120 new India-Japan deals: Japan is significantly
expanding its economic footprint in India, with investments worth nearly Rs.1
lakh crore spread across manufacturing, semiconductors, artificial intelligence
(AI), green energy, finance and digital infrastructure. The investment push
comes alongside 120 Memorandums of Understanding (MoUs) signed between India
and Japan since August 2025, signalling that the bilateral relationship is
evolving beyond trade into a broader technology and strategic partnership. The
projects span multiple states, including Haryana, Gujarat, Maharashtra,
Telangana, Assam and Meghalaya, and reflect India's growing importance in
Japan's efforts to diversify supply chains and strengthen economic cooperation
in the Indo-Pacific.
(Business Today)
India’s rupee denominated
external debt up 10 percentage points over the last 15 years: India’s external debt profile
has undergone a notable shift over the past decade and a half, with the share
of rupee-denominated liabilities rising by 10.6 percentage points. Analysis of
the data from the Reserve Bank of India (RBI) and the Department of Economic
Affairs (DEA) shows that rupee-denominated debt accounted for 29.4 per cent of
India’s external debt at the end of March 2026, compared with 18.8 per cent at
the end of March 2011.
(Business Line)
US unemployment rate drops
to 4.2% though employers added 57,000 jobs: The US unemployment rate fell
to 4.2% in June from 4.3% in May, even as employers added fewer jobs than
expected. According to the US Bureau of Labor Statistics (BLS), nonfarm
payrolls increased by 57,000 jobs in June, well below the 110,000 jobs economists
had expected in a Reuters poll. Payroll growth was also sharply lower than the
revised 129,000 jobs added in May. The May figure was revised down from
172,000, but April payroll growth was lowered from 179,000 to 148,000, bringing
total revisions for the two months to 74,000 fewer jobs than previously
reported.
(Financial Express)
SBI targets Rs 1.20 lakh
crore in fresh home loans in FY27: State Bank of India (SBI) is
targeting Rs 1.20 lakh crore in fresh home loan disbursements during the
current financial year, aiming to increase its market share by one percentage
point in one of the fastest-growing retail lending segments. With the planned
addition, the country’s largest lender expects its home loan portfolio to rise
to Rs 10.64 lakh crore by the end of FY27 from Rs 9.44 lakh crore as of March
31, 2026. “The bank’s retail loans,
including housing and non-housing, grew about 15% in FY26 over the previous
year, and we are seeing strong demand in the current fiscal as well. We are
projecting to increase our home loan book by Rs 1.20 lakh crore in FY27,” said
SBI Managing Director Rama Mohan Rao Amara, who oversees the bank’s retail
business.
(Financial Express)
Microfinance & gold
rewriting Axis Bharat Banking loan book: Axis Bank is witnessing a
shift in the composition of its Bharat Banking portfolio covering rural and
semi-urban regions — a reduction in the dominance of traditional farm lending
as newer segments such as gold loans and microfinance grow at a faster pace. In
the near term, the bank expects the change in the product mix to deepen and
strengthen its profitability as well, Group Head-Bharat Banking Bipin Saraf
said. Farmer finance and Bharat Enterprise remain the two largest segments
within the portfolio, though with a lower share. The share of farmer finance
declined to 37% at the end of March from 43% a year ago while Bharat Enterprise
— which finances the broader rural value chain including warehouses, traders
and processors — fell to 29% from 32%.
(Financial Express)
Bank of Baroda to pay $600
million to settle NMC Health insolvency claims: Bank of Baroda has agreed to a
$600 million settlement with administrators of the insolvent NMC Health Plc.
The bank faced allegations of gross negligence, failing to conduct proper due
diligence, and allowing fraudulent transactions without adhering to anti-money
laundering and KYC norms. This payout, significantly exceeding its reported
exposure, aims to resolve claims from NMC Health and its affiliates, stemming
from a fraud discovered between 2012-2020.
(Economic Times)
Banks' loan growth outpaces
deposit growth in Q1 across public, pvt lenders: Commercial banks that have
announced their business updates for the April-June quarter of the current
financial year showed loan growth outpaced deposit growth. Punjab National Bank
posted 11.74 per cent year-on-year (Y-o-Y) growth in domestic advances to 12.06
trillion as of June 30, 2026, while domestic deposits grew 8.63 per cent Y-o-Y
to 16.70 trillion. Another large public sector bank (PSB), Bank of Baroda, saw
its domestic advances grow 16.14 per cent Y-o-Y to 11.51 trillion and domestic
deposits increase 14.74 per cent Y-o-Y to 13.82 trillion as of June 30, 2026.
(Business Standard)
RBI keeps 8.05% bond rate
unchanged: RBI
has kept the interest rate on its Floating Rate Savings Bond (FRSB) unchanged
at 8.05 per cent for the next six months, giving investors a state-backed
fixed-income option that offers higher returns than several popular savings schemes
and bank fixed deposits. The RBI said the coupon rate on the Floating Rate
Savings Bond 2020 (Taxable) from July 1 to December 31, 2026, will remain at
8.05 per cent. The rate remains unchanged
because the bond’s return is linked to the National Savings Certificate (NSC)
interest rate. The government recently retained the NSC rate at 7.7 per cent
for the second quarter of financial year 2026-27. The RBI bond carries a 0.35
per cent additional spread over the NSC rate, keeping its coupon at 8.05 per
cent.
(Business Standard)
Adani Enterprises, Abu
Dhabi's IRH to invest $11.5 billion in Odisha: Adani Enterprises Ltd (AEL) and Abu Dhabi-based
International Resources Holding (IRH), a unit of IHC group company, on Thursday
signed a deal with the Odisha government to set up an integrated aluminium
project for a proposed investment of $11.5 billion (about Rs.1.08 trillion). Billed
as India’s largest foreign direct investment (FDI) in mining and metallurgy and
the biggest FDI proposal for Odisha, the project will be developed through a
50:50 joint venture between AEL and IRH. It is expected to position the
mineral-rich state as a key player in the global aluminium supply chain, while
significantly strengthening India’s ambitions of becoming a global hub for
value-added aluminium manufacturing.
(Business Standard)
After WhatsApp, IT Ministry
sends notices to Telegram, Signal: After sending a notice to WhatsApp, the IT
Ministry has now sent a notice to Telegram and Signal, raising questions on
their existing username feature and asking how the platforms are addressing
concerns related to fraud and impersonation, according to a source. Sources
said that in the notice to Telegram, the government has asked the platform why
it should be allowed to retain the username feature. On Wednesday, the Centre
issued a notice to Meta over the username feature on WhatsApp, citing concerns
that it could materially increase online fraud, phishing, digital arrest scams,
and impersonation attacks. It had also directed WhatsApp to pause the feature
until consultations on the issue are completed "to the satisfaction of the
Government".
(Business Standard)
West Asia crisis
caused Rs.74,781 cr loss on fuel sales for oil firms: Puri: State-run oil marketing companies (OMCs)
incurred losses of Rs.74,781 crore on the sale of petrol, diesel and liquefied
petroleum gas (LPG) up to June 30 as a spike in global crude oil prices raised
input costs, Union Petroleum Minister Hardeep Singh Puri said on Thursday. Speaking
to reporters, Puri said the losses were linked to the sharp rise in
international crude prices during the West Asia conflict, even as fuel
continued to be sold domestically at prices below cost. He said that although
global crude prices have eased in recent weeks, the impact of the earlier surge
is still being felt because refiners are processing crude purchased when prices
were significantly higher.
(Business Standard)
SEBI plans shift to
INR-denominated fees for FPI, FVCI: The Securities and Exchange
Board of India (SEBI) has decided to shift the payment of registration and
related fees by Foreign Portfolio Investors (FPIs) and Foreign Venture Capital
Investors (FVCIs) from US dollars to Indian rupees, with the changes set to be
implemented within six months of the notification.Fees will be specified in
rupee terms, while FPIs and FVCIs will continue to pay the equivalent amount in
eligible foreign exchange to their Designated Depository Participant (DDP).
(Business Line)
IBBI proposes recovery
clarity for guarantors, tighter valuation norms: The Insolvency and Bankruptcy
Board of India (IBBI) on Thursday proposed operationalising the recent
withdrawal of interim moratorium protection for personal guarantors while
tightening the valuation framework by requiring creditors’ approval for
appointing valuers and keeping valuation reports confidential until resolution
plans are received. In a discussion paper, the insolvency regulator said, “The
proposals are aimed at plugging identified gaps, reducing procedural
uncertainty, and aligning the regulatory framework with legislative
developments under the Amendment Act, 2026.” Earlier, an interim moratorium
came into effect from the time an insolvency application was filed against a
personal guarantor. This prevented creditors from continuing recovery
proceedings while the application was pending. To prevent misuse of this
provision, the Insolvency and Bankruptcy Code (Amendment) Act, 2026, removed the
automatic interim moratorium.
(Business Standard)
PF above Rs.1,800
now formally voluntary: What changes under EPF Scheme 2026: The Centre has notified the EPF Scheme,
2026, clarifying that contributions above the statutory EPF limit of Rs 1,800 a
month are voluntary. While this has been the practice in many organisations,
the new scheme explicitly incorporates it into the legal framework and removes
ambiguity for employers and employees alike. The change does not alter the
statutory wage ceiling of Rs 15,000 a month or the mandatory contribution rate
of 12 per cent. Instead, it formally distinguishes between mandatory EPF
contributions and any additional contributions made on salaries above the wage
ceiling. The notification also introduces another significant change for nearly
80 million EPF members by simplifying advance withdrawal rules, reducing
categories from 13 to just three. Under the earlier EPF framework, employers
were legally required to contribute 12 per cent of the statutory wage ceiling,
which works out to Rs 1,800 a month. However, many companies voluntarily
calculated EPF contributions on an employee’s full basic salary, resulting in
much higher deductions for both the employee and employer.
(Business Standard)
CROWDING OUT EFFECT
·
A situation when increased
interest rates lead to a reduction in private investment spending such that it
dampens the initial increase of total investment spending is called crowding
out effect.
·
Sometimes, government adopts
an expansionary fiscal policy stance and increases its spending to boost the
economic activity. This leads to an increase in interest rates. Increased
interest rates affect private investment decisions. A high magnitude of the
crowding out effect may even lead to lesser income in the economy.
·
With higher interest rates,
the cost for funds to be invested increases and affects their accessibility to
debt financing mechanisms. This leads to lesser investment ultimately and
crowds out the impact of the initial rise in the total investment spending.
Usually the initial increase in government spending is funded using higher
taxes or borrowing on part of the government.
RBI KEY RATES
Repo
Rate: 5.25%
SDF:
5.00%
MSF
/Bank Rate: 5.50%
CRR:
3.00%
SLR:
18.00%
FOREX RATES (RBI REF. RATE)
INR
/ 1 USD : 95.2731
INR
/ 1 GBP : 126.6637
INR
/ 1 EUR : 108.4957
INR
/100 JPY: 58.7200
EQUITY INDEX
Sensex:
77502.12 (+579.48)
NIFTY:
24175.70 (+169.85)
Bnk NIFTY: 58031.65 (-1.40)
International Plastic Bag Free Day: July 3rd is
primarily celebrated globally as International Plastic Bag Free Day, dedicated
to eliminating single-use plastic bags. Depending on your location and
interests, it is also observed as a national holiday, a religious feast day,
and a day for global campaigns.
Historical events: July 3 is a
pivotal date in history, marked by major political agreements, the arrest of a
key freedom fighter, and the births of globally renowned figures. Notably, it
is the day the Shimla Agreement was signed between India and Pakistan in 1972.
****Have a nice
Day****
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