Issue: 1210
· India’s bank credit grows
15.9% in FY26 to ?212.9 lakh crore, reflecting strong economic momentum.
· India sees sharp rise in cash
withdrawals, pushing currency in circulation to record ?42.3 trillion.
· Public sector banks plan to
increase IT spending amid rising cybersecurity threats.
· India likely to issue new
10-year government bond above 7% coupon, signalling rising borrowing costs amid
inflation concerns.
· Move expected to strengthen
GIFT City as a global financial hub and deepen capital markets.
Dollar softens as Middle
East ceasefire holds: The U.S. dollar edged down on
Tuesday as markets weighed developments in the Iran war, while the yen nudged
lower in muted trade after a suspected intervention by Tokyo last week sparked
sharp gains. The dollar index, which measures the U.S. currency against six
peers, was 0.03% lower at 98.437 after rising 0.3% on Monday. The euro was 0.1%
higher at $1.17005, while sterling was 0.1% higher at $1.35510.
(Mint)
RBI signals potential shift
to lower inflation target and narrower band if macro stability holds: A decade into India’s
inflation-targeting regime, the Reserve Bank of India (RBI) has opened the
door, albeit cautiously, to a possible recalibration of its inflation target
and a tighter tolerance band in the next review cycle. “If the growth-inflation
mix evolves as it has in the past 10 years—robust growth, and lower and more
stable inflation—one could perhaps consider tweaking the level of inflation and
the tolerance band a bit,” deputy governor Poonam Gupta said in a speech on
Tuesday, adding that this could justify a slightly lower inflation target and a
slightly narrower tolerance band.
(Mint)
Financial services
spearhead surge in outbound FDI, manufacturing slips: The composition of India’s
outward foreign direct investment (FDI) is shifting even as flows surge, with
financial services emerging as the dominant sector and its share rising by
12.31 percentage points between FY21 and FY26. Manufacturing’s share, on the
other hand, declined by 14.52 percentage points. The rebalancing according to
experts, reflects both India’s emergence as a service-led economy and
investors’ search for deeper, more sophisticated financial systems overseas. The
shift comes alongside a sharp increase in overseas deployment, with outward FDI
jumping to $7.06 billion in March, a 156 per cent rise from the previous month
and the highest level since at least April 2021. For FY26, outbound FDI climbed
to $46.8 billion, up from $41.6 billion in FY25. Monthly flows have broadly
stabilised in the $2 billion-7 billion range since early 2024, suggesting a
sustained, if uneven, outward investment cycle.
(Business Standard)
RBI proposes 7-year cap on
holding non-financial assets: The Reserve Bank of India (RBI)
on Tuesday said lenders may classify collateral as specified non-financial
assets (SNFAs) only when all other recovery options have been exhausted and hold
them for up to seven years. “Regulated entities may, as part of a recovery
strategy, acquire ownership of an immovable asset furnished as collateral
security,” the central bank said in draft directions on the treatment of SNFAs
acquired by banks, adding that a controlled and timely disposal of such assets
may enable the lender to maximize net recoveries “while ensuring transparency
and prudence in the recovery process”. The regulator has sought comments and
feedback on the proposals by 26 May 2026..
(Mint)
Bank LCR dips in Q4 FY26 as
deposit growth lags credit expansion; buffers remain above norms: Several banks have reported a
further decline in the liquidity coverage ratio (LCR) in the fourth quarter of
FY26 amid slowing deposit growth, banks’ earnings disclosures showed. For
instance, HDFC Bank has cut down LCR to 114% in the March quarter from 116%,
Federal Bank has decreased it to 119.9% from 123.9%, while Union Bank of India
has decreased its ratio to 113.8% from 123.6% a quarter ago. Among other large
private banks, Kotak Mahindra Bank‘s LCR fell 42 bps to 134.4%, while it stayed
flat for ICICI Bank and rose by 1% to
117% for Axis Bank. This is the second straight quarter banks reported a
fall in the LCR.
(Financial Express)
Department of Financial
Services (DFS) Approves Viability Plan 2.0 for Regional Rural Banks (RRBs): To institutionalize
performance monitoring and strengthen governance reforms in RRBs, the
Department of Financial Services (DFS) had introduced a three-year Viability
Plan covering FY 2021-22 to FY 2024-25. In view of emerging financial sector
challenges and the need for continued oversight, DFS has now approved a revised
Viability Plan 2.0 for a further period of three years from 2025-26 to 2027-28,
aimed at enhancing financial sustainability and long-term competitiveness of
RRBs. The Viability Plan 2.0 comprises a defined set of 30 performance
parameters anchored around four main key pillars viz. operational excellence,
asset quality, profitability, and growth. The key critical metrics across these
four pillars include CRAR, credit-deposit ratio, digital adoption, NPA levels,
recovery performance, profitability ratios and performance in implementation of
Government of India schemes.
(PiB)
Banks record
robust 15.9% credit growth in FY26: Finance Ministry: Indian banks saw strong credit growth of
15.9 percent in the 2025-26 fiscal year. This reflects a vibrant economy and
high demand for loans. Services, personal loans, agriculture, and industry all
contributed to this expansion. The Finance Ministry highlighted India's
resilience as the world's fastest-growing major economy amidst global
challenges.
(Economic Times)
PNB Q4 result:
Profit rises 14.4% to ?5,225 crore; asset quality improves: PNB on Tuesday reported a 14.4 per cent
year-on-year rise in net profit to ?5,225 crore for the three months ended
March 2026, driven by higher interest income. The lender had earned a net
profit of ?4,567 crore in the year-ago period. However, the bank's total income
fell to ?36,319 crore during the quarter under review from ?36,705 crore a year
ago, PNB said in a regulatory filing. On the asset quality front, the bank's
gross Non-Performing Assets (NPAs) improved to 2.95 per cent of gross advances
as compared to 3.95 per cent by the end of March 2025. Similarly, net NPAs came
down to 0.29 per cent from 0.4 per cent.
(Economic Times)
Kumar Mangalam Birla takes
over as Vodafone Idea non-executive chairman: Vodafone Idea Limited on Tuesday announced a
boardroom reshuffle, with Kumar Mangalam Birla appointed as its new non-executive
chairman, replacing Ravinder Takkar, who has stepped down from the role and
will now serve as non-executive vice chairman. The changes, effective May 5, were approved by the
company’s board and disclosed under Regulation 30 of the SEBI Listing
Regulations, the telecom operator said in a filing to exchanges. Takkar, who
had been serving as non-executive chairman, will continue on the board in a
re-designated role as vice chairman, ensuring continuity in leadership.
Meanwhile, Birla—already a non-executive director on the board—has been
elevated to lead the board as chairman.
(Moneycontrol)
Cabinet approves Ship
Repair Facility at Vadinar, Gujarat: The Cabinet Committee on Economic Affairs,
chaired by the Prime Minister Shri Narendra Modi, today has approved the
development of a state?of?the?art Ship Repair Facility at Vadinar, Gujarat,
marking a major expansion of the national ship repair ecosystem. The project
will be jointly implemented by Deendayal Port Authority (DPA) and Cochin
Shipyard Limited (CSL), with a combined investment of Rs.1,570 crore. The
project is planned as a brownfield facility with a 650 metres jetty, two large
floating dry docks, workshops and associated marine infrastructure. Vadinar’s
natural deep draft, connectivity to major shipping routes, and proximity to key
ports such as Mundra and Kandla make it an optimal location for repair
operations, particularly for large commercial and foreign?flagged vessels.
(PiB)
Tata Power’s Bhutan hydro
project gets $515 mn World Bank nod: The Bhutan government and the World Bank on
Tuesday signed financing agreements worth $515 million for the 1,125 megawatt
Dorjilung Hydroelectric Power Project being developed by a joint venture
between India’s largest private sector power company, Tata Power Co. Ltd, and
Bhutan’s state-run Druk Green Power Corp. Ltd. The project in eastern Bhutan,
once completed, is set to generate 4,500 gigawatt-hours (GWh) of clean
electricity every year, with 80% of this to be exported to India during the
peak summer season, the World Bank said in a statement..
(Mint)
ECLGS 5.0 approved: Govt to
provide credit support to MSMEs, airlines, targets ?2.55 lakh cr credit flow: The Union Cabinet has approved
the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, aiming to provide fresh
liquidity suppot to businesses impacted by global uncertainties, particularly
the ongoing West Asia crisis. The scheme seeks to facilitate an additional
credit flow of ?2.55 lakh crore, including a dedicated ?5,000 crore window for
the airline sector. The latest version of the
scheme will offer credit guarantee coverage through the National Credit
Guarantee Trustee Company Limited (NCGTC) to banks and financial institutions,
enabling them to extend additional working capital to eligible borrowers
without increasing their risk exposure. Under ECLGS 5.0, micro, small
and medium enterprises (MSMEs) will receive 100% government-backed guarantee on
incremental loans, while non-MSMEs and airlines will be covered up to 90%.Eligible
borrowers include MSMEs, non-MSMEs, and scheduled passenger airlines that had
outstanding credit facilities as of March 31, 2026, provided their accounts
were classified as standard. The scheme allows additional
credit of up to 20% of the peak working capital utilised during the fourth
quarter of FY26, capped at ?100 crore per borrower. For airlines, the support
is significantly higher—up to 100% of their outstanding credit, subject to a
cap of ?1,500 crore per borrower and specific conditions. The
guarantee cover will remain co-terminus with the loan tenure, ensuring lenders
remain protected throughout the repayment period. The scheme will apply to all
loans sanctioned from the date of notification until March 31, 2027.
(Business Today)
Cabinet approves
?10/quintal hike in sugarcane price for 2026-27 season: The Cabinet on Tuesday raised the minimum
amount that mills are legally bound to pay growers by ?10 per quintal, the
lowest in three years. After this revision, sugar mills will buy sugarcane at
the new Fair and Remunerative Price (FRP) of ?365 per quintal when they open
the factories for 2026-27 season from October. “The FRP will be ?365/quintal
for a basic recovery rate of 10.25 per cent,” Union Minister Ashwini Vaishnaw
told reporters after the Cabinet Committee on Economic Affairs (CCEA) meeting.
The approved FRP is 2.81 per cent higher than the current rate of ?355 per
quintal for 2025-26 season. In 2023-24 season, too, the government had hiked
FRP by ?10 per quintal.
(Business Line)
UIDAI joins hands with NFSU to enhance cybersecurity and digital
forensics resilience: The Unique Identification Authority of India
(UIDAI) and the National Forensic Sciences University (NFSU) have joined hands
to establish a structured, five-year collaboration in the domains of digital
forensics, cybersecurity, and advanced technology research. The
memorandum of understanding provides an umbrella framework for collaboration
and brings together two key national institutions to further strengthen cyber
resilience across UIDAI’s digital infrastructure, which underpins India’s
digital identity ecosystem.
(PiB)
FROTH
·
Froth refers to a market
condition where an asset's price begins to increase beyond its intrinsic value.
·
Froth refers to market
conditions preceding an actual market bubble, where asset prices become
detached from their underlying intrinsic values as demand for those assets
drives their prices to unsustainable levels.
·
A frothy market is
characterized by overconfident investors that ignore market fundamentals and
bid up an asset's price beyond the asset's quantitative worth.
·
Two examples of burst bubbles
include the dot-com bust of 2001 and the housing crash of 2007-08.
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 : 95.3602
INR
/ 1 GBP : 129.0020
INR
/ 1 EUR : 111.4392
INR
/100 JPY: 60.6400
EQUITY INDEX
Sensex:
77017.79 (-251.61)
NIFTY:
24032.80 (-86.50)
Bnk NIFTY: 54547.05 (-331.45)
International No
Diet Day: May 6 is
recognized as International No Diet Day, a day promoting body positivity and
health-focused education over restrictive dieting. It is also celebrated as
National Nurses Day, National Beverage Day, and for fans, it is sometimes
celebrated as "Revenge of the Sixth" or "Return of the 6th"
in the Star Wars community.
Historical
events: May 6th marks
significant milestones in history, notably the 1861 birth of Indian
independence leader Motilal Nehru, the 1529 Battle of Gogra where Babur
established Mughal control, and the 1944 unconditional release of Mahatma
Gandhi. Globally, this day saw the 1840 release of the first adhesive postage
stamp (Penny Black) in Great Britain, and the 1910 coronation of King George.
****Have a nice Day****
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