Issue: 1341
· Big tech companies flag
concerns over India’s proposed Digital Competition Bill.
· Air Marshal Ashutosh Dixit
appointed new Chief of Indian Air Force.
· Mukesh Ambani’s Jio Platforms
plans $3.8 billion IPO on October 21.
· India services PMI climbs to
55.2 in September as domestic demand strengthens.
· UP, Maharashtra & Gujarat
account for 45% of residential rooftop solar capacity in September.
· RBI seen beginning rate-hike
cycle, repo rate may reach 6% by FY27 as inflation risks rise: Reports.
· Domestic banks tighten grip
on equity deals as fundraising surges.
RBI likely to hike rates
for the first time since February 2023 in battle against inflation: After 21 consecutive monetary policy committee
(MPC) meetings without a rate hike, the Reserve Bank of India (RBI) is on
October 7 expected to raise the repo rate by 25 basis points to 5.5 percent. Elevated crude prices,
tighter global financial conditions and a weak rupee are complicating the
inflation outlook and will likely drive the hike. With the hike largely priced
in, markets will focus on the RBI’s guidance on the pace and depth of the
tightening cycle, its inflation and growth assessments and strategy to manage
surplus liquidity.
(Moneycontrol)
World Bank ups India’s
growth to 7.1% in FY27: The World Bank on Tuesday raised India’s growth
forecast for current fiscal by 50 basis points to 7.1 per cent. However, it
cautioned that growth during the second half of the current fiscal year is
likely to slow down. In its latest India Development Update, the multilateral
agency noted that medium-term prospects are strong but also cautioned that
“external risks are elevated, including downside risks related to global oil
prices, El Nino and stock market corrections that would result in capital flow
volatility.” Last month, the Asian Development Bank (ADB) and the OECD and
other global agencies like S&P and Fitch raised India’s FY27 GDP growth
projection to around 7 per cent.
(Business Line)
Govt notifies 375
permissible works under VB-G RAM G, expands scope by 41%: The Centre has notified 375
permissible works under the new rural employment framework, with a greater
emphasis on livelihood infrastructure, water security and disaster
preparedness, expanding the list of works by 41 per cent over the previous
scheme. The Ministry of Rural Development said the new schedule, under the Viksit
Bharat Guarantee for Rozgar and Ajeevika Mission (VB-G RAM G) Gramin Act, 2025,
divides the works into four categories -- water security, core rural
infrastructure, livelihood-related infrastructure, and special works for
extreme weather events and disaster preparedness.
(Business Line)
UPI payments could soon
offer a monthly window into India’s classrooms and hospitals: India’s UPI payments could
soon do more than capture how consumers spend. The transaction data could also
help the government track activity across the country’s schools, colleges,
hospitals and clinics, under a proposal by the Ministry of Statistics and Programme
Implementation (MoSPI). MoSPI has proposed using UPI
transactions classified by merchant category codes as a high-frequency
indicator of private and household spending on education and healthcare, as it
looks to expand the coverage of its newly introduced Index of Services
Production. Education and human health and
residential-care activities together account for a little over 10 percent of
services-sector gross value added (GVA). Education accounts for 7.2 percent,
while health and residential care contribute nearly 3 percent.
(Moneycontrol)
RBI steps on the gas to
drain out surplus liquidity; to conduct VRRR auction for Rs.3 lakh cr: RBI is stepping on the gas to
drain out surplus liquidity from the banking system. The central bank said it
will conduct a one-day Variable Rate Reverse Repo (VRRR) auction to absorb Rs.3
lakh crore on Wednesday. The VRRR auction announcement, coming on the heels of
a one-day VRRR auction for Rs.2.50 lakh crore conducted on Tuesday, is
significant as it will be conducted on a day when the RBI’s rate setting
committee is expected to announce a 25 basis points repo rate hike. The
rate hike will require tighter liquidity conditions for it to get transmitted
in the financial system -- money markets and loans and deposits. As on October
5, the banking system had surplus liquidity of Rs.5,30,096 crore, according to
the latest RBI data.
(Business Line)
NBFCs log 15.8% credit
growth in August 2026 on the back of loans to retail and agri segments: NBFCs reported a strong 15.8
per cent year-on-year (yoy) growth in credit in August 2026 as compared to 10
per cent a year ago, on the back of a robust pick-up in retail loans,
especially housing loans, loans against gold jewellery and consumer durables
loans, and loans to agriculture and allied activities. While credit to industry
grew marginally, credit to services decelerated, according to RBI data on
sectoral deployment of credit by NBFCs for August 2026. Retail loans growth
accelerated to 22 per cent (yoy) in August 2026 compared to 13.6 per cent a
year ago.
(Business Line)
Indian banks set for strong
Q2 FY27 earnings on robust credit growth: Indian banks are likely to see
a pickup in earnings momentum during the second quarter of FY27, supported by
strong credit growth and stable or lower provisioning costs, even as elevated
liquidity and a changing deposit mix are expected to keep pressure on net
interest margins (NIMs), according to a Systematix Research report. The
brokerage expects earnings growth across its banking coverage universe to
accelerate to 14.9 per cent year-on-year in Q2 FY27.
(Business Line)
Rupee hits two-month low
amid foreign outflows, higher oil prices: The Indian rupee weakened to a
two-month low on Tuesday as foreign investors continued to sell. It finally
closed at 96.43 against the dollar, down 13 paise from the previous session. Oil
prices hovered above $100 a barrel during the day before retracing to $98.45. A
strengthening dollar index and rising US yields further added to the pressure,
weighing on emerging-market currencies. The rupee remains the worst-performing
Asian currency this calendar year, falling 7.3%.
(Financial Express)
Banks cannot cut interest
on court-ordered FDs arbitrarily: Delhi HC: The Delhi High Court has ruled
that banks cannot arbitrarily lower the interest payable on a fixed deposit
created under a court direction. Any such reduction must be supported by a
valid basis, the High Court said. A Division Bench of Justices
Avneesh Jhingan and Shail Jain rejected an appeal filed by NatWest Markets PLC
against an order directing it to pay higher interest on a Rs.5.89 crore fixed
deposit maintained in connection with an ongoing arbitration dispute involving
Hero Exports.
(Business Standard)
Cabinet clears Rs.10,000
crore SME fund to help Indian companies scale, compete globally: The Union Cabinet on Tuesday approved a Rs.10,000-crore
government commitment to set up an SME Growth Fund aimed at providing long-term
equity capital to small and medium enterprises and helping create a new
generation of Indian companies capable of competing globally. The fund, announced
as part of the Union Budget 2026-27, will make direct equity investments in
SMEs with viable businesses and the potential to scale. The government said the
initiative is intended to address a gap in growth-stage equity funding for
SMEs. A majority of the SME Growth Fund's allocation will
go towards small and medium manufacturing-focused enter
(Business Today)
Cabinet approves Integrated
Transport & Logistics Authority for greater efficiency: The Union Cabinet on Tuesday approved the
setting up of a special purpose vehicle (SPV) — Integrated Transport &
Logistics Authority (ITLA) - to strengthen research, planning, appraisal,
monitoring and impact assessment of transportation and logistics. “The approval
seeks to address the long-standing challenges arising from fragmented planning
and implementation across multiple transport-related Ministries and agencies,”
per a statement issued by the government.
(Business Line)
Insurance brokers oppose
IRDAI commission caps, warn of 60-70% revenue hit: Insurance brokers in India are opposing
commission cap proposals from the Insurance Regulatory and Development
Authority of India. They warn that these changes could reduce their revenue
significantly and threaten many jobs. The Insurance Brokers Association of
India seeks more time to provide feedback and opposes hard caps without proper
assessments. Proposed changes aim to lower distribution costs and improve policyholder
value, according to the regulator.
(Economic Times)
GST state-centre panel
proposes 3% IGST on gold, silver and platinum imports by banks: The GST Fitment Committee has recommended
withdrawing the IGST exemption available to banks and nominated agencies on
imports of gold, silver and platinum, a move that would bring such imports
under a 3% IGST levy. The exemption was introduced for gold in 2017, following
a recommendation of the GST Council, as a trade facilitation measure for banks
and nominated agencies importing the precious metals. It was subsequently
extended to imports of silver and platinum. At present, the import of gold is a restricted
activity and is permitted through specified channels, including banks and
nominated agencies notified by the Directorate General of Foreign Trade (DGFT),
qualified jewellers through the India International Bullion Exchange (IIBX),
and eligible India-UAE Tariff Rate Quota holders through IIBX.
(Business Today)
Centre plans faceless
assessment for GST payers, to begin with assessees under central formulations: The Finance Ministry is launching a faceless
GST assessment system, initially targeting taxpayers under central
formulations. Industry experts anticipate significant benefits for multi-State
enterprises, exporters and large manufacturers. “We plan to introduce a
faceless assessment scheme in few months under GST. Initially, we would like to
bring assessees under central formations under the scheme. Later, it could be
offered to States as optional,” a top government official said here on Tuesday.
A faceless assessment scheme is already in place for Income Tax and Custom Duty
assessees.
(Business Line)
Finmin asks pvt banks to
increase participation in govt's financial inclusion schemes: The Finance Ministry on
Tuesday asked private sector banks to step up participation in financial
inclusion schemes, including PMMY and Stand Up India. Financial Services
Secretary Sanjay Lohiya urged banks to support the upcoming saturation
campaign, expand digital outreach, improve loan processing, strengthen
insurance claim awareness and address grievances.
(Economic Times)
HERSTATT RISK
§ Herstatt
risk arises when a bank pays the currency it has sold but does not receive the
currency it has purchased because its counterparty fails. The exposure can
involve the full principal amount, making it much larger than a loss caused
merely by exchange-rate movements.
§ Differences
in settlement timings across countries can increase this exposure.
Payment-versus-payment arrangements reduce the risk by ensuring that the final
transfer of one currency occurs only if the other currency is also transferred.
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 : 96.4348
INR
/ 1 GBP : 127.3756
INR
/ 1 EUR : 108.0729
INR
/100 JPY: 60.9600
EQUITY INDEX
Sensex:
73067.81 (+685.34)
NIFTY:
22776.10 (+220.35)
Bnk NIFTY: 55128.40 (+414.30)
****WISHING A NICE DAY****
Visit our website www.thebankingupdates.com
For Regular updates, Monthly e-magazines &
Promotion Study materials
CLICK HERE TO JOIN OUR COMMUNITY/GROUP FOR
DAILY UPDATES
CLICK HERE TO JOIN OUR CHANNEL FOR DAILY
UPDATES & QUIZ
Contact us: # 8261802533
Email: bankingupdates2020@gmail.com
CLICK HERE TO ORDER BANK PROMOTION KIT