Issue: 1216
· India’s retail inflation rose
to 3.48% in April amid rising food and energy concerns.
· Export-Import Bank of India
plans to raise about $10.5 billion in FY27 through domestic and overseas
borrowings.
· RBI introduced a revised
reporting framework for offshore rupee-linked foreign exchange derivative
contracts.
· India’s food inflation
accelerated to 4.2% in April, driven by higher prices of essential commodities.
· The bullion industry proposed
measures including recycling old gold reserves to reduce India’s gold import bill
and ease forex pressure.
Retail inflation rose to
3.48% in April: Retail
inflation, based on consumer price index (CPI) rose a tad to 3.48 per cent in
April from 3.4 per cent of March, government reported on Tuesday, According to
official data, year-on-year inflation rate based on All India Consumer Food
Price Index (CFPI) for the month of April was 4.20 per cent as against 3.87 per
cent of March. Year-on-year Housing
inflation rate for the month of April, 2026 is 2.15 per cent and the
corresponding inflation rates for rural and urban are 2.65% and 1.96%,
respectively.
(Business Line)
Moody's slashes 2026 India
growth forecast to 6%: Moody's Ratings on Tuesday
slashed India's GDP growth forecast for year 2026 by 0.8 percentage points to 6
per cent on subdued private consumption, capital formation, and industrial activity
amid higher energy costs. In its Global Macro Outlook May update, Moody's said
over the next six months, the impact from higher energy prices and fuel and
fertilizer-related shortages will vary widely across countries, reflecting
differences in exposure and resilience. For calendar year 2027,
Moody's slashed India’s GDP growth estimates by 0.5 percentage points to 6 per
cent.
(Business Line)
Uday Kotak warns
self-reliant country doesn’t need to ‘depend on somebody’s money or power’;
urges companies to reinvest profits: Market veteran and celebrated
banker Uday Kotak said that India needs to reduce its dependence on foreign capital
and focus on building a strong domestic pool of long-term risk capital to achieve
true economic self-reliance. Speaking at a Confederation of Indian Industry
(CII) event, Kotak said a genuinely self-reliant country is the one that “does
not need to depend on somebody else’s money or power.” He urged companies to reinvest
profits rather than simply managing large treasury portfolios.
(Financial Express)
PSBs post record Rs 1.98
lakh crore profit in FY26: Public sector banks (PSBs)
posted a record aggregate net profit of Rs 1.98 lakh crore in 2025-2, aided by
robust credit growth, improved asset quality and stronger operational
efficiency, finance ministry said on Tuesday. The combined business of PSBs
rose 12.8% on-year to Rs 283.3 lakh crore as on March 31, 2026. Aggregate
deposits increased 10.6% to Rs 156.3 lakh crore, while gross advances grew
15.7% to Rs 127 lakh crore, reflecting sustained credit demand across sectors. Retail,
agriculture and MSME lending remained the key growth drivers during the year.
Retail advances expanded 18.1%, agriculture loans rose 15.5% and MSME credit
grew 18.2%. Asset quality of PSBs improved sharply during the year, with the
gross non-performing asset (NPA) ratio falling to a historic low of 1.93% and
the net NPA ratio declining to 0.39% as of March-end 2026. Total recoveries,
including from written-off accounts, stood at Rs 86,971 crore during the year.
All PSBs maintained a provisioning coverage ratio above 90%.The capital
position PSBs also remained comfortable, with the aggregate capital-to-risk
weighted assets ratio (CRAR) improving to 16.6%, well above the regulatory
requirement of 11.5%. PSBs raised Rs 50,551 crore during the year to support
future lending growth.
(Financial Express)
SBI approves raising $2 billion via overseas bonds amid decline in
India’s forex reserves: India’s largest domestic
lender, State Bank of India has approved its long-term fundraising plans of up
to $2 billion. The funds will be raised via the issuance of long-term bonds
during the period of FY26-27. The fund
raising would be carried in one or multiple tranches through fixed or floating
rate bonds, which will be issued via public offer or private placement in US
Dollars or any other major currencies. The development comes at a crucial time
when India’s foreign exchange reserves have fallen by $7.79 billion to $690.90
for the week ended May 1, 2026, according to the data released by RBI. These
reserves provide import cover for around 10 months.
(Financial Express)
Life insurers see strongest
growth in over two years: India’s life insurers reported
their highest monthly growth in new business premium (NBP) in more than two
years in April, driven by robust inflows and sustained momentum following the
reduction in GST on retail life insurance policies. The industry’s new business
premium (NBP) rose 39% YoY to 30,550 crore in April, led by strong growth
across both state-owned Life Insurance Corporation of India (LIC) and private
insurers. The previous highest monthly growth was recorded in April 2024, when
the industry NBP surged 61% YoY to12,565.31 crore. According to the latest data
from the Life Insurance Council, LIC’s NBP in April 2026 rose 38% YoY to 18,782
crore, while private life insurers reported a 41% increase in premium income
to11,768 crore.
(Financial Express)
Bajaj Finserv to
up mkt share despite competition, aims to serve every Indian household in 10
yrs: CMD:
Seemingly
unfazed by the aggressive competition in the landscape, largest private sector non-bank
lender Bajaj Finserv is looking to gradually increase its market share and
serve every Indian in the next decade, a top company official has said. Speaking
on the occasion of the diversified Bajaj group's centenary celebrations, Sanjiv
Bajaj, the company's Chairman and Managing Director, said inherent strengths in
the ecosystem, including high economic growth and the digital public
infrastructure (DPI) platform will make such goals possible.
(Economic Times)
Indian Banks
poised for double-digit corporate credit growth on infra, energy, data centre
push:
Indian
banks foresee robust corporate loan growth this fiscal year. Demand is surging
from key sectors including renewable energy, infrastructure, and manufacturing.
Major lenders like SBI and Bank of Baroda report strong loan pipelines. This
expansion signals a positive outlook for business lending across the country.
However, banks face liquidity challenges in sustaining this growth.
(Economic Times)
OMC losses mount to Rs1
lakh crore; govt weighs how long firms can absorb hit: Amid mounting pressure for retail fuel price
hikes after the recently concluded assembly elections, Union Petroleum and
Natural Gas Minister Hardeep Singh Puri on Tuesday said fuel price revisions
were “unrelated” to elections, while acknowledging that the government would
eventually have to assess how long state-run oil companies can continue
absorbing massive losses caused by elevated crude prices and stagnant retail
fuel rates. The remarks come at a time when state-run oil marketing companies
(OMCs) are estimated to be incurring under-recoveries of nearly Rs.1.98 lakh
crore in the current quarter, while actual losses are projected at around Rs.1
lakh crore as petrol, diesel and LPG prices remain largely unchanged despite
the sharp rise in global energy prices following the West Asia conflict.
(Financial Express)
RBI cancels licence of
Sarvodaya Co-operative Bank over weak finances: The Reserve Bank of India (RBI) on Tuesday
cancelled the licence of Sarvodaya Co-operative Bank, citing inadequate
capital, poor earnings prospects, and non-compliance with provisions of the
Banking Regulation Act. RBI said the co-operative bank would cease to carry on
banking business effective May 12, 2026. The Commissioner for Cooperation and
Registrar of Cooperative Societies, Maharashtra, has also been requested to
initiate the process of winding up the bank and appoint a liquidator.
(Business Standard)
Nifty IT tumbles 3.7% to
near 3-year low amid AI disruption concerns: Domestic information technology (IT) stocks
slumped on Tuesday, mirroring losses in their US-listed peers, after OpenAI
announced the acquisition of consulting and engineering firm Tomoro as part of
its push to deepen enterprise adoption of artificial intelligence (AI)
software. The Nifty IT index declined 3.73 per cent to close at 28,235 — its
lowest closing level since May 18, 2023. The index has now shed more than a
fourth of its value so far this year amid rising concerns over the long-term
viability of traditional IT service business models in the age of AI-led
automation.
(Business Standard)
SC refuses to reopen 2021
ruling exempting foreign software payments from royalty tax: The Supreme Court has once
again dismissed the income tax department's review petitions concerning the
taxation of software payments to non-residents. The court reiterated its March
2021 ruling that such payments are not royalty, as end-user licenses do not
transfer copyright. This decision provides significant tax relief for Indian
companies acquiring software.
(Economic Times)
RBI's 3-day VRR
auction receives muted demand amid surplus liquidity: The Reserve Bank of India (RBI) received
bids worth Rs.7,091 crore against the notified amount of Rs.50,000 crore at the
three-day variable rate repo (VRR) auction on Tuesday. The central bank
allotted the bid amount at a weighted average rate of 5.26 per cent. The weak
demand at the auction was due to ample liquidity in the banking system, said
dealers. Net liquidity in the banking system stood at a surplus of Rs.1.94
trillion on Monday, according to the latest central bank data. The weighted
average overnight call rate fell to 5.25 per cent after the VRR auction,
against the previous close of 5.31 per cent. The call rate remains elevated as
the money market is increasingly pricing in the possibility of a rate hike.
(Business Standard)
Govt links state
fiscal incentives with RE adoption to address PPA issue: Renewable energy (RE) adoption is now
being linked to state’s fiscal incentives to encourage them to sign power
purchase agreements (PPAs), Minister of New and Renewable Energy Pralhad Joshi
said at the CII Annual Business Summit on Tuesday. “This is a new policy
accepted by finance and power ministries,” he said. While he did not disclose
further details, Joshi said renewable energy-related criteria would also be
considered while extending interest-free loans to states.The Union minister
also said that the government is addressing the quality issue of imported solar
modules.
(Business Standard)
PENT-UP DEMAND
§ Pent-up demand is a situation where there is a
sudden, unusually strong increase in demand for a product or service that has
been suppressed, or "held back," for some time.
§ This often occurs after a period of economic
uncertainty, like a recession, when consumers delay purchases due to factors
such as fear of job loss or reduced income. Once economic confidence returns,
or restrictions are lifted, the built-up desire to buy is unleashed, leading to
a surge in consumption.
§ For Example: After a period of decreased spending,
consumers may rush to buy durable goods, leading to a sharp rise in sales.
Demand for services like resort vacations may surge during the first period of
good weather after a long winter or travel restrictions.
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 : 95.5564
INR
/ 1 GBP : 129.5732
INR
/ 1 EUR : 112.3418
INR
/100 JPY: 60.7100
EQUITY INDEX
Sensex:
74559.24 (-1456.04)
NIFTY:
23379.55 (-436.30)
Bnk NIFTY: 53555.20 (-884.70)
Historical events: May 13 holds
significant historical milestones, featuring the first sitting of India's Rajya
Sabha (1952), the 1998 Pokhran-II nuclear tests, and the 1648 completion of
Delhi's Red Fort. Globally, it marks the 1995 ascension of Mt. Everest without
oxygen by Alison Hargreaves and the 1954 first cross-country helicopter flight.
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