Issue: 993
ECONOMY & FINANCE
Jerome Powell hints at rate cuts amid weak US job market, says
'impact of tariffs clearly visible on prices': Federal Reserve Chair Jerome
Powell said Friday that the weak job market may soon force the Fed to cut
interest rates. He noted that lower rates could help the labour market, after
the Fed kept them unchanged for the past eight months. In a key Friday speech, Powell
warned that risks of higher inflation and a weakening jobs market created a
"challenging situation." "Downside risks to employment are
rising," according to Powell's prepared remarks at the Jackson Hole
Economic Policy Symposium. He added that "the effects of tariffs on
consumer prices are now clearly visible," with high uncertainty in the
coming months. "Downside risks to employment are rising," Powell
said, according to a copy of his prepared remarks at the Jackson Hole Economic
Policy Symposium.
(Moneycontrol)
US may double tariffs on
India to 50% as planned, says Navarro: The US is likely to proceed
with plans to double India’s tariffs to 50 per cent on August 27, as New Delhi
imposes `Maharaj’ tariffs that harm
American businesses and is helping perpetuate Russia’s war on Ukraine by
refining its oil, White House Trade Advisor Peter Navarro has said. “I see that
(doubling of India’s tariffs on August 27) taking place. India does not appear
to want to recognise its role in the bloodshed….The argument that they need
Russian oil to cool their homes and drive their cars is nonsense,” Navarro told
reporters on Thursday, lashing out against India the second time this week.
(Business Line)
I-T Department revises
instruction to ensure no prosecution for undisclosed foreign account worth up
to ?20 lakh:
The Income
Tax Department has instructed its officials not to initiate prosecution in
cases where aggregate value of undisclosed foreign assets (other than immovable
property) is up to ?20 lakh. Earlier, this threshold was ?5 lakh. New threshold
will be effective from October 1, 2024. According to the law, the penalty can
be up to ?10 lakh.
(Business Line)
BANKING & FINANCE
GST exemption could take a toll on insurers' health: Exempting
life and health insurance premiums from the Goods and Services Tax (GST) could
leave policyholders paying less, but the move may also squeeze insurers'
margins. In protection products,
commissions initially range between 35% and 40% before tapering off, averaging
about 5-6% over time. On top of this, insurers incur about 10% in other
expenses. Currently, service tax of around 2% on such costs is offset through
input tax credits. If GST exemptions remove that credit, insurers will have to
bear the additional expense.
(Economic Times)
RBI approves Indranil
Bhattacharya's nomination as MPC ex-officio member: The RBI's Central Board has approved the
nomination of Executive Director Indranil Bhattacharyya as an ex-officio member
of the Monetary Policy Committee (MPC). During the 618th meeting, the board
reviewed the global and domestic economic environment, including geopolitical
developments and financial market challenges. The board also assessed the
functioning of select central office departments, board committees, and the
Ombudsman Scheme.
(Economic Times)
Banks bad loans decline
sharply 9.5% YoYy in Q1FY26, asset quality improves: Care Edge Report: Care Edge Ratings reports a significant
improvement in Indian banks' asset quality for Q1FY26. Gross NPAs fell to 2.3%,
driven by better asset management and recoveries, though microfinance and
unsecured loans showed some stress. Despite a slight sequential increase in
NPAs, the overall structural improvement is evident, with NNPA ratios at a
post-AQR low of 0.5%.
(Economic Times)
15K hospitals to suspend
cashless services for Bajaj Allianz policyholders: Citing low reimbursement rates and arbitrary
payment deductions, the Association of Healthcare Providers-India (AHPI) on
Friday said that it has advised member hospitals in north India to stop
providing cashless treatment facilities for policyholders of Bajaj Allianz
General Insurance Company with effect from September 1, 2025. There are over
15,000 member hospitals, including Max Healthcare and Medanta, which would now
stop cashless treatment by the insurer. The decision came in the wake of AHPI
member hospitals raising repeated complaints of unilateral deductions by the
company, delay in payments and unduly high time taken for issuing pre-auth and
pre-discharge approvals.
(Business Standard)
AMFI inks pact with Dept of Posts to train 100K postmen to distribute MFs: Mutual fund industry body AMFI on Friday signed a pact with the Department of Posts to train one lakh postmen across India, enabling them to distribute mutual funds in remote areas. A memorandum of understanding in this regard was signed between AMFI and the postal department at an event here to mark AMFI's 30th foundation day. On this occasion, AMFI also announced a host of other initiatives to deepen financial literacy and expand reach of mutual fund products across the country. These measures include 'Nivesh Ka Sahi Kadam' an engaging multi-lingual content in 13+ regional languages, distributed through various channels including 30 on-ground investor camps across the country as well as 'Bharat Nivesh Rail Yatra' -- a first-of-its-kind initiative to bring investor education onboard Vande Bharat trains, making financial literacy accessible on the move.
(Business Standard)
BUSINESS & INDUSTRY
Russia must import more pharma, agri, textiles from India to
address ballooning deficit: Jaishankar: Russia must import much more from India,
including items such as pharmaceuticals, agriculture and textiles, to address
the glaring trade imbalance between the two counties, Minister of External
Affairs S Jaishankar has said. It must also remove non-tariff barriers and
other impediments. “We reaffirmed our shared ambition to expand bilateral trade
in a balanced and sustainable manner, including by increasing India’s exports
to Russia,” Jaishankar said at a joint press conference with his Russian
counterpart Sergey Lavrov in Moscow following their bilateral meeting on
Thursday.
(Business Line)
Persistent Systems CEO
Sandeep Kalra tops India Inc remuneration charts: Sandeep Kalra, CEO of mid-size IT services
company Persistent Systems, topped the remuneration chart of India Inc’s top
brass with ?148 crore, nearly double the previous year. Hero MotoCorp Promoter
and Chairman Pawan Munjal followed at ?109 crore, while Swiggy Cofounder
Lakshmi Nandan Reddy Obul’s remuneration surged almost 14 times to ?90 crore. The
compensation continued to rise in FY25 despite a slowdown in corporate revenues
and profits. The overall remuneration of CEOs and board members grew 8.7 per
cent YoY.
(Business Line)
Govt commits 97% of chip
manufacturing fund, scope for new projects: The government has committed around ?62,900
crore, or 97 per cent, of the ?65,000 crore fund earmarked as incentives for
semiconductor production in the country, a top official said on Friday. While
briefing on the Semicon India 2025 event, Electronics and IT Secretary S
Krishnan said the funds left can accommodate only small projects. He said that
under the ?76,000 crore India Semiconductor Mission, ?65,000 crore was
allocated for chip production, ?10,000 crore for the modernisation of the
Semiconductor Laboratory in Mohali and ?1,000 crore for the design-linked
incentive scheme. "Out of this ?65,000 crore, I think we have committed
close to ?62,900 crore or so already. We have limited funding, which we have
available; we might be able to just accommodate two or three small
projects," Krishnan said.
(Business Standard)
India's outward FDI inches
up to $3.51 billion in July, shows RBI data: India’s outward foreign direct investment
(FDI) commitments rose marginally to $3.51 billion in July 2025, up from $3.31
billion in July 2024. However, sequentially, they declined sharply compared to
$5.13 billion in June 2025, according to data from the Reserve Bank of India
(RBI). Outbound FDI, expressed as a financial commitment, comprises three
components: equity, loans, and guarantees. Equity commitments fell to $1.6
billion in July 2025, compared with $2.04 billion a year ago and $2.09 billion
in June 2025. Debt commitments rose to $305.9 million in July 2025, from $283.9
million in July 2024. However, they were lower than the $592.4 million recorded
in June 2025.
(Business Standard)
REGULATIONS & DEVELOPMENT
SEBI proposes to revamp block deal norms, increase order size
and price range: Securities
and Exchange Board of India (SEBI) has proposed tweaking the reference price
range and increasing the minimum order size for block deals. The block deal
mechanism allows pre-negotiated deals between parties to be executed on the
exchange within designated windows and under strict rules to prevent price
manipulation. SEBI, in a draft
circular issued on Friday, proposed that stocks which are available for trading
in the Futures & Options (F&O) segment will remain within the plus and
minus 1 percent price range of the applicable reference price. Non-F&O
segment stocks will be placed under the plus and minus 3 percent price range of
the reference price. Similarly,
SEBI has proposed the minimum order size is to be revised to Rs 25 crore
instead of the current Rs 10 crore.
(Moneycontrol)
Government notifies Income-tax Act, 2025; law to come into
effect from April 1, 2026: The government on Friday formally notified the Income-tax Act, 2025.
The legislation was passed in the Parliament last week and is aimed at
consolidating and updating India’s income tax framework. The Act received the
President’s assent on Thursday (August 21) and was notified by the Ministry of
Law and Justice through a gazette order. According to the notification, the law
will come into effect next year on April 1, unless specified otherwise.
(Financial Express)
Additional incentives likely for first-time women investors in
mutual funds, says SEBI chief: Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta
Pandey on Friday said that additional incentives could be given to women
investing in mutual funds for the first time. He said that financial inclusion
will be complete only when equal participation of women is ensured. “We are
proposing to give additional incentives to distributors of mutual funds for
first-time women investors,” Pandey said at an AMFI event. AMFI launched the ‘Investment Ka Sahi Kadam’ campaign, under which
content in 13 languages ????and more than 30 on-ground camps will be organized.
Apart from this, a unique initiative like ‘Bharat Nivesh Rail Yatra’ has also
started, under which information related to investor education will be
delivered to the passengers on Vande Bharat trains. Also, the Mutual Funds Sahi
Hai website has been launched in a new format, with features like
multi-language support and easy navigation.
(Financial Express)
TODAY’S CONCEPT
CREDIT DEFAULT SWAPS
Ø Credit
default swaps (CDS) are a type of insurance against default risk by a
particular company. The company is called the reference entity and the default
is called credit event. It is a contract between two parties, called protection
buyer and protection seller. Under the contract, the protection buyer is
compensated for any loss emanating from a credit event in a reference
instrument. In return, the protection buyer makes periodic payments to the
protection seller.
Ø In
the event of a default, the buyer receives the face value of the bond or loan
from the protection seller. From the seller’s perspective, CDS provides a
source of easy money if there is no credit event. CDS was introduced by JP
Morgan.
Ø Assume that two parties A and B enter in a five-year
CDS. In this, A is the protection buyer and B is the protection seller. Let’s
assume that the notional principal is Rs 50 crore and the protection buyer
agrees to pay 100 basis points annually to the protection seller. If the reference
entity does not default, the protection buyer keeps on paying 100bps of Rs 50
crore, which is Rs 50 lakh, to the protection seller every year. On the
contrary, if a credit event occurs, the protection buyer will be compensated
fully by the protection seller. The settlement of the CDS takes place either
through cash settlement or physical settlement. For cash settlement, the price
is set by polling the dealers and a mid-market value of the reference
obligation is used for settlement.
Ø If the credit event does not occur before the maturity
of the loan, the protection seller does not make any payment to the buyer.
KEY INDICES
RBI KEY RATES:
Repo
Rate: 5.50%
SDF:
5.25%
MSF
/Bank Rate: 5.75%
CRR:
4.00%
SLR:
18.00%
FOREX RATES (RBI REF. RATE)
INR /
1 USD : 87.4375
INR /
1 GBP : 117.1313
INR /
1 EUR : 101.3389
INR
/100 JPY: 58.8400
EQUITY INDEX
Sensex: 81306.85 (-693.86)
NIFTY: 24870.10 (-213.65)
Bnk
NIFTY: 55149.40 (-606.05)
TODAY’S IMPORTANCE
National Space Day: National Space
Day 2025 in India is celebrated on August 23, 2025. This date marks the
anniversary of the historic achievement of Chandrayaan-3’s successful soft
landing on the lunar south pole on August 23, 2023.
Historical events: Globally, notable events happened on 23rd August include the 1866 Treaty of Prague ending the Austro-Prussian War and the 1942 beginning of the Battle of Stalingrad.
****Have a nice Day****
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