Issue: 1307
·
Amazon to buy 2 million Nvidia chips for data center
build-out.
·
NRI deposit inflows fall 22% to $2.8 b in Q1 FY27.
·
Fire insurance premiums fall 28% in Q1 amid deep discounting.
·
Non-food bank credit rose to Rs.6.69 trillion from Rs.0.73
trillion in the corresponding period last year, while total outstanding
commercial credit grew by 17.4% by the end of July.
·
Home loan portfolio set to cross Rs 10 lakh cr milestone this
quarter: SBI Chairman.
·
The Bank of Baroda launched “UPI Global QR Payments” (UPI
Global Reverse Acceptance) for international tourists, overseas Indians, and
foreign wallet/payment application users from eligible countries, allowing them
to make payments across its UPI QR merchant network in India.
US economy expands 1.5%
with spending, investment revised up: The US economy expanded at an unrevised 1.5% pace
in the second quarter, though underlying details showed stronger consumer
spending and business investment than initially reported. The annualized gain in
inflation-adjusted gross domestic product compares with a 2.1% advance in the
first quarter, according to the second estimate issued Wednesday by the Bureau
of Economic Analysis.Consumer spending, which comprises more than two-thirds of
economic activity, increased an annualized 3.4%, stronger than the initially
estimated 3.2% gain. Nonresidential fixed investment climbed at an 8.5% pace.
(Moneycontrol)
Discussions underway in the
government on cutting gold, silver duties: Discussions are underway
within the central government on whether to scale back duties on gold and
silver as concerns grow that the higher tax burden could be encouraging more
imports through unofficial channels. While there is no decision yet on any
reduction, some sections of the government are examining whether lowering the
duty could reduce the incentive to smuggle gold and encourage more imports
through the formal channel, one of the sources, a government official said. Industry
representatives comprising bullion traders and jewellers are pushing for the
duties to be scaled back to 6 percent from the current 15 percent, according to
the sources. The duties were hiked on May
13, 2026, with the intent to reduce the import of gold and conserve the
country's dollar reserves.
(Moneycontrol)
FM makes strong investment
pitch in Canada to woo global capital: The government has stepped up
its outreach to global investors with the Finance Minister Nirmala Sitharaman
beginning her nine-day tour of Canada and the US by strongly pitching India as
the fastest-growing major economy offering a combination of scale, sustained
growth, a young population, expanding consumption and rapidly deepening capital
markets. In her first formal event
after reaching Canada, Sitharaman asserted that India’s transformation is
structural, driven by rapid urbanisation, a growing middle class and
world-class digital infrastructure, which are creating new opportunities across
virtually every sector of the economy.
(Business Line)
SIDBI, RRBs plan to expand
co-lending arrangement to boost MSME credit in rural areas: SIDBI and Regional Rural Banks
(RRBs) are set to expand their co-lending arrangement to improve access to
credit for micro, small and medium enterprises (MSMEs) in rural and semi-urban
areas, with the government stressing the need to leverage the banks' wider
reach and SIDBI's expertise in MSME lending. The proposed expansion was
discussed at a conclave of the heads of all 28 RRBs organised by SIDBI in New
Delhi and chaired by Department of Financial Services Secretary Sanjay Lohiya.
The arrangement is aimed at combining SIDBI's understanding of MSME credit
requirements with the extensive network of RRBs across smaller towns and
villages.
(Business Line)
PSBs borrow more to cater
to credit demand as deposits lag: Public sector banks are
borrowing more to fund lending expansion. Deposits are not keeping pace with
credit growth for these banks. Private banks show stronger deposit growth and
are gaining market share. This trend raises concerns about funding
sustainability for state-owned lenders. Abundant system liquidity currently
cushions the impact of these shifts.
(Economic Times)
Jio Financial to launch
AI-powered ‘personal CFO’, membership programme: Jio Financial Services (JFS)
is preparing to launch an artificial intelligence-powered “personal CFO” and a
membership programme on the JioFinance app, as the company scales its lending,
asset management and payments businesses while seeking to leverage its digital
distribution network to acquire customers at lower costs, managing director and
chief executive Hitesh Sethia said at the company's annual general meeting on
Wednesday.
(Economic Times)
EAC-PM paper suggests
consolidation of banks of equal size without compromising market competition: India should make efforts to consolidate banks
in such a manner that a few big banks of equal size would be created, without
compromising market competition in the industry, the Economic Advisory Council
to the Prime Minister (EAC-PM) said in a working paper. The paper titled
'Reforms, Efficiency, and Productivity of Indian Banking Sector in the Last
Decade : A DEA Approach' further said this will help support the growing credit
need of the economy as India strives to be Viksit Bharat by 2047. "Though
the concentration in the Indian banking industry is low, the market share of
the banks varies significantly, starting from 20 per cent to below 1 per cent. (Business Line)
RBI may tighten liquidity
via iCRR before resorting to repo rate hike: RBI may tighten liquidity by imposing an
incremental cash reserve ratio (iCRR), requiring banks to park a larger share
of fresh deposits with the central bank, before resorting to a repo rate hike
to make monetary transmission more effective in a tighter interest rate regime.
The possibility of a policy repo rate hike has increased following the release
of the MPC’s minutes, which were seen as hawkish. Economists now see October as
a possibility, against earlier expectations of a rate action in the next
financial year. The case for an incremental CRR comes amid rising surplus
liquidity in the banking system. Core, or durable, liquidity is expected to
increase further as government spending picks up ahead of the festival season.
Overnight benchmark rates —weighted average call rate (WACR) for the triparty
repo (Treps) rate —have already been trading below the repo rate despite the
RBI conducting daily variable rate reverse repo (VRRR) auctions to absorb
excess liquidity. VRRR auctions are aimed at draining transient liquidity.
(Business Standard)
Banks and NBFCs reassess
partnerships with fintech companies: Banks and NBFCs are reviewing their contracts and
data-sharing arrangements with fintech firms following the RBI’s proposed
data-governance framework and the implementation of India’s Digital Personal
Data Protection requirements. Regulated entities may have to strengthen
customer-consent systems, third-party risk controls and accountability for data
breaches.
(Business Standard)
Generali Central Insurance
examining health insurance product that will link premiums to policyholder’s
location:
Generali
Central Insurance Company is exploring introducing a health insurance product
that will link premiums to the location of a policyholder. Further, it is also
weighing if covers for cyber-related risks faced by bank depositors and
identity theft can be launched. In an interaction with businessline, MD &
CEO KG Krishnamoorthy Rao, observed that hospital costs can vary significantly
between cities. However, traditional health insurance products charge similar
premiums irrespective of where the customer lives or seeks treatment.
(Business Line)
Goyal proposes India-Japan
'Shark Tank' to boost investment, business ties: Commerce and Industry Minister Piyush Goyal on
Wednesday proposed an India-Japan startup pitching series, on the lines of the
popular 'Shark Tank' format, to connect young startups from the two countries
with investors and potential business partners. Addressing a roundtable on startups, Goyal said
such pitching sessions could be organised virtually, leveraging digital
connectivity, to facilitate greater interaction between Indian and Japanese
startups. "India and Japan can develop a pitching series, something like
the Shark Tank initiative, that can help young startups pitch," Goyal
said. He said Indian startups could pitch their ideas to Japanese investors,
while Japanese startups could seek partners and business opportunities in
India.
(Business Standard)
MCA requires separate
compliance for foreign companies despite RBI approvals: The government has clarified that there is
currently no automatic data-sharing mechanism between the ministry of corporate
affairs (MCA) and the RBI for foreign company registrations. In a FAQ document
on registration of foreign companies and subsidiaries of foreign bodies
corporate, the MCA said that documentation requirements of the two regulators
differ and that RBI approval does not by itself replace the separate MCA filing
and documentation requirements. The clarification comes in the backdrop of
foreign companies having to comply with requirements under both the Companies
Act and foreign exchange regulations. The ministry said the National Single Window System
(NSWS) can help foreign companies find out which approvals they need, but it
does not replace MCA filings or approvals from sectoral regulators. Foreign
companies must still file form FC-1 along with the required regulatory approvals.
(Financial Express)
SEBI crackdown signals tighter
supervision of derivatives market: SEBI’s action against JPMorgan-owned Copthall
Mauritius Investment and a Mumbai broker for alleged closing-auction price
manipulation indicates faster regulatory intervention in the derivatives
market. Further measures—such as higher collateral requirements and
restrictions on weekly contracts—may be considered to protect retail investors.
(Business Standard)
Smaller PSBs may partner
larger peers to expand their credit card business: PSBs are exploring partnerships to issue
co-branded credit cards, as smaller state-owned lenders seek to tap the scale,
technology and distribution networks of peers with an established presence in
the fast-growing business. Under the proposed strategy, smaller PSBs could
partner with larger state-owned banks that already have credit-card
capabilities, enabling them to access established customer networks and
distribution channels without having to build the entire infrastructure
themselves. The proposal is aimed at helping lenders with limited credit-card
operations scale up in a segment dominated by a handful of larger banks.
(Business Standard)
FINANCIAL
REPRESSION
·
Financial repression refers to government policies
that channel funds toward the public sector at below-market costs. It may
involve interest-rate controls, high statutory liquidity requirements, directed
lending, capital-flow restrictions, or regulatory incentives encouraging banks
to hold government securities.
· Such measures can help
governments finance fiscal deficits and manage public debt, but prolonged
repression may reduce returns to savers, distort credit allocation, weaken
monetary-policy transmission, and crowd out productive private investment.
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 : 95.7143
INR
/ 1 GBP : 130.4155
INR
/ 1 EUR : 111.5748
INR
/100 JPY: 60.0700
EQUITY INDEX
Sensex:
77472.94 (-183.15)
NIFTY:
24207.75 (-126.80)
Bnk NIFTY: 57783.75 (+269.55)
Historic events: August 27 holds
a significant place in history, marked by the establishment of the Guru Granth
Sahib at the Golden Temple in Amritsar in 1604 and the birth of Nobel laureate
Mother Teresa in 1910, alongside major global events like the powerful Krakatoa
volcanic eruption in 1883 and the first flight of the world's first jet-engine
aircraft in Germany in 1939.
****WISHING A NICE DAY****
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