The Indian government has approved the sale of a 60.72 per cent stake in IDBI Bank Ltd to Canadian billionaire Prem Watsa's Fairfax Financial Holdings Ltd for approximately 52,878 crore, a move that reflects improving India-Canada ties and marks a significant turning point for the bank.
Indian banks are projected to achieve healthy profit growth in the second quarter of financial year 2027 (Q2FY27), driven by lower credit costs, robust advance growth, and fee income. However, net interest margins (NIMs) are expected to face pressure due to significant mobilisation of foreign currency non-resident (bank) FCNR(B) deposits.
The Reserve Bank of India's recent measures, including a dedicated dollar window for state-run oil marketing companies and tightened foreign exchange derivative rules, are expected to provide near-term relief to the rupee's depreciation, but market participants believe global factors and balance of payment dynamics will continue to exert pressure in the medium term.
Reserve Bank of India (RBI) Governor Sanjay Malhotra stated that surplus liquidity in the banking system is expected to drain within the current financial year, utilising tools like currency leakage, sell-buy swaps, open market operations (OMOs), and variable rate operations.
The Reserve Bank of India's outstanding net short dollar position in the forward book surged to a record $200.06 billion at August-end, up from $136.77 billion at July-end, primarily driven by FCNR(B) flows.
After a significant 9.9% depreciation in FY26, the Indian rupee has shown comparative stability in the first half of FY27, depreciating by only 1.1%, attributed to regulatory interventions and measures to attract foreign capital, despite ongoing global pressures from rising crude oil prices and foreign investor outflows.
Reliance Industries Ltd (RIL) has successfully raised a total of Rs 25,000 crore through domestic bond issues in September, including a recent Rs 13,000 crore 10-year bond at 7.90 per cent, as it prioritises funding certainty amidst expectations of a possible RBI rate hike and rising borrowing costs.
The Reserve Bank of India (RBI) net purchased a record $18.65 billion in July, driven by inflows from its concessional swap facility, leading to a significant increase in India's foreign exchange reserves.
'There will be some inconvenience to people. But we have given one-month notice to the government one month ago.'
Bankers said the impact could become more visible from September 29 as customers could withdraw larger amounts of cash, although ATM operations are increasingly managed through third-party cash-loading arrangements.
'This rise in foreign exchange reserves was expected given the amount of FCNR(B) flow.'
The Indian rupee experienced its sharpest single-day decline in eight weeks, settling at 94.83 per dollar, primarily due to escalating crude oil prices and persistent risk-off sentiment driven by heightened geopolitical tensions and limited foreign inflows.
Indian banks anticipate a reduction of up to 50 basis points in their funding costs due to a surge in liquidity from robust Foreign Currency Non-Resident (Bank), or FCNR (B), flows, lessening their reliance on more expensive certificates of deposit (CDs).
Bank credit to industry in India surged by 20 per cent year-on-year in July, significantly accelerating from the previous year, driven by strong expansion in sectors like engineering, gems and jewellery, and petroleum-related industries, according to the Reserve Bank of India (RBI). However, growth in gold loans, while still expanding, saw a sharp moderation.
'The changes in its leadership team will help address the scepticism that has engulfed the bank over the recent period.'
'Resolution plan with this much haircut is totally unviable.'
The Reserve Bank of India (RBI) net bought $561 million in June, marking its first net purchase since February, following three consecutive months of net sales. This move coincided with a series of government and RBI measures to attract foreign capital, leading to a 0.36 per cent appreciation of the rupee against the dollar.
Inflows into non-resident Indian (NRI) deposit schemes decreased by 23.24 per cent to $2.78 billion during the first quarter of FY27, down from $3.61 billion in the previous year, according to Reserve Bank of India (RBI) data.
State Bank of India's latest report highlights a 'chalk and cheese' divide in the Reserve Bank of India's recent policy communications, with the Monetary Policy Committee minutes showing a hawkish tone while the Governor's statements are more data-dependent, leading to market uncertainty regarding future interest rate hikes.
Despite large inflows of foreign funds mobilised through the Reserve Bank of India's (RBI's) concessional swap schemes, the rupee has seen little impact because the dollars have largely been absorbed into the central bank's reserves instead of being released into the spot market, according to market participants.
