Week ending 11th Oct 2025

# 1 Markets

Nifty closed at 25,285.35 (+103.55; +0.4%) and Sensex at 82,500.82 (+328.72; +0.4%); both indices rose 1.6% for the week, their best weekly gain since late June. Advances were led by a rebound in information technology and banking, while mid- and small caps remained volatile. Sentiment was aided by easing crude prices and foreign institutional flows turning supportive after recent outflows. Q2 results over the next three weeks will be the key catalyst for whether the rally sustains.

The 10-year Indian government bond yield held steady at around 6.52% on October 10, 2025, reflecting continued investor confidence.​ Market volatility remained subdued as RBI’s supportive policy stance and limited fresh issuance kept yields in a narrow range throughout the week.

US equity markets suffered steep losses last week, ending with a sharp sell-off after President threatened major new tariffs on China.​ All major indices wiped out early gains, with the S&P 500 down 2.4%, the Dow dropping 2.7%, and the Nasdaq falling 2.5% for the week.​
Heightened US-China trade tensions and persistent uncertainty around the government shutdown weighed heavily on investor sentiment.​

US bond markets witnessed a decline in yields last week, with the 10-year Treasury falling to 4.05% as investors flocked to safety amid heightened market volatility.​
Continued concerns over the government shutdown and renewed trade tensions supported strong demand for Treasuries throughout the week.

# 2 RBI

2.1 RBI during Global Fintech Fest 2025 unveiled four digital payment initiatives—IoT-based UPI payments, Banking Connect (interoperable net banking), UPI Reserve Pay, and AI-based UPI Help (powered by NPCI’s Small Language Model).

• IoT-based UPI: Enables UPI payments from connected devices (e.g., cars, smart glasses, smart TVs) for services like fuel or EV charging, making transactions faster, smarter, and frictionless. for services like fuel, EV charging, or other services
• Banking Connect (interoperable net banking): One integration for payment aggregators to access participating banks; standardized merchant onboarding and settlement via NBBL.
• UPI Reserve Pay: Lets users “reserve/block” funds or a portion of card/credit limits for repeat purchases with later capture (Auth-and-Capture within UPI Autopay).
• AI-based UPI Help: An SLM-powered assistant for payments support, complaint resolution, tracking, and mandate management.
• Biometric approvals (no PIN): UPI transactions can be authenticated on-device via fingerprint/face; Aadhaar/UIDAI face authentication simplifies onboarding and allows setting/resetting UPI PINs without debit cards

RBI’s package advances UPI from app-centric to ambient, interoperable and credit-enabled rails—using biometrics and AI to reduce user friction while lowering integration complexity for banks and aggregators.

2.2 RBI proposes a more granular, risk-sensitive Standardised Approach (SA) for credit risk to spur lending—covering corporates, MSMEs, real estate, credit cards, and off-balance-sheet items.

• Credit cards users who paid in full for the last 12 months reclassified to regulatory retail; risk weight cut to 75% (from 125%).
  • Revolvers/other users remain at 125% risk weight.
• Housing loans (≤2 loans) risk weights aligned to LTV—20% at LTV ≤50%, rising to 40% when LTV >80% (granular bands implied within this range).
  • Housing loans (3rd loan): Higher risk weights up to 60%; additional surcharge proposed for ticket sizes >₹3 crore.
  • Earlier regime largely uniform 35–50% with limited differentiation.
• Unsecured personal loans (ex-education/housing/vehicle) risk weight retained at 125%.
• Corporate loans BBB-rated exposures reduced to 75% (from 100%); AA-rated to 20% (from 30%); unrated >₹200 crore or previously rated now unrated stay penal at 150%.
• Rated MSME: same risk weights as corporates; Regulatory retail-qualifying MSME: 75%.; Unrated MSME (non-retail): 85%; MSME secured by real estate: risk-weighted per real-estate asset class.

RBI’s recent risk-weight overhaul rebalances capital toward disciplined retail and rated corporates (transactors, low-LTV housing, BBB/AA loans), tightens risk sensitivity, lowers capital where risk is demonstrably lower while keeping unsecured credit tight—lifting capital efficiency and enabling sharper home-loan pricing.

2.3 RBI proposes replacing incurred-loss provisioning with an Expected Credit Loss (ECL) framework for universal banks, effective 1 April 2027.

• Introduces Stages 1–3 under ECL while retaining extant NPA norms; sets calibrated provisioning ceilings by exposure class and stage.
  • One-time additional provisions expected; minimal impact on minimum regulatory capital; five-year glide path to March 2031 for a non-disruptive transition.
  • Microfinance-focused banks (Bandhan, IndusInd, RBL, AU SFB, IDFC First) likely to see higher impact.
• Income recognition aligns to Effective Interest Rate (EIR) method.

The ECL shift advances loss recognition and tightens model governance, improving risk pricing discipline with limited drag on sector capital.

2.4 S&P Global Ratings in its reported commented

• Indian banks are well-positioned amid global uncertainty, tariffs, rate cuts and a weaker rupee.
• Credit costs expected to rise 80–90 bps over the next two years, driven by stress in unsecured retail, SME and microfinance; banks can absorb this increase.

• Pre-provision operating profit (PPOP) projected at 3.6%–3.7% of loans, keeping earnings comparable to or better than regional peers.
• Credit growth seen rebounding to 11.5%–12.5% in FY27, aided by potential GST cuts, income-tax reliefs and regulatory easing from H2 FY26.
• Overall asset quality to soften modestly; GNPA expected at 3.0%–3.5%.
  • New NPA formation—corporate: ~1.1% p.a.; overall: 1.7%–1.8% due to higher slippages in SME/retail.
• Financial strength among Indian corporates improving, supporting bank stability.

Near-term credit-cost pressure from unsecured/SME stress notwithstanding, robust PPOP and stronger corporates leave Indian banks well placed to absorb slippages and re-accelerate credit growth from H2 FY26 with only modest asset-quality softening.

2.5 As per ICRA report published last week

• Organised gold loans to reach ₹15 lakh crore by Mar 2026 (vs earlier Mar 2027), and ₹18 lakh crore by FY2027, led by sustained gold price uptrend.
• Banks’ share at 82% (Mar 2025); bank gold-loan AUM grew ~26% CAGR (FY20–FY25) vs ~20% for NBFCs. Overall market AUM at ~₹11.8 lakh crore (Mar 2025).
• Retail/personal gold loans rose to 18% (from 11% YoY); agri/other gold-secured loans down to 63% (from >70%).
• NBFC gold-loan AUM expected to grow 30–35% in FY2026 (benefiting from high gold prices, slower unsecured lending, and sizeable free gold). NBFC AUM at ~₹2.4 lakh crore (Jun 2025), +41% YoY; top 4 NBFCs = 81% of NBFC gold loans.

A price-fuelled, bank-led gold-loan cycle is accelerating with banks widening share and tilting to retail, while NBFCs pursue a 30–35% FY26 catch-up from a concentrated base.

2.6 As per CRIF Highmark report released last week

• Growth moderated in fintech funding with active fintech loans up 25.6% YoY to ₹2.1T (June 2025) vs 29.6% YoY on a ₹1.6T base (June 2024).
• Stress worsened at deep stage: DPD 180 = 8.6% (Jun’25) vs 7.1% (Jun’24); DPD 91–180 = 2.1% (2.0%); DPD 31–90 = 2.8% (elevated).
• Secured business loans share rose to 10.1% (from 7.5%); within secured, property-backed fell to 11% (from 13.1% in Jun’23). Unsecured still 70% of portfolio (Jun’25).
  • In sub-₹10k personal loans, fintech DPD 31–90 = 4.1% vs other NBFCs 1.7%; DPD 91–180 = 4.8% vs 1.8%. Mid-ticket ₹50k–1L improved: DPD 31–90 to 2.2% (from 2.7% Jun’24); DPD 91–180 to 2.0% (from 2.3% Jun’23).
• RBI tightened unsecured lending norms and capped FLDG at 5% (2023); fintech’s leaning into FD-backed cards, hypothecated 2-wheelers, gold loans (gold loan segment +34–35% YoY; typical pledge 10–40g).
• High-risk borrower cohort fell to 28.9% from 38.4% (fintech’s; Jun’24→Jun’25), yet DPD 180 rose, implying weaker recoveries on severe delinquencies.

Post-RBI tightening, fintech lending growth has slowed (₹2.1T, +25.6% YoY) even as deep-stage stress worsened (DPD180 8.6%), driving a pivot to secured MSME/gold while sub-₹10k loans remain the delinquency hotspot (DPD31–90 4.1% vs NBFC 1.7%).

 

# 3 SEBI

3.1 Govt. has announced local foreign currency settlement in IFSCA-Gift City

• It enables local, (near) real-time settlement of foreign-currency payments between IFSC Banking Units (IBUs)—initially USD only. CCIL IFSC Ltd is the payment system operator; Standard Chartered (IBU) is the designated settlement bank.
• Replaces correspondent-banking chains that took 36–48 hours with seconds-level settlement (real-time/near real-time) within GIFT.
• Places GIFT among a small set of international centres with local FCY settlement rails (e.g., Hong Kong, Tokyo), strengthening its pitch to onshore offshore activity.

Why it matters

• Reduces dependence on external nostro/correspondent paths and aligned time zones; improves fail-risk and message latency.
• Enhances GIFT’s proposition against hubs like Dubai/Singapore; authorities are also exploring domestic bank access to boost volume.

A high-signal onshoring step that credibly cuts settlement latency and improves liquidity control for GIFT IBUs; to be transformational, it must de-risk concentration, add major currencies, and broaden participation—preferably with PvP-grade safeguards as cross-currency activity scales.  Still gap management (shortfall/excess on a daily basis) in the FCY accounts will have to be done through the correspondent outside India unless IFSCA is empowered to offer a mechanism similar to call money market managed by RBI.

3.2 SEBI is exploring simplification of the Securities Lending & Borrowing (SLB) framework to drive higher adoption. SLB would be operationally easier, so short positions shift from futures dependence to a more balanced use of SLB. Brief highlights:

• SLB enables temporary lending/borrowing of shares for settlement efficiency and short sales; long-only holders earn incremental yield by “renting” holdings.
• Previous attempts to widen the stock universe (from dematerialised F&O-segment equities on NSE/BSE) saw limited traction.
  • Globally, SLB is largely OTC and customizable; in India it is exchange-run with the clearing corporation as central counterparty/guarantor.
• Anticipated benefits from reform: deeper liquidity, better price discovery, and a clearer income path for passive inventories; stronger support for short-selling and hedging.

Streamlining SLB and widening access could shift India’s shorting toolkit beyond futures, deepening cash-market liquidity—so long as ease-of-use gains are matched by uncompromised risk controls.

3.3 SEBI has finalised key reforms for stockbrokers and stock exchanges as announced last week

• Single lead exchange to levy penalties; uniform structure across exchanges.
• Minor procedural lapses reclassified as “financial disincentives” (term “penalty” dropped for these).
• Reviewed 225 items under Penalty framework – 40 eliminated; 105 recast as financial disincentives; 36 rationalised; 7 advisory/warning for first-time lapses; 6 categories capped; 29 unchanged; 12 new penalties added.
• Common reporting (NSE platform)- One portal for multi-exchange brokers (~800 affected).

SEBI is hard-wiring uniform enforcement and a single NSE-led reporting pipe—recasting minor penalties as “financial disincentives”—to cut duplication and compliance friction across exchanges.

3.4 SEBI revises block deal norms to enhance transparency and execution efficiency.

• Price band widened to ±3% of reference price (from ±1%);
• Minimum order size raised to ₹25 crore (from ₹10 crore; last changed Oct 2017).
• Reference price: a. Morning window — previous day’s close b. Afternoon window — VWAP of trades from 13:45–14:00.

Smaller negotiated trades (<₹25 crore) shift to the normal market, potentially improving regular market liquidity and reducing noise in block windows.

Tighter process, wider band, and higher size threshold aim to streamline genuine large trades while pushing smaller deals into the main market.

# 4 Economy

4.1 World Bank in its report published last week

• Raises India’s FY26 growth to 6.5% (from 6.3% in June); trims FY27 growth to 6.3% (-20 bps) on steeper-than-expected US tariffs.
• India to remain fastest-growing major economy, supported by strong consumption, better-than-expected agriculture and rural wage growth, and GST simplification (fewer slabs, easier compliance).
• A 50% tariff now applies to ~75% of India’s goods exports to the US; the US took ~20% of India’s goods exports in 2024 (≈ 2% of GDP).
• Peer forecasts for FY2025-26: Fitch 6.9%, RBI 6.8%, OECD 6.7%, S&P/ADB 6.5%.

World Bank’s FY26 upgrade to 6.5% highlights resilient domestic demand and GST tailwinds, while the FY27 trim to 6.3% flags export headwinds from steeper US tariffs.

4.2 World Trade Organisation in its publication last week:

• Merchandise trade forecast in 2025 raised to 2.4% (from 0.9%) on disinflation, supportive fiscal policy, and strong emerging-market growth.

• • 2026: Cut to 0.5% (from 1.8%), reflecting delayed US-tariff impact and partial unwinding of 2025 inventory build-up (notably durables).
  • Services exports growth to slow from 6.8% (2024) to 4.6% (2025) and 4.4% (2026).
  • Regional contribution: Asia ~two-thirds of global AI-trade growth; US ~one-fifth.

WTO flags a 2025 rebound but a tariff-delayed growth dip in 2026, with rising protectionism as the key risk and Asia-led, artificial-intelligence trade providing only a partial offset.

4.3 As per S&P Global release- HSBC PMI released last week

• Composite PMI (Sep 2025): 61.0 — below flash 61.9 and Aug 63.2; lowest since June, but still well above long-run average.
  • Manufacturing PMI: 7 (Sep) vs 59.3 Aug; slowest in 4 months, still expansion.
  • Services PMI 60.9 (Sep) vs.62.9 Aug —expansion slowed on softer new business and weakest foreign sales since March, employment up modestly.
• Output growth eased in both manufacturing and services.
  • total new orders at 3-month softest; gains in exports and employment moderated.
  • Services price trend: input inflation eased (below long-run average) despite labour/material pressures; selling price inflation at a 6-month low.

Activity remains robustly expansionary, but momentum is cooling; price pressures are mixed—firmer in manufacturing, softer in services—while services sentiment improves.

# 5 PE / VC

5.1 As per report (Apr-Sep 25) released by Tracxn last week

• Funding: India fintech raised $1.6B in 9M-2025 (↓ 17% YoY from $1.9B) yet
• India remained #3 globally after the U.S. and U.K;
  • Seed $129M (↓38%), Late $863M (↓23%), Early $598M (↑8%); two new unicorns signal continued early-stage momentum.

5.2 HSBC raised its India startup lending commitment to USD 1.0 bn. (from USD 600M) under its newly launched Innovation Banking vertical.

• India joins select markets (US, Israel, China, Australia, UK) where the vertical operates.
• Lending from Series A through IPO, including cash-burning companies; pricing cheaper than private credit.
• ~USD 500M (~80%) of the prior USD 600M is already committed; portfolio performance described as satisfactory.
• Expansion leverages VC relationships strengthened post SVB acquisition; management calls USD 1B an interim step with intent to channel more global capital into India.

A large global bank scaling venture lending in India signals strengthened institutional confidence and likely compresses private-credit pricing, but disciplined risk selection will be pivotal in a still-volatile borrower segment.

5.3 Brief takeaways from the report published by BCG in Global Fintech Fest 2025-India last week.

• India processes >50% of global real-time payments; 19.63B UPI transactions in Sep-2025 (~31% YoY growth).
• $1.3T invested in AI in 5 years (≈4× fintech funding)
• GenAI hit 40% user adoption in 2 years
• ChatGPT reached 100M users in 2 months.
• Corporates planning ~60% budget lifts in 12–24 months.
• Consumer AI finance apps: Viable at ₹150–250/month today; could fall to ₹50 in 3–4 years.
• India on track for a $17B AI market by 2027; IndiaAI Mission $1.3B with 34,000 GPUs; data centre share can rise 2% → 8% by 2030 (needs 17 GW).
• India has ~6 lakh (600k) AI professionals; India holds 56% of global IT services outsourcing; GCCs expected to drive ~⅓ of AI services revenues by 2028.
• Leading FIs report 20–25% cost efficiency gains and 10–20% revenue uplift; yet only 27% of banks are “future-ready” on AI maturity.
• Global fintech revenues projected at $1.5T by 2030; Indian fintech’s at $170–190B by 2030.
  • India’s AI software & services at $100–120B by 2028 (~50% of today’s IT services market).
• ₹22,000 crore lost to cyber-fraud in 2024 (+206% YoY), underscoring urgency of secure-by-design adoption.

An accelerating $1.3T AI super cycle positions India as a payments-and-talent hub with expanding AI revenue pools, but execution hinges on closing bank maturity, exit-value, and cyber-risk gaps.