# 1 Markets
Indian equity market has faced a sharp correction, last week, culminating in a three-day losing streak where the Sensex fell 1.27% to close at 76,681.29 and the Nifty 50 dropped 1.13% to settle at 23,897.95 on Friday. The downturn has been driven by a “triple threat” of Iraq conflict, disappointing FY27 revenue guidance from IT bellwethers and persistent FII outflows. The likely trajectory remains cautious and medium-term outlook hinges on the stabilization of crude prices and the resilience of domestic earnings as the Q4 season progresses.
The US equity market diverged from the Indian trend, with the S&P 500 rising 0.80% to a record 7,165.08 and the Nasdaq jumping 1.63% to a record 24,836.60 on Friday, driven by a 23% surge in Intel and optimism surrounding a US-Iran ceasefire. However, Dow Jones slipped 0.16% amid pressure on cyclicals, suggesting a trajectory where AI-driven earnings outperformance continues to battle broader geopolitical and inflationary volatility.
The Indian bond market saw yields climb to a two-week high with the 10-year G-Sec settling at 6.98% due to persistent energy-led inflation concerns, while US Treasury yields softened slightly toward the weekend as the 10-year note closed at 4.31% amid tentative signs of geopolitical de-escalation.
# 2 RBI
2.1 RBI on Friday revoked Paytm Payments Bank licence, fully barring it from banking operations after prolonged non-compliance. Launched in 2017 by One97 Communications (led by Vijay Shekhar Sharma), the bank faced persistent compliance issues despite scale (30M accounts, 100M+ KYC users).
- RBI cited operations harmful to depositor interests, poor governance, and no public interest in allowing the bank to continue. Background:
- Mar 2022: Bar on onboarding new customers due to KYC and compliance lapses
- Mar 2024: Ban on deposits, credit transactions, and wallet/FASTag/NCMC top-ups
- Now: Full licence cancellation
- Bank to undergo winding-up via court process; RBI indicates sufficient liquidity to repay depositors.
- Signals declining relevance of payments banks amid rise of Unified Payments Interface, alongside rising compliance burden and regulatory scrutiny.
- No direct financial hit to Paytm; stock is likely to react when markets reopen despite mixed recent performance trends.
RBI’s decisive action underscores a zero-tolerance stance on compliance failures and marks a structural shift away from the payments bank model.
2.2 Supreme Court judgement last week reaffirming IBC is not a recovery mechanism:
- The case involved a creditor (Subh Gautam) seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Anjani Technoplast based on a civil court money decree obtained from the Delhi High Court (2018). Instead of pursuing execution of the decree, the creditor approached the insolvency route under the Insolvency and Bankruptcy Code, 2016 (IBC).
Key Issues
- Can a decree-holder creditor invoke IBC purely to recover adjudicated dues?
- Is existence of a decree sufficient to trigger insolvency proceedings even if the company is not in financial distress?
Supreme Court ruling: Reaffirmed -IBC is not a debt recovery mechanism. Key Observations
- IBC is meant for: Resolution of genuine insolvency, maximisation of asset value and revival of corporate debtor
- It is not: A substitute for execution proceedings or a tool to coerce repayment of dues
- The insolvency process has “far-reaching consequences”, including moratorium and potential loss of control—hence must be used cautiously.
- A decree may give a fresh cause of action, but: Creditors must still demonstrate default + financial distress
- If intent is pure recovery, appropriate remedy is Execution proceedings in civil court, not insolvency tribunals.
The Supreme Court has firmly ring-fenced the IBC as a resolution tool for genuine distress—closing the door on its use as a backdoor debt recovery or coercion mechanism.
2.3 RBI issued a consolidated circular replacing all previous e-mandate rules, effective 21 April 2026 – Covers recurring payments (OTT, MFs, insurance, utility bills, EMIs, credit cards) via cards, UPI, wallets, and prepaid instruments — domestic and cross-border:
Authentication Rules
- One-time Additional Factor Authentication [AFA] required at registration; if first payment coincides, AFA can be combined
- Transactions up to ₹15,000 processed automatically without OTP thereafter
- Transactions above ₹15,000 require AFA each time
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- insurance premiums, MF investments, and credit card bill payments can go up to ₹1 lakh without AFA
Consumer Protections
- Mandatory pre-debit alert at least 24 hours before every transaction (merchant name, amount, date) ; Customers choose notification channel (SMS, email, etc.)
- Customers can modify, pause, or cancel mandates anytime — changes require AFA Variable mandates: users can set an upper debit limit
- Zero-liability policy extended to e-mandates for unauthorized/fraudulent debits (subject to timely reporting)
- No charges to customers for using the e-mandate facility
Why It Matters
- Addresses rising complaints over unauthorized auto-debits and difficulty cancelling mandates
- Brings uniformity across all payment systems under one framework
- Balances automation convenience with security and user control
RBI has struck a pragmatic balance — making recurring digital payments frictionless for everyday transactions while layering in transparency, user control, and fraud safeguards where it counts.Top of FormBottom of Form
2.4 As per data released by RBI last week for banks in FY26, Bank lending dominance restored accounting for 65.4% of total resource flows (three-year high FY 25- 51.4% and FY24 -64.5%). Other key takeaways:
- From a balanced mix in FY25, financing has tilted decisively toward banks in FY26.
- Equity share declined 10.8% → 7.7% (₹ 3.45 lakh cr.)
- Bond issuances increased 5.6% → 6.8% (preference for longer-tenure debt (₹3 lakh cr)
- Formal loan credit surged +38% in FY26 (vs –8% in FY25) → strong borrowing revival
- Non-food bank credit grew 61.5% YoY, (₹ 3.62 lakh cr.) driven by fresh disbursements.
- Outstanding bank credit reached ₹219 lakh crore, up 16% YoY by March 2026.
- Foreign capital share increased 6.8% (FY24) → 11% (FY26); flows nearly doubled to ₹4.9 lakh crore.
- Domestic non-bank share fell from 28.7% → 23.6% over FY24–FY26.
- Debt market trends:
- Corporate bonds: +52.4% (to ₹3 lakh crore)
- Commercial paper: –57.8% (lower short-term funding demand)
- External commercial borrowings: +66.2%
- Total financial resources to commercial sector crossed ₹300 lakh crore, reaching ₹311.8 lakh crore (+15.8%)
Corporate financing in FY26 shows a clear reorientation toward bank-led funding, with supportive but secondary roles played by bonds and foreign capital.
2.5 As per SIDBI-Crif Highmark report published last week
- Small business credit exposure rose 14.9% YoY to ₹47.8 lakh crore (Dec 2025), showing resilience amid global headwinds.
- Stable domestic conditions and policy support continue to drive sustained credit expansion (≤₹5 crore segment).
- Sole proprietors constitute~80% of total portfolio; 73% of borrowers; 62.5% of active loans; key driver of growth and new borrower addition
- Healthy origination trends:
- Overall originations up 13.3% YoY
- Sole proprietor originations up 15%
- ~40% of sole proprietor credit now from smaller cities
- Top 10 states hold ~72% share; UP, Telangana, West Bengal drive growth
- Rising participation from women (23.9%) and younger (<35) borrowers
- Stable average ticket size (~₹3.34 lakh)
- New-to-credit borrowers: 23.3% (sole proprietors), 11% (enterprises)
- NBFCs gaining share:
- Portfolio share increased to 28% (from 26.8%)
- >41% share in sole proprietor lending, reflecting last-mile reach
- Asset quality stable:
- PAR 31–90 days: 3.5%
- PAR 91–180 days: 1.3%
- Increasing share of low-risk borrowers
India’s small business credit ecosystem is expanding in a balanced manner—broadening access, improving borrower quality, and maintaining asset stability, signalling structural maturity.Top of Form
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# 3 SEBI
3,1 NSE last week revised norms/metrics for SME listings
- FCFE (Free Cash Flow to Equity calculation modified: Proceeds from equity, preference shares, and securities premium now included as positive FCFE components.
- Earlier approach excluded capital-raising inflows, focusing mainly on operating cash flows, capex, and borrowings.
- No change to eligibility rule: SMEs must still show positive FCFE in at least 2 of last 3 years.
- Aligns FCFE with SME funding reality, where growth is often equity funded.
- Likely to improve eligibility for high-growth, reinvesting SMEs.
Risks:
- May inflate FCFE optics without strong underlying operating cash flows.
- Potential risk of weaker businesses qualifying, increasing investor caution on SME platform.
The reform makes SME listing norms more growth-friendly and realistic but shifts greater responsibility onto investors to assess true cash flow strength beyond headline FCFE.
3.2 Top of Form
SEBI has notified some amendments in AIF Regulations last week: Key Amendments
- The liquidation of assets and distribution of proceeds to investors after satisfying all liabilities is now expressly subject to conditions as may be specified by the Board from time to time. This gives SEBI broader discretion to regulate the winding up process beyond the standard liquidation period. (Enhanced oversight)
- SEBI has introduced a new sub regulation empowering the Board to classify an AIF as an inoperative fund. This tagging will be carried out in such manner and subject to conditions as may be specified by the Board
- The minimum investment value for individual investors for Social Impact Funds is reduced from two lakh to one thousand rupees.
SEBI’s amendments tighten regulatory control over AIF lifecycle events while widening retail participation in social impact investing.
# 4 Economy
4.1 Key points from Moodys’ and UN Economic and Social Commission for Asia and the Pacific (UNESCAP} projections for India released last week
- Moody’s Ratings: FY27 growth cut to 6.0% (from 6.8%) due to weaker consumption and industrial slowdown
- United Nations ESCAP: FY27 at 6.4%, rising to 6.6% in FY28
- Core drag factors (common view):
- West Asia/Iran conflict → energy & supply shocks
- Higher oil, fertilizer, and commodity prices
- Weaker private consumption, exports (esp. US), and industrial activity
- External sector pressures:
- Wider trade & current account deficits (higher import bill + possible remittance slowdown)
- Risks to rupee stability and need for central bank intervention
- Added risks: 1% US remittance tax, GCC slowdown affecting inflows
- Key buffers
- Strong forex reserves, services exports, low external debt
- Continued government capex & infrastructure push
- Ongoing PLI-led manufacturing expansion (solar, batteries, green hydrogen)
- India still attracting strong greenfield FDI (~$50B)
- Outlook assumes conflict de-escalation; prolonged tensions = downside risk
- Policy imperative (both reports):
- Need for timely fiscal/monetary response to manage inflation, subsidies, and growth trade-offs
Growth is set to normalise rather than collapse—external shocks (energy, geopolitics) are the key downside, while services strength, policy support, and macro buffers prevent a sharper slowdown.
4.2 As per data released by Govt. last week,
- Core sector output contracted 0.4% YoY in March, a 19-month low; first decline in five months.
- Core sector growth moderated to 2.6% in FY26 vs 4.5% in FY25 (five-year low)
- Four of eight sectors shrank: fertilizers (-24.6%), crude oil (-5.7%), coal (-4%), electricity (-0.5%)
- Energy supply constraints and geopolitical disruptions cited as key pressures; impact expected to persist in the near term
- Natural gas output rebounded to +6.4% (22-month high)
- Steel growth slowed to 2.2% (from 7.6%); cement to 4% (from 8.9%), indicating weaker construction activity
Core sector contraction reflects geopolitical supply shocks and weakening industrial momentum, with near-term growth likely to remain subdued
# 5 PE/VC
5.1 Govt. has notified operational guidelines for Fund of funds for Startups [FFS 2.0]
- SIDBI as anchor and Initial implementation agency; provision to add another to scale reach.
Fund structuring & incentives
- Deep-tech, small early-stage funds, manufacturing-focused, and sector-agnostic funds as four different segments.
- 25%–40% of corpus of an AIF, depending on segment (higher for deep-tech), with defined corpus limits and tenures.
- Mandatory 1.5x–2.5x deployment to amplify capital flow into startups.
- Govt FoF exposure capped at 50% of any AIF corpus.
Governance & selection
- Due diligence by implementing agency → VCIC recommendation → final board approval. VCIC presently comprises of: (Vallabh Bhansali, Smt. Renu Swaroop, Shri Chintan Vaishnaw, Shri Rajesh Gopinathan, Ashok Jhunjhunwala)
- Third-party assessments every 5 years.
- Ministries/institutions can add sector-specific capital through co investments.
- Up to 5% of returns for capacity building, mentorship, and infra support.
- Gains flow back to Consolidated Fund of India unlike FFS 1.0 where returns were ploughed back to Fund for redeployment.
A well-structured, multiplier-driven fund-of-funds that can catalyse broader, more disciplined startup capital—provided execution and private capital crowd-in keep pace.
5.2 As per Knight Frank Wealth report 2026 released last week
- India – current vs forecast – UHNWIs: 19,877 → 25,217 by 2031 and Billionaires: 207 → 313 by 2031 (UHNWI definition: Net worth ≥ $30 million)
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- UHNWI growth driven by technology, industrials, capital markets
- Billionaire count rose +58% (past 5 years)
- Further +51% growth expected by 2031
- UHNWIs worldwide: 551,435 (2021) → 713,626 (2026)
- India has 6th-largest UHNWI population globally
- Billionaire ranking: 3rd globally – United States: 914; China: 485; India: 207
- Mumbai accounts for 35.4% of India’s UHNWIs
- Growth despite geopolitical risks, high interest rates, uneven growth
- Key drivers of India’s wealth expansion:
- Digitalisation
- Listed equities
- Private capital
- Family-owned businesses
- Rise of entrepreneurial ecosystem & global founders/investors
India’s wealth surge reflects deepening capital markets + structural economic evolution toward an entrepreneurial economy