# 1 Markets
Indian equity markets declined for most of last week, Nifty dropping to end near 24,654 and the Sensex at 80426 marking a seventh straight session of losses. Selling was broad-based after President Trump announced tariffs on branded drugs and higher US visa fees, dampening investor sentiment. Continued FII outflows and a weakening rupee outweighed domestic institutional buying support. Incidentally, September 2025 marked the strongest month for IPOs in nearly three decades, with 25 mainboard and 56 SME issues—the highest tallies since 1997 and 2012, respectively. NSE’s unique investor base has crossed 12 crores, with women now accounting for one in every four investors.
Indian bond markets remained stable last week, with the 10-year G-Sec yield trading in a narrow band around 6.50% as global uncertainty and US tariff shocks weighed on risk sentiment. Foreign investors showed selective buying interest, helping contain upward pressure on yields, while domestic fiscal discipline further anchored rates near multi-week lows
US equities ended the week lower, with the S&P 500 down 0.3%, Nasdaq dropping 0.6%, and the Dow falling 0.1% as all major indices suffered their longest losing streak since March, mainly due to renewed rate-cut uncertainty and profit-taking. Despite strong economic data and resilient corporate earnings, elevated valuations and hawkish Fed signals kept investors cautious ahead of key inflation data releases.
U.S. consumer spending rose 0.6% in August, beating forecasts, underscoring economic resilience with low layoffs and strong business demand—reducing chances of Fed rate cuts this year. US bond yields edged up last week, with the 10-year Treasury rising from about 4.15% to 4.18%, as stronger economic data (3.8% growth in Q2’2025) and continued inflation concerns prompted markets to scale back expectations of aggressive Fed rate cuts.
# 2 RBI
2.1 Highlights from “State of NBFCs” published in RBI bulletin last week:
- The NBFC sector continued to experience double-digit growth in total assets and liabilities as of December 2024, with loans and advances growing by 15.4% y-o-y, though at a slower pace compared to previous years.
- Unsecured loans accounted for 24.0% of gross loans by December 2024, dropping from 26.8% a year ago.
- At year-end 2024, credit to the retail and industrial sectors comprised roughly 72% of NBFC portfolios. Vehicle loans (34.9% of retail loans) and gold loans (12.6%) were the largest segments, both seeing double-digit growth rates.
- Return on Assets (RoA), Return on Equity (RoE), Net Interest Margin (NIM), and capital to risk-weighted assets ratio (CRAR) all stayed healthy. As of December 2024, CRAR was 20.6% for upper layer NBFCs and 28.6% for the middle layer, both above regulatory norms
- Gross Non-Performing Asset (GNPA) and Net NPA (NNPA) ratios improved to 3.4% and 1.2% respectively by December 2024, indicating enhanced asset quality. However, GNPA for microfinance loans rose, driven partly by new lending caps and exposure guardrails.
- NBFCs remain reliant on bank borrowings (37.4% of funding as of December 2024) and debentures (35.6%), underscoring interconnectedness with the formal banking sector.
- Debentures and inter-corporate borrowings increased at a higher rate, while bank borrowing grew more moderately.
- Liquidity Coverage Ratio (LCR) norms, phased in since December 2020, required large NBFCs to maintain 100% LCR by December 2024. The sector has consistently maintained LCR above regulatory requirements, strengthening short-term resilience.
India’s NBFC sector remains a critical engine for credit growth with robust financials, healthy asset quality, and prudent regulatory oversight supporting its resilience and expansion. However, ongoing dependence on market and bank borrowings underscores the need for diversified funding and continued vigilance against emerging risks
2.2 RBI last Friday simplified process of settlement of claims of deceased depositors. Brief highlights
- Banks cannot insist on succession certificates, probate, indemnity bonds, or sureties when releasing funds to nominees/survivors, regardless of amount.
- For smaller claims without nomination or survivor clauses, banks may accept a legal heir certificate or an independent declaration in RBI’s format. Above threshold limits (₹5 lakh for co-operative banks; ₹15 lakh for others), additional documents like succession certificates and indemnities may be required.
- Claims on deposit accounts, lockers, and safe custody articles must be settled within 15 calendar days of receiving documents.
- Compensation for Delays:
- Deposits: Interest at not less than Bank Rate (currently 4% p.a.) for the delay period.
- Lockers/Articles: ₹5,000 per day of delay.
RBI’s revised norms beside bringing uniformity across banks replacing divergent practices, streamline claim settlements for deceased customers, ensuring faster payouts, reduced legal hurdles, and penalising banks for delays—significantly improving customer service and accountability.
2.3 RBI revised its rules on digital payment authentication on Friday effective from April 1, 2026. Brief highlights:
- Two-Factor Authentication (2FA) mandatory for all transactions.
- At least one factor must be dynamic and unique to the transaction.
- New factors encouraged: biometrics, device-based tokens, passphrases.
- SMS-based OTPs remain valid; not discontinued.
- Small-value transactions exempted from mandatory 2FA.
- Card issuers allowed to add risk-based checks beyond minimum 2FA (based on fraud perception).
- Digi Locker can be used for alerts/confirmations in high-risk cases.
- Tokenisation services must be interoperable, usable across all applications and requestors.
- Open access mandated for authentication/tokenisation providers.
- From October 1, 2026, card issuers must validate non-recurring, cross-border card-not-present (CNP) transactions if authentication is requested by an overseas merchant/acquirer.
The RBI’s new rules make two-factor authentication mandatory for digital payments while promoting newer technologies like biometrics and tokenisation, tightening security for customers but also requiring banks and issuers to upgrade systems and bear liability for non-compliance.
2.4 As per Sept’25 CIBIL market report released last week,Top of Form
- Loan demand from younger borrowers (18–35) slowed to 6% YoY in Q1 FY26 (vs. 9% last year), dragging the Credit Market Indicator down to 98.
- Their share of overall demand dipped to 56% as credit card appetite weakened, though personal, consumer durable, and gold loans stayed resilient.
- In contrast, semi-urban and rural markets drove growth, with loan originations rising 9% YoY—led by personal loans (+15%)—lifting their share to 61%.
- New-to-credit (NTC) borrowers slowed in Q1FY26 making up 16% of loan originations, down from 18% a year ago, as lenders took a cautious stance.
- TransUnion CIBIL flagged this urban-rural divergence as a sign of a maturing, resilient, and more inclusive credit market.
Bottom of Form
- 25% of score migrations were downgrades (vs 23% last year); upgrades fell to 29% (vs 31%). Repayment stress noted in prime segment.
Youth credit demand is slowing, but strong semi-urban and rural momentum is sustaining overall market resilience.
2.5 As per CRIF report released last week
- Non-bank lenders are rapidly gaining ground in the personal loan segment as banks step back from small-ticket disbursements.
- NBFCs’ share of new originations rose to 41% by value and 92% by volume as of June 2025 (vs. 27% and 82% two years earlier), driven by fintech NBFCs.
- Banks’ share fell to 28% each for private and state-run institutions, with volumes at just 4%.
- NBFCs are capturing the small-ticket, high-yield segment with flexible lending and competitive pricing, while banks retain focus on large-ticket, lower-risk loans.
- Asset quality remains stable: NBFC PAR (31–90 DPD) at 2.1% vs. 1% for private banks and 2.2% for PSBs.
- The ₹15 lakh crore personal loan market continues to expand, with NBFCs leveraging technology to outpace banks in growth and consumer durable loans.
NBFCs are rapidly outpacing banks in small-ticket personal loans, capturing market share through tech-driven flexibility despite slightly higher credit risk.
2.6 As per Systematix Group report released last week
- PSBs outpaced private peers in FY25 with 12.2% credit growth vs 9.5%, marking their first double-digit expansion since 2010.
- PSB retained deposit share despite competition, closed the asset quality gap, and boosted profitability via recoveries, while technology adoption, branch expansion, and third-party product sales are strengthening sustainability amid margin pressures.
PSBs have staged a strong comeback, outgrowing private banks in credit while closing gaps in asset quality and profitability
# 3 SEBI
3.2 The Supreme Court last week has cleared JSW Steel’s ₹19,700 crore acquisition of Bhushan Power & Steel, ending years of litigation and rejecting dissenting creditors’ challenges under the Insolvency and Bankruptcy Code. Earlier, a May 2025 Supreme Court ruling had quashed the resolution plan and ordered liquidation, but this has now been reversed.
This removes legal overhang, secures continuity of JSW’s turnaround of BPSL into a profitable enterprise, and stabilises ₹34,000 crore of bank debt exposure.
3.3 Supreme Court landmark judgement last week on SARFAESI Act. settles redemption controversy and points of extinguishment of right of redemption under Section 13 of the SARFAESI Act in M. Rajendran v. KPK Oils (22.09.2025)
Case Synopsis
- Borrowers defaulted on a credit facility, and the secured property was classified as NPA, triggering SARFAESI enforcement by the bank.
- After due procedure, the bank published an auction sale notice, and the property was successfully auctioned to M. Rajendran (appellant).
- Borrowers challenged the auction post-publication, and though the Debt Recovery Tribunal (DRT) dismissed their claim, the High Court entertained their writ, which the Supreme Court ultimately set aside.
Judgement Highlights
- The borrower’s right of redemption under Section 13(8), post-2016 amendment, strictly ends with the publication of an auction notice, not with the eventual sale of the asset.
- Any tender of dues after the auction notice publication is invalid for redeeming the secured asset. Third party rights created after the auction are void.
- The Court criticized the “ill-wording” of Section 13(8) and its conflict with SARFAESI Rules, urging legislative intervention.
This judgement thus establishes a clear and final boundary for borrower redemption rights under SARFAESI post-auction notice and sets a direct path for future recovery actions and dispute adjudications under the Act. Conflicting High Court views allowing redemption post-auction or requiring multiple notices are overruled.
# 4 Economy
4.1 Key highlights from “The State of Economy” published in RBI Bulletin last week.
- GST Council simplified rate structure (mainly 5% and 18%) tackled inverted duty structures and streamlined compliance processes; expected to benefit MSMEs and startups, enhance tax buoyancy and ease of doing business.
- Central and state fiscal deficits higher YoY due to increased expenditure and sluggish direct tax receipts; indirect tax collections remained steady.
- Merchandise trade deficit narrowed to USD 26.5 billion in August, exports expanded 6.7% YoY, imports contracted 10.1% YoY.
- Current account deficit improved to -0.2% of GDP for Q1; Net FDI inflows hit a 38-month high in July; forex reserves cover >11 months imports and >95% external debt.
- Bank credit growth reached 10.3% YoY; deposit growth at 9.8% YoY; transmission of repo rate cuts robust with lending rates falling by up to 53 bps.
Impact analysis:
- Tax reforms, policy support, and favourable macroeconomics expected to offset tariff-related headwinds and drive a demand-led economy in H2 FY26.
- Income tax relief, job creation, and GST reforms (duty simplification, MSME/startup benefits, compliance ease) to boost household consumption, tax buoyancy, and business ease.
- RBI projects FY26 GDP at 6.5%; Q1 actual at 7.8%, Q2 likely around 7%; optimism for H2 on strong corporate balance sheets and structural reforms.
- Higher kharif sowing supports agriculture growth and stable food prices; CPI inflation below 4% target for seven straight months.
- Despite US tariff headwinds, domestic economy remains resilient.
Tax reforms, policy support, and stable macro fundamentals are expected to drive a demand-led recovery in H2 FY26, offsetting tariff-related headwinds. With resilient agriculture output, surplus liquidity, and healthy corporate balance sheets, India is positioned for sustained consumption growth and investment momentum
4.2 As per report released by Institute of International Finance, released last week
- Global debt climbed to a record $337.7 trillion by end-Q2 2025, rising $21 trillion in the first half of the year. The increase was driven by easing global financial conditions, a softer U.S. dollar, and accommodative central banks, with China, the U.S., France, Germany, Britain, and Japan leading the rise.
- Debt-to-GDP ratio globally eased slightly to ~324%, but emerging markets hit a record 242.4%.
- Emerging markets debt crossed $109 trillion, with $3.2 trillion in bond and loan redemptions due in late 2025.
- Fiscal strains in Japan, Germany, and France; “bond vigilantes” selling off unsustainable debt; and rising U.S. reliance on short-term borrowing (20% of government debt, 80% of Treasury issuance) are highlighted as risks.
- Short-term issuance may pressure central banks to keep rates low, threatening monetary policy independence.
Record global debt heightens fiscal strain and refinancing risks, with U.S. short-term reliance and emerging market redemptions posing systemic vulnerabilities.
4.3 Trump announced 100% tariffs on branded and patented drug imports from Oct 1, 2025, unless firms build plants in the US.
- India, which sends 31% of its $27.9 bn. pharma exports to America, faces risk though generics may be spared.
- Firms like Sun, Dr. Reddy’s, Aurobindo, and Zydus, heavily reliant on US sales, could see margin pressure.
- Tariffs threaten higher drug costs, shortages in the US, and uncertainty for Indian pharma exporters.
The proposed 100% tariff on branded and patented pharmaceutical imports is unlikely to have an immediate impact on Indian exports, as the bulk of our contribution lies in simple generics and most large Indian companies already operate U.S. manufacturing or repackaging units and are exploring further acquisitions.
4.4 As per DPIIT report released last week
- Logistics cost has come down to 7.97% of GDP (₹24.01 lakh crore in FY24): 9.09% of non-services output (agriculture, mining, manufacturing).
- First scientifically derived estimate (NCAER study for DPIIT). Combines secondary data (RBI, etc.) with nationwide surveys.
- Corrects earlier misrepresented figures of 13–14% of GDP.
- Growth pace of logistics costs slowing in past 5 years.
- Attributed to PM Gati Shakti, dedicated freight corridors, Sagarmala, ULIP, integrated check posts.
- Govt. has already launched integrated state and city logistics plans in 8 states/cities to reduce industry transaction costs.
- Recommendations
- Expand dedicated freight corridors and modernise rail infra.
- Invest in tech (GPS, automation, safety) and green logistics (fuel-efficient vehicles, renewable energy).
- Develop multi-modal logistics parks, freight consolidation centres, truck lanes, and cargo-friendly airports in non-metros.
- Strengthen inland waterways (wider/deeper navigation channels, multimodal terminals).
India’s logistics cost has been scientifically pegged at 7.9% of GDP far lower than earlier estimates, with rail emerging as the most efficient mode; continued infra and multi-modal initiatives are expected to further drive cost rationalisation.
4.5 As per S&P report released last week,
- India’s private sector growth cooled in September, with HSBC’s flash PMI slipping to 61.9 from 63.2 in August.
- Softer new business intake, slower output and job growth, and weaker exports due to the US’s 50% tariff.
- Manufacturing (58.5 vs 59.3) and services (61.6 vs 62.9) both moderated, though growth stayed robust by historical standards.
- Business confidence improved to a seven-month high, supported by domestic demand (helped by lower GST rates) offsetting some export weakness.
India’s private sector growth eased in September on weaker exports and slower hiring, though domestic demand and confidence kept expansion robust.
4.6 OECD in its report published last week,
- raised India’s FY26 growth forecast to 6.7% (from 6.3%) on policy easing and GST reforms,
- while S&P held at 6.5% citing strong domestic demand but weak private capex. Trade risks from steep US tariffs loom, though resilient consumption and lower inflation (3.2%) are expected to cushion export headwinds.
# 5 PE/VC
5.1As per data released by Tracxn last week,
- Digital lending startups raised $462m in Jan–Aug 2025, down from $1.1b a year earlier (-58%).
- Of 154 fintech deals in 2025, only ~50 involved digital lenders.
Reasons for slowdown:
- Rising defaults and RBI regulatory tightening on unsecured/digital lending.
- RBI raised risk weight on unsecured loans/credit cards to 125% in 2023, leading banks to cut exposure.
- Most large lenders now profitable; relying on internal accruals instead of equity raises.
- No significant new entrants emerging.
Valuation reset:
- Shift from tech-style growth multiples to traditional NBFC metrics (net worth, profitability).
Digital lending funding has sharply contracted as RBI curbs, rising defaults, and a valuation reset push investors to prioritise profitability and asset quality overgrowth.
- As per ASK Private Wealth Hurun India Unicorn and Future Unicorn Report 2025 released last week
- India’s startup ecosystem is accelerating, with 73 unicorns (11 new in 2025) led by Ai.tech, Navi, Rapido, and others across fintech, e-commerce, AI, SaaS, and NBFCs.
- Unicorns employ 206,000+ people, with future unicorns raising the total to 374,000 jobs
- Bengaluru dominates (26 unicorns, $70B), followed by Delhi-NCR (12, $36.3B) and Mumbai (11, $22.8B). Fintech leads (19 unicorns, $50.1B).
- Investor backing remains strong, aided by angel tax abolition, though regulatory changes cut gaming unicorns.
- The report also highlights young founders (Zepto’s 22-year-olds) and women leaders, with 150 future unicorns valued at $62B, signalling sustained momentum.
India’s startup ecosystem is surging, with unicorns crossing 73 and future unicorns valued at $62 billion, underscoring strong investor confidence and sectoral diversity despite regulatory headwinds.