# 1 Markets
1.1 Indian markets fell nearly 2% last week amid rising global tensions around US–Iran talks. The Sensex closed at 81,287 and the Nifty at 25,179 — its third-worst weekly performance of the year — erasing post-budget gains. A viral Anthropic blog post claiming Claude Code can automate COBOL legacy modernisation — cutting timelines “from years to quarters” — rattled markets. India’s Nifty IT fell 4.7% to its lowest since August 2023 and is down ~21% since the February 3 announcement. Volatility is expected to intensify coming week after Israel’s strike on Iran, raising escalation risks.
1.2 US–Israel strikes on Iran have sparked a global risk-off wave—oil and gold surged, Bitcoin slid, US yields fell, and equities are set for a gap-down open—raising inflation and currency risks (especially for oil importers like India) while putting defence and energy stocks back in focus amid fears of a prolonged missile-driven conflict. Reports that Ayatollah Khamenei is killed may create further geo political tensions.
1.3 Indian bond yields declined last week, with the benchmark 10-year G-Sec ending at 6.6603% on Friday marking a ~3-4 bps weekly drop amid surplus banking liquidity and strong state debt auctions.
1.4 US stock markets declined modestly last week amid AI sector concerns, hotter-than-expected inflation data, and rising US-Iran tensions boosting oil prices. The S&P 500 fell 0.4%, Dow dropped 1.3% to 48,978, Nasdaq lost 1%, and Russell 2000 shed 1.2%.
1.5 US Treasury yields eased last week, with the 10-year note falling to 4.02% on Feb 26 (down ~6 bps from early week highs), driven by stagflation fears post-hot inflation data and safe-haven demand.
# 2 RBI
2.1 What happened in IDFC First Bank?
A major fraud occurred at IDFC First Bank’s Chandigarh branch between September 2025 and January 2026 involving Haryana government accounts. The Development and Panchayats Department had deposited ₹50 crore under MMGAY 2.0. When it sought account closure in January 2026, only ₹1.27 crore was transferred, exposing large discrepancies.
- Investigation revealed forged cheques and debit notes — including instruments signed in the name of a senior IAS officer who had already relinquished charge.
- In one case, a ₹2.5 crore cheque was processed as ₹25 crore.
- The total fraud amounted to ~₹590 crore, with funds routed to a private firm linked to the accused.
- Four individuals were arrested — two former bank officials and two private individuals. The alleged mastermind was a former branch manager who had already moved to another bank.
Impact
IDFC First Bank refunded ₹583 crore (principal + interest). The stock initially fell sharply but stabilised after repayment. Haryana directed departments to close accounts with the bank, potentially leading to significant deposit outflows.
Key Learnings
- Cheque risk is underestimated – Though cheques form <3% of transactions, weak verification makes them a high-fraud channel.
- Multi-layer control failure – Forged signatures, amount mismatches (figures vs words), and post-tenure authorisations were not detected.
- Weak government reconciliation – The fraud ran for ~5 months before detection.
- Insider–outsider collusion risk – A former employee allegedly exploited internal knowledge to engineer the fraud externally.
A low-frequency channel, weak controls, and insider knowledge combined to create a high-impact failure — underscoring that governance gaps, not transaction volume, determine risk.
2.2 As per CRIF Highmark (credit bureau) report (Q3 FY26) released last week
- New to Credit [NTC] share declined YoY across all loan products except consumer durables (up marginally to 16.3%).
- Two-wheeler loans retained highest NTC share at 38.3% but saw sharpest decline (from 41.2%).
- Auto & housing loans: Moderate NTC penetration (9–10%).
- Gold & personal loans: NTC below 5%.
- Credit cards: Stable at 8.5%.
- Retail Lending
- Retail lending portfolio grew 1% YoY to ₹162.7 lakh crore.
- Asset quality improved: PAR 31–180 declined to 1% (from 3.6%).
- Premiumisation
- Home loan average ticket size up 6.4% QoQ to ₹33 lakh.
- Loans above ₹75 lakh formed 40% of originations (vs 35% YoY).
- Gold loans above ₹5 lakh contributed 36.5% of value (vs 24% earlier).
- Gold loan originations more than doubled, aided by gold price rally.
- Credit Performance
- Higher-ticket loans showed stronger asset quality.
- Personal loans >₹5 lakh: PAR 91–180 below 1%.
- Smaller-ticket loans exhibited relatively higher delinquencies.
- Gold loan PAR improved to 1.8% (from 2.4%).
- Consumer durable PAR improved to 1.9% (from 2.7%).
- Home loan PAR 31–90 improved to 2.1%.
- Personal loan early delinquency stable at 1.5%.
- Institutional & Segmental Shifts
- PSBs outpaced private banks in home loan origination value (50.3% vs 23.3%), especially >₹75 lakh segment.
- PSBs held 45.8% gold loan origination value share.
India’s retail credit growth remains robust and increasingly premiumised, with improving asset quality and stronger performance in higher-ticket segments even as new-to-credit participation moderates.
2.3 As per RBI data released last week
- Non-food bank credit growth: ~14% YoY in January, indicating sustained expansion in bank lending.
- Services sector credit: Grew 15.5% YoY, up from 12.3% in the corresponding period last year. Growth supported by lending to NBFCs, trade financing and Commercial real estate.
Sectoral Credit Trends
- Gold loans surged 128% YoY in January, more than doubling from 91% growth a year earlier: reflecting elevated gold prices, increased household liquidity needs and strong demand for secured short term credit.
- Credit to renewable energy (under priority sector classification) grew 62% YoY: Among the fastest-growing mandated lending segments, signalling alignment with green transition objectives
- Outstanding bank credit to NBFCs: ₹ 19.05 lakh crore (all-time high) Growth: 18% YoY; Housing Finance Companies: ₹ 3.53 lakh crore (+8.5% YoY)
Green Deposits – Emerging but Small Base
- Public Sector Banks (PSBs) dominate mobilisation, though absolute levels remain modest relative to total deposits. – SBI ₹ 172.26 crore; BoB ₹ 1,707 crore
RBI’s latest data indicates broad-based credit momentum led by gold loans and NBFC financing, with accelerating green and renewable lending signalling a gradual but structurally important shift in capital allocation.
2.4 The RBI confirmed last week that
- Peer-to-peer merchant (P2PM) UPI transactions — covering small, unorganised merchants — do not require a payment aggregator (PA) partner and fall outside the MD-PA framework.
- Due diligence responsibility rests with the acquiring bank.
- The clarification relieves compliance pressure on PhonePe and Paytm, which have large QR-code and soundbox deployments in the long-tail merchant segment, where small merchants account for most of the transaction volume but less than 20% of total value.
The RBI’s clarification pragmatically balances compliance with inclusion—easing regulatory burden on UPI players while preserving oversight through banks, and safeguarding the growth momentum of India’s long-tail merchant ecosystem
# 3 SEBI
3.1 SEBI overhauled mutual fund categorisation last week
What Changed & Why It Matters
- Solution-Oriented Funds scrapped Immediately Retirement and children’s plans are discontinued with immediate effect. Existing schemes stop accepting subscriptions and will be merged with similar categories post regulatory approval. SEBI essentially acknowledged these were labelling exercises with no distinct investment merit. Impact > Forced migration to new schemes, review asset allocation
- Life Cycle Funds — New Category Introduced These are open-ended funds with fixed maturities (5 to 30 years, in 5-year multiples) that follow an automatic glide path — progressively shifting from equity to debt as maturity nears. They can invest across equity, debt, gold/silver ETFs, InvITs, and commodity derivatives. At any time, only six such funds can be open for subscription per AMC. Impact > Cleaner, goal-linked investing with automatic de-risking.
- Portfolio Overlap Caps on Thematic & Sectoral Funds No more than 50% overlap is permitted between a thematic/sectoral fund and other equity schemes (excluding large cap). Funds have three years to comply; those unable to do so must mandatorily merge. This will likely trigger consolidation among smaller or duplicative thematic funds. Impact > Some funds may merge.
- Value & Contra Funds — Both now permitted – AMCs can now run both simultaneously, provided portfolio overlap stays below 50%. Earlier, AMCs had to choose one or the other.
- Arbitrage Funds — Returns Set to Fall Debt exposure within arbitrage funds is now restricted to government securities with residual maturity under one year. Combined with the increase in STT from April 2025, this is expected to compress arbitrage fund returns by 30–40 basis points.
- Gold & Silver ETF Valuation — Domestic Pricing Adopted Physical gold and silver held by ETFs will now be valued using exchange-polled spot prices discovered in India’s regulated markets, replacing the earlier LBMA AM fix-based methodology. This improves transparency and reduces currency/conversion-related distortions.
- Scheme Naming Tightened Fund names cannot emphasise or highlight return expectations. Descriptions in offer documents must follow a prescribed format — addressing past misselling through naming conventions.
SEBI has moved from a world of creative fund naming to one demanding genuine differentiation — investor clarity over product clutter – a belated but necessary correction that prioritises investor clarity over product proliferation.
# 4 Economy
4.1 India GDP Update: Key Highlights (Q3 FY26)
What Changed
India released a new GDP series with 2022-23 as the base year, replacing the 2011-12 series.
- The overhaul incorporates GST data, double deflation methodology, broader informal sector coverage via Annual Survey of Unincorporated Sector Enterprises and Periodic Labour Fource Surveys, and the Proportional Denton Benchmarking method for quarterly estimates.
- As a result, nominal GDP has been revised downward by ₹11 trillion to ₹345.47 trillion ($3.93 trillion), though real growth estimates have generally been revised upward.
Growth Recorded (Q3 FY26: Oct–Dec 2025)
- Real GDP grew 7.8%. Key sectoral contributions:
- Manufacturing: 13.3% — the standout performer, with double-digit growth sustained across multiple quarters
- Services (Tertiary): 9.5%, with Trade, Hotels & Transport posting 10.1%
- Agriculture & Allied: 1.4%, a slowdown from 4.2% prior year
- Private Consumption (PFCE): 8.7%
- Gross Fixed Capital Formation: 7.8%
- Government Expenditure: 4.7%
For full-year FY26, GDP growth is now projected at 7.6%, up from the earlier 7.4% estimate.
Positive signals:
- CEA Nageswaran described momentum as strong enough to deliver 7.3%+ in Q4, achieving the 7.6% full-year target, and raised the FY27 forecast to 7–7.4%, partly citing a trade framework agreement with the US
- The 7%+ growth trajectory since FY24 corroborates the Economic Survey’s view that India’s medium-term growth potential is around 7%
Concerns raised:
- The lower nominal GDP base pushes the FY26 fiscal deficit to 4.51% of GDP from 4.36%, without any change in the actual deficit amount
- Debt consolidation becomes steeper — FY27 debt-to-GDP could rise to 57.5%, about 1.9 percentage points higher than previously estimated
- A weaker rupee and the nominal GDP reduction may delay India surpassing Japan as the 4th largest economy, though the $4 trillion mark is expected in FY27
- the downward nominal revision implies the old series was likely overestimating GDP, a first of its kind correction
India’s economy is growing robustly on the ground, but the new GDP series has essentially traded a bigger but less accurate number for a smaller but more honest one — and the fiscal math will need to catch up.
4.2 India’s Engineering Goods Exports excel – April–January FY26
- Engineering goods exports rose 10.4% YoY to $10.40 billion in January 2026.
- Cumulative Achievement (Apr–Jan FY26): Crossed the $100 billion milestone.
- Key Growth Drivers: Strong export momentum in copper, iron & steel, and motor vehicles.
- Exports to the US — India’s largest engineering goods destination — declined 6.8% YoY to $1.51 billion, reflecting tariff-related uncertainties.
- EEPC India projects FY26 exports to exceed $120 billion.
Despite softness in the US market, diversified product strength and sustained global demand signal resilient momentum for India’s engineering exports in FY26.
# 5 PE VC
5.1 Bain Global Private Equity Report 2026 — Key takeaways
- After three weak years, global PE rebounded in 2025: buyout deal value hit ~$900B and exits crossed ~$700B, making it the second-strongest year after 2021. However, the recovery was concentrated and not broad-based.
- Momentum was driven by large transactions (including record take-privates), while mid-market activity remained uneven—limiting structural repair across the industry.
- Corporate M&A revived and sponsors faced pressure to return capital, boosting exits. Yet a backlog of unsold assets and strained cash flows persist.
- LP caution and denominator effects kept capital raising subdued. GPs must now prioritise DPI and credible liquidity over valuation-led narratives.
- With high asset prices, elevated rates, and intense competition, success will hinge on underwriting rigor, operational value creation, and execution quality—not financial engineering.
(Full report >> https://www.bain.com/globalassets/noindex/2026/bain-report_global-private-equity-report-2026.pdf )
PE momentum has returned, but it is concentrated and incomplete. Liquidity and fundraising remain structural constraints, making disciplined deployment and real value creation the key differentiators in 2026.
India Private Credit AIF — Market Snapshot
- India’s private credit AIF market has been one of the fastest-growing alternative asset segments globally.
- AUM of India-focused private debt grew over 25x from $0.7 billion in 2010 to $17.8 billion in 2023— a trajectory that outpaced every other alternative asset class in the country, including Venture Capital (8x), Private Equity (2.1x), Real Estate (1.6x), and Infrastructure (1.8x) over the same period.
- By early 2025, India’s private credit AUM was estimated at $25–30 billion, representing roughly 0.6% of India’s GDP and about 1.2% of the overall corporate lending sector
What’s Driving Demand
- Bank credit growth to industry remained sluggish at 8.5% in FY24, and the share of industry in bank credit had shrunk to 23% from 27% in March 2022— creating a persistent gap that private credit fills.
- The IBC (Insolvency and Bankruptcy Code, 2016) provided legal backbone for creditor protection, and the Finance Acts of 2023 and 2025 improved the tax treatment of AIF debt investments, broadening the investor base.
- Globally, private credit crossed $2 trillion in AUM by 2023, up from under $400 billion pre-GFC.
- India, while still nascent at ~0.6% of GDP penetration, is projected to grow combined private credit and real assets AUM to $116.6 billion by 2029, with private credit and real assets expected to reach 48% of India’s overall alternatives industry by then
- The RBI’s 2023 circular restricting banks and NBFCs from investing in AIFs with exposure to their existing debtors created short-term friction — but clarifications in 2024 and a reduction in NBFC risk weights in early 2025 have eased the environment.
India’s private credit market has graduated from a niche post-crisis phenomenon into a structurally essential pillar of corporate finance — and with AUM still at just 0.6% of GDP versus 5–7% in mature markets, the runway ahead is arguably longer than the runway already covered.