Week ending 4th Oct 2025

# 1 Markets

Indian equity markets experienced a sharp decline last week with Nifty and Sensex losing about 2.65% amid sustained foreign selling and global uncertainties. A modest recovery on the last two sessions followed the RBI’s decision to keep rates steady and a slightly improved growth outlook, but overall market sentiment remained cautious and volatile during the week. As per an interesting survey report, although 63% of Indian households, are aware of at least one securities market product, only 9.5%, or roughly 32.1 million households, actively participate in the markets.

Yields on Indian 10-year government bonds hovered around 6.5% last week, declining slightly after touching a four-week high of approximately 6.59%. The market awaited the auction of a new 10-year bond and was supported by RBI’s decision to maintain rates at 5.50%, amid expectations of subdued inflation and supportive growth projections

US equity markets ended last week, at new all-time highs, with the S&P 500 and Dow both recording record closes while the Nasdaq was marginally lower due to pressure in select tech names. Investors shrugged off the ongoing government shutdown and the absence of key economic data, instead remaining focused on optimism around artificial intelligence, expectations of imminent Federal Reserve rate cuts, and resilient corporate earnings.

US Treasury yields on the 10-year note declined slightly last week, ending around 4.1% on October 3, 2025, pressured by concerns over economic growth and a softening labour market. Market expectations of further Federal Reserve rate cuts and ongoing government shutdown uncertainty contributed to subdued bond market activity and lower yields during the week.

# 2 RBI

2.1 Details, rationale and impact of Monetary Policy Committee decisions and sweeping banking reforms announced last week is discussed in a separate blog to do justice.

2.2 Key highlights from RBI’s revised guidelines on ECBs released last Friday.

• Ceiling raised to $1 billion or 300% of net worth (whichever is higher), up from the earlier fixed cap of $750 million. Aligns borrowing capacity with balance sheet strength.
• Cost caps on ECBs removed; interest rates to be market-determined. For loans maturing under three years, costs linked to trade credit ceilings.
• Minimum average maturity period (MAMP): 3 years across sectors. Manufacturing firms may borrow with maturities between 1–3 years, capped at $50 million outstanding.
• Proceeds can be deployed more broadly, including investments abroad (deposits, CDs, short-term T-bills) and for foreign branches/subsidiaries of Indian banks. On-lending allowed only in regulated/group structures.
• Even companies under restructuring or investigation may now access ECBs.
• ECBs can be converted into equity or other non-debt instruments.

Implications

• Well-rated NBFCs gain new access to cheaper offshore funds, reducing dependence on domestic banks and bonds.
• Broader corporate sector benefits from lower-cost, market-aligned foreign borrowing.
• Structural shift from rigid limits to a flexible, market-driven framework designed to deepen India’s access to global capital.

RBI’s draft ECB liberalisation shifts from rigid caps to a flexible, market-driven framework, boosting well-rated NBFCs and corporates with higher limits, market-linked pricing, and broader end-use flexibility.

2.3 RBI’s expanded related party lending guidelines published last week. Key revisions:

• Now covers promoters, KMPs, >5% shareholders, influential entities, and their relatives (earlier limited to directors).
• Mandatory approvals for material exposures, director recusal, quarterly internal audits, statutory auditor review, and public disclosures.
• Loans capped at ₹50 crore (large banks >₹10 lakh crore assets), ₹10 crore (mid-sized), ₹5 crore (small); above these require board approval.
  • Exempted if fully secured (govt. securities, FDs, insurance policies), certain personal/employee loans, trustee-linked advances, or cash-collateralized facilities.
• Foreign banks barred from lending to Indian firms where their global board directors hold interests.

RBI has overhauled related party lending rules from April 2026, widening the scope to promoters and major shareholders, tightening board-level oversight, and setting size-based thresholds to curb conflicts of interest.

2.4 As per report published by UBS last week on Indian Banks and NBFCs

• UBS expects credit costs to continue declining in H2FY25 and further ease in H2FY26 vs FY25.

• Banks:(June-Aug 25 over previous year)
  • PAR 1–90 down 30 bps to 3.8%; PAR 1–30 down 30 bps; PAR 31–90 flat.
• NBFCs:(June-Aug 25 over previous year)
  • PAR 1–90 down 80 bps to 3.2%.; PAR 1–30 down 20 bps; PAR 31–90 down 60 bps.; Early delinquencies improving faster than banks.

• Economic slowdown could lead to slower credit growth, higher NPA risk, pressure on fee income and NIMs
• Rising deposit costs may strain banks; margins expected stable-to-declining in near term.

UBS expects credit costs for Indian banks to decline in FY26, but near-term slippages remain high with asset quality pressure concentrated in banks, while NBFCs show relatively stronger delinquency trends.

2.5 As per RBI Circular published last week,

• Lenders now have discretion on whether to offer borrowers the option to switch from floating to fixed rates at reset; it is no longer mandatory.
• Lenders may still set limits on how many times a borrower can switch during the loan tenor.
• Earlier, banks could alter spread components (other than credit risk premium) only once in three years; now they may reduce them earlier if it benefits borrowers.
• Banks and tier-3/4 UCBs can lend working capital against gold as raw material beyond jewellers; draft proposes extending gold metal loan tenor to 270 days and allowing non-manufacturing jewellers.
• Revised Basel III norms, raising limits for offshore perpetual debt instruments, giving banks more flexibility to raise Tier-1 capital abroad.

RBI’s latest regulatory changes aim to speed up rate transmission, ease gold loan access, expand banks’ capital-raising options, and tighten credit data reporting.

2.6 RBI has proposed changing the credit reporting frequency by banks last week

• Proposes moving from fortnightly to weekly credit reporting by lenders to Credit Information Companies (CICs); daily reporting may follow in future.
• Only incremental data (new accounts, closures, repayments, demographic changes, guarantor/ownership changes, asset reclassification) to be reported.
  • Data must be submitted within 2 calendar days of these dates.
  • Mandatory inclusion of CKYC number in a separate reporting field.
• To close the timelag that fraudsters exploit before defaults are updated in CIC records, thereby strengthening credit underwriting.

Proposed weekly (vs fortnightly) credit reporting by lenders to CICs to enhance transparency, reduce risk, strengthens lender insights, curb fraud and pushes adoption of advanced technology in credit information systems.

2.7 RBI last week has launched a one-year incentive scheme (Oct 1, 2025 – Sept 30, 2026) to reduce unclaimed deposits:

• Banks will earn payouts linked to account inactivity:
  • Up to 4 years inoperative → 5% of amount or ₹5,000 (whichever is lower).
  • Over 10 years inoperative → 7.5% of amount or ₹25,000 (whichever is lower).
• Unclaimed deposits stood at ₹67,000+ crore as of June 2025.
• RBI had earlier launched the UDGAM portal to simplify search and access for unclaimed deposits.

Scheme aims to reduce stock and slow fresh accretion of unclaimed deposits.

2.8 As per rating upgrades published by rating agencies,

• Corporate credit quality in India remains resilient, backed by strong balance sheets, domestic demand, and government spending.
• Rating upgrades outpaced downgrades across agencies in H1FY26
  • ICRA 2.9x; Care Edge 2.56x; CRISIL 2.17x; India Ratings downgrade ratio 0.31
  • CRISIL’s ratio has moderated for the second consecutive half
• Agencies note most ratings (~80%) remain stable, with only ~20 entities impacted so far.

# 3 SEBI

3.1 SEBI has introduced Validated UPI Handles (@valid) and SEBI Check to secure investor payments and prevent fraud.

• Only SEBI-registered intermediaries (brokers, mutual funds, etc.) can use the new @valid UPI handles, with category tags like “.brk” for brokers and “.mf” for mutual funds.
• Over 90% of brokers and all mutual funds have already adopted it.
• Transactions will show a green triangle with a thumbs-up icon and a distinct QR code, allowing investors to easily verify authenticity.
• SEBI has urged investors to use these verified handles for all payments to the Registered intermediaries.

SEBI’s new @valid UPI handles with SEBI Check aim to curb fraud by ensuring only verified brokers and mutual funds can collect investor payments securely.

3.2 Rationale and impact of interesting decisions by SEBI and RBI last week on two companies Man Industries and Simpl.

3.2.1 Man Industries Ltd

• Man Industries failed to consolidate its wholly-owned subsidiary, Merino Shelters, in financials for six years (FY15–FY21), despite legal merger approval in 2015, allowing it to conceal losses and transactions.

• By excluding Merino Shelters’ cumulative losses of ₹4.73 crore, profits appeared inflated by 1–4% annually — a distortion, though numerically small, that violated SEBI’s disclosure norms.
• The subsidiary was used as a conduit to funnel hundreds of crores to promoter-linked entities (e.g., Man Realty, Limitless Contracting), with questionable repayments, round-tripping, and even a bogus cheque shown as “cash in hand.”
• SEBI imposed a two-year market ban and ₹1 crore penalties on promoters and key officials.

The case underscores how weak governance and opaque related-party dealings can mask true financial health, highlighting governance quality as a critical due diligence marker

3.2.2 Simpl

• RBI ordered Simpl- the checkout pay later startup – to halt all operations after finding it was running an unauthorised payment system under the PSS Act.
• The decision stems from Simpl’s handling of collections and settlements, which in RBI’s view makes it a de-facto Payment Aggregator without the required licence.
• The move reinforces RBI’s stance that any entity touching money flows must operate strictly within licensed categories (PA or NBFC)
• Simpl faces existential risk—forced to either partner with a licensed PA, apply for its own licence, or pivot to a pure service-layer model, all of which shrink its margins and autonomy.

RBI’s clampdown on Simpl underscores its zero-tolerance for shadow payments and reaffirms that only licensed entities can touch money flows.

# 4 Economy

4.1 As per S&P and GoI data release last week,

• India’s manufacturing PMI eased to a four-month low of 57.7 in September (vs. 59.3 in August), with softer growth in orders, output, and hiring.
  • However, optimism remains high as GST cuts are expected to revive demand ahead of the festive season, and export orders rose despite global trade headwinds.
• India’s industrial output rose 4% in August, down from 4.3% in July
  • manufacturing slowed to 3.8% while mining (+6%) and electricity (+4.15%) recovered.
  • Capital goods grew 4.4% (vs 6.8% in July), while infrastructure/construction goods stayed strong at 10.6%.
  • Rural demand is supported by a good monsoon and benign inflation, while urban demand is expected to benefit from GST cuts and lower lending rates.

Slowing down of the economy is visible and Q2GDP growth could be much lower than Q1

4.2 Global rating agency Moody’s has in its release last week

• Retained India’s sovereign credit rating at Baa3 with stable outlook.
• Large and fast-growing economy, sound external position, stable domestic financing base.
• High government debt and weak debt affordability; fiscal consolidation expected to reduce debt only gradually.
• Recent fiscal measures to boost consumption have eroded revenue base; high US tariffs and geopolitical tensions may limit manufacturing investments.
• Other agencies (R&I, S&P Global, DBRS) have recently upgraded India’s ratings.

Reforms and steady growth have enhanced resilience and credibility, leading to multiple rating upgrades in FY25. Strong growth potential, supported by demographics and a large domestic market, continues to insulate India against external shocks.

# 5 PE/VC

5.1 As per Hurun India 14^th edition of Annual Wealth List published last Wednesday

• Mukesh Ambani reclaimed the title of India’s richest person in 2025 with a net worth of ₹9.6 trillion (down 6% YoY), overtaking Gautam Adani, whose wealth fell 30% to ₹8.1 trillion.
• Roshni Nadar Malhotra entered the top 10 richest with ₹2.8 trillion, becoming India’s richest woman and youngest on the list after inheriting 47% of Shiv Nadar’s stake in HCL Corporation and Vama Delhi.
• India added 24 new dollar billionaires in 2025, taking the total to 358 (vs 109 in 2014). The number of Indians with wealth above ₹1,000 crore rose to 1,687 (from 750 in 2019), with combined wealth at ₹167 trillion (~50% of FY25 GDP at ₹330.7 trillion).
• Richest self-made Indian woman: Jayshree Ullal (Arista Networks CEO) with ₹50,170 crore, followed by Radha Vembu (Zoho), Falguni Nayar (Nykaa), Kiran Mazumdar Shaw (Biocon), and Ruchi Kalra (OfBusiness).
• Sectors: Pharma leads with 137 individuals, followed by industrial products (132) and chemicals/petrochemicals (125). Richest in pharma: Cyrus Poonawalla (Serum Institute) at ₹2.5 trillion.
• Cities: Mumbai is the top hub with 451 wealthy individuals; Bengaluru (116) overtook Hyderabad (102) as third largest.
• Demographics: Average age 65; 87% above 50, only 4% below 40.

India’s wealth concentration continues to deepen, with Ambani near the ₹10-trillion-mark, pharma as the dominant wealth-creating sector, and Mumbai as the epicentre of India’s billionaire class.