Core Viewpoint - The Reserve Bank of India's Monetary Policy Committee is expected to maintain the policy rate at 5.25%, indicating a pause in rate cuts after previous easing measures [1][3][4]. Monetary Policy Outlook - A Mint poll indicates that nine out of ten economists predict the repo rate will remain unchanged at 5.25%, with only one economist expecting a 25-basis-point cut to 5.00% [1]. - The MPC is anticipated to keep a 'neutral' stance, allowing flexibility in future policy adjustments [2][4]. - The focus is shifting towards liquidity management rather than rate adjustments, as systemic liquidity remains low [2][6]. Liquidity Concerns - As of February 2, liquidity in the banking system was in surplus of ₹1.7 trillion, but pressures persist due to RBI's foreign exchange interventions [7][9]. - Economists suggest that the RBI should prioritize easing liquidity through open market operations (OMOs) and dollar buy-sell swaps [6][7]. - A potential temporary 1% cut in the cash reserve ratio (CRR) may occur if liquidity pressures continue [10][11]. Inflation and Growth Dynamics - Inflation is expected to average around 4% in FY27, aligning with the RBI's target, while growth indicators show improvement [3][4]. - The MPC is likely to wait for the new consumer price index (CPI) series release on February 12 before making significant policy changes [12][13]. - The current CPI inflation forecast for FY26 is expected to remain at 2.0%, with a possible downward adjustment for the January-March quarter [14]. Economic Context - The conclusion of the 125-basis-point easing cycle is attributed to strong domestic growth, with expectations of growth remaining above 7.6% despite global uncertainties [5][14]. - Recent government borrowing programs and the India-US trade deal are not expected to significantly impact the MPC's immediate decisions [4][14].

The US government's move to cut tariffs on Indian goods is likely to benefit several sectors especially gems & jewellery, textiles, and marine products, which faced drop in exports to the US in the first eight months of this fiscal year.Prime Minister Narendra Modi and US President Donald Trump announced that US tariffs on Indian goods would be lowered to 18% from 50%. While the US cut a 25% reciprocal tariff to 18%, it removed a 25% penal tariff for India's purchases of Russian oil. The tariffs, imposed l ...

The Reserve Bank of India (RBI) on Tuesday said the government has directed banks handling government receipts and payments to remain open on 31 March 2026, to ensure that all government transactions are accounted for within the current financial year.This year, 31 March will be observed as a public holiday in several regions, including as a regional holiday for Mahavir Jayanti in India. As per the RBI’s calendar of bank holidays, the day has been marked as a bank holiday in parts of the country.However, in ...

Core Insights - The credit-deposit (CD) ratio of scheduled commercial banks reached 81.75% on December 31, 2025, marking the highest level since 2000-01, indicating efficient fund deployment in loans [1] Group 1: CD Ratio Trends - CD ratios typically rise during periods of booming credit and increasing economic activity, although the Reserve Bank of India (RBI) has cautioned against excessively high ratios without specifying an ideal level [2] - Over the last two decades, private sector banks have consistently maintained higher CD ratios compared to public sector banks (PSBs), with the gap widening in recent years [3][4] - The divergence in CD ratios is attributed to the differing credit and deposit profiles of private and public sector banks, with private banks being more aggressive in loan book expansion and deposit mobilization [4] Group 2: Growth Rates - From 2022-23 to 2024-25, PSBs experienced deposit growth of 8-9.5% and credit growth of 12-14.5%, while private banks saw deposit growth ranging from 12-20% and credit growth fluctuating between 9.5% and 28% [4][5] - The higher volatility in credit and deposit growth for private banks has resulted in significantly higher CD ratios compared to PSBs, which benefit from a stable deposit base [5] Group 3: Individual Bank Cases - Legacy factors have influenced the CD ratios of specific private banks, such as HDFC Bank, which inherited a large loan book post-merger without corresponding deposits, resulting in a CD ratio of 110% [8][9] - IDFC First Bank also faced a high CD ratio of 137% at the time of its merger, which was subsequently reduced to 94.7% by September 2025 [9] Group 4: Risks and Current Status - A CD ratio above 80% can lead to tighter liquidity, reliance on higher-cost borrowings, and potential deterioration in loan quality [19] - Despite the rising CD ratios, current indicators show that non-performing assets (NPAs) are at multi-decade lows, and liquidity coverage ratios exceed the benchmark, suggesting that the banking system remains healthy [20] Group 5: Future Considerations - The increasing reliance on non-deposit sources such as borrowings indicates a shift in funding dynamics, prompting discussions among bankers about modifying the CD ratio to include these sources [23]

The benchmark The rally added over about Rs 13 lakh crore in investor pockets within 15 minutes of early trade, with the total market capitalization of BSE-listed companies surging to Rs 468.32 lakh crore.Here’s what’s behind the massive rally: India-US Trade Deal Following months of negotiation, India and the US signed a trade deal after US President Donald Trump said the US would reduce reciprocal tariffs on India to 18%, a sharp reduction from the earlier 50%, while India would also move to cut tariffs ...

Minutes after US President Donald Trump announced that India and United States have agreed to a trade deal, GIFT Nifty futures rose 3.8%. Minutes after US President Donald Trump announced that India and United States have agreed to a trade deal, GIFT Nifty Futures rose 3.8%. The futures contract based on the benchmark Nifty 50 as of 11:21 p.m. was trading 821 points higher at 25,950.In addition, US-listed iShares MSCI India ETF hit session highs and was up as much as 2.4%. The rupee also rallied in the offs ...

The government may consider hiking the foreign direct investment (FDI) limit in public sector banks from 20% to as high as 49% after conducting a review of foreign direct holdings in these banks, a senior government official said on Friday. The goal is to attract foreign investors to Indian banks while raising their capital base and creating more big banks in the process, the official added.After the finance minister's Budget speech on Sunday, department of financial services secretary M Nagaraju said the f ...

Core Viewpoint - A weakening dollar is beneficial for emerging market stocks, as evidenced by their strong performance when the dollar declines [1][3]. Currency Trends - The U.S. dollar has decreased by 11% over the past year and more than 2% in 2026, as indicated by the U.S. Dollar Index (DXY) [1]. - Factors contributing to the dollar's decline include unpredictable White House policies, pressures on the Federal Reserve to cut interest rates, and unfunded tax cuts increasing national debt [2]. Investment Opportunities - Emerging market (EM) stocks tend to perform well when the dollar weakens, as seen in 2025 when the dollar fell 9% and EM stocks rose by 25.6%, outperforming the S&P 500's 17.7% gain [3]. - The Vanguard FTSE Emerging Markets ETF (VWO) is highlighted as a strong investment vehicle for gaining exposure to emerging markets [4][7]. Market Sentiment - A weaker dollar indicates reduced risk aversion among global investors, leading to increased investment in emerging markets [4]. - The current U.S. administration supports a weaker dollar, with President Trump expressing that it is beneficial for business [5]. Economic Outlook - The International Monetary Fund has raised its growth forecast for emerging markets from 3.7% to 4.1%, largely due to improved expectations for China's economy [9]. - Emerging market stocks are currently considered undervalued compared to U.S. equities, with a forward price-to-earnings ratio of about 13.4 compared to 22 for the S&P 500 [10].

Key Changes in Banking Services - State Bank of India (SBI) will revise service charges on certain IMPS transactions starting February 15, 2026. For online IMPS transfers above ₹25,000 and up to ₹1 lakh, a charge of ₹2 plus GST will apply. Transfers exceeding ₹1 lakh and up to ₹2 lakh will incur a fee of ₹6 plus GST, while transactions above ₹2 lakh and up to ₹5 lakh will cost ₹10 plus GST [4][6] - ICICI Bank will discontinue the complimentary movie benefit via BookMyShow on select credit cards from February 1, 2026. The bank will also adjust reward point earnings on transport and insurance spends across various card variants [4][6] - HDFC Bank will implement changes to its credit card program from February 1, 2026, revising reward point redemption rules for its Infinia metal credit card to a maximum of five redemptions per month [4][6] KYC Compliance Update - Punjab National Bank (PNB) has issued an alert for customers to update their Know Your Customer (KYC) details in accordance with RBI guidelines. Customers whose KYC is due as of December 31, 2025, must complete the update by February 2, 2026, or face potential restrictions on account operations [5][6]

Core Viewpoint - In February 2026, significant banking and card-related changes will be implemented, affecting transactions, credit card usage, and compliance for customers of major Indian banks like State Bank of India (SBI), ICICI Bank, and HDFC Bank [1] Group 1: Changes in Banking Services - Revised service charges on IMPS (Immediate Payment Service) transfers will be introduced, impacting transaction costs for customers [1] - Updates in credit card benefits are expected, which may alter the value proposition for cardholders [1] - New Know Your Customer (KYC) update rules will be enforced, affecting compliance requirements for customers [1]