In 2025, India's primary equity market scaled new heights as companies raised a record ₹1.95 trillion through more than 365 initial public offerings (IPOs), according to a latest strategy report by Motilal Oswal Financial Services. In the last two years, ₹3.8 trillion were raised across 701 IPOs in the primary market. In 2024, ₹1.90 trillion was mobilised through 336 IPOs. The resurgence of NBFCs and the strategic re-entry of banks into the primary fundraising arena also took the centrestage in this time pe ...

In the last two years, Rs 3.8 trillion were raised across 701 IPOs in the primary market. In 2024, Rs 1.90 trillion was mobilised through 336 IPOs. The resurgence of NBFCs and the strategic re-entry of banks into the primary fundraising arena also took the centrestage in this time period.Credit intermediaries, especially NBFCs, emerged as key beneficiaries of investor appetite, while banks recalibrated their capital-raising playbooks through selective IPOs, QIPs, and OFS.NBFCs were the dominant players in ...

Core Insights - The year 2025 marked a significant shift in global investment dynamics towards India's banking, financial services, and insurance (BFSI) sector, transitioning from cautious participation to deep strategic engagement [1][15] - Foreign investments in India's BFSI sector reached an estimated $14-15 billion through various transactions, indicating a structural re-rating of India's financial system by global investors [15][16] Investment Trends - Mitsubishi UFJ Financial Group's acquisition of a 20% stake in Shriram Finance for approximately $4.4 billion highlighted foreign confidence in India's diversified lending platforms, particularly those focused on retail and small businesses [2][15] - Emirates NBD's acquisition of a 60% controlling stake in RBL Bank signified a maturation of India's regulatory environment, allowing foreign banks to take operational control rather than merely being passive shareholders [15][16] - Sumitomo Mitsui Banking Corporation's near-25% investment in Yes Bank illustrated that foreign banks view India as a core growth market deserving of sustained strategic presence [4][15] Growth Fundamentals - India's credit demand is expanding rapidly, driven by rising household consumption, SME formalization, infrastructure spending, and digital financial inclusion, making it attractive for global investors facing slower growth in developed markets [5][16] - Indian banks and NBFCs entered 2025 with stronger capital adequacy and cleaner balance sheets, enhancing their appeal to foreign investors seeking predictable growth [6][16] Regulatory Environment - The evolving stance of the Reserve Bank of India on foreign ownership and governance standards has reassured overseas investors about the accessibility and prudence of India's financial system [8][16] - The willingness of regulators to consider control transactions, such as the RBL Bank deal, indicates an openness to foreign participation that strengthens institutions [9][16] Long-term Implications - The influx of foreign capital is expected to support faster loan growth, technology investment, and product innovation in the retail and SME segments [10][16] - Consolidation within the sector may occur as well-capitalized players expand and weaker institutions seek strategic investors, leading to fewer but stronger entities [11][16] - Sustained foreign investment will enhance India's financial capacity, supporting economic growth while integrating the country more deeply into global financial networks [12][16] Structural Shift - The participation of overseas investors in India's BFSI sector in 2025 reflects a structural reassessment of India as a long-term financial growth story, driven by rising capital needs and scalable business models [13][16] - If the momentum continues, India's BFSI sector is likely to remain a magnet for global capital, influencing the next phase of the country's financial and economic development [14][16]

The Reserve Bank of India’s (RBI) 25 basis points (bps) repo rate cut will support consumption, investment, and reduce funding costs for corporates, according to senior bankers.State Bank of India (SBI) Chairman CS Setty said the decision to cut rates while keeping the door open for further easing helps cushion the economy against unexpected shocks or external headwinds. “The move reinforces the structural drivers of a ‘higher-for-longer’ growth trajectory across investment, credit and consumption,” he said ...

Group 1 - The RBI's fourth bi-monthly policy aims to enhance credit flow and support growth through measures such as the withdrawal of frameworks related to specified borrowers and allowing M&A financing by Indian banks [1][12] - The extension of timelines for repatriation from foreign currency accounts and simplification of reconciliation processes will improve the ease of doing business for the export sector [2][12] - The focus on enhancing customer satisfaction and improving the use of the rupee in cross-border transactions will strengthen the financial ecosystem and currency outlook [3][12] Group 2 - The RBI maintained the repurchase rate at 5.5% and adopted a neutral policy stance, allowing flexibility for future adjustments [6][12] - With inflation at historic lows, there is significant room for supporting growth, and future policies will be data-driven [7][12] - The principle-based framework for infrastructure lending clarifies risk weights and supports long-term lending practices, contributing to nation-building [9][12] Group 3 - The combination of policy stability, improving consumption, and sustained credit demand positions India for long-term growth [10][12] - GST reforms are providing fiscal support, giving the RBI more flexibility and reducing reliance on monetary easing [10][12] - The RBI's decision to hold rates reinforces stability in the lending environment, with previous rate cuts already making home loans more affordable [11][12]

Core Insights - The combination of a tax overhaul and festival demand is driving higher credit growth, potentially providing a short-term boost to the economy while lenders are cautious about overextension [1][19] Tax Reform Impact - The GST has been simplified to two slabs of 5% and 18%, down from four, with a flat 40% tax on luxury and sin goods, leading to lower prices for many essential items while increasing costs for others [2][3][19] - Essentials like milk, staples, and medicines have become cheaper, while items like cars and tobacco have seen price increases [3][19] Lending Strategies - Banks and NBFCs are launching aggressive marketing campaigns to capitalize on the new GST slabs and the festive shopping season, aiming to convert pent-up demand into loans [6][19] - Kotak Mahindra Bank is offering discounts up to ₹30,000 on electronics, while IDFC First Bank has introduced cashback offers on large purchases [7][19] - L&T Finance is promoting "buy now, pay later" schemes and other incentives to stimulate demand in the two-wheeler loan segment [8][20] Credit Growth Projections - Bank credit in India is projected to grow by 11-12% in the second half of FY26, with retail lending expected to expand by 13% [11][20] - The total resources raised in the economy have more than doubled from ₹13.58 lakh crore in 2019-20 to ₹30.08 lakh crore in 2024-25, reflecting an annualized growth rate of over 20% [10][20] Consumer Behavior - The festive season and tax reforms are expected to push deferred purchasing decisions forward, with many consumers having held off on purchases during the inauspicious Pitru Paksha period [12][20] - The mechanics of promotional schemes often involve manufacturers subsidizing loans, allowing lenders to maintain income while offering consumers attractive deals [13][20] Economic Implications - Increased consumer spending on items like televisions and bikes through credit is expected to boost GST collections and factory orders, benefiting lenders and expanding their customer base [15][20] - The government benefits from reinforcing the narrative of successful tax reform and increased accessibility to credit [15][20] Risks and Challenges - The Reserve Bank of India has expressed concerns about the rapid growth of unsecured personal lending, which could lead to rising defaults if economic momentum slows [16][20] - NBFCs face challenges with high funding costs and liquidity mismatches, making them vulnerable to interest rate fluctuations [17][20] - The lending ecosystem in India is at a critical juncture, with banks, NBFCs, and capital markets all influencing credit flows, highlighting both opportunities and potential future stress [18][20]