Core Viewpoint - The Reserve Bank of India (RBI) is adopting a cautious approach towards cryptocurrencies and stablecoins due to their associated risks [1][6]. Regulatory Approach - The Indian government is yet to decide on the regulation of cryptocurrencies, with a working group established to evaluate how to handle crypto assets in the country [4]. - India is leaning towards maintaining partial oversight of cryptocurrencies rather than creating comprehensive legislation, citing concerns over systemic risks [5]. Digital Innovations - The RBI has a more accommodating stance towards digital innovations such as the Unified Payments Interface (UPI) and digital lending, contrasting with its cautious approach to cryptocurrencies [2]. Market Context - U.S. dollar-backed stablecoins have a market capitalization exceeding $300 billion, while the overall cryptocurrency market cap has surpassed $4 trillion [3]. - The rising popularity of U.S. dollar stablecoins is expected to pose challenges for global monetary policy in the coming year [2]. Trading Environment - The RBI's warnings about the risks associated with cryptocurrencies have led to a near freeze in trading between India's formal financial system and cryptocurrencies [6].

Group 1 - Corporates are likely to return to commercial banks for credit needs due to rising bond yields in the debt market [1][3] - The issuance of debt paper volumes has decreased significantly, dropping from ₹three lakh crore in the first quarter to lower levels in the current quarter [2] - Ten-year bond yields have increased by 6.6%, while 30-year state government bond yields have risen to 7.5%, prompting corporates to seek bank credit [3] Group 2 - Domestic banks possess adequate capital to support growth and are eager to lend to emerging sectors such as renewable energy and start-ups [4] - The credit to GDP ratio in India stands at 65% to 70%, compared to nearly 100% in developed countries, indicating room for growth in credit availability [4] - The popularity of digital public infrastructure, such as UPI, is increasing, reflecting a significant shift in customer behavior towards digitalization [5]