India’s banking and financial sectors are in a state of transition this July, responding to regulatory crackdowns, liquidity imbalances, and investor sentiment shifts. Here’s a fresh perspective on this week’s most critical developments.
SEBI Acts Tough on Global Firm
India’s financial regulator, SEBI, has taken a strong stand against global trading powerhouse Jane Street. The firm is alleged to have manipulated BankNifty derivatives, amassing profits illegally to the tune of ₹48,000 crore. In response, SEBI has barred it from trading in India and frozen those funds pending investigation. The case has triggered sharp reactions in the equity market, especially among listed Indian brokers.
Banks Flush with Funds but Loan Demand Remains Weak
The Indian banking system currently holds surplus liquidity, with over ₹4 trillion resting idle. Yet, credit growth hasn’t picked up pace. Analysts from J.P. Morgan note that despite cheaper funds, banks are hesitant to lend and borrowers are equally cautious. The RBI’s monetary operations, including a reverse repo worth ₹1 trillion, signal its intent to maintain rate discipline over credit expansion.
International Capital Returns to Indian Financials
June saw foreign investment flowing back into India’s stock market, with foreign portfolio investors (FPIs) pouring in over ₹14,500 crore. The majority of these funds were directed toward the financial sector. The reasons? Stable inflation trends, attractive valuations, and policy consistency. This marks the third straight month of foreign investor optimism.
PSU Banks Adjust Lending Rates
Three major state-owned banks PNB, Indian Bank, and Bank of India have revised their lending rates downward. The slight 5 basis point reduction in the MCLR (Marginal Cost of Funds-Based Lending Rate) means loans tied to this rate are now marginally cheaper, with the one-year MCLR hovering around 8.90%–9.00%.
Deposits Grow Faster Than Loans at HDFC Bank
In Q1 of FY25, HDFC Bank reported a higher rise in deposits than loan growth. Total deposits stood at ₹27.64 lakh crore (1.8% rise), while advances only increased by 0.4% (₹26.53 lakh crore). The figures highlight a cautious lending approach amid subdued borrowing appetite.
Financial Compliance Rules Get an Update
From July 1, several new financial and tax regulations came into effect. Noteworthy changes include:
- Aadhaar is now mandatory for new PAN card applications
- GSTR-3B returns cannot be modified after filing
- A second e-way bill portal launched for businesses
- Aadhaar-based OTP needed for booking Tatkal train tickets
- Changes in bank service charges including ATM fees at private banks like ICICI and Axis
These reforms aim to tighten compliance and enhance transparency in financial transactions.
Revamped Rural Banking Strategy Launched
To boost banking access in rural India, the government has launched a large scale restructuring of Regional Rural Banks (RRBs). Under the “One State, One RRB” scheme, states like Madhya Pradesh and Bihar saw multiple RRBs merged into unified entities. The goal: better service delivery, stronger rural credit, and streamlined operations.
Conclusion: Reform, Regulation & Realignment
July 2025 reflects a financial landscape balancing growth and caution. With SEBI’s regulatory clampdown, shifting investor flows, policy adjustments, and operational banking reforms, India is clearly steering toward a more accountable and digital-first financial future.
