Banks plan to align norms for project finance lending
Indian banks are collaborating to establish a common framework for project finance lending. This initiative aims to reduce regulatory arbitrage, streamline operational procedures among lenders, and enhance risk mitigation. Discussions involve both public and private sector banks, with the goal of creating unified parameters that will also address divergent audit observations. Final guidelines are expected to emerge from bank boards, leading to greater consistency in project financing.
Why it matters
A standardized approach to project finance could lead to more efficient capital allocation and reduced systemic risk. For bankers, this implies a need to adapt internal processes and risk assessment models to align with new common guidelines. It also suggests increased transparency and potentially more competitive yet stable lending environments for large infrastructure and industrial projects.
The Economic Times · Mon, 21 September 2026
Read more →'FCNR haul to power HSBC's India wealth, retail banking push'
HSBC anticipates that its foreign currency deposits will significantly bolster its operations in India, particularly for wealth management and retail banking. The bank secured $14.5 billion through a special RBI swap facility, which it plans to deploy cautiously. This substantial capital influx, combined with attractive leverage options, will support an expansion of corporate lending and mortgage offerings, underpinning HSBC's strategic growth ambitions in the Indian market.
Why it matters
The successful mobilization of FCNR deposits by a foreign bank highlights India's attractiveness for global capital and the effectiveness of special RBI facilities in channelizing foreign funds. For the banking sector, this signifies increased competition in wealth management, corporate lending, and retail mortgages from foreign players, potentially driving innovation and service enhancements.
The Economic Times · Mon, 21 September 2026
Read more →Bank credit growth hits 8-quarter high, widens funding gap as deposits lag: Report
Bank credit growth in India has reached an eight-quarter high, indicating robust lending activity. However, this acceleration is widening the funding gap as deposit growth continues to lag behind. The expansion in credit is primarily driven by increased lending to the finance sector, particularly NBFCs. This disparity is creating funding pressure on banks, with public sector banks experiencing higher credit growth but less capital headroom, underscoring the critical need for sustained deposit mobilization efforts.
Why it matters
The widening credit-deposit gap signals increasing pressure on banks' net interest margins (NIMs) and liquidity. Banks may need to intensify efforts to attract deposits, potentially leading to higher deposit rates or innovative savings products. For NBFCs, continued bank funding is crucial, but banks will need to manage their own funding costs carefully.
The Economic Times · Mon, 21 September 2026
Read more →FCNR(B) scheme could yield Rs 5.5 trillion notional profit for banks, RBI: SBI Research
A report by SBI Research indicates that the FCNR(B) deposit scheme could generate a notional profit of Rs 5.5 trillion for banks and the Reserve Bank of India. This analysis contradicts earlier estimations that suggested significant financial losses from the scheme. The report highlights that the funds mobilized through FCNR(B) could support additional bank credit and yield substantial interest income, while hedging costs are deemed manageable. It also projects increased profitability for the RBI from this liquidity infusion.
Why it matters
This report offers a more optimistic view on the financial implications of FCNR(B) deposits, suggesting they are a net positive for the banking system and the central bank. For banks, it implies that these deposits can be a stable and profitable source of funding for credit expansion. For the RBI, it affirms the strategic value of such instruments in managing liquidity and supporting economic activity.
The Economic Times · Mon, 21 September 2026
Read more →EPFO wage ceiling raised to ₹25,000: Know the impact on contributions, pension and EDLI benefits — all FAQs answered
The Employees' Provident Fund Organisation (EPFO) has increased the wage ceiling for mandatory contributions from ₹15,000 to ₹25,000. This revision brings over 51 lakh additional employees under the EPFO's social security net. The change will affect EPF deductions, employer contributions, pension entitlements, and Employees' Deposit Linked Insurance (EDLI) benefits, requiring employers and employees to understand the revised calculation methodologies.
Why it matters
This expansion of the EPFO wage ceiling will increase the formalization of the workforce and enhance social security coverage for a larger segment of employees. For employers, it necessitates updates to payroll systems and contribution calculations, potentially increasing compliance costs. For banks, this could translate to a larger pool of individuals with formalized savings, potentially impacting deposit mobilization and retail lending strategies.
Livemint · Mon, 21 September 2026
Read more →EM local bonds gain favour as dollar debt lags — Current trends indicate that investors are leaning towards local emerging market debt rather than dollar-denominated bonds.
Investors are showing a clear preference for local currency emerging market debt over dollar-denominated bonds. This shift is driven by the allure of attractive valuations and ongoing carry trades. Fund inflows and performance metrics distinctly reflect this investor inclination. However, the report cautions that potential rate hikes by the Federal Reserve could pose challenges to this emerging trend, affecting market dynamics.
Why it matters
This investor preference indicates a potential strengthening of local bond markets in emerging economies, including India. For Indian banks, this could mean increased demand for domestic government securities and corporate bonds, potentially leading to lower borrowing costs for issuers. It also suggests that a stable Rupee and attractive local yields are drawing global capital, but US monetary policy remains a key external risk factor.
The Economic Times · Mon, 21 September 2026
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