RBI seeks faster export earnings repatriation, delegates more powers to Banks
The Reserve Bank of India has initiated measures to accelerate the repatriation, or bringing back, of export earnings into the country, aiming to improve foreign exchange inflows. The central bank is delegating more approval powers to authorised dealer banks, effectively reducing regulatory bottlenecks that previously slowed down the process. These changes are expected to streamline how export proceeds are managed, making the system more efficient for businesses engaged in international trade.
Why it matters
For banks, this means greater autonomy and responsibility in managing foreign exchange transactions related to exports. It requires robust internal processes for compliance and risk management, but could also enhance their role as facilitators of international trade. Faster repatriation also improves the country's foreign exchange reserves and rupee stability.
The Hindu BusinessLine · Sat, 26 September 2026
Read more →Bank deposits, credit shrink in fortnight to September 15
Outstanding bank deposits and advances, which are loans provided by banks, both saw a significant contraction during the fortnight ending September 15. Deposits fell by a substantial ₹2.49 lakh crore. This decline is largely attributed to the maturity of high-cost bulk deposits, which are large-value deposits usually made by institutions or high-net-worth individuals, which banks often use for short-term funding. Consequently, deposit growth slowed to 17.3%, and credit growth also dropped to 18.1%. The Reserve Bank of India's data indicates a net withdrawal from cumulative outstanding deposits, reflecting a period of liquidity adjustment for banks.
Why it matters
A sharp drop in deposits, especially from maturing bulk deposits, can tighten liquidity for banks and potentially push up funding costs if they need to replace these funds. Slower credit growth, even if temporary, warrants attention as it can signal softening demand or banks becoming more cautious. It hints at banks adjusting their liability structure after attracting higher-cost deposits.
The Economic Times · Sat, 26 September 2026
Read more →UPI payments above ₹2,000: Who will pay the 0.4% MDR? FM clarifies banks, payment gateways & apps to get a share | Check breakdown
Finance Minister Nirmala Sitharaman clarified that the new 0.4% Merchant Discount Rate (MDR), a fee paid by merchants for processing payments, on specified Unified Payments Interface (UPI) merchant payments above ₹2,000 will be charged to merchants, not customers, starting October 15, 2026. The new fee aims to cover operational costs and fund future infrastructure development for the UPI ecosystem. The collected MDR will be distributed: 40% will go to customer banks, 30% to payment gateways, and 20% to UPI apps, ensuring stakeholders get a share. This clarifies earlier misconceptions about consumers bearing the cost.
Why it matters
For banks, especially those with large UPI customer bases, this MDR introduces a new revenue stream, helping offset the costs associated with maintaining and upgrading UPI infrastructure. It could incentivize banks to promote UPI further, but also increases pressure to differentiate services for merchants. Merchant acquisition teams will need to be well-versed in explaining this structure.
Livemint · Sat, 26 September 2026
Read more →AI boom raises ‘too-big-to-fail’ concerns as ecosystem expands, says Kansas Fed's Jeff Schmid
Kansas City Federal Reserve President Jeff Schmid has voiced concerns about the growing interconnectedness within the artificial intelligence industry. He emphasized the necessity for a clearer understanding of the emerging AI ecosystem and its economic implications. Schmid drew parallels between the rapid expansion of AI and the financial system prior to the 2008 crisis, warning about potential 'too-big-to-fail' scenarios if key AI infrastructure becomes indispensable. The rapid investment in AI infrastructure raises questions about potential systemic risks.
Why it matters
For Indian banking, this global caution about AI suggests regulators might soon start scrutinizing AI integration more closely, especially its systemic risks. Banks heavily investing in AI for operations, fraud detection, or customer service need to consider regulatory expectations around resilience, ethical use, and potential dependencies on critical AI providers. This perspective calls for a proactive risk assessment framework for AI adoption.
The Economic Times · Sat, 26 September 2026
Read more →Bank strike from September 28-30: Are banks closed for 5 days from Saturday, Sept 26? Here’s what you need to know
A widespread bank strike led by the United Forum of Bank Unions (UFBU) is scheduled from September 28 to 30, which will significantly disrupt in-branch banking services. This means many banks will be closed for these three days. However, banks are expected to operate normally on September 27 to allow customers to complete urgent transactions. While branch operations will be affected, digital banking services like ATMs, UPI, NEFT, and RTGS are expected to remain functional across most banks, mitigating some of the impact on customers.
Why it matters
For banks, this recurring strike action highlights ongoing labour relations challenges and the need to bolster digital channels. While digital services offer continuity, branch closures can still impact customer segments reliant on physical banking and complicate cash management. Banks must manage public communication effectively to guide customers towards alternative services.
Livemint · Sat, 26 September 2026
Read more →Cooperative banks to remain operational during proposed Bank strike
During the upcoming bank strike from September 28-30, cooperative banks are expected to remain fully operational. This means customers of cooperative banks will continue to have access to traditional branch banking services, including agricultural and rural credit facilities, and business banking. Furthermore, digital channels such as ATMs, internet banking, mobile banking, and UPI will also be available, depending on the specific services offered by individual cooperative banks. This offers an alternative for customers seeking in-person banking services during the strike.
Why it matters
This provides an opportunity for cooperative banks to showcase their reliability and potentially attract new customers who are inconvenienced by the closures at commercial banks. It also highlights the fragmented nature of the Indian banking system, where different types of banks operate under varying labour agreements. Commercial banks might see some temporary diversion of urgent business to cooperative counterparts.
The Hindu BusinessLine · Sat, 26 September 2026
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