Banking

Public sector banks (PSUs) are experiencing a fresh wave of momentum, driven by strong credit growth, improved asset quality, and policy measures aimed at fortifying India’s banking landscape. After years of grappling with non-performing assets (NPAs) and subdued profitability, these institutions are now witnessing a revival in both operational performance and investor confidence.

In a landmark development in India’s banking sector, the State Bank of India (SBI) has sold a 13.18% stake in Yes Bank to Japan’s Sumitomo Mitsui Banking Corporation (SMBC) for Rs. 8,889 crore. The divestment, executed at Rs. 21.50 per share, transfers 413.44 crore shares to SMBC, which now emerges as the single-largest shareholder in Yes Bank. With this move, SBI trims its holding to 10.8%, signaling a strategic shift away from its earlier rescue role in the private lender.

Crisil has projected a 12% growth in bank credit for FY26, reflecting a stable credit demand outlook driven by retail, corporate, and infrastructure lending. However, the rating agency highlighted emerging concerns, including rising non-performing assets (NPAs), tightening monetary policy, and potential global economic headwinds. While credit expansion supports economic growth and investment activity, Crisil urges banks and regulators to monitor asset quality, interest rate risks, and sectoral vulnerabilities.

India’s public sector banks (PSBs) have reported steady improvements in profitability and asset quality, underscoring their central role in fueling the country’s economic recovery. Bolstered by robust credit demand, stronger balance sheets, and a significant reduction in non-performing assets, these banks are regaining investor confidence after years of stress. Capital adequacy levels have improved, supported by government backing and prudent lending practices, while advances in digital banking have enhanced customer outreach.

In a significant development in the Punjab National Bank (PNB) fraud case, the court has discharged a senior executive director previously implicated in financial irregularities. The decision follows a detailed review of evidence, highlighting the lack of direct involvement or culpability in the alleged multi-crore scam. Legal experts suggest that the discharge underscores the importance of due process in high-profile corporate fraud investigations. The ruling provides relief to the executive while reinforcing the principle that accountability must be substantiated by clear evidence.

Indian corporates are increasingly turning to banks for financing as elevated bond yields make market borrowings less attractive, according to the State Bank of India. With interest rates on corporate bonds rising in tandem with global monetary tightening, companies are recalibrating their funding strategies and leaning on traditional banking channels for working capital and expansion needs. This trend highlights a cyclical shift in corporate financing preferences and underscores the critical role of banks in maintaining liquidity for India’s growth-oriented enterprises.

The Reserve Bank of India (RBI) has formally approved significant board changes at Yes Bank, signaling renewed regulatory confidence in the lender’s governance framework. The approvals include appointments and reappointments of key directors and executives aimed at reinforcing strategic oversight, risk management, and financial stability. This development comes at a crucial time as the bank continues its post-recapitalization growth trajectory, balancing asset quality improvement with expansion objectives.

The Enforcement Directorate (ED) has attached assets worth Rs. 186 crore belonging to Dewan Housing Finance Corporation Limited (DHFL) in connection with a large-scale bank fraud investigation. The move is part of a wider crackdown on financial irregularities involving the company and its promoters, who are accused of orchestrating fraudulent transactions and misusing bank funds.

Sumitomo Mitsui Banking Corporation (SMBC) has sold its stake in Kotak Mahindra Bank in a landmark deal valued at Rs. 6,256 crore. The transaction marks a strategic divestment by the Japanese banking giant, reflecting a portfolio realignment while allowing other investors to increase their holdings in one of India’s leading private sector banks. Market analysts note that such high-profile share sales can influence stock liquidity, valuations, and investor sentiment.

The Enforcement Directorate (ED) has launched a case against industrialist Anil Ambani and Reliance Communications (RCom) over alleged financial irregularities involving the State Bank of India (SBI). The probe centers on claims of loan defaults and fraudulent financial transactions, highlighting ongoing scrutiny of corporate governance within India’s telecom sector. Analysts note that the investigation could have significant implications for the company’s financial standing and investor confidence.