Banking

India’s banking sector delivered a robust performance in FY25, with gross non-performing assets (GNPAs) declining to their lowest level in several decades, according to the Reserve Bank of India. The sharp improvement reflects sustained balance sheet clean-up, stronger credit underwriting and a favorable economic environment. Rising profitability, improved capital adequacy and disciplined lending have reinforced the sector’s resilience.

The Finance Ministry has urged banks to strengthen vigilance mechanisms and ensure timely reporting of irregularities, underscoring the growing importance of governance and risk management in India’s financial system. The directive comes amid heightened regulatory scrutiny, rising digital transactions and increasing complexity in banking operations. Authorities emphasize that early detection and prompt disclosure of suspicious activity are critical to safeguarding public funds, maintaining institutional credibility and preventing systemic risks.

Punjab National Bank (PNB) has reported a loan fraud involving former promoters of Srei Group, bringing renewed focus on governance failures and credit oversight within India’s financial system. The case, which has been formally reported to investigative agencies, underscores the risks associated with large-ticket corporate lending and the long tail of stress from infrastructure-focused nonbank lenders. While the alleged fraud pertains to legacy exposures, its disclosure highlights the banking sector’s continued efforts to clean up balance sheets and strengthen accountability.

Punjab National Bank (PNB) has reported an alleged fraud connected to the former promoters of SREI Infrastructure Finance and SREI Equipment Finance, adding another layer of scrutiny to one of India’s most high-profile corporate distress cases. The disclosure follows internal reviews and regulatory reporting requirements, underscoring the banking sector’s heightened focus on legacy exposures and accountability. While investigations are ongoing, the development highlights persistent vulnerabilities in lender oversight during the previous credit cycle.

The Indian government has reaffirmed its commitment to consolidating public sector banks (PSBs) to create globally competitive institutions by 2026. The strategic initiative aims to enhance operational efficiency, strengthen balance sheets, and expand credit outreach, positioning PSBs as pillars of India’s economic growth. Analysts suggest that the consolidation drive will help mitigate systemic risks, reduce duplication, and foster financial innovation, while creating a more resilient banking ecosystem.

Bank of India has successfully raised Rs 10,000 crore through the issuance of long-tenure infrastructure bonds, reinforcing its capital base and supporting funding for priority infrastructure projects. The fundraise reflects sustained investor appetite for high-quality bank paper amid stable interest rate expectations and improving balance sheet metrics across public sector lenders. By tapping the bond market, the bank aims to diversify its funding sources while aligning with national infrastructure development goals.

India’s competition watchdog has approved a proposal allowing global investment firm Blackstone to acquire a stake in Federal Bank, marking a significant development in the country’s banking and financial services landscape. The clearance underscores regulatory comfort with foreign capital participation in well-capitalized private lenders. For Federal Bank, the investment is expected to provide long-term capital support and strategic depth at a time when banks are strengthening balance sheets and accelerating digital transformation.

The Reserve Bank of India has taken fresh steps to improve system liquidity by announcing open market operations and USD/INR swap transactions, signaling a proactive approach to managing monetary conditions. The measures are aimed at ensuring adequate rupee liquidity amid evolving market dynamics and seasonal cash pressures. By deploying both bond purchases and forex swap tools, the central bank is seeking to maintain orderly market functioning without altering policy rates.

Tata Motors Finance has reached a settlement with the Securities and Exchange Board of India (SEBI) concerning issues related to the issuance of non-convertible debentures (NCDs), bringing regulatory clarity to the matter. The resolution closes a chapter of compliance scrutiny and allows the company to refocus on its core lending operations. The settlement reflects the regulator’s emphasis on disclosure norms and investor protection in the corporate debt market.

HDFC Bank significantly scaled up its social development initiatives in FY25, deploying Rs 1,068 crore toward corporate social responsibility programs across education, healthcare, livelihood generation, and financial inclusion. The spending underscores the bank’s long-standing commitment to inclusive growth and community development, even as it navigates a competitive banking environment. By aligning CSR priorities with national development goals, HDFC Bank has sought to create measurable social outcomes while strengthening institutional credibility.