Banking Awareness of 21, 22 and 23 August 2025

Topic: Indian Economy/Financial Market

1. Retail inflation for agricultural and rural workers declined in July 2025.

• Farm labourers saw inflation drop to 0.77% in July, compared to 1.42% in June.

• Inflation for rural workers also decreased, standing at 1.01% in July, down from 1.73% in June.
• The Consumer Price Index for agricultural workers rose by 1.23 points, reaching 135.31.
• For rural workers, the index increased by 1.30 points, reaching 135.66.
• The Food Index for agricultural workers rose by 1.94 points.
• For rural workers, the Food Index increased by 2.16 points.
• Food inflation for agricultural workers was -1.56% in July.
• For rural workers, food inflation was -1.13% in July.
• The year-on-year inflation rate for agricultural workers was 0.77% in July.
• Rural workers experienced a year-on-year inflation rate of 1.01% in July.

Topic: Reports and Indices

2. Banks saw a sharp 9.5% reduction in gross non-performing assets (NPAs) in Q1FY26 compared to the previous year, as per a report by Care Edge Ratings.

• As per the report, the gross NPA ratio improved to 2.3% in Q1FY26, down from 2.7% in the same quarter last year.
• The report said that the total GNPA stood at Rs 4.18 lakh crore in Q1FY26.
• The net NPA ratio held steady at 0.5% for the second quarter in a row in Q1FY26.
• NNPAs dropped 8.7% year-on-year to Rs 0.92 lakh crore in Q1FY26.
• While GNPAs rose by 0.5% quarter-on-quarter, this was primarily due to rising slippages in microfinance and unsecured loans.
• NNPAs also grew by 2.5% from the previous quarter.
• Public sector banks experienced a decrease in GNPAs, with agriculture being the only exception.
• The NNPA ratio dropped from 6% in March 2018 to 0.5% in Q1FY26, the lowest since the asset quality review (AQR) began.
• This progress was driven by extensive write-offs, recoveries from older NPAs, enhanced provision coverage, and resolutions under the IBC 2016.
• Although asset quality remains robust, the pace of fresh recoveries has slowed as fewer old stressed assets remain.

Topic: Appointments

3. Yes Bank’s shareholders have approved the extension of Prashant Kumar’s tenure as MD & CEO.

• His new term will run from October 6, 2025, to April 5, 2026.
• Prashant Kumar initially became MD & CEO in March 2020.
• This appointment came after the bank’s restructuring.
• He was reappointed in October 2022 for another three-year term.
• The extension will remain in effect until either the end of the six months or until a new MD & CEO takes charge, whichever is earlier.
• At the same time, Sumitomo Mitsui Banking Corporation is preparing to acquire a 20% stake in Yes Bank.
• The acquisition will be made through a definitive agreement.
• Shares will be purchased from the State Bank of India and other major institutional shareholders.
• YES Bank was founded in 2004. It is headquartered in Mumbai.

Topic: Banking System

4. State Bank of India has opened a Centre of Excellence for MSMEs at its training facility in Gurugram.

• The centre is aimed at boosting the MSME sector through skill development, research, and cross-sector collaboration.
• It will work with entrepreneurs, startups, academic institutions, industry bodies, and regulators.
• The goal is to support the overall growth of MSMEs and help India progress toward becoming a developed economy.
• The initiative also focuses on rural development and employment generation.
• SBI Chairman C. S. Setty reiterated the bank’s position as the largest MSME lender in the country.
• He underlined SBI’s responsibility to design innovative financial solutions tailored to the sector.
• The Centre of Excellence will serve as a platform for fresh ideas and improved practices in MSME banking.

Topic: RBI

5. RBI Executive Director Indranil Bhattacharyya has been appointed as an ex officio member of the Monetary Policy Committee (MPC).

• The appointment was approved by the Central Board of the Reserve Bank of India.
• The Board held its meeting in Lucknow. RBI Governor Sanjay Malhotra chaired the meeting.
• The Board discussed current global and domestic economic developments.
• It focused on geopolitical tensions and financial market trends.
• The functioning of key departments at the RBI’s Central Office was reviewed.
• Deputy Governors M. Rajeshwar Rao, T. Rabi Sankar, J. Swaminathan and Dr. Poonam Gupta attended the meeting.
• Monetary Policy Committee:
  • Monetary Policy Committee decides the benchmark interest rate in India.
  • Its meetins are held at least four times a year (specifically, at least once a quarter).
  • It has six members. These are three officials from the RBI (including the Governor) and three external members appointed by the Government of India.

Topic: Taxation

6. The GST Council will discuss the two-rate tax proposal in its September meeting.

• The Goods and Services Tax (GST) Council will hold its 56th meeting in New Delhi on September 3–4, 2025.

• The meeting was announced in a memorandum issued on 22 August 2025.
• Reforming the GST system into a two-rate structure will be on the agenda.
• The Centre had forwarded its proposal for the new GST regime to the Group of Ministers.
• Prime Minister Narendra Modi had called it a “Deepavali gift” during his Independence Day address.
• Bihar Deputy Chief Minister Samrat Chaudhary, chair of the GoM, said recommendations were sent to the Council.
• Kerala Finance Minister K.N. Balagopal expressed concerns over revenue losses to the states.
• He said the Group of Ministers has suggested to the GST Council that there should be a mechanism to compensate states if they incur any losses due to rationalization of rates.
• The GST Council meeting will be the first after more than eight months, the last being in December 2024.
• As per the rules, the Council is required to meet at least once in every quarter.

Topic: Indian Economy/Financial Market

7. The growth rate of Indian core industries increased by 2% in July compared to the same period last year.

• India’s Eight Core Industries index recorded a 2% increase in July compared to the same month last year.
• According to the provisional data released by the Ministry of Commerce and Industry, four major sectors of India, including steel, cement, fertilizer, and electricity, registered positive growth last month.
• Steel production grew by 12.8%, marking the highest increase among the sectors.
• Cement output rose by 11.7% during the month.
• Fertilizer production was reported to have grown by 2%.
• Electricity generation showed a marginal rise of 0.5%.
• Coal production, however, declined sharply by 12%.
• Natural gas production fell by 3.2%, while crude oil production dipped by 1.3%.
• Petroleum refinery output also went down by 1% compared to July last year.
• Meanwhile, the final growth rate of the Index of Eight Core Industries for the month of June this year stood at 2.2%.
• The cumulative growth rate of ICI during the April-July period over the corresponding period of last year is provisionally recorded at 1.6%.

Topic: Taxation

8. The center's two-rate GST proposal gets approval from the Group of Ministers.

• The Group of Ministers (GoM) on Rate Rationalisation constituted by the Goods and Services Tax (GST) Council has decided to accept the Centre's two-rate structure proposal for GST and will recommend it to the GST Council
• The decision now awaits final approval from the GST Council in its upcoming meeting.
• The proposed reform will remove the existing 12% and 28% GST slabs.
• Instead, a simplified structure of 5% and 18% rates will be retained.
• Most goods in the 12% category will move to 5%, while many items in the 28% category will shift to 18%.
• Certain goods like tobacco and online gaming will be placed in a 40% tax bracket.