Banking Awareness of 24, 25, 26 and 27 August 2025

Topic: Indian Economy/Financial Market

1. Fitch Ratings has reaffirmed India’s sovereign credit rating at ‘BBB-’.

• The outlook remains stable. This decision reflects India’s strong economic performance and resilient external finances.
• India’s economic growth is expected to remain at 6.5% in the current fiscal year.
• This shows resilience despite global trade uncertainties, including possible US tariffs.
• While Fitch held its rating steady, other agencies have been more optimistic.
• S&P Global and DBRS both upgraded India to a higher ‘BBB’ rating.
• Fitch highlighted strong domestic demand. This is supported by government-led infrastructure spending and steady consumer activity.
• However, Fitch also pointed out structural concerns.
• These include high fiscal deficits, rising public debt, and weaker fundamentals compared to other ‘BBB’ countries.
• India’s per capita income remains low. Governance indicators also lag behind peers.
• These factors continue to limit the potential for a rating upgrade.
• Private investment is likely to remain cautious. This is partly due to uncertainty over proposed US tariff hikes.
• Nominal GDP growth is projected to slow. Fitch expects it to be 9% in FY26, down from 9.8% in FY25 and 12% in FY24.
• The US plans to impose a 50% tariff on Indian goods by August 27. Fitch sees this as a moderate risk.
• Exports to the US account for only 2% of India’s GDP. So the direct economic impact will be limited.
• Still, ongoing tariff uncertainty could hurt business sentiment and reduce investment.

Topic: Banking System

2. SEBI has approved LIC’s reclassification as a public shareholder in IDBI Bank.

• LIC held a 49% stake in IDBI Bank at the end of June.
• This decision is part of the government’s strategy to privatise the bank.
• The government had approved IDBI Bank’s privatisation in May 2021.
• LIC’s voting rights in the bank will be limited to 10%.
• The insurer cannot exercise direct or indirect control over the bank’s operations.
• It will also not enjoy any special privileges or rights in the bank.
• This applies to both formal agreements and informal arrangements.
• LIC will not have any representation on IDBI Bank’s board. It cannot appoint a nominee director.
• LIC is also barred from acting as a key managerial person in the bank.
• The plan to classify LIC’s remaining shares as public will be disclosed.
• This will be stated in the open offer letter sent to IDBI Bank’s shareholders.
• Once the disinvestment is completed, LIC must reduce its shareholding.
• LIC is required to bring its stake down to 15% or lower.
• This must be done within two years from the closing date of the deal, as directed by the RBI.

Topic: RBI

3. The Reserve Bank of India has approved SMBC’s proposal to acquire up to 24.99% of Yes Bank’s shares.

• The approval was issued on August 22, 2025. It will remain valid for one year.

• Despite the significant stake, SMBC will not be treated as a promoter of the bank.
• The approval comes with several conditions.
• Japan’s Sumitomo Mitsui Banking Corporation (SMBC) must comply with the Banking Regulation Act, 1949.
• It must also follow RBI’s guidelines on shareholding in banks, issued in January 2023.
• Other applicable laws, including FEMA 1999, must be followed.
• RBI reserves the right to review any future share transactions.
• Yes Bank disclosed the proposed acquisition on May 9, 2025.
• SMBC plans to buy a 20% stake in Yes Bank. This includes 13.19% from the State Bank of India.
• Another 6.81% will come from seven other banks. These banks are Axis Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank, and Kotak Mahindra Bank.
• The deal still needs approval from the Competition Commission of India.
• It is also subject to standard closing conditions.
• As of March 2024, SBI held a 23.97% stake in Yes Bank.
• It has agreed to sell 13.19% of this stake to SMBC for ₹8,889 crore.
• Yes Bank faced a major financial crisis in early 2020.
• The government intervened in March 2020 to stabilize the bank.
• SBI led a group of banks to infuse capital and rescue Yes Bank.

Topic: Appointments

4. Rajiv Anand has officially taken over as the new Managing Director and Chief Executive Officer of IndusInd Bank for a three-year term.

• This leadership change received formal approval from the bank’s Board of Directors.
• Anand brings prior experience as the former Deputy MD at Axis Bank.
• His tenure as MD and CEO began on August 25, 2025.
• His appointment comes in the wake of operational and leadership challenges the bank  encountered earlier in the year.
• With his assumption of the role, the temporary executive committee managing daily functions has been disbanded.

Topic: Appointments

5. Rajiv Ranjan has been appointed as Vice President of the New Development Bank (NDB).

• He will serve a five-year term in this role.

• The appointment was announced by the NDB’s Board of Governors.
• The New Development Bank was created in 2015 by the BRICS countries.
• It focuses on financing infrastructure and sustainable development projects.
• The bank supports initiatives in BRICS nations and other emerging and developing economies.
• Rajiv Ranjan has over 35 years of experience in central banking.
• He began his career at the Reserve Bank of India (RBI) in 1989.
• Since May 2022, he has served as an Executive Director at RBI.
• He has also been a Member of the Monetary Policy Committee (MPC).
• From 2012 to 2015, he worked as an Economic Policy Expert at the Central Bank of Oman.
• Dilma Rousseff is the current President of New Development Bank (NDB).

Topic: Banking/Financial/Govt Schemes

6. A one-time switch facility from UPS to NPS introduced by the Union Finance Ministry.

• A one-time facility allowing a shift from the Unified Pension Scheme (UPS) to the National Pension System (NPS) has been announced by the Union Finance Ministry.
• According to the notification, the option can be availed up to one year before superannuation or three months before voluntary retirement.
• It has been stated that employees facing dismissal, removal, or disciplinary action will not be eligible for this switch.
• Once exercised, the option to switch will make employees ineligible for UPS benefits, including assured payouts.
• The government’s 4% differential contribution will be credited to the NPS corpus of the individual at the time of exit.
• The initiative has been aimed at providing flexibility and reinforcing NPS as a long-term retirement solution.
• The government has introduced UPS as an option under the National Pension System for central government employees from April 1, 2025.
• Assured payouts have been promised under the UPS for employees opting for the scheme.
• Till July 20, around 31,555 central government employees had opted for UPS.
• The last date for enrolling under the Unified Pension Scheme has been set as September 30.

Topic: Summits/Conferences/Meetings

7. The FIBAC banking conference titled ‘Charting New Frontiers’ held in Mumbai from August 25.

• It was a two-day event. The conference is jointly organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Indian Banks’ Association (IBA).
• RBI Governor Sanjay Malhotra addressed the gathering. He said India is on track to become the world’s third-largest economy.
• He spoke about current global economic challenges.
• These include ongoing trade disputes, financial instability, and rising geopolitical tensions.
• Malhotra stressed the importance of monetary policy.
• He said it plays a key role in maintaining stability while promoting growth.
• Malhotra announced plans for a Regulatory Review Cell.
• This cell will reassess financial regulations every 5 to 7 years.
• Malhotra spoke about building a prosperous India—‘Samriddh Bharat’.
• The conference brings together top banking leaders and global experts.
• They will discuss major issues facing the sector and share effective strategies.
• A roadmap for the future of India’s banking industry will be developed during the event.

Topic: Indian Economy/Financial Market

8. The Ministry of Labour and Employment has reported a major increase in women’s employment.

• This growth took place between 2017-18 and 2023-24.

• According to the Periodic Labour Force Survey (PLFS), the female unemployment rate has declined.
• It dropped from 5.6% in 2017-18 to 3.2% in 2023-24.
• In rural areas, women’s employment has surged significantly.
• There has been a 96% increase in rural female employment.
• Urban areas have also seen positive growth. Female employment in urban regions rose by 43%.
• The number of women-led MSMEs has also shown strong progress.
• It has doubled between 2010-11 and 2023-24.
• Over the past seven years, 1.56 crore women joined the formal workforce.
• This reflects a growing shift towards formal employment among women.
• The e-Shram portal has registered a large number of women workers.
• As of this month, over 16 crore unorganized women workers are registered on the platform.

(Source: News on AIR)