Banking Awareness of 7, 8 and 9 August 2025

Topic: Indian Economy/Financial Market

1. India’s household savings as a share of GDP fell to 18.1% in FY24.

• This is the lowest level in five years. It was 19.1% in FY20.
• Household debt, as a percentage of GDP, rose to a five-year high. This is based on data from the Finance Ministry.
• In actual figures, household savings increased from ₹38.5 lakh crore in FY20 to ₹54.6 lakh crore in FY24.
• Gross domestic savings also grew during this period. It rose from ₹59.4 lakh crore to ₹92.6 lakh crore.
• The share of gross domestic savings in GDP stayed steady at about 30%. This reflects consistent domestic resource mobilisation.
• Household savings are made up of two parts. These are financial savings and physical savings.
• Financial savings are the difference between financial assets and liabilities.
• Assets include bank deposits, insurance, mutual funds, and similar instruments.
• Liabilities include loans from banks and non-banking financial companies.
• Physical savings refer to investments in property, land, and gold.
• Bank credit increased from ₹103.7 lakh crore in FY20 to ₹159.01 lakh crore in FY24. This indicates healthy liquidity and active lending.
• Gross fixed capital formation remained close to 30% of GDP.
• This shows investment demand remained strong despite global challenges.
• Private investment was supported by strong economic conditions. These include high GDP growth and fiscal and external stability.
• An SBI report, based on RBI data, showed a slight rise in net financial household savings.
• It improved to 5.1% of Gross National Disposable Income (GNDI) in FY24, up from 4.9% in FY23.
• Household liabilities rose to 6.1% of GNDI. Gross financial savings climbed to 11.2% from 10.7% in the previous year.

Topic: RBI

2. The Reserve Bank of India has introduced the final guidelines for co-lending arrangements.

• These rules apply to all registered lending entities involved in such partnerships.
• Each party in a co-lending deal must retain at least 10% of every loan in its own books.
• The entity that originates the loan can offer a default loss guarantee.
• This guarantee can be up to 5% of the total outstanding loan to the partner entity.
• Co-lending agreements signed before these directions remain under existing rules.
• This also applies to new agreements entered into before January 1, 2026.
• Lenders must revise their credit policies to reflect the new co-lending structure.
• They must define internal limits for their co-lending exposure.
• Credit policies should identify target borrower groups and vetting procedures for partner entities.
• They must also include standards for customer service and a grievance redressal process.
• Loan agreements with borrowers must clearly outline each party’s roles.
• They must state which entity is the main point of contact for the borrower.
• Any change in the customer-facing entity must be communicated in advance.
• Loan documents must also include customer protection clauses. They should explain how complaints will be resolved.
• The co-lending agreement must contain an irrevocable commitment.
• The partner must agree to take its share of each loan on a back-to-back basis.
• Each entity must record its share of the loan in its own books. This must be done within 15 calendar days of the loan being disbursed.

Topic: World Economy

3. The United States imposed the highest tariffs in 90 years on 70 countries.

• The United States has announced a sweeping range of tariffs, from 10% to 50%, on imports from nearly 70 countries, marking the highest level since 1934.
• According to Yale University’s nonpartisan Budget Lab, this tariff hike is expected to increase the average cost of imported goods by 18.3%, burdening American consumers.
• President Donald Trump has stated that the move aims to correct global trade practices deemed unfair to American industries.
• U.S. allies like Japan, South Korea, and the European Union will now face a base import duty of 15%.
• Selected Brazilian goods have been subjected to the maximum 50% tariff rate under the new policy.
• A 100% tariff has been announced on imported semiconductors, although exemptions will be provided for domestically produced chips.
• The imposition of future tariffs on China is being considered, based on its continued purchase of Russian oil.
• US President Trump announced 25% reciprocal tariffs on India on August 1.
• The tariffs were higher than many competing countries and were implemented on August 7.
• On 6 August, US President imposed an additional 25 per cent tariff on India for buying oil and arms from Russia.
• This tariff would be applicable from August 27.
• The imposition of cumulative teriffs of 50% is being affected by India’s exports of labour-intensive products to the US, such as textiles, gems & jewellery and leather goods.

Topic: Banking System

4. Axis Bank has rolled out a new ‘Lock FD’ feature aimed at enhancing the security of Fixed Deposits against digital fraud.

• This feature disables the option to close FDs prematurely through online or mobile banking platforms.
• To terminate a locked FD before maturity, customers will be required to physically visit a bank branch for identity verification.
• The ‘Lock FD’ option is accessible through Axis Bank’s mobile application ‘open’ and across all its branches.
• By preventing digital closures, the feature provides an added safeguard against cybercriminal activity.
• It is particularly useful for individuals who may not be comfortable with or adept at using digital services.
• The feature is designed to protect customers’ funds from unauthorized online access.

Topic: RBI

5. RBI’s Urban Consumer Confidence Survey for July 2025 indicates a slight uplift in consumer sentiment across major cities.

• The Current Situation Index (CSI) rose modestly to 96.5 from 95.4 in May, reflecting improved public sentiment.
• This rise was largely due to more favorable views on income, spending habits, and the overall economic environment.
• However, worries about job availability and inflationary pressures remain prevalent.
• The Future Expectations Index (FEI) increased to 124.7 from 123.4, suggesting ongoing optimism about the year ahead.
• Positive expectations regarding economic conditions, income prospects, and spending drove the FEI higher.
• Concerns over inflation have lessened for the third time in a row, showing signs of stabilizing sentiment.
• Perceptions around current price levels showed improvement, with the net response moving from -88.5 in May to -87.0 in July.
• The share of respondents feeling better about their current income rose, with the net sentiment improving to 2.1.
• Expectations for income in the coming year remained largely unchanged, inching up to 52.6 from 52.3.
• Looking ahead, optimism about job prospects increased, with the net response rising to 31.0 from 29.8.
• Consumers reported stronger spending activity, with current spending sentiment improving to 78.0.
• Anticipated future spending also rose, reaching a net response of 80.0.
• For the first time in recent rounds, non-essential spending registered a slight positive net sentiment at 0.4, up from -3.4.
• Expectations for non-essential expenditure in the future also strengthened, moving up to 15.0 from 13.8.

Topic: RBI

6. RBI has opted to keep the repo rate steady at 5.5%, continuing with a neutral policy stance.

• The standing deposit facility (SDF) rate stays unchanged at 5.25%.
• The marginal standing facility (MSF) rate and Bank Rate are also held constant at 5.75%.
• This pause in rate changes follows a total reduction of 100 basis points since February 2025.
• The decision comes ahead of the festive season, aiming to sustain consumer demand.
• Despite trade pressures from new US tariffs, the RBI has maintained its FY26 economic growth projection at 6.5%.
• The inflation forecast for FY26 has been revised downward to 3.1% from 3.7% in June.
• CPI inflation is anticipated to climb to 4.9% in the following fiscal year, FY27.
• With inflation easing and external uncertainties persisting, the RBI is taking a measured stance to balance growth and risk.
• The MPC convened for its policy review on August 4th, 5th, and 6th, 2025.

Topic: RBI

7. RBI added an auto-bid facility in the Retail Direct portal for T-bills.

• A new auto-bid feature has been added by the Reserve Bank of India to its Retail Direct portal for Treasury Bills (T-Bills).
• The feature will allow retail investors to schedule automatic bids in primary auctions, making investment planning more systematic.
• RBI Governor Sanjay Malhotra stated that the facility covers both investment and reinvestment of T-Bills.
• In November 2021, the Reserve Bank launched the Retail Direct portal to facilitate retail investors in opening their Gilt accounts under the Retail Direct Scheme (RDS).
• The scheme allows retail investors to buy government securities (G-Secs) in primary auctions as well as buy and sell G-Secs in the secondary market.
• A mobile app version of the Retail Direct portal was introduced in May 2024 to further increase accessibility.
• New features related to product offerings and payment integration have been added since the scheme’s inception.

Topic: Reports and Indices

8. Bengaluru has been placed 26th in the 2025 Global AI City Index.

• It has emerged as India’s foremost center for artificial intelligence activity.
• The index, released by Counterpoint Research, ranks cities worldwide based on advancements in AI development and infrastructure.
• Bengaluru’s prominence is driven by its strong presence in AI research, innovation, and data center growth.
• Other major Indian cities in the ranking include Mumbai, Delhi, Chennai, and Kolkata, with Bengaluru leading nationally.
• Mumbai and Delhi are making notable strides by applying AI technologies in urban management and public safety.
• Despite this growth, the report notes that Indian cities would benefit from clearer AI strategies and stronger regulatory support.
• Singapore tops the global index, credited with its dynamic AI startup environment and effective public-private sector cooperation.
• Following Singapore are Seoul, Beijing, Dubai, and San Francisco, completing the global top five.
• Beijing is set to implement AI as part of its core school curriculum starting in 2025.
• Seoul is recognized for its impactful use of AI in areas like education and healthcare.
• Microsoft leads the corporate AI race by expanding data centers, launching training initiatives, and establishing innovation hubs. It emerged as the most active vendor.
• Google and Amazon are also strengthening their AI infrastructure and introducing similar programs to advance in the sector.