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The first week of July 2025 has brought a flurry of financial developments that reflect the changing dynamics of India’s economy. From enforcement actions and interest rate updates to shifts in investor behavior, here’s what’s shaping the banking sector right now.
SEBI Cracks Down: Jane Street Faces Market Ban
In a major regulatory move, SEBI has suspended Jane Street, a prominent US-based quantitative trading firm, from operating in Indian markets. The financial watchdog accuses the firm of manipulating BankNifty options and raking in illegal profits worth over ₹48,000 crore. SEBI also directed that the amount be held in an escrow account. The company, however, denies any wrongdoing and is preparing its legal response.
Credit Flow Sluggish Despite Ample Liquidity
India’s banking system currently holds a surplus of liquidity, but that hasn’t translated into increased credit activity. The Reserve Bank of India (RBI) has been trying to maintain overnight rates within its policy range. Despite efforts, credit growth remains underwhelming below the 10% mark signaling that more than liquidity is needed to spur borrowing in the economy.
FPIs Make Strong Comeback in Indian Markets
June 2025 witnessed significant foreign inflows into India’s stock markets. Foreign Portfolio Investors (FPIs) invested over ₹14,000 crore, with nearly 60% of that directed toward financial companies. This is the third consecutive month of positive FPI sentiment, driven by stable monetary policy, better-than-expected economic indicators, and optimism around global trade talks involving India.
Public Sector Banks Cut Lending Rates Slightly
Following signals from the RBI, top government-run banks Punjab National Bank, Indian Bank, and Bank of India have trimmed their benchmark lending rates marginally. The new MCLR (Marginal Cost of Funds Based Lending Rate) now stands around 8.90–9.00% for one year loans, providing some relief to borrowers across home, auto, and SME loan categories.
HDFC Bank: Deposit Growth Outpaces Lending
One of India’s largest private lenders, HDFC Bank, released data showing a stronger increase in deposits than in loans during the first quarter of FY25. Total deposits rose to ₹27.64 lakh crore, up 1.8%, whereas advances saw only a 0.4% uptick. This trend suggests cautious lending amid an uncertain demand environment.
Key Financial Rules Now in Effect (July 1 Changes)
Several new regulations were rolled out at the start of the month that affect banking, taxation, and digital services. Highlights include:
- Mandatory Aadhaar for new PAN card issuance
- No post-submission edits allowed in GSTR-3B returns
- Launch of a second e-way bill system
- Aadhaar OTP verification for Tatkal train ticket booking
- Revised banking and ATM fee structures by private banks like ICICI and Axis
These updates reflect India’s push towards digitization, transparency, and compliance.
Rural Banking Gets a Makeover
Under the One State, One RRB policy, multiple Regional Rural Banks have been merged to improve efficiency and reach. Newly formed entities in states like Madhya Pradesh and Bihar will now operate with larger branch networks, unified operations, and enhanced credit capabilities for rural populations.
Summary: A Changing Financial Landscape
- Market integrity under scrutiny with SEBI’s aggressive action
- Credit inertia persists despite liquidity comfort
- Investor confidence returns, particularly in financial equities
- Public banking sector responds to rate cues from the central bank
- Regulatory reforms continue to modernize India’s financial ecosystem
