India Finance Pulse
1. 🏦 RBI Conducts Record ₹2.5 Lakh Crore Reverse Repo to Tackle Liquidity Glut
The Reserve Bank of India (RBI) today announced a historic ₹2.5 lakh crore variable-rate reverse repo auction, aimed at absorbing a massive liquidity surplus. With an estimated ₹9 lakh crore excess funds in the banking system despite earlier VRRR auctions totalling ₹3 lakh crore, the central bank is taking decisive action to normalise liquidity conditions and ensure “financial stability,” according to central bank sources.
This move mirrors the quantitative easing unwinding strategies seen in developed economies post-2008. RBI Governor Sanjay Malhotra has signalled that these operations will continue until the overnight markets align closely with policy rates. This strategy seeks to foster a stable interest rate environment as credit demand strengthens.
2. 💰 SBI Weighs Bond Sale to Boost Basel III Capital
In a dual capital-raising effort, State Bank of India (SBI) is exploring a Basel III-compliant bond issuance in 2025–26, according to reports from July 10. A board meeting scheduled for July 16 will weigh the proposal—potentially expanding SBI’s ability to raise both equity and debt to shore up its capital ratios.
This move follows SBI’s ambitious ₹25,000 crore QIP plan and reflects a broader strategy to strengthen financial buffers. The bonds, to be issued in rupees, will align with global capital norms and signal a diversified approach to building more resilient bank capital structures.
3. 🏥 India to Rein in Healthcare Costs with Regulatory Tightening
The Union government has decided to transfer oversight of the National Health Claims Exchange (NHCE) from the Health Ministry to the Ministry of Finance and IRDAI. This step aims to curb rising healthcare costs—projected to increase 13% in 2025 versus the global average of 10%—by cracking down on inflated hospital bills and unwarranted charges for insured patients.
This regulatory shift could rein in insurance premiums that had already slowed from over 20% growth to approximately 9% in 2024–25. Strengthening insurer negotiation powers is expected to standardise treatment costs, relieve households of heavy medical expenses, and support a healthier insurance market.
4. 💱 Rupee Set for Weak Opening as Tariff Fears Linger
The Indian rupee is expected to open slightly weaker at ₹85.70–85.74, pressured by a stronger U.S. dollar following President Trump’s threat to impose blanket 15–20% tariffs on several trading partners, including Canada at 35% from August 1.
Despite the volatility, the rupee has stayed within the broader ₹85.50–86.00 range, with traders highlighting a preference for fading dollar strength near 85.90–86.00. Analysts indicate that U.S. inflation data remains a stronger influence on the rupee than trade uncertainties, hinting at limited downside if macro indicators soften.
5. 📉 Consumer Price Inflation Slows to Six-Year Low
According to a Reuters poll of 50 economists, India’s June CPI inflation is expected to slip to 2.50%, its lowest level in six years, from 2.82% in May. This deceleration reflects robust food production and favorable base effects. Meanwhile, core inflation—excluding food and fuel—edged up to 4.3%.
This persistent disinflationary environment reinforces RBI’s rationale for earlier interest rate cuts and may provide room for further monetary easing, although officials will remain cautious ahead of potential supply-side shocks.
6. 🏗️ Adani Enterprises Sees Strong Bond Demand
Gautam Adani-led Adani Enterprises witnessed strong demand as its ₹1,000 crore public bond issue was oversubscribed 1.5 times on Day 1. The company plans to raise up to ₹10 billion through two-, three-, and five-year bonds, offering coupons between 8.95% and 9.30%.
The issue drew attention from corporates, high-net-worth individuals, and retail investors, marking it as India’s largest public bond launch in over a year. The success showcases growing investor appetite for stable-yield instruments amid a backdrop of still-cautious corporate investment.
7. 📊 Jio BlackRock to Disrupt Mutual Funds with Low-Cost Launch
Meanwhile, Jio BlackRock AMC, a joint venture, plans to launch around a dozen equity and debt funds by year-end—with ticket sizes as low as ₹500 and significantly lower expense ratios—using Jio’s telecom reach of 475 million subscribers and BlackRock’s Aladdin platform.
This move could shake up India’s ₹72 trillion mutual fund space, currently priced at an average total expense ratio of 1.78%, by enabling direct-to-consumer distribution and inducing further fee compression.
Final Take
India’s financial landscape is undergoing a series of strategic realignments:
- Policy levers: RBI’s liquidity management is transitioning to a more disciplined phase.
- Capital structures: SBI is building buffers through both equity and debt, enhancing resilience.
- Cost containment: Government intervention targets medical inflation and insurance premiums.
- Credit appetite: Private bond issuances continue to attract investors.
- Financial innovation: Jio BlackRock is poised to democratize investments through low-cost, tech-driven funds.
As global headwinds persist, India appears to be strengthening its financial ecosystem—balancing short-term caution with long-term ambition.
