BANKING News
Axis Bank Q1 profit falls 4% due to technical provisioning hit
Axis Bank reported a 4% year-on-year decline in net profit to Rs. 5,806 crore for Q1 FY26, impacted by higher provisions linked to a technical adjustment in loan classification. This one-time internal recalibration of cash credit, overdraft, and one-time settled accounts resulted in Rs. 2,709 crore of fresh slippages, leading to Rs. 821 crore in additional provisions. Without this, provisions would have been Rs. 3,127 crore, compared to the reported Rs. 3,948 crore. The bank clarified this move was not indicative of actual asset quality deterioration but a “prudential application” of regulatory guidelines. Gross non-performing assets (NPAs) rose 29 basis points quarter-on-quarter to 1.57%, while net NPAs increased 12 basis points to 0.45%. Despite the hit to net profit, the bank maintained stable operational performance, with steady growth in revenue, loans, and fee income. Axis Bank described the adjustment as a one-off event to ensure compliance with evolving RBI guidelines.
PSBs write off Rs. 5.82 trillion in 5 years, recover just 28%
Public sector banks (PSBs) have written off Rs. 5.82 lakh crore in bad loans over the past five financial years, Minister of State for Finance Pankaj Chaudhary told Parliament. In FY25 alone, Rs. 91,260 crore was written off, while the highest annual write-off occurred in FY21 at Rs. 1.33 lakh crore. Recoveries during this five-year period stood at Rs. 1.65 lakh crore, amounting to just 28% of total write-offs. The minister clarified that such write-offs do not waive the liabilities of borrowers; rather, they follow RBI norms and are based on bank board-approved policies. Write-offs typically occur after four years of provisioning. Banks continue pursuing recovery through legal and other channels. The disclosures come amid scrutiny over NPA resolution and efforts to clean up balance sheets. While write-offs offer accounting relief, the low recovery ratio raises concerns about long-term credit discipline and borrower accountability in India’s banking system.
RBI: Re-KYC completed for 3.5 million accounts under inclusion push
The Reserve Bank of India (RBI) announced that banks have completed re-KYC for over 3.5 million accounts under the ongoing financial inclusion drive. From July 1 to September 30, 2025, a nationwide campaign is underway at the Gram Panchayat level to ensure saturation of financial inclusion (FI) schemes and KYC compliance. As of August 11, over 1.41 lakh outreach camps have been conducted. Re-KYC is mandated at intervals depending on customer risk profiles—every 2 years for high-risk, 8 years for medium, and 10 years for low-risk customers. RBI Governor Sanjay Malhotra visited a camp in Gozaria, Mehsana (Gujarat), where he interacted with local stakeholders and emphasized collaborative efforts between banks, RBI, and communities to expand access to financial services. The campaign also aims to improve uptake of government FI schemes. RBI is closely monitoring progress to ensure full KYC compliance across the banking ecosystem.
IBA urges banks to expedite ISO 20022 migration to avoid payment disruptions
The Indian Banks’ Association (IBA) has issued a directive urging all banks to fast-track the migration to SWIFT’s ISO 20022 messaging standard by August 2025, warning of potential cross-border payment issues if deadlines are missed. In a communication to bank heads, IBA CEO Atul Kumar Goel stressed the need to initiate migration early to allow for monitoring and buffer time before the global deadline of November 2025. ISO 20022 aims to enhance cross-border payments through better data quality, cost efficiency, faster processing, and improved reconciliation. While three Indian banks have achieved migration rates exceeding 85%, most are still lagging. ISO 20022 adoption by SWIFT marks a significant shift toward harmonized financial messaging globally. The IBA’s advisory aligns with the industry’s goal of modernizing payment infrastructure to meet evolving compliance and efficiency standards in global banking.
Union Bank of India waives minimum balance charges for savings accounts
Union Bank of India has announced the complete waiver of charges for non-maintenance of minimum balance in general savings deposit accounts, effective from the quarter ending September 2025. The initiative aims to promote financial inclusion and ensure equitable access to basic banking services, particularly for underserved and rural segments. However, this waiver excludes customized savings account products. The move aligns Union Bank with other public sector banks—including State Bank of India, Indian Bank, Canara Bank, Punjab National Bank, and Bank of Baroda—that have previously eliminated such charges. Notably, accounts under the Pradhan Mantri Jan Dhan Yojana, and those belonging to pensioners and senior citizens, were already exempt. The bank stated that this measure will foster fairness and deepen customer engagement. The waiver reflects a broader trend in the Indian banking sector to remove entry-level financial barriers and encourage wider savings account ownership.
PSB savings account rates hit record low since deregulation, says RBI
Savings account interest rates at several public sector banks (PSBs) are now at their lowest levels since deregulation in 2011, according to the Reserve Bank of India’s (RBI) July bulletin. The bulletin highlights that weighted average domestic term deposit rates have fallen for both PSBs and private sector banks. This decline coincides with the RBI’s 100 basis point policy repo rate cut since February 2025, prompting banks to reduce their repo-linked lending rates by 100 bps and marginal cost-based lending rates by 10 bps. Consequently, weighted average lending rates on new and outstanding rupee loans dropped by 26 and 18 basis points, respectively. Meanwhile, small savings scheme rates remained unchanged for the September quarter and are currently 33–118 bps higher than the formula-based benchmark. The data underscores the downward interest rate environment and its impact on savings returns, especially within the public banking sector.
Karur Vysya Bank announces 1:5 bonus share issue after strong Q1 earnings
Karur Vysya Bank has announced a bonus issue of one equity share for every five shares held, marking its first such issuance in seven years. The bonus shares, having a face value of Rs. 2 each, are subject to shareholder approval at the upcoming Annual General Meeting and necessary regulatory clearances. The record date will be communicated in due course. The announcement came alongside the bank’s robust Q1 FY26 earnings, reflecting continued growth momentum. This move is aimed at rewarding shareholders and enhancing stock liquidity. Market analysts view the bonus issue as a sign of confidence in the bank’s future performance. Investors have reacted positively, considering the combination of bonus issue and healthy financial performance an encouraging development. Karur Vysya Bank continues to strengthen its capital position while also focusing on expanding its retail and digital banking footprint, further boosting investor sentiment and stakeholder trust.
Canara Bank posts 22% profit growth, strong asset quality in Q1 FY26
Canara Bank reported a 21.6% year-on-year rise in net profit to Rs. 4,752 crore for the April–June quarter of FY26, driven by robust loan growth, increased fee-based income, and improved asset quality. The bank’s global business expanded 11% YoY, reaching Rs. 25.6 lakh crore, reflecting sustained momentum across both deposits and advances. Analysts have attributed this performance to the bank’s stable margins, efficient cost management, and proactive risk control measures. Canara Bank’s consistent profitability and sound asset quality underline its improved operational metrics, especially in a challenging economic environment. The bank has also shown strong progress in retail lending and digitisation initiatives. Market observers expect the bank to maintain a steady trajectory for the remainder of the fiscal year, supported by its strategic focus on financial inclusion, technology adoption, and balanced loan growth. The first-quarter performance solidifies Canara Bank’s position among the better-performing public sector banks in India.
Bank of Maharashtra Q1 profit rises 23% on strong interest income
Bank of Maharashtra posted a 23.2% year-on-year rise in net profit to Rs. 1,593 crore for Q1 FY26, propelled by a 17.6% increase in net interest income (NII), which reached Rs. 3,292 crore. However, the bank’s net interest margin (NIM) slightly moderated to 3.95% compared to 3.97% a year earlier. MD & CEO Nidhu Saxena stated that the bank expects its full-year NIM to average around 3.75%. Non-interest income declined 8% YoY to Rs. 825 crore, with management highlighting potential margin pressure if interest rates fall further. Despite this, the bank remains optimistic about sustaining profitability through efficient asset deployment and digital transformation. Analysts noted that while margin compression may occur in later quarters, healthy credit growth and capital adequacy provide resilience. The bank’s focus on risk containment and branch-level productivity improvements are expected to support earnings in the coming quarters, making BoM one of the more consistent PSBs this year.
Public sector banks flag 1,629 wilful defaulters with dues of Rs. 1.62 trillion
Public sector banks (PSBs) have reported 1,629 unique wilful defaulters with outstanding loans amounting to Rs. 1.62 trillion as of March 31, 2025, according to data shared by the Union Finance Ministry. This information was provided in response to a query in the Rajya Sabha by Minister of State for Finance Pankaj Chaudhary. These defaulters are listed on credit information company platforms such as CIBIL, Equifax, and CRIF High Mark. The government also revealed that nine individuals declared as Fugitive Economic Offenders have had assets worth Rs. 15,298 crore seized under the PMLA and another Rs. 750 crore under the FEOA. PSBs have recovered Rs. 1.65 lakh crore from write-offs over five years. Measures against wilful defaulters include denial of fresh credit, debarment from capital markets, and restrictions on launching new ventures for five years. The government continues to enhance frameworks for recovery and deterrence through both legislative and institutional mechanisms.
ICICI Bank revises minimum balance rule after criticism
ICICI Bank has revised its earlier directive requiring Rs. 50,000 average monthly balance (AMB) for new savings accounts, reducing it to Rs. 15,000 after facing public backlash. The updated AMB norms apply to accounts opened post August 1, 2025, excluding salary accounts, senior citizens, Jan Dhan, and accounts opened before July 31. In metros and urban areas, the AMB is Rs. 15,000, Rs. 7,500 for semi-urban, and Rs. 2,500 in rural zones. A penalty of 6% of the shortfall or Rs. 500, whichever is lower, will apply for non-maintenance. HDFC Bank clarified that its regular savings AMB remains Rs. 10,000, not Rs. 25,000 as reported. ICICI will offer three premium programs with higher thresholds that waive MAB charges. The decision is seen as a response to concerns that high balance requirements restrict financial inclusion. Customers welcomed the rollback, noting it as a step toward accessible banking.
Bank of Baroda celebrates 118th year with tech-driven innovations
Marking its 118th Foundation Day, Bank of Baroda launched a suite of customer-centric, tech-enabled services under the theme “Trust Empowered by Innovation.” Key initiatives included the launch of ‘bob World Business’ app for MSMEs and corporates, a Virtual Front Office using AI and 3D holograms, and a Braille debit card for the visually impaired. The bank also introduced green financing schemes and global UPI services via ‘bob E Pay International’. The celebrations were attended by DFS Secretary M. Nagaraju, who applauded the bank’s focus on inclusive growth and sustainability. These initiatives align with Bank of Baroda’s broader vision of combining legacy trust with digital transformation, as it targets enhanced customer experience across sectors. With rising expectations from public sector banks to drive financial innovation, BoB’s efforts reinforce its position as a progressive player in the evolving banking ecosystem.
RBI mandates banks to pay penalties for delay in settling claims of deceased customers
Starting January 1, 2026, banks will be required to settle claims of deceased account holders within 15 days, failing which they must pay penal interest or compensation. The RBI’s new directive mandates interest at the bank rate plus 4% for delayed deposit claims and Rs. 5,000 per day for locker delays. The move targets procedural delays and rising unclaimed deposits. For accounts with nominations or survivorship mandates, banks must release funds without legal paperwork. In the absence of nominees, claims up to Rs. 15 lakh will require a legal heir declaration and NOC from other heirs; higher amounts need succession documents. Lockers follow a similar framework. The new RBI (Settlement of Claims) Directions, 2025, aim to ensure swift resolution, reduce harassment for legal heirs, and improve awareness on nominations. Standardised forms and increased outreach will support smoother implementation.
PSBs collect Rs. 9,000 crore in minimum balance penalties over five years
Eleven public sector banks (PSBs) collected approximately Rs. 9,000 crore as penalties for non-maintenance of minimum balance in savings accounts over the last five years, as disclosed in Parliament. While SBI waived such charges in 2020, other PSBs like Canara Bank, Bank of Baroda, and PNB followed suit only recently, starting Q2 FY26. Private sector banks, which levy higher charges, have yet to announce similar waivers. Exempt categories include Jan Dhan, salary, and basic savings accounts. The Finance Ministry noted that banks were advised to rationalise penal charges, especially for semi-urban and rural customers. As per RBI norms, such charges must be proportionate to the shortfall, and policies must be board-approved. Minister of State for Finance Pankaj Chaudhary stated that efforts are ongoing to make banking fairer and more inclusive. Remaining PSBs are expected to align soon with the Ministry’s recommendation.
Banks hold over Rs. 67,000 crore in unclaimed deposits: Finance Ministry
Indian banks are sitting on more than Rs. 67,000 crore in unclaimed deposits, as per data presented by the Finance Ministry in the Lok Sabha. Unclaimed balances include inoperative savings and current accounts for over 10 years, and term deposits not claimed within 10 years from maturity. These are transferred to the Depositor Education and Awareness (DEA) Fund maintained by the RBI. Public sector banks account for over Rs. 58,000 crore, with SBI topping the list, while private sector banks account for Rs. 8,600 crore, led by ICICI Bank. NBFCs are exempt from transferring unclaimed deposits to the DEA fund. Minister of State for Finance Pankaj Chaudhary stated that RBI has advised banks to publish lists of unclaimed deposits, trace customers or legal heirs, and ensure redressal mechanisms are in place. Banks must also maintain a board-approved policy for classifying and managing such deposits.
35% of Indian bank accounts inactive, says World Bank
A World Bank report has revealed that 35% of Indian bank accounts remain inactive, citing the Jan Dhan Yojana as a key factor behind this trend. The “Global Findex 2025” study highlights that India’s account inactivity is significantly higher than the 5% average among developing economies. Inactive accounts are those with no customer-initiated transactions for over 12 months. The report attributes this to mass account openings under Jan Dhan Yojana, which added 450 million Indians to the formal banking system by April 2022. Distance from financial institutions, lack of trust, and absence of need were major deterrents. Additionally, 40% of respondents said they lacked sufficient funds to use the account, and 30% admitted to discomfort in handling accounts independently. These findings raise concerns over the depth of financial inclusion in India, despite high account ownership rates.
