Banking News for July 2026

SBI to raise Rs 60,000 crore via bonds in FY27

The Central Board of State Bank of India has approved a plan to raise up to Rs 60,000 crore in FY27 to strengthen its capital base and support future growth. Funds will be raised through bonds, Basel III compliant Additional Tier 1 instruments and Tier 2 bonds in domestic and international markets via public issue or private placement.

The fundraising remains subject to approvals from the Government of India wherever required. The bank has been actively tapping bond markets in recent years, including Tier 2 issuances and a large qualified institutional placement to strengthen Tier 1 capital.

These capital raising efforts have seen strong investor demand and reflect SBI’s ability to access funding efficiently to support balance sheet expansion and regulatory requirements. In July 2025, SBI raised equity capital through QIP further strengthening its Tier-1 capital position for future growth.

UPI transactions in May soared to Rs. 29.9 trillion

National Payments Corporation of India reported record UPI activity in May 2026, with transactions hitting Rs. 29.9 lakh crore in value and 23.2 billion in volume. Compared to April, the value increased from Rs. 29.03 lakh crore, while volume rose from 22.35 billion, reflecting a 19% and 24% year-on-year growth, respectively.

Cashfree Payments CEO Akash Sinha attributed the surge to summer travel, IPL 2026, and heightened seasonal consumer spending, demonstrating strong organic demand. The consistent upward trajectory indicates continued adoption of digital payments across India, with broader penetration in urban and semi-urban regions.

The milestone underscores UPI’s growing role in India’s payments ecosystem, providing fast, cost-effective, and interoperable transaction capabilities. Analysts noted that the increase in both value and volume highlights resilience amid economic uncertainties, with fintech platforms and banks innovating to support high transaction throughput while maintaining secure and seamless customer experiences.

Banking sector key to realising Viksit Bharat vision; deposit trends analysed

SBI Chairman C S Setty emphasised the transformative role of the banking sector in India’s Viksit Bharat vision, highlighting the importance of mobilising capital, fostering entrepreneurship, supporting infrastructure, and advancing financial inclusion.

Setty noted SBI’s focus on a “Digital First, Customer First” strategy, including investments in technology, AI, data analytics, cybersecurity, and digital infrastructure to build an agile, intelligent banking ecosystem. He added that FY26 marked a landmark year with strengthened market leadership and progress toward a technology-driven, customer-centric institution.

RBI Governor Sanjay Malhotra noted that slower deposit growth relative to credit growth does not constrain lending as banks have sufficient capital. Meanwhile, RBI data shows savings deposits declined from 34.6% in March 2022 to 28.7% in March 2026, while term deposits rose from 55.2% to 61.6%, reflecting structural shifts driven by interest rate differentials and contributions from households, public sector, and private sector banks.

Small banks hold on to upgrade plans

The recent statements of the chiefs of Ujjivan Small Finance Bank and Jana Small Finance Bank indicate that small finance lenders continue to pursue transition to universal banking despite regulatory setbacks. The Reserve Bank of India returning their applications for voluntary conversion has strengthened their resolve rather than slowing ambitions.

Among the 11 small finance banks in India, only three have applied so far for upgrading into universal banks, with only AU Small Finance Bank meeting eligibility requirements and successfully making the transition. AU SFB, the largest among peers with strong deposit and loan growth, is seen as the benchmark for scaling operations.

Other SFBs continue to work on improving capital adequacy, governance standards and balance sheet size to meet regulatory thresholds. Industry observers note that the transition remains challenging due to strict RBI norms, but long-term aspirations remain intact.

Axis Bank flags fraud hotspots in Bengal

Axis Bank has identified Kolkata and parts of Bengal as key hotspots for financial fraud involving mule accounts used to route illicit transactions. Bank officials said nearly 80 per cent of such mule accounts are concentrated in about 700 of its 6,200 branches nationwide.

Higher concentrations are seen in districts bordering Bangladesh, Bihar and Jharkhand, along with other hubs in Rajasthan, Madhya Pradesh, Haryana and outskirts of Chennai. The bank has intensified monitoring and deployed AI-led systems to detect fraud patterns in these regions. It has also shifted OTP delivery to its own app, introduced facial recognition inspired by DigiYatra and launched a fixed deposit lock feature for senior citizens.

According to the bank, digital fraud prevention improved 4.5 times in FY26 compared to the previous year due to AI-driven monitoring. Officials said mule accounts remain a major concern across border districts.

Indian money in Swiss banks drops by over 8%

Indian money parked in Swiss banks fell more than 8 per cent in 2025 to 3.25 billion Swiss francs (approximately Rs 36,793 crore), according to data from the Swiss National Bank. The decline was mainly driven by reduced funds held through local branches and other financial institutions.

However, direct customer accounts of individuals and institutions rose by over 50 per cent to 524 million Swiss francs, representing about 16 per cent of total Indian-linked funds. The largest share remained in “amounts due to banks” at 2.6 billion Swiss francs despite a 15 per cent drop.

The fall follows a three-fold rise in 2024, when Indian funds in Swiss banks reached 3.5 billion Swiss francs, the highest since 2021. The SNB clarified that total liabilities included customer deposits, interbank holdings, fiduciary amounts, and bonds, securities, and other instruments, reflecting volatility in cross-border flows.

Large-term deposits dominate India’s banking system

India’s banking system is increasingly dependent on high-value term deposits, with accounts of Rs. 5 crore and above now accounting for over a third of total term deposits, according to Reserve Bank of India (RBI) data. Deposits of Rs. 1 crore and above represented 46.3% of all term deposits as of March 2026, up from 45.07% in March 2025 and 43.66% in March 2024.

Within this, Rs. 5 crore+ deposits alone made up 34.8% of term deposits but just 0.05% of the total number of accounts, highlighting concentration among a few large depositors. Nearly 38% of term deposits were Rs. 3 crore and above, exceeding the retail cap of Rs. 2 crore. In contrast, term deposits under Rs. 5 lakh constituted only 17.8%.

The data underscores an ongoing shift from retail to high-value deposits, reflecting both rising liquidity among wealthy clients and banks’ increasing reliance on large-ticket fixed deposits.

Bandhan-Centrum to lau-nch ‘3-in-1’ account

Bandhan Bank partnered with Centrum Finverse to launch a 3-in-1 account integrating banking, demat, and trading services on a single platform.

The account allows customers to open and manage banking, demat, and trading accounts through a paperless process via branches and digital channels. Users can access equities, IPOs, derivatives, ETFs, and indices, with trading features like chart-based execution, algorithmic strategies, and margin leverage.

Bandhan Bank MD and CEO Partha Pratim Sengupta said the initiative improves accessibility and provides seamless investment opportunities. Centrum Group Executive Chairman Jaspal Bindra noted the collaboration democratizes investment access while ensuring security and simplicity. The platform aligns with growing retail participation in India’s financial markets and rising digital adoption. It aims to provide a unified, efficient, and user-friendly interface for customers to manage their banking and investment activities.

BOI sets up SBB for partnership-led lending

Bank of India inaugurated a Strategic Business Branch (SBB) at Nariman Point, Mumbai, focused on digital and partnership-led financing. The SBB will handle Pool Buyout, Co-Lending, TReDS, and Supply Chain Finance initiatives, consolidating strategic lending under a single specialised unit.

Ravi Shankar, General Manager of Digital Lending, highlighted that the SBB strengthens BOI’s partnership-led ecosystem, improves portfolio monitoring, and enhances operational efficiency. The branch will serve as a centre of excellence for partnership-driven financing, helping the bank scale operations while maintaining strong governance and risk management.

The initiative aligns with BOI’s strategic goal to leverage technology and partnerships for sustainable growth, optimize risk-adjusted returns, and expand market share. By centralising these segments, the bank aims to improve credit deployment, support MSMEs and corporates, and provide a framework for innovative lending products, enhancing its competitive positioning in the financial services sector.

India to see 6.6% growth in FY27: World Bank

The World Bank raised India’s FY27 GDP growth forecast to 6.6% from an earlier estimate of 6.5%, citing reduced US tariffs and benefits from upcoming free trade agreements. The World Bank expects these measures to mitigate weaker external demand arising from the Middle East conflict.

Growth is projected to slow from 7.7% in FY26 due to higher energy prices and rising input costs affecting private demand. The report notes that recent GST reductions are expected to support consumer spending. India remains one of the fastest-growing major economies, with projected GDP growth of 7.2% in FY28 and 7% in FY29.

“Growth is then anticipated to rebound over the next two fiscal years, driven by strong domestic demand and a pick-up in exports,” the report said. Analysts highlighted that the policy and trade measures provide resilience and support sustained expansion in India’s medium-term economic outlook.

Bank credit growth at 2-year high of 17.65%

Bank credit expanded at its fastest pace in nearly two years, rising 17.65% year-on-year (Y-o-Y) as of May 31, 2026, highlighting strong momentum across the banking system. In contrast, deposits grew 12.21%, widening the credit-deposit growth gap to 544 basis points, according to Reserve Bank of India (RBI) data.

Outstanding bank credit reached Rs. 215.15 trillion from Rs. 182.87 trillion a year earlier, while deposits rose to Rs. 260.02 trillion from Rs. 231.73 trillion. Sequentially, credit expanded by Rs. 3.29 trillion over two weeks, compared to Rs. 3.13 trillion in deposits.

RBI Governor Sanjay Malhotra noted that slower deposit growth does not constrain lending as banks have sufficient capital, while SBI Chairman C S Setty emphasized the banking sector’s pivotal role in achieving the Viksit Bharat vision, highlighting investments in technology, digital infrastructure, and AI to strengthen financial inclusion and infrastructure support for sustainable economic growth.

Slower deposit growth does not constrain lending; term deposits rise sharply

RBI Governor Sanjay Malhotra said slower deposit growth relative to credit growth does not limit banks from lending, as they have sufficient capital. As of May-end 2026, credit growth across all scheduled banks stood at 17.44% year-on-year, outpacing deposit growth of 12.14% by 530 basis points. Malhotra added that the shift of some bank deposits to equities is healthy, encouraging diversification between credit and equity capital.

Meanwhile, RBI data shows a structural shift in scheduled commercial banks’ (SCBs) deposit composition over the last five years. Savings deposits fell from 34.6% in March 2022 to 28.7% in March 2026, while term deposits increased from 55.2% to 61.6%. Public sector banks contributed 50.8% of incremental deposits, private banks 38.6%, with households remaining the primary contributors at 59.3% and non-financial corporations increasing to 18.5% of total deposits.