Banking Pulse for October 2026
Jan Dhan Accounts Move Towards Savings, Insurance and Pension Adoption
India’s financial inclusion programme is entering a new phase, with millions of Jan Dhan account holders moving beyond basic banking access towards savings, insurance and pension products.
State Bank of India (SBI), which holds nearly 30% of the country’s Jan Dhan accounts, said the average balance in these accounts has increased to around Rs. 5,000 from the initial zero-balance stage.
Nearly 590 million PMJDY accounts have been opened, with more than 54% held by women and significant participation from tier 3 and tier 4 regions. Speaking at the Global Fintech Fest 2026 in Mumbai, Rama Mohan Rao Amara, MD (RB&O), SBI, highlighted the role of Jan Dhan accounts, Aadhaar, mobile connectivity and fintech applications in bringing millions into the formal economy.
“Time and again we talk about the transformational impact of the PMJDY, Aadhaar, mobile and coupled with various fintech applications, the kind of transformation it has brought into the Indian economy helping millions of people be part of the formal economy,” the official said.
SBI is now encouraging customers to adopt insurance schemes such as PMJJBY and PMSBY along with pension products like Atal Pension Yojana.
UPI Transactions Above Rs. 2,000 to Attract 0.4% MDR
The National Payments Corporation of India (NPCI) has announced a 0.4% Merchant Discount Rate (MDR) on selected UPI transactions above Rs. 2,000, with an overall cap of Rs. 300.
The revised framework includes a flat Rs. 5 charge for utility payments, fuel purchases, insurance premiums, railway tickets and several government services.
Person-to-person UPI transfers will remain exempt from charges, while auto-debits and UPI mandates will also not attract MDR. Small merchants such as vegetable vendors, tea shops and kirana stores will remain exempt if their monthly UPI receipts are below Rs. 1 lakh.
“Banks have been advised to ensure merchants do not pass MDR charges on to customers. UPI application providers are expressly prohibited from imposing platform fees or hidden charges,” the finance ministry said in a statement.
The move aims to balance the sustainability of digital payment infrastructure with continued customer adoption.
SBI Targets Rs. 200 Lakh Crore Business Franchise in Four Years
State Bank of India (SBI) has set a target of building a Rs. 200 lakh crore business franchise over the next three to four years after crossing Rs. 100 lakh crore in combined deposits and advances.
SBI Chairman CS Setty said the focus would remain on sustainable and profitable expansion rather than growth alone.
“The scale is available to us. Our focus is to ensure that this scale is profitable, meaningful and qualitative. We do not want to compromise on any of these,” he said in an interaction with businessline.
The bank has recorded deposit growth of around 10% CAGR and loan growth of 14-15% over the last five years. SBI is also targeting around $10 billion in FCNR(B) deposits to strengthen long-term liquidity.
“We have a strong retail franchise and limited dependence on bulk deposits. These inflows will further reduce that dependence while providing sustainable long-term liquidity,” Setty said.
On market share, he added, “Market share is not merely a number. It demonstrates whether you are remaining relevant as times change. New depositors are entering the system and younger people are joining the community of earners. If we are not acquiring these customers, we are effectively losing a part of growing market share,” the SBI chief said.
SBI Extends Cash Withdrawal Charges to All Basic Savings Accounts
State Bank of India (SBI) has expanded the applicability of cash withdrawal charges for Basic Savings Bank Deposit Accounts (BSBDA), bringing branch-opened accounts also under the revised framework from October 1.
Under the revised rules, customers will continue to get four free cash withdrawals every month, including withdrawals through SBI ATMs, other bank ATMs and branch channels. Any withdrawal beyond this limit will attract a charge of Rs. 15 plus GST per transaction.
Earlier, the charge structure was mainly applicable to customers who opened BSBDA accounts through customer service points (CSPs) or business correspondents (BCs). The latest revision creates a uniform framework across all BSBDA accounts.
Industry sources said the move is aimed at improving fee income recovery and encouraging greater adoption of digital banking transactions. Digital transactions will continue to remain free without restrictions.
Bank of Baroda Introduces UPI Global QR Payments for International Visitors
Bank of Baroda (BoB) has launched “UPI Global QR Payments” to enable international tourists, overseas Indians and foreign wallet users from eligible countries to make payments through its UPI QR merchant network in India.
The initiative allows visitors to use their home-country banking or payment applications for QR-based payments, reducing dependence on cash and foreign currency exchange during travel.
The facility supports cross-border Person-to-Merchant (P2M) transactions through NPCI International’s Global Payments ecosystem. Eligible countries include Singapore, UAE, Nepal, Bhutan, Mauritius, Sri Lanka, the USA, Qatar and France, among others.
Sanjay Mudaliar, Executive Director, BoB, said the introduction of UPI Global Reverse Acceptance is an important step towards making digital payments more accessible across borders.
The initiative is expected to improve payment convenience for international visitors while expanding customer reach for merchants.
Indian Bank Plans 100 Branches and 2,500 New Employees in FY27
Indian Bank plans to expand its branch network by around 100 branches and increase its workforce by nearly 2,500 employees during the current financial year to support business growth and replace retiring staff.
The bank is focusing on strengthening its presence in Central and Western India after expanding significantly in eastern regions and Uttar Pradesh following the merger of Allahabad Bank in 2020.
“Last year we opened 100 branches. This year too we have similar plans. Just on August 15, which was our foundation day, the bank inaugurated 15 branches across the country,” Indian Bank MD and CEO Binod Kumar told PTI in an interaction.
The bank currently operates 6,003 domestic branches along with overseas branches in Singapore, Colombo and Jaffna and an IFSC Banking Unit at Gandhinagar.
Indian Bank aims to reduce gross NPAs to 1.5-1.6% and net NPAs to 0.15-0.2% by the end of the financial year.
Credit Card Users Shift Towards Timely Repayments: Axis Bank
India’s credit card industry is witnessing changes in consumer behaviour, with revolving credit declining as customers become more disciplined about repayments, according to Arnika Dixit, group head, cards, payments and wealth management at Axis Bank.
The bank said the reduction in revolving credit is driven by greater customer awareness, digital payment platforms and reminders that help users avoid carrying outstanding balances.
“Revolvers have been coming down for roughly five years,” Dixit said after the launch of the Axis Bank-Scapia co-branded credit card.
She said the trend reflects both industry changes and credit cycle movements, with consumers increasingly making timely repayments.
The moderation in revolving credit does not necessarily indicate weaker credit card growth. Point-of-sale transactions converted into equated monthly instalments (EMIs) continue to support spending and receivable growth.
“Newly acquired customers also take time to contribute meaningfully to the book. Typically, it takes six to 12 months for a new cardholder to build meaningful spending on the card, providing banks with a pipeline for future receivables growth,” she said.
Banks’ Share in Microfinance Portfolio Declines as NBFC-MFIs Drive Recovery
Banks’ share in India’s microfinance portfolio has declined as lenders shift some loans from the microfinance category to retail portfolios, while NBFC-MFIs are supporting recovery in the sector, according to MFIN’s Micrometer report.
Banks’ microfinance portfolio declined 28.5% year-on-year to Rs. 83,080 crore as of June 30, 2026, reducing their share in the overall portfolio to around 25% from 33% a year earlier. MFIN attributed the decline partly to reclassification of MFI loans as retail loans.
In contrast, NBFC-MFIs recorded 5.2% growth, taking their portfolio to Rs. 1.46 trillion and increasing their share to 44%. The overall microfinance portfolio stood at Rs. 3.29 trillion, lower than Rs. 3.53 trillion a year earlier.
“The industry has sustained the growth momentum seen in the last quarter, marking a turnaround after seven consecutive quarters of slowdown. Growth has been driven primarily by NBFC-MFIs and higher loan sizes, reflecting a degree of consolidation around existing borrowers,” MFIN CEO and Director Alok Misra said.
Banking System Liquidity Surplus Reaches Rs. 6.65 Lakh Crore
The Indian banking system is witnessing a significant liquidity surplus, with excess liquidity reaching Rs. 6.65 lakh crore as of August 31, 2026, supported by strong inflows through FCNR(B) deposits under the RBI’s concessional swap facility.
To absorb surplus liquidity, the Reserve Bank of India conducted Variable Rate Reverse Repo (VRRR) auctions worth Rs. 6 lakh crore and Rs. 4 lakh crore.
The seven-day VRRR auction received bids of Rs. 1,14,320 crore at a weighted average rate of 5.24%, while the overnight auction attracted Rs. 2,59,846 crore.
K Arvind, Head – Treasury, Tamilnad Mercantile Bank, said banks prefer parking surplus resources overnight rather than for longer durations as they need flexibility to support credit opportunities.
The RBI has indicated that currency movements, government cash balances and capital inflows will influence liquidity conditions in the near term.
“Going ahead, the usual return of currency during the monsoon season, drawdown of government cash balances and our special measures to attract capital inflows are expected to aid banking system liquidity in the near-term.
Karur Vysya Bank Opens 16 New Branches Across India
Karur Vysya Bank (KVB) has expanded its branch network by inaugurating 16 new branches across Tamil Nadu, Andhra Pradesh, Telangana, Karnataka and Delhi NCR.
With the latest expansion, the bank’s branch network has increased to 919 branches across the country. The new branches include six in Tamil Nadu, five in Andhra Pradesh, three in Telangana and one each in Karnataka and Delhi NCR.
Shri Ramesh Babu, Managing Director & CEO of Karur Vysya Bank, inaugurated the Gachibowli branch in Hyderabad and opened the remaining branches virtually through video conference.
The expansion is part of KVB’s strategy to strengthen its presence across metropolitan, urban, semi-urban and rural markets. The branches will cater to retail customers, MSMEs and agricultural businesses while complementing the bank’s digital banking services.
Shri Ramesh Babu, Managing Director & CEO, Karur Vysya Bank, said, “We continue to expand our branch network in markets where we see good business potential and an opportunity to deepen our relationship with customers. While digital banking has made everyday transactions much easier, branches continue to play an important role, particularly for our MSME, retail and agricultural customers. The new branches will help us get closer to customers and offer them the convenience of both personalised service and digital banking.”
PhonePe and Visa Introduce Cardless Payment Solutions
PhonePe and Visa have jointly launched three new payment solutions, Tap to Pay, Cross Border Scan to Pay and Smart Accept, at the Global Fintech Fest 2026.
The partnership makes PhonePe the first app in India to introduce Cross Border Scan to Pay for international transactions. It also enables PhonePe users to access Visa’s complete suite of capabilities, including Online Device Tokenization, Tap to Pay and Cross Border Scan to Pay.
The initiative builds on Visa Device Tokenization launched on the platform in February 2025 and aims to create a seamless cardless payment ecosystem.
Users saving their Visa cards on PhonePe will be able to make payments by tapping their phones at stores, completing online transactions and scanning QR codes while travelling abroad without carrying physical cards.
The Smart Accept solution will also enable micro-merchants to accept card payments digitally.
IDFC FIRST Bank and Sarvam Set Up Joint AI Research Lab
IDFC FIRST Bank and Sarvam have announced a partnership to establish a joint Research and Development (R&D) Lab focused on exploring the future of artificial intelligence applications in banking.
The collaboration aims to address the challenge of making advanced AI capabilities practical and effective within regulated banking environments.
While AI models are developing rapidly, banks require systems that can understand institutional processes, operate within regulatory controls, learn from product outcomes and improve continuously without requiring major structural changes.
The joint lab will combine IDFC FIRST Bank’s banking expertise with Sarvam’s artificial intelligence research and engineering capabilities.
The initiative reflects the increasing focus among financial institutions on developing responsible AI solutions that can support operational improvement, customer services and decision-making while maintaining governance and risk controls.
Smartphones Will Become New Bank Branches, Says Jyotiraditya Scindia
Union Minister Jyotiraditya Scindia said smartphones will become India’s new bank branches as digital connectivity, artificial intelligence and financial infrastructure continue to expand.
Speaking at the Global Fintech Fest 2026, Scindia said mobile phones, telecom networks and data are becoming key components of India’s digital financial ecosystem.
“You need to take that in perspective. Voice is pretty much free. 1 GB of data costs close to about Rs. 9. The world average is close to about $2.5. We operate on 5 per cent of world’s cost. Average data consumption has gone to close to 32 GB per customer. So, the phone is going to become the bank branch. The mobile network is going to become your gateway for credit and investment,” Scindia said.
He also highlighted the potential of AI in personalised financial advice, credit assessment and fraud detection.
PNB Plans Entry into Wealth Management Segment
Punjab National Bank (PNB) is planning to enter the wealth management segment and strengthen its credit card business as the public sector lender seeks growth in new areas.
PNB Managing Director and CEO Ashok Chandra said the bank plans to launch wealth management services in early 2027.
“For the wealth management business, we have deployed relationship managers (RMs) in 1,700 branches. Another 1,300 branches will have RMs by September end,” Chandra said.
PNB has over 10,000 branches across the country. The relationship managers will focus on providing wealth management services to the top 250 customers in each branch, supported by specialised training programmes.
The wealth management segment is witnessing increased competition from banks, mutual funds and broking firms, driven by rising financialisation and growth in the high-net-worth individual segment.
Axis Bank and Scapia Launch No-Fee Travel Credit Card
Axis Bank and travel fintech Scapia have launched a co-branded travel credit card aimed at digitally focused travellers, offering zero foreign exchange markup, travel benefits and rewards without joining or annual fees.
The Scapia Axis Bank Credit Card is available on Mastercard and RuPay networks and allows customers to earn up to 20% rewards on eligible travel bookings and up to 10% on other eligible spends through the Scapia app. Rewards earned as Scapia Coins can be redeemed for flights, hotel stays, visas, experiences and shopping.
The card is managed through the Scapia app, which provides travel discovery, planning and booking services. It also includes Smart Forex features, airport lounge access, dining and retail privileges.
Axis Bank Group Head Arnika Dixit said the partnership aims to move beyond traditional co-branded card offerings by integrating payments into how customers discover, plan and experience travel.
Bandhan Bank Launches Credit Card Portfolio with Four Variants
Bandhan Bank has entered the credit card segment through a partnership with Mastercard, launching four variants designed for different customer segments.
The cards include Sparks, Ignite, Flare and Lumina, catering to everyday shoppers, travellers and premium lifestyle customers. Sparks offers rewards on grocery and apparel purchases, while Ignite provides travel benefits and international lounge access. Flare focuses on travel-related privileges, including golf and dining benefits, while Lumina offers premium features such as concierge services, airport meet-and-greet and enhanced international rewards.
All four cards are issued on the Mastercard network and are available through a digital-first application process along with branch channels.
MD & CEO Partha Pratim Sengupta said, “from Gen Z and emerging affluent consumers to seasoned travellers and premium lifestyle seekers,” the portfolio has been designed to serve diverse customer needs.
Bandhan Bank currently serves over 3.2 crore customers through more than 6,400 banking outlets across 35 states and union territories.
Recovery in Personal Guarantee Cases Under IBC Remains Weak
Recovery from personal guarantee cases under the Insolvency and Bankruptcy Code (IBC) remains significantly lower compared with corporate insolvency proceedings, with creditors realising only around 1% of admitted claims so far.
According to data released by the Insolvency and Bankruptcy Board of India (IBBI), 5,186 applications have been filed by creditors and companies since December 2019. However, resolution professionals have been appointed in only around 41% cases.
So far, 64 cases have received approval for repayment plans, with creditors realising Rs. 235 crore against admitted claims. The average realisation stands at around Rs. 3.7 crore.
Personal guarantees were mainly provided by promoters to secure loans or restructuring facilities for companies they controlled. Under IBC provisions, creditors can pursue guarantors when dues are not fully recovered through corporate insolvency resolution.
IBBI data also showed avoidance transactions exceeding Rs. 4.6 lakh crore across 2,132 cases.
