This month, India’s banking and financial landscape is navigating a mix of market discipline, liquidity challenges, rural reforms, and renewed global investment. Here’s a fresh look at the major shifts defining the financial sector in July 2025.
Global Trader Jane Street Faces Indian Market Ban
SEBI has taken bold action against the multinational trading firm Jane Street, accusing it of unfairly manipulating the BankNifty derivatives market. The firm allegedly made gains exceeding ₹48,000 crore. In response, SEBI issued an interim ban and froze profits via escrow, citing protection of investor interest. This move underscores India’s growing regulatory assertiveness in policing market behavior.
Credit Flow Still Flat Despite Cash Overflow
Despite the banking system being flush with funds (₹4 trillion in surplus liquidity), actual credit disbursement remains stagnant. Banks are cautious about lending amid subdued demand, and corporate borrowers seem hesitant too. The Reserve Bank of India recently pulled back ₹1 trillion via reverse repo, seeking to stabilize overnight rates and cool excessive liquidity.
FPIs Reinvest in Indian Finance
In June 2025, India saw a significant boost in Foreign Portfolio Investments (FPIs), with over ₹14,500 crore pumped into domestic equities. Financial stocks were the top recipients, accounting for nearly 60% of the total inflows. The trend highlights increased foreign confidence driven by central bank stability, macroeconomic strength, and long-term growth potential.
Compliance Tightens: Key Policy Updates in Effect
From July 1, new financial regulations have been rolled out across sectors:
- Aadhaar made compulsory for new PAN applications
- No revisions allowed after filing GSTR-3B returns
- Second e-way bill portal introduced for logistics and GST
- Aadhaar OTP now required for Tatkal IRCTC bookings
- Revised ATM and banking fees implemented by ICICI, Axis, and others
These updates aim to enhance transparency, digital identity verification, and taxpayer accountability.
Lending Rate Cuts Announced by PSU Lenders
To align with the Reserve Bank’s accommodative stance, state run banks including Punjab National Bank, Indian Bank, and Bank of India have slightly reduced their Marginal Cost of Funds-Based Lending Rate (MCLR). The cut of 5 basis points brings one-year MCLR down to 8.90–9.00%, offering minor relief to borrowers.
HDFC Bank Sees Cautious Lending Amid Deposit Growth
Q1 FY25 data from HDFC Bank shows deposits grew by 1.8% to ₹27.64 lakh crore, while loans rose only 0.4%. This highlights a conservative lending approach and signals that consumers and businesses are parking funds but hesitant to borrow amid economic uncertainty.
Regional Rural Banks Consolidated to Enhance Rural Access
Under the ongoing One State, One RRB initiative, several Regional Rural Banks in states like Madhya Pradesh and Bihar have been merged. The government’s objective is to streamline rural banking, enhance credit flow, and reduce operational fragmentation across regions.
Big Picture: Financial System Embraces Reform
July 2025 captures a turning point in India’s financial ecosystem. Regulatory control is getting tighter, foreign capital is returning, digital compliance is being enforced, and rural banking is being realigned. While challenges persist, the sector is clearly preparing for a more transparent and digitally driven future.