Indian Bank CEO Binod Kumar says India’s development will likely push interest rates higher, while net interest margins thin. To meet regulatory Expected Credit Loss norms, the bank plans to raise capital and build a wealth management business. It also targets faster retail and MSME loan growth, arguing that bank consolidation could help achieve global scale.
Indian banks are tightening their exposure to Gulf markets as the Iran crisis drags on. Several lenders, including SBI and Punjab National Bank, are pausing fresh business in the region while monitoring existing relationships. The strategy is aimed at limiting financial fallout, managing cross-border risk, and protecting stability in international operations until the situation becomes clearer.
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Indian banks have activated business continuity plans to protect staff in West Asia as Iran US tensions raise security concerns. With government guidance to assess risks and provide support, some banks have moved key wholesale activities to India, running parts of the work remotely. Authorities are monitoring the situation closely, prioritizing business continuity and staff well-being.
McKinsey says India’s banking sector is shifting from a phase of strong profits and balance sheet improvement to a tougher era of structural pressures. Higher operating costs and emerging credit risks are likely to weigh on profitability, forcing banks to navigate “turbulence” as the operating environment grows more complex than in recent years.
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