Amid threats from the latest AI models, the government is exploring a centralised back office, for Regional Rural Banks (RRBs) to strengthen tech infrastructure and expand their digital services.

The National Bank for Agriculture and Rural Development may lead the initiative, focusing on shared digital platforms, analytics and enhanced cybersecurity capabilities, said people familiar with the developments.

"These discussions are part of the initiative to further strengthen RRBs and ensure that the tech infrastructure is secure," said an official, adding that the new structure will also look at common procurement operations and knowledge exchange with sponsor banks. All RRBs have state-run banks as their sponsor banks and hold up to a 35% share.

The sharp rise in insurance commissions highlights the structurally high-cost nature of the insurance industry, with growth still heavily reliant on expensive intermediary-driven distribution than cost-saving digital transformation, Ajay Seth, Chairman of the Insurance Regulatory and Development Authority of India (Irdai), said.

The remarks were made during the 133rd Authority meeting of Irdai held in December 2025, the minutes of which were released on Thursday.

Seth noted that high front-loaded acquisition costs erode policyholder value in long-term products, resulting in low asset build-up in the initial years and minimal surrender value in case of early exits. This cost structure, he said, undermines trust and policy persistency. “As early exits effectively wipe out the policyholder’s principal while weakening the sector’s overall value proposition,” he said.

With benchmark yields rising by as much as 45 basis points in the March quarter, banks’ bond portfolios were hit by mark-to-market losses. The yield on the 10-year benchmark bond hit 7% last quarter, as crude oil prices surged, triggering fears of inflation. Curbs imposed by Reserve Bank of India (RBI) on net open forex positions of banks at $100 million also hurt treasury income as lenders unwound positions.

Mark-to-Market Pain
The other income for public sector banks fell 21% YoY to Rs 45,904 crore, marking the first decline in six quarters. Other income at State Bank of India (SBI) declined 29% owing to a treasury loss of around Rs 1,800 crore. Excluding that, non-interest income rose across every segment, SBI Chairman CS Setty said.

Asia Pacific banks may have to raise their loan loss provisions further in the near-term as the Iran conflict darkens economic prospects in the region heavily reliant on Middle Eastern oil, analysts said.

Banks in countries including Australia, Singapore, and India flagged possible credit hits of hundreds of millions of dollars each as they reported their March quarter earnings, blaming the indirect cost of the conflict.

The surging credit loss provisions come at a time when the lenders are also facing the prospects of higher-for-longer oil prices, supply chain and trade disruptions, rising interest rates and weaker corporate balance sheets.

While higher loss provisions would not make a big dent in the short term given strong capital buffers, analysts warn that prolonged energy market disruptions could result in actual credit losses and pile pressure on banks to replenish balance sheets.

"More Asian banks have increased provisions and forward-looking overlays to reflect the risks from the Iran war," said Gary Ng, senior economist for Asia Pacific at Natixis CIB, though as yet there has not been a wave of credit defaults.

"The bottom line is that even if the war ends soon, energy prices may remain elevated due to supply destruction. Interest rates may not fall, which can hurt corporate repayment capacity and pressure credit demand," he said.

Non-bank entities facilitating outward remittances will no longer require prior approval from the Reserve Bank of India (RBI) to enter into tie-ups with authorised dealer banks, the regulator said in a revised sectoral framework published Wednesday.

The framework shifts regulatory focus away from ex-ante approvals toward compliance, transparency and consumer protection obligations at regulated banks facilitating the transactions.

RBI said authorised dealers must continue to comply with existing foreign exchange rules while facilitating cross-border outward remittances.

The Reserve Bank of India (RBI) on Tuesday cancelled the banking licence of Mumbai-based Sarvodaya Co-operative Bank, citing poor financial health, inadequate capital and weak earning prospects.

With the cancellation coming into effect from the close of business on May 12, 2026, the bank can no longer carry out any banking operations, including accepting or repaying deposits.

The RBI has also directed the Commissioner for Cooperation and Registrar of Cooperative Societies in Maharashtra to begin the process of winding up the bank and appoint a liquidator.

Depositors protected up to Rs 5 lakh
The central bank said depositors would be protected under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme.

On liquidation, every depositor would be entitled to receive the deposit insurance claim amount of his/her deposits up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

Indian banks expect corporate loans to expand in double digits this fiscal, led by demand from diverse sectors such as renewable energy, infrastructure, auto manufacturing and data centres.

Several large lenders, such as State Bank of India (SBI), Bank of Baroda (BoB) and Canara Bank, have a strong corporate pipeline that they expect would fructify into concrete advances this fiscal.

SBI, India's largest corporate lender, expects credit growth in this segment at 13% to 15% in FY27 on the back of a RS 5.5 lakh crore corporate loan pipeline, chairman CS Setty told reporters post-earnings.

To extend affordable shipping insurance cover amid the West Asia conflict, the government on Tuesday launched the ‘Bharat Maritime Insurance Pool’ (BMIP), a $1.5 billion domestic insurance mechanism backed by a sovereign guarantee of $1.4 billion, or nearly Rs 12,980 crore.

The pool has been created to ensure uninterrupted maritime insurance coverage for Indian-flagged or Indian-controlled vessels, as well as ships operating to and from India.

India’s life insurers reported their highest monthly growth in new business premium (NBP) in more than two years in April, driven by robust inflows and sustained momentum following the reduction in Goods and Services Tax (GST) on retail life insurance policies.

The industry’s new business premium (NBP) rose 39% year-on-year (YoY) to 30,550 crore in April, led by strong growth across both state-owned Life Insurance Corporation of India (LIC) and private insurers. The previous highest monthly growth was recorded in April 2024, when the industry NBP surged 61% YoY to12,565.31 crore.

According to the latest data from the Life Insurance Council, LIC’s NBP in April 2026 rose 38% YoY to 18,782 crore, while private life insurers reported a 41% increase in premium income to11,768 crore. The industry has been witnessing strong double-digit growth since the government exempted individual life insurance products, including term life policies, from GST in September 2025.

State Bank of India reported its highest-ever annual net profit, crossing Rs 80,000 crore — but investors had questions. Markets zeroed in on two numbers that slipped: net interest income (NII) and net interest margin (NIM). SBI Chairman CS Setty addressed both head-on in an interview with ET Now, and his message was clear: the worst is over.

NIMs have hit the floor and Chairman Setty is confident they hold at 3%
SBI's NIM came in at exactly 3% for Q4 FY25 — matching the bank's own guidance. Setty confirmed that FY27 guidance also stands at 3% and above, pushing back on concerns that margins could slip further.

Indian Bank's MD & CEO, Binod Kumar, believes that interest rates have bottomed out and that retail deposit rates are likely to rise if credit demand stays strong. He tells Sangita Mehta the 3% net interest margins enjoyed by Indian banks are a luxury that may not last. Net interest margins (NIM) would be further crimped as India moves toward becoming a developed economy, he says. Kumar also outlines the lender's capital-raising plans ahead of Expected Credit Loss (ECL) norms, while explaining the rationale behind entering the wealth management business. Edited excerpts:

Health insurance is steadily increasing its dominance in India's non-life insurance industry, with its share rising to 40.8% in FY26 from 38.6% a year earlier. Health as a segment grew 15.4% to about Rs 1.4 lakh crore, even as the non-life industry grew 9.3%, with total gross direct premium income reaching nearly Rs 3.4 lakh crore in FY26.

Stand-alone health insurers accounted for 32.7% of the total health insurance premium, underwriting Rs 44,863.7 crore out of the industry's total health premium of Rs 1,37,144.5 crore. The top five insurers in the health segment were New India Assurance with Rs 21,531.5 crore and 15.7% market share of health, followed by Star Health & Allied Insurance with Rs 18,435 crore and 13.4% share. Care Health Insurance followed with Rs 9,768.4 crore (7.1%), ICICI Lombard with Rs 8,617.3 crore (6.3%) and Niva Bupa Health Insurance with Rs 8,479.7 crore (6.2%). Standalone health insurers outperformed the broader industry with growth of 19.4%.

Indian banks have stopped fresh exposure in the Gulf countries in the aftermath of the prolonged Iran crisis, bankers told ET, with the focus shifting instead to careful monitoring of existing relationships to prevent balance-sheet pain.

State Bank of India (SBI) chairman CS Setty said that though there is no direct impact on the bank's business or asset quality due to the ongoing conflict, the bank is being cautious.

"We have decided to take no new business in the GCC (Gulf Cooperation Countries) until we get some clarity on the situation. The existing business we are managing, and we see no impact there so far," Setty said.

Large banks have sent feelers to the regulator to rethink the blanket rule on their uncovered foreign currency exposure. As rupee came under attack, the Reserve Bank of India (RBI) had imposed a $100 million uniform limit on all banks' net open position (NOP), which is the difference between a bank's foreign currency assets and liabilities at the end of each business day.

In recent interactions with RBI, officials of big state-owned and private sector banks have suggested a dynamic regulation on the unhedged forex exposure, by linking an institution's NOP to its size and flows, two bankers told ET.

"It makes little sense to fix one NOP for all. It's a temporary measure to handle turbulence," said an industry official. "But if RBI chooses to review the rule, it could be once volatility subsides. It would mean suggesting a formula for NOP."

Health insurance is steadily increasing its dominance in India’s non-life insurance industry, with its share rising to 40.8% in FY26 from 38.6% a year earlier. Health as a segment grew 15.4% to about Rs 1.4 lakh crore, even as the non-life industry grew 9.3%, with total gross direct premium income reaching nearly Rs 3.4 lakh crore in FY26.

Stand-alone health insurers accounted for 32.7% of the total health insurance premium, underwriting Rs 44,863.7 crore out of the industry’s total health premium of Rs 1,37,144.5 crore. The top five insurers in the health segment were New India Assurance with Rs 21,531.5 crore and 15.7% market share of health, followed by Star Health & Allied Insurance with Rs 18,435 crore and 13.4% share. Care Health Insurance followed with Rs 9,768.4 crore (7.1%), ICICI Lombard with Rs 8,617.3 crore (6.3%) and Niva Bupa Health Insurance with Rs 8,479.7 crore (6.2%). Standalone health insurers outperformed the broader industry with growth of 19.4%.

Financial services secretary M Nagaraju on Thursday highlighted the risks posed by Anthropic's Mythos AI model and urged the banking community to be prepared in case Mythos is released publicly in the country.

Banking risks are no longer confined to trade books or balance sheets; they now arise from geopolitical developments, technology, cyber threats and operational disruptions among others, Nagaraju said. He specifically mentioned Mythos AI, alluding to its advanced capability to identify and potentially exploit these systems.

The governance concerns that had recently clouded India’s largest private sector lender, HDFC Bank, appear to be easing. According to a Reuters report, law firms reviewing the Bank’s internal workings are not expected to flag any major lapses, according to sources cited by Reuters.

The law firms are set to submit their report this month. The Reuters report added that this development could potentially clear the path for the bank to proceed with the reappointment of its chief executive officer, Sashidhar Jagdishan.

The banking sector fared quite creditably in FY26 notwithstanding tariff threats and war. Bank deposits grew by 13.5% and credit by 16.1%. The question now is, how will business be in FY27

Several developments in March and April have a bearing on banking this year. The GDP growth number is the primary factor that will guide bank credit growth. While there are links with nominal GDP growth, it can be said with reasonable confidence that a double-digit growth rate looks likely more on account of a higher GDP deflator than a real GDP growth rate.

Indian banks are sufficiently capitalised to transition to the expected credit loss (ECL) framework, which has now been finalised by the Reserve Bank of India, Fitch Ratings said on Thursday.

The new framework will come into force starting April 1, 2027.

The ratings agency expects the banking system's average common equity tier 1 (CET1) to decrease by 30 basis points in the financial year 2027-28.

The decline will gradually extend to about 80 basis points by 2022-23 if banks use the RBI's four-year transition period, Fitch says.

Starting provisions of banks are higher than expected, lowering the impact of the new rules.

The contribution of government health schemes to the revenues of India's leading private hospital chains is declining, a possible sign that private healthcare providers may be reevaluating their participation. Experts said profitability squeeze due to payment delays, low reimbursements and pricing curbs may be the reasons.

While hospital chains have not announced that they are limiting their participation in government health programmes, Max Healthcare, Narayana Health, Fortis Healthcare and HealthCare Global are among those that have reported revenue impact and highlighted challenges in managing these schemes.