Finance News Roundup: Government Bonds Recover, RBI Relief Sought Amid Market Challenges
August 27, 2025 | Smart Money Mindset
The latest developments in India’s financial markets and economic policies indicate both resilience and caution as government instruments rebound and sectors seek relief amid global and domestic pressures.
Government Bonds Bounce Back After Short Covering
On Tuesday, government bonds regained their footing after earlier losses, with the 10-year government bond yield closing steady at 6.60%. This recovery was primarily driven by short covering activities. However, state development loan (SDL) yields experienced a sharp surge, with spreads widening significantly to 80 basis points, signaling increased market caution on state-level borrowing costs.
Overseas Fundraising Plans Amid Yield Pressure
The National Bank for Financing Infrastructure and Development (NaBFID) plans to raise approximately $1 billion by issuing external commercial borrowings (ECBs) and dollar-denominated bonds by the end of the fiscal year 2025-26. Similarly, the National Bank for Agriculture and Rural Development (Nabard) intends to tap into international markets within the same timeframe. Rising domestic bond yields and prevailing global economic uncertainties are key factors influencing these overseas fundraising moves.
Gems and Jewellery Sector Appeals for RBI Support
The gems and jewellery industry, facing a steep 50% tariff on exports to the United States, has urgently appealed to the Reserve Bank of India (RBI) for loan relief measures and support on equated monthly installments (EMIs). Industry representatives warn that the substantial tariff hike threatens to cause payment delays, job losses, and widespread sectoral stress if immediate intervention is not provided.
SBI Card and Flipkart Introduce Co-Branded Credit Card
In a move to enhance consumer convenience, SBI Card has partnered with Flipkart to launch a co-branded credit card aimed at facilitating seamless digital shopping experiences. Customers can apply for the card via the Flipkart app or the SBI Card website, streamlining access to credit with integrated loyalty benefits.
UPI Cross-Border Transactions Surge Twentyfold
Unified Payments Interface (UPI) continues its rapid international expansion, with cross-border transactions increasing twentyfold to reach 755,000 in fiscal year 2024-25. The platform now operates in seven countries and boasts over 1.5 million merchants accepting UPI payments, underscoring its growing global footprint.
Corporate Sector and Banking Updates
State Bank of India (SBI) Chief C.S. Setty noted that Indian corporations are largely meeting capital expenditure requirements through internal cash reserves. The Indian Banks’ Association (IBA) is seeking RBI approval to allow banks to finance mergers and acquisitions among listed firms, reflecting a push to invigorate corporate activity.
In other banking news, Axis Bank Managing Director Amitabh Chaudhry highlighted that banks currently do not earn revenues from UPI transactions, despite bearing infrastructure costs, with subsidies diminishing. Meanwhile, non-bank lender Altum Credo successfully raised ₹170 crore in funding led by BII to support its affordable housing initiatives.
Regulatory and Sectoral Developments
The RBI Governor reassured stakeholders that the central bank will remain proactive in response to growth challenges posed by the 50% US tariffs and announced Basel-III compliance for credit and market risks by April 2027. Additionally, the Finance Ministry has approved a one-time switch option from the New Pension Scheme to the National Pension System for eligible central government employees, with the deadline set one year prior to retirement.
Internationally, the BRICS-led New Development Bank appointed RBI Executive Director Rajiv Ranjan as Vice President and Chief Risk Officer for a five-year term starting September.
Market Participants Adopt Cautious Stance
After a record four-month run in the current fiscal year, corporate bond issuances have slowed in August. Market experts attribute this to wait-and-watch sentiment amid uncertainties from government borrowings and global pressures.
Stock Market Highlights and Sector News
Private non-financial companies posted a modest 5.5% sales growth in Q1 FY26, according to RBI data from financial disclosures of over 3,000 corporates.
Moreover, public sector banks are experiencing an 87% decline in pension fund deposits over five years, while private banks attract more household deposits driven by demands for higher returns and convenience.
Other Notable Updates
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SMBC received RBI clearance to acquire up to 25% stake in Yes Bank, without assuming promoter status.
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The Association of Mutual Funds in India (AMFI) signed an MoU with the Department of Posts to train 100,000 postmen for mutual fund distribution, aiming to expand financial inclusion.
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Fintech company Kiwi raised $24 million in Series B funding led by Nexus Venture Partners and others, targeting profitability within two years.
Looking Ahead
India’s financial sector continues to navigate challenges posed by global trade tensions, rising yields, and evolving regulatory frameworks. Strategic interventions by government agencies, financial institutions, and emerging fintech players suggest a concerted effort to support growth, safeguard exporter interests, and innovate financial services.
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