The measures include scrapping capital gains tax for foreign holders of government bonds, sweetening dollar deposit schemes for non-resident Indians, and subsidising hedging costs for offshore borrowing.

The RBI’s rate panel voted unanimously to keep the policy repo rate unchanged at 5.25%, a decision predicted by nearly 80% of 56 economists polled by Reuters.

The monetary policy committee also stuck to its “neutral” stance.

“The central bank’s rate panel noted that the global environment has deteriorated,” RBI Governor Sanjay Malhotra said while announcing the policy decision. The panel felt it was “prudent” to wait until greater clarity emerges, he said.

While inflation is expected to rise, underlying price pressures remain benign, Malhotra said. Second-round effects of the price pressure warrant vigil, he said.

Also read: India ramps up defence of faltering rupee after holding fire on rates

India’s benchmark 10-year bond yield tipped slightly lower to 6.96%, after the RBI decision, while the rupee rose 0.35% to 95.48 against the dollar. The benchmark equity indexes added marginally to early gains, and were up 0.2%.

A war-driven surge in crude prices and record foreign fund outflows have pushed the rupee down nearly 5% to historic lows since the Gulf conflict erupted late in February, fuelling calls from some analysts for higher rates to defend the currency.

Across the region, policymakers are already moving to shore up their currencies. Indonesia, the Philippines and Sri Lanka have raised interest rates in recent weeks, while South Korea has held fire but signalled a turn is imminent.

Steps to support Rupee

The RBI held rates to avoid further pressure on growth, while policymakers moved separately to support the rupee.

The government, alongside the RBI’s announcement, said it will scrap capital gains tax for foreign investors and removed the 20% tax on interest earned from such investments, effective from April 1, 2026.

Foreign investors are subject to a 12.5% long-term capital gains tax on listed shares and bonds held for more than 12 months.

Separately, the RBI said it will offer concessional forex swaps until September 30 to encourage state-owned firms to tap dollar borrowings.

It will also compensate banks for hedging costs on 3-year and 5-year foreign currency non-resident deposits aimed at the Indian diaspora.

Taken together, the measures could draw in $40–60 billion, said Sachchidanand Shukla, group chief economist at Larsen & Toubro.

Also read: India needs to monitor Iran war impact, RBI report says

The rupee has slid 5% this year after a similar drop in 2025. Economists warn higher oil prices and capital outflows could widen India’s balance of payments deficit to about $65 billion this fiscal year.

Higher inflation; lower growth

The central bank updated its economic forecasts for the current financial year.

Average retail inflation for the year is now projected at 5.1% compared with 4.6% earlier.

The central bank expects core inflation at 4.7%, up from its earlier projection of 4.4%.

Retail inflation in India remains below the 4% target and is projected to stay within the central bank’s tolerance band of 2-6% in the current fiscal year, giving the RBI headroom to hold interest rates.

GDP growth in the current financial year is now expected at 6.6%, below the 6.9% forecast in April. In the year ended March 31, 2026, India’s economy is expected to have grown 7.6%. Data is due later on Friday.

The global outlook and the prospect of a weak monsoon could add downside risks to growth, Malhotra said.

Economic growth has held up well so far with high-frequency indicators such as industrial output and the purchasing managers index showing steady momentum.

Rising inflation will likely prompt rate hikes in the second half of the year.

Given the RBI focus on “amplified risks on the inflation front, we expect 50 basis points of rate hike beginning in October,” said Upasna Bhardwaj, chief economist at Kotak Mahindra Bank.

According to bank, this achievement reflects Meezan Bank’s strong commitment to supporting the Government of Pakistan’s vision of promoting affordable homeownership and expanding access to housing finance for underserved segments of society.

As Pakistan’s leading Islamic bank, Meezan Bank remains dedicated to making homeownership more accessible through Shariah-compliant financing solutions that address the needs of salaried individuals and low-to-middle-income households.

The Bank is actively offering housing finance facilities under the program through its network of over 350 designated branches across Pakistan, with a particular focus on enabling lower-income and salaried customers to realize their dream of owning a home. Through its customer-centric and Shariah-compliant financing approach, Meezan Bank continues to play a key role in advancing financial inclusion and supporting the development of the housing sector in the country.

The milestone also contributes to the State Bank of Pakistan’s broader objective of promoting affordable housing and expanding access to formal housing finance, supporting national efforts aimed at financial inclusion, economic development, and improved living standards.

Copyright Business Recorder, 2026

One-year hedging costs have dropped from the mid-May peak of 3.50% to 2.92%. In parallel, the rupee has strengthened from a record low of 96.96 per U.S. dollar to 94.7275, before dipping to 95.6875.

The recovery in the rupee and fall in forward premiums have been largely spurred by RBI’s spot dollar sales alongside simultaneous buy-sell swaps that counter the impact FX interventions have on domestic rupee liquidity.

The plunge in premiums comes in the lead-up to Friday’s RBI policy decision, where the central bank is expected to hold rates despite the rupee’s 6.5% decline this year amid an Iran war-driven oil shock and equity outflows.

The policy decision comes at a time when markets expect steps to bolster dollar inflows and support the rupee.

A treasury official at a large private bank said it was possible the “engineered fall” in premiums was linked to measures the RBI may announce, without elaborating further.

Foreign investors pivot to short India debt ahead of policy turn

Shifting sands

There has been a notable shift in the RBI’s FX swap operations, triggering a significant repricing in forwards, a currency trader at a mid-sized private-sector bank said, pointing out that the central bank had previously been largely absent from this market.

Market estimates of the RBI’s swap activity vary widely, with lower-bound estimates putting it at roughly $2 billion over the past 10 days.

The swap operations have been concentrated in the 12-to-18-month segment, a change from the typical reliance on swaps of less than one year.

This has pushed down two-year forward points by more than one rupee from recent peaks.

The longer-tenor swaps provide the central bank flexibility in managing its ballooning forward book, an economist at a private-sector bank said.

All the bankers spoke on condition of anonymity as they are not authorised to speak publicly.

Liquidity management

RBI’s buy-sell swaps have not fully neutralised the liquidity impact of its spot FX intervention, bankers said, prompting it to inject funds into the banking system through variable rate repos.

The central bank has conducted 10 such auctions over the last 20 trading sessions.

The South Asian nation’s currency has come under sharp pressure from surging oil prices and foreign money outflows, prompting higher taxes on precious metal imports and calls to conserve foreign exchange.

In a rare move over the past three weeks, the Reserve Bank of India (RBI) has sent at least 10 queries to ascertain whether funds were routed overseas without a clear business purpose or tangible asset backing, one of the three sources said.

“The scrutiny is not about curbs but about the pace of capital outflows and why and whether they are exacerbating pressure on the currency and reserves,” another source said.

Indian rupee dented by oil price jump, equity weakness; likely RBI intervention caps losses

India’s capital account is only partially open. Companies can invest abroad through the overseas direct investment (ODI) route, subject to limits tied to net worth and for specific purposes. Individuals may remit up to $250,000 annually under the Liberalised Remittance Scheme (LRS) for uses such as education, healthcare and investments.

Regulators are focusing on large overseas investments routed through opaque structures, inflated valuations of offshore assets, and potential misuse of ODI routes for private wealth management by individuals and family offices, the sources said.

Reuters could not determine the recipients of the letters.

The sources declined to be identified as they are not authorised to speak to the media. Email queries sent to RBI and Securities and Exchange Board of India (SEBI) on Tuesday went unanswered.

Details of queries

According to RBI data, overseas direct investment rose 11% year-on-year to $48.39 billion in financial year 2025–26, while individuals remitted $28.9 billion abroad.

Under current rules, regulated entities must secure sectoral no-objections and file valuation reports with the RBI for ODI remittances. Larger or complex deals may also need prior RBI approval.

The SEBI has also recently slowed no-objection letters for its regulated firms seeking to establish overseas structures, a third source said.

RBI policy decision, growth data in focus for Indian rupee and bonds

Focus on family offices

In particular, regulators are taking a closer look at offshore remittances by family offices, many of which are structured as corporate entities, two sources said. This allows them to access higher remittance limits under ODI, compared with the individual remittance caps.

The RBI is examining at least two instances of family offices using the ODI route for managing personal wealth, the second source said.

The RBI could also scrutinise instances where corporates have established overseas investment arms, as such structures are often used for capital market exposure rather than genuine strategic expansion abroad, two sources said.

Separately, SEBI, while approving proposals from its regulated entities - including funds and wealth management firms - to set up overseas structures, is flagging cases where its assessments indicate aggressive valuations in capital market and private asset investments, one of the three sources said.

Valuations are typically conducted by SEBI-registered merchant bankers. Regulators are also scrutinizing whether bankers are assigning inflated valuations.

“The current approach appears to be one of enhanced oversight and calibration of remittances, rather than any rollback of legitimate cross-border expansion by Indian companies and entrepreneurs,” said Moin Ladha, Partner, Khaitan & Co, a law firm in India.

“We are seeing greater focus on ensuring that commercial rationale, deployment of funds and business plans remain robust throughout the life cycle of an overseas investment.”

In addition to the financial support, BankIslami also on-boarded SATH as an institutional client, providing the hospital with access to the Bank’s premier Shariah-compliant banking services, including advanced cash management solutions. This initiative reflects BankIslami’s approach of combining financial purpose with social impact, extending its mission beyond commercial banking to actively enable institutions at the forefront of public welfare.

“At BankIslami, our mission of Saving Humanity from Riba extends to every dimension of our work, including our responsibility toward communities that need support the most,” said Rizwan Ata, President and CEO of BankIslami.

Copyright Business Recorder, 2026

REC may raise 30 billion to 50 billion rupees, while Small Industries Development Bank of India (SIDBI) may raise 30 billion rupees through bonds maturing in about three years.

Both companies have generally relied on fixed-rate bonds. REC has yet to issue bonds this financial year, while SIDBI has raised around 30 billion rupees through bonds maturing in three years and three months at 7.61% coupon.

India’s maritime lender set to launch country’s first blue bond, top exec says

“The companies have already started the talks and negotiations for the spread that they could offer over the underlying benchmark, which in this case is the three-month treasury bills,” one of the sources said.

“SIDBI is eyeing around 130-140 bps over T-bills, while REC is aiming for 150-160 bps, but the levels are not yet finalised,” the source added.

The sources requested anonymity as they are not authorized to speak to the media.

The companies did not reply to Reuters emails seeking comment.

Coupons for such floating-rate bonds are priced at a spread over three-month Treasury bill yields and reset quarterly.

When rate hikes are expected, these bonds become more attractive for both issuers and investors, as companies can borrow at a lower initial cost, while investors benefit from returns that could rise over time, without reinvestment risk.

Earlier this month, Cholamandalam Investment, Muthoot Finance, Tata Capital, Mahindra & Mahindra Financial Services, HDB Financial Services, 360 One Prime, and ICICI Home Finance Co were among the major issuers of such notes.

Bets that the Reserve Bank of India will raise interest rates as early as next week or in August have strengthened, with inflation expected to rise amid persistently high oil prices stemming from the Iran war.

India’s overnight index swap rates have surged, with the one-year swap now pricing in around 100 bps of rate hikes over the next 12 months.

The Reserve Bank of India books gains when it sells dollars from its reserves in the foreign exchange markets to protect the rupee, using the historical average price of its dollar purchases as a benchmark.

In the previous year, the RBI reported a 1.11 trillion rupee gain from forex intervention. Earlier this month, the central bank said it will transfer a record 2.87 trillion rupees to the federal government for the fiscal year ending March 2026, after setting aside funds for its contingency reserves.

The RBI’s balance sheet expanded by 20.61% to 91.97 trillion rupees as of March 31, 2026.

Alongside gains from foreign exchange operations, the RBI also earned from its investments in foreign securities, including U.S. treasuries.

Interest income from foreign securities rose to 1.077 trillion from 970.07 billion rupees a year earlier.

Indian central bank likely selling dollars to limit Indian rupee’s slide, traders say

Macro outlook

The annual report, which comes a week before a crucial monetary policy review amid the Middle East crisis, said India’s economy is expected to remain resilient this year despite a challenging external environment.

But a “prolonged” crisis in the Middle East could pose a “downside risk”, the report said.

The RBI has forecast growth at 6.9% for the current financial year, while inflation is seen averaging 4.6%, but economists expect the projections to be revised.

Analysts are also split on whether the central bank will hike rates preemptively, as rising fuel costs and a weak monsoon could push up price pressures in the economy.

“In a highly uncertain global environment, continuous assessment of the evolving developments is warranted to frame the appropriate policy response on an ongoing basis,” the annual report said, without giving clues on the direction of interest rates from here.

It added that banking system liquidity operations would continue to be in sync with the monetary policy stance.

“Foreign exchange operations would be principle-based, guided by the objective of ensuring orderly movements in the exchange rate of the Indian rupee,” the report said.

India central bank’s daily $1 billion FX defence struggles to turn Indian rupee tide, bankers say

Both the rupee and interest rates have come under pressure since March due to surging global oil prices.

Indian rupee internationalisation

The annual report, which also lays down the central bank’s agenda for the year ahead, said the RBI will continue to push forward efforts to internalise the rupee.

There has been a considerable pick-up in INR-based invoicing and settlement since July 2022, the RBI said.

Between August 2022 and July 2025, compound annual growth of imports and exports invoiced in INR has been 20.9% and 12.7%, respectively, data from the report showed.

In 2025-26, trade invoicing and settlement in INR rose 6.5% for exports and 9.5% for imports.

“The INR internationalisation process has been mutually beneficial to all trading partners, and based on the principles of reciprocity, it has given a fillip to trade invoicing in several other emerging market currencies,” the RBI said.

New tax limits were imposed in February 2023, applicable to all insurance schemes except unit-linked insurance plans (ULIPs). Since then, inflows into non-ULIP schemes have risen a modest 2% and 5% for fiscal years 2024 and 2025, respectively. This is sharply lower than the 13% and 18% growth in the previous two years, data showed.

The flows for fiscal 2026 grew 16%, largely due to a reduction in the goods and services tax.

Stronger inflows into such funds will boost demand for ultra-long bonds - which these funds heavily invest in - at a time when the federal and state governments’ supply has risen, the sources said, declining to be identified as they are not authorised to speak to the media.

Similar requests had been made after new tax limits were imposed.

The Life Insurance Council and the Insurance Regulatory and Development Authority of India did not reply to a Reuters email seeking comment.

India’s Life Insurance Corp posts quarterly profit rise on strong retail demand

Slower inflows have curbed demand for longer-maturity debt, along with pushing up yields on 30-year and above maturity papers, faster than the 10-year note.

The Indian government has reduced the share of ultra-long bonds in April-September borrowing to 25%, sharply lower than 30% for the second half of fiscal 2026 and 35% for the preceding six months.

It would be difficult to maintain supply at this level, and the government will have to increase it to at least 30% in October-March, according to traders.

“Increasing the tax exemption limit is a necessary first step to unlock the deep pool of long-term capital required to anchor India’s fiscal expansion,” said Arun Srinivasan, chief - fixed income, ICICI Prudential Life Insurance.

“Implementing this measure will incentivise long-term retail and institutional savings, offering critical domestic support for the state’s ultra-long-term borrowing needs,” he said.

The appeal was made via a letter from the Life Insurance Council, a forum which represents insurers, to the government earlier this month, the sources said.

The move comes as India seeks to broaden the use of the digital rupee and explore its role in overseas payments.

The RBI has conducted multiple welfare-linked central bank digital currency pilots during the 25/26 fiscal year including in states and union territories such as Gujarat, Puducherry and Chandigarh where beneficiaries received food subsidies through digital rupee, the RBI said.

“At the institutional level, multiple government agencies commenced  pilots in various direct benefit transfer (DBT) schemes leveraging programmability feature of CBDC to ensure productive utilisation of public funds,” RBI said in its annual report.

Indian banks seek hedging cost subsidy from RBI to raise dollar funding, sources say

Reuters had reported in April that India is piloting at least ten CBDC pilots across the country to test whether the e-rupee can be used to deliver welfare payments more efficiently.

The push comes even as retail e-rupee circulation fell to 7.71 billion rupees as of March 31, 2026, from 10.16 billion rupees a year earlier, annual report data showed.

To advance cross-border payments, the RBI has signed a digital assets pact with Singapore’s monetary authority and is discussing pilot projects with Singapore and the United Arab Emirates.

It is also participating in multilateral initiatives led by the Bank for International Settlements, it said in the annual report.

Separately, the RBI said its cloud platform for financial firms went live in beta mode with nine users, making such a move amongst the first among central banks. Reuters was the first to report the RBI’s plan.

India’s Pine Labs posts quarterly profit on digital payments boost

“The work on phase I of the IFS cloud services is in advanced stage,” RBI said.

The phase I of the RBI’s Indian Financial Sector (IFS) cloud will have basic services and subsequently work on Phase II of the cloud with advanced services will be initiated, RBI said.

The $7.5 billion decline was largely due to a $4.5 billion fall in the value of the central bank’s gold holdings, week-on-week.

The value of the RBI’s foreign currency assets also shrunk by nearly $3 billion to $543 billion.

Changes in foreign currency assets, expressed in dollar terms, include the effect of appreciation or depreciation of other currencies in the reserves.

The RBI has been selling dollars to defend the beleaguered rupee, which has declined 4% since the U.S.-Iran war began, as surging energy prices sparked capital outflows and clouded India’s macroeconomic outlook.

India’s FX reserves fall below $700 billion for the first time in over two months

In the week to which the data pertains, the rupee slid to a record low of 96.96 per dollar before being shored up by firm RBI intervention over multiple trading sessions, including likely on Friday.

It ended the session at 95 per dollar, up 0.7% week-on-week. Foreign exchange reserves include India’s Reserve Tranche position in the International Monetary Fund.

FOREIGN EXCHANGE RESERVES (in million U.S. dollars)

Since exiting a decade-long, massive stimulus programme in 2024, the central bank has raised its short-term policy rate several times, including in December to 0.75% from 0.5%.

The BOJ thus pays 0.75% interest on the excess reserves financial institutions park with the central bank under a programme aimed at controlling money market rates around its policy rate.

The BOJ spent 2.7 trillion yen ($16.95 billion) on such interest payments in the fiscal year ending in March, much higher than the previous year’s 1.3 trillion yen and exceeding the 2.5 trillion yen interest it earned from its government bond holdings, the data showed.

Also read: BOJ warns of financial system risks from investment fund activity

It was the first time the BOJ’s interest payment on reserves exceeded the amount of interest earned from its bond holdings, highlighting the cost of normalising monetary policy.

As a result, the BOJ saw net income shrink to 1.9 trillion yen in fiscal 2025 from 2.3 trillion yen in the previous year, the data showed.

Aside from raising its short-term policy rate, the BOJ has been slowing bond purchases to scale back its massive balance sheet as part of its policy normalisation efforts.

Due in part to shrinking government bond holdings, the BOJ’s total asset balance fell 9.1% as of the end of fiscal 2025 from a year earlier, the data showed. Japan’s fiscal year runs from April to March of the following year.

Representing Soneri Bank at the awards ceremony, Syed Naveed Ul Zafar, Head of Learning and Development, Human Resources, Dr Sanya Shahid, Head of Marketing, Communications and Brand Management and Amna Junaid, Manager Learning & Development & DEI received the awards on behalf of the Bank.

Soneri Bank was recognized for its efforts across multiple areas including Vision, Strategy and Business Impact; Leadership and Accountability; DEI Structure and Implementation; Recruitment; Advancement and Retention; DEI Communications; DEI Learning and Development; Connecting DEI and Sustainability; Community, Government Relations and Philanthropy; Services and Products Development; and Marketing and Customer Service.

Copyright Business Recorder, 2026

Leveraging AI-driven automation, FOCUS reengineers the Bank’s credit underwriting process from initiation to disbursement. The platform replaces manual credit procedures with a standardised, automated, and AI-driven framework enforced across all branches. This platform further elevates the quality and consistency of credit decisions while significantly reducing turnaround times.

Developed entirely by BankIslami’s internal team, the launch represents a major financial and strategic milestone. By eliminating reliance on external partners for software licensing, customisation, and ongoing maintenance, the bank has significantly optimised its operational efficiency.

“At BankIslami, our customers remain the center of every action and innovation. With this launch, we aim to simplify the customer financing journey,” said Rizwan Ata, President and CEO of BankIslami. “For us, FOCUS is more than a technology upgrade. It is a statement of what our people are capable of building when the mission is as noble as Saving Humanity from Riba,” he added.

The deployment of FOCUS adds to BankIslami’s growing portfolio of digital and operational transformation initiatives, as the bank continues to expand its network and deepen its service offerings in line with its mission of Saving Humanity from Riba.

Copyright Business Recorder, 2026

In a circular issued on Monday, the central bank said that “it has been decided to delegate the functions of registration of shares/units on repatriable basis issued/transferred by local companies/funds to the non-residents and designation of ADs for remittance of dividend and disinvestment proceeds to non-resident shareholders/unitholders to ADs”.

Furthermore, the documentary requirements for registration of shares/units on a repatriable basis have been simplified.

“Accordingly, relevant provisions of the Foreign Exchange Manual (FEM) have been suitably amended, and Standard Operating Procedures (SOPs) have also been developed and made part of the revised instructions,” the central bank said.

The revised instructions will become effective one month after issuance of the circular to allow ADs sufficient time to establish the required institutional arrangements.

Separately, the SBP, as part of its strategic goal to enhance efficiency and effectiveness of the financial system, also announced the implementation of a digital “Non-Resident Shareholding Registration System (NSRS)” aimed to streamline and automate the record keeping of registration of non-residents’ shareholding in locally incorporated companies, and subsequent repatriation of dividend/ disinvestment proceeds.

Under the new mechanism, ADs will be required to submit monthly reports to the SBP regarding designation of banks, share issuance, dividend repatriation, and disinvestment transactions through the Data Acquisition Portal (DAP). The first reporting cycle for July 2026 transactions will be due by the fifth working day of August 2026.

The central bank has also directed banks to submit historical or “legacy” data related to dividend and disinvestment transactions in three phases.

“Phase I: From January 1, 2021, to June 30, 2026, within four (04) months of issuance of this circular.

Phase II: From January 1, 2016, to December 31, 2020, within six (06) months of issuance of this circular.

Phase III: From January 1, 2006, to December 31, 2015, within one (01) year of issuance of this circular.

After the conclusion of Phase-III, the ADs shall submit a compliance report within 15 days, duly signed by their Group Head Compliance, confirming that the data submitted in the three phases is complete in all respects and is free of errors.”

The central bank met with treasury heads of large banks through last week, ahead of a monetary policy review on June 5, where the suggestions were discussed, the sources who are familiar with the discussions, said.

Bankers at the meeting proposed a mechanism under which companies can hedge dollar-denominated borrowings through lenders, while banks access lower-cost swaps from the central bank, according to the sources. They suggested that this will help reduce the overall cost of raising overseas funds.

“As per the latest discussions, the RBI is comfortable at bearing 150 basis points of the hedging cost, which should make the dollar borrowing cheaper than local fundraise, but some banks have requested for higher discounts,” one of the sources said.

India’s central bank approves 2.87 trillion Indian rupee surplus transfer to government

Bankers were of the view that such a subsidy could help raise up to $50 billion, two of the sources said.

Reuters could not determine whether this subsidy will only be available to select borrowers or for all.

The sources requested anonymity as the matters are private, while the central bank did not respond to a Reuters email seeking comment.

Elevated crude oil prices and relentless outflows from Indian equities are likely to swing India’s balance of payments to a large deficit this financial year, economists have warned.

The Indian rupee has been one of the worst performing Asian currencies so far in 2026, dropping as much as 4.7% against the dollar since the Iran war began.

India needs to take steps to improve its current and capital accounts, Reserve Bank of India Governor Sanjay Malhotra said in an interview with Mint newspaper on Monday.

Earlier this month Reuters had reported that the central bank is studying ways to mobilise dollar inflows - which could include deposits from non-resident Indians, a measure used in 2013 that garnered about $26 billion - to stabilise the rupee. The central bank had then allowed banks to swap dollars raised via such deposits at concessional rates.

India is considering several steps to counter the depreciation of the rupee, and New Delhi is monitoring the situation, trade minister Piyush Goyal said last week.

The package aims to restart production, create jobs and restore business confidence, as export-oriented industries, especially the ready-made garment sector, struggle with weaker global demand, higher input costs and supply chain disruptions, while rising import bills add to pressure on the economy amid geopolitical tensions in the Middle East.

Bangladesh Bank Governor Mostaqur Rahman said the stimulus includes a 410 billion taka refinancing fund raised from banks with excess liquidity through long-term deposits of at least three years at a 10% interest rate, alongside a 190 billion taka fund drawn from the central bank’s own resources and backed by a government guarantee.

The largest allocation, amounting to 200 billion taka, will be used to reopen closed and distressed factories and support service-sector businesses. The central bank estimates the programme could help create around 250,000 jobs.

Another 100 billion taka has been earmarked for agriculture and the rural economy, to support food production and rural employment, officials said.

The refinancing scheme is intended to prioritise export-oriented industries, particularly garments, which account for more than 80% of Bangladesh’s export earnings.

Bangladesh’s economic growth eased to 3% in the second quarter of the 2025–26 fiscal year, which ends in June, compared to 3.5% a year earlier, according to provisional data from the Bangladesh Bureau of Statistics.

Businesses have been calling for stronger policy support as high borrowing costs, persistent inflation and tight financing conditions weigh on investment and industrial activity.

Economists say reopening idle factories and improving access to credit could help stabilise production, protect jobs and support exports.

Copyright Business Recorder, 2026

This mega-collaboration is uniquely positioned to drastically expand nationwide financial accessibility, accelerate digital innovation, and empower millions of retail merchants across the country.

Under this game-changing alliance, ABHI Microfinance Bank Ltd (Abhi MFB) will leverage CBA’s widespread digital footprint to deploy a secure, next-generation Super Agent Network and tailored Retailer Lending Solutions.

This collaboration directly addresses key financial hurdles facing Pakistan’s Micro, Small, and Medium Enterprises (MSMEs) by bridging the gap in business liquidity, formal credit, and branchless banking infrastructure.

This infrastructure deployment enhances financial interoperability, expanding branchless banking deep into urban and semi-urban hubs under a highly compliant operational framework:

According to statement, the network activates widespread real-time cash-in/cash-out services, digital transaction routing, and secure biometric account opening for underserved retail ecosystems.

To ensure stability, the framework dictates strict mutual safeguards. Either party can terminate the agreement immediately for an unrectified material breach (with a 30-day cure period) or provide 30 days’ written notice for termination without cause, ensuring all outstanding accounts are securely settled.

The partnership embeds instant digital credit facilities and essential working capital directly into CBA’s fast-growing merchant ecosystem, replacing traditional banking hurdles with a streamlined architecture.

Copyright Business Recorder, 2026

High-frequency economic indicators in April suggest sustained demand, with domestic demand continuing to be a key growth-driver.

However, challenges remain in a few sectors.

Near-term outlook somewhat clouded by supply-side pressures.

Headline inflation remains firmly within tolerance band, but pass-through to domestic prices needs to be monitored.

Indian stocks muted as Iran war worries offset IT gains

Financial conditions, crude oil prices and capital flows continue to pose challenges to external sector outlook.

FX reserve buffers as well as the number of proactive policy measures undertaken by the government and the Reserve Bank of India are likely to cushion the Indian economy against external headwinds.

The Indian rupee fell 4% in March to post its steepest monthly decline in over 6 years as a surge in energy prices following the start of the Iran left India staring at steep risks to its growth-inflation balance.

In the month to which the data pertains, the rupee had declined to its then record low of 95.21 per dollar, drawing stern regulatory measures to manage volatility.

During the month, the RBI purchased $19.88 billion and sold $29.64 billion. In February, it had net bought $7.4 billion.

The RBI’s net outstanding forward dollar sales stood at $103.06 billion as of end-March, compared with $77.7 billion at the end of the previous month.

India’s central bank approves 2.87 trillion Indian rupee surplus transfer to government

The Iran war has disrupted global energy markets, sparking a record pace of foreign portfolio outflows from Indian stocks and bonds as investors fret over the risks to India which imports most of its energy.

The currency has since extended its decline and hit a record low of 96.96 per dollar earlier this week on Wednesday. Dollar selling interventions by the central bank on Thursday and Friday, meanwhile, helped it recover and close at 95.69 on Friday.

India’s central bank intervenes in the spot and forward markets to curb exchange rate volatility.

The surplus transfer is higher than last year’s record 2.69 trillion Indian rupees.

In the annual budget, the government had accounted for 3.16 trillion rupees in dividends from the RBI and state-owned financial institutions. New Delhi does not provide an estimate of the dividend from the central bank alone.

The RBI lowered its contingency risk buffer - funds kept aside to protect the central bank’s finances from volatility - to 6.5% of its balance sheet from 7.5% in the previous year.

The central bank’s economic capital framework allows for a risk buffer of between 4.5% and 7.5%, with a final decision left to its board.

India central bank’s daily $1 billion FX defence struggles to turn Indian rupee tide, bankers say

A Reuters poll of economists had pegged the surplus transfer at 2.9 trillion rupees to 3.2 trillion rupees.

The lower-than-expected dividend is likely to hurt bond markets, which are expecting the federal government’s budget deficit to rise.

The government has cut federal taxes on fuels to protect domestic consumers from the surge in crude prices. Expenditure on subsidies for goods such as fertilisers is also expected to rise.

The Reuters poll cited above pegged the fiscal deficit at 4.7% of gross domestic product this fiscal year, more than last year’s 4.4% and above the government’s 4.3% target. Some economists say the deficit could rise to as much as 5% of GDP.

Representing the Bank at the ceremony, Saman Abbasi, EVP – Divisional Head, Learning & Development and Organizational Effective-ness, received the award along with her team on behalf of NBP.

The recognition acknowledges the Bank’s ongoing work to strengthen inclusive policies and practices, encourage broader representation, and foster a workplace culture grounded in fairness, respect, and opportunity. It reflects NBP’s belief that inclusive institutions are better positioned to grow sustainably, strengthen culture, and create lasting impact.

NBP continues to advance its people agenda in line with contemporary global benchmarks and institutional priorities, while reinforcing its commitment to building a workplace that is equitable, forward-looking, and responsive to the evolving expectations of a modern financial institution.

Copyright Business Recorder, 2026

In a statement, the Islamic bank said that it is digitising the cattle markets, simplifying the experience through its digital capabilities and making it easier for buyers and merchants to transact with convenience and ease.

Commenting on the initiative, Chief Officer of aik, Ashfaque Ahmed, said: “Pakistan’s cattle markets move billions of rupees every Eid season, almost entirely in cash. At aik, we are working to not only improve this experience by providing a safe and seamless alternative, but also contribute to the growth of Pakistan’s Riba-free banking ecosystem.”

As the Go-Cashless campaign expands its wingspan every year, aik by BankIslami aims to be at the forefront of the government’s efforts to transform and digitise the economy, directly supporting the Prime Minister’s vision of a Cashless Pakistan.

Through these efforts, aik by BankIslami is strengthening the digital payment infrastructure within Pakistan’s most traditional and cash-dependent marketplaces, helping bridge the gap between modern financial technology and the everyday Pakistani.

Days ago, the SBP launched a nationwide “Go Cashless” campaign for Eid al-Azha 2026 to promote secure, convenient, and cashless transactions in cattle markets across Pakistan. The initiative forms part of SBP’s broader strategic vision to reduce reliance on cash and accelerate the digitisation of the country’s payment ecosystem.

The participating banks onboard cattle sellers (Beoparis), transporters, and allied service providers onto digital payment channels through account opening and deployment of QR code-based payment solutions.

The swap followed a review of current and evolving liquidity conditions, the central bank said, and comes as it continues to defend a rapidly weakening rupee by selling dollars from forex reserves.

Such sales remove rupee liquidity from the country’s banking system and can push up interest rates.

The rupee has weakened more than 6% since the Iran war began, pushing up crude. The Indian currency has fallen to consecutive record lows, including an all-time low of 96.96 per dollar on Wednesday.

The RBI has sold dollars at an estimated pace of $1 billion per day in recent sessions, Reuters reported earlier in the day, citing bankers.

India’s banking system liquidity remains in surplus but has fallen to 1.51 trillion rupees ($15.6 billion), which is around 0.6% of deposits.

India central bank’s daily $1 billion FX defence struggles to turn Indian rupee tide, bankers say

“It is quite likely that the swap is meant to address the liquidity drag on account of FX intervention. It would also help cool down the USD/INR forward premiums,“ said Sakshi Gupta, an economist at HDFC Bank.

The swap will be good for bonds as it will help maintain surplus liquidity, said Alok Singh, head of treasury at CSB Bank.

“It should cool forwards, which have been rising over the past two weeks, and bring down hedging costs. The impact on the INR spot rate is likely to be neutral,” Singh said.

India’s benchmark 6.48% 2035 bond yield dipped 3.4 basis points to end at 7.0761% on Wednesday.

(Reporting by Nishit Navin in Bengaluru, Jaspreet Kalra and Khushi Malhotra in Mumbai; Editing by Janane Venkatraman and Mrigank Dhaniwala)

The RBI has been selling dollars every day via state-run banks in the past one-and-a-half weeks to stem pressure on the rupee, the bankers said.

India imports around 90% of its crude oil requirements, making higher for longer oil prices a key challenge, alongside subdued capital inflows and muted exporter dollar sales.

The absence of a resolution to the U.S.-Israeli war with Iran is leaving the rupee vulnerable to further depreciation against the dollar, even after its near 8% fall so far this year made it Asia’s worst performing currency.

Bankers estimate the RBI’s daily dollar sales in the spot market to be between $800 million to $2 billion in recent days, based on USD/INR volumes, broker inputs on state-run bank activity and order flow patterns.

Indian central bank likely selling dollars to limit Indian rupee’s slide, traders say

Central bank intervention has moderated the pace of losses, rather than reverse them, with the rupee on a nine-day slide, nearing the 97 per dollar mark for the first time.

The RBI did not immediately respond to an email seeking comment.

One banker, whose estimate is at the higher side of around $2 billion, said the intervention is “in-and-out”, rather than continuous through the session. This person, and other bankers cited in the story, requested anonymity as they are not authorised to speak publicly.

“For the RBI, the aim is to manage the pace of the rupee’s decline and prevent it from turning into a self-fulfilling spiral,” said Gaura Sen Gupta, chief economist at IDFC FIRST Bank.

Based on her calculations from reserve money data, she estimates that the RBI sold about $5 billion in the first week of May.

Sen Gupta expects further steps by the central bank to address current account pressures and bolster capital flows, after the central bank cracked down on chunky arbitrage trades that had amplified pressure on the rupee.

US yields compound oil jolt

The surge in U.S. Treasury yields, driven by expectations of Federal Reserve rate hikes in response to Iran war-linked inflation concerns, is compounding pressure on the rupee.

Market pricing of potential Federal Reserve rate hikes this year has climbed, a marked shift from pre-conflict sentiment, when markets expected the next move to be a rate cut.

The concurrent pressures are skewing market flows against the rupee.

“Exporters are delaying conversion of proceeds … while importers are front-loading demand and hedging aggressively. The result is a persistent imbalance in FX flows that intervention alone struggles to offset,” said Dhiraj Nim, FX strategist and economist at ANZ.

“Outflows from the financial account only add to the pressure.”

Brent crude futures fell 1.7% in Asian trade to about $110 a barrel after Trump said Washington had paused planned strikes on Tehran following a fresh peace proposal that could pave the way for a nuclear deal.

The benchmark 6.48% 2035 bond yield settled at 7.1101%, down 2.4 basis points from Monday’s close. Bond yields move inversely to prices.

India imports about 90% of its crude needs, making it highly vulnerable to Middle East supply disruptions. Every $10-per-barrel rise in crude oil prices, along with a related increase in gas prices, could add $22 billion, or 55 basis points of GDP, to India’s current-account deficit, Kotak Institutional Equities wrote in a note.

India’s annual wholesale inflation jumped in April to its highest in three-and-a-half years, raising concerns that price pressures could feed into consumer inflation.

The rupee also slumped to a fresh record closing low of 96.5325 per dollar on Tuesday, weakening for an eighth straight session.

The government has raised fuel prices twice in a week, increased import duties on gold and silver, and urged people to work from home and avoid travel to conserve fuel. Traders are still betting on a turn in the central bank’s rate cycle.

“Market seems to have factored in the worst and is pricing in a rate hike…which might be two policies away if the situation doesn’t get resolved,” said Kruti Chheta, Mumbai-based fund manager and fixed income analyst at Mirae Asset Investment Managers India.

Rates

India’s overnight index swaps (OIS) eased as lower oil prices boosted sentiment.

The one-year swap fell 3 bps to 6.27% and the two-year rate dropped 3.5 bps to 6.5225%. The five-year rate was down 1 bps at 6.8475%.

The development came during a meeting between Federal Minister for Economic Affairs, Ahad Cheema, and President of the AIIB, Zou Jiayi, as read in an official statement on Tuesday.

As per the statement, the President of AIIB reaffirmed that Pakistan remains a strategic development partner of the Bank, with an overall portfolio amounting to almost $3.5 billion.

She inquired about Pakistan’s strategic priorities for the next three to five years to ensure that AIIB’s future engagement is closely aligned with the country’s development priorities.

The president further conveyed the bank’s interest in expanding its operations in Pakistan beyond sovereign financing by exploring opportunities for non-sovereign interventions, thereby strengthening collaboration with the private sector and broadening the scope of development cooperation.

Cheema also acknowledged AIIB’s ongoing portfolio of $1.387 billion in Pakistan and conveyed appreciation for the bank’s continued support toward the country’s development priorities.

The minister highlighted the vast potential of Pakistan’s railway system, noting that modernisation of freight movement and logistics would significantly enhance efficiency and strengthen overall economic productivity.

He emphasised the importance of aligning AIIB’s engagement with Pakistan’s infrastructure priorities, citing transformative projects such as the Main Line-1 Railway Project (ML-1), N-5 National Highway Phase-II, and the modernisation of electricity transmission and distribution systems.

He also recognised AIIB’s contributions to key projects in energy, transport, and urban development.

In continuation, the minister emphasised the government’s priority for adopting a pragmatic approach over the next three to five years, focusing on select solid and outcome-oriented projects.

He underscored the importance of aligning the external economic assistance-funded portfolio with federal government priorities to ensure maximum developmental impact.

Cheema further highlighted the need for establishing an AIIB office in Pakistan to facilitate closer coordination and more effective engagement. He also encouraged enhanced collaboration with the private sector, particularly in the agriculture domain, to unlock growth potential and strengthen value chains, thereby contributing to sustainable economic development.

The federal minister reiterated Pakistan’s request for AIIB’s expeditious cooperation and enhanced support for priority infrastructure initiatives.

Coupons for floating-rate bonds are priced at a spread over three-month Treasury bill yields and reset quarterly. When rate hikes are expected, these bonds turn more attractive to both issuers and investors - companies can borrow at a lower initial cost, while investors benefit from returns that rise over time.

Four non-banking finance companies, ICICI Home Finance, Tata Capital, Mahindra & Mahindra Financial Services and HDB Financial Services, plan to raise about 85.50 billion rupees ($887.74 million) this week through the sale of floating-rate bonds with a three-year maturity, merchant bankers said.

These companies have traditionally relied on fixed-rate bonds for their funding requirements. The four companies did not reply to a Reuters request for comment.

Venkatakrishnan Srinivasan, founder and managing partner of debt advisory firm Rockfort Fincap, cited the volatile interest-rate environment for the rising interest in such bonds, and said several issuers have been struggling to raise targeted amounts through fixed-rate issuances.

Bets that the Reserve Bank of India will raise interest rates in 2026 have strengthened, with inflation expected to rise due to persistently high oil prices from the Iran war.

India’s April annual wholesale price index inflation jumped to its highest level in three and a half years, while overnight index swap rates have surged.

The one-year swap is now pricing in at least 100 basis points of hikes over the next 12 months, possibly from August, lifting fixed-rate yields.

Yield pickup

Currently, spreads on AAA-rated floating-rate debt are in the 193–210 bp range over the T-bills, implying a yield of about 7.35%. This is roughly 30–40 bps lower than the comparable fixed-rate bonds.

“If an asset manager fully hedges the floating rate bond, the all-in yield (for the investor) is closer to 8.85%, compared with around 8.25% on a conventional fixed-rate bond. On a hedged basis, it makes a lot of sense for asset managers to add these papers,” said Basant Bafna, head of fixed income at Mirae Asset Investment Managers (India).

Investors can use the swap market to convert floating returns into fixed ones.

From the issuer’s perspective, they are “getting good size”, Bafna said, referring to a larger quantum of funds, and added that their incremental cost of funds is lower.

The deficit follows a surplus of $1,134 million recorded in March 2026 and a deficit of $12 million in April 2025.

The deficit came from a significantly higher import bill and a marginal increase in exports during the month.

In April 2026, the country’s total export of goods and services amounted to $3.47 billion, up over 3% as compared to $3.36 billion in the same month of the previous year.

Meanwhile, total imports clocked in at $6.86 billion during April 2026, an increase of over 11% on a yearly basis, as compared to $6.16 billion in the same month last year, according to SBP data.

During April 2026, Pakistan’s workers’ remittance inflows clocked in at $3.54 billion, as compared to $3.18 billion in the same month last year, reflecting an increase of 11% on a yearly basis.

During the 10MFY26, the current account recorded a cumulative deficit of $252 million, as compared to a surplus of $1.66 billion recorded in the same period last fiscal.

Pakistan’s foreign exchange reserves (excluding CRR/SCRR) rose to $15.98 billion, reflecting a substantial 54% rise year-on-year, indicating stronger external buffers despite ongoing structural pressures on the current account.

Pakistan’s REER Index

Pakistan’s Real Effective Exchange Rate (REER) has increased to a seven-year high of 105.80 in April 2026 compared to 104.29 in March 2026.

“This is also higher than the last 10-year average of 102.68,” said Topline Securities.

A REER above 100 means the country’s exports are uncompetitive, while imports are cheaper. The situation reverses when REER stands below 100 on the index.

Meanwhile, the Nominal Effective Exchange Rate Index (NEER) decreased by 0.35% MoM in April 2026 to a provisional value of 37.89 from 38.02 in March 2026.

What is REER?

As per the central bank, REER is an index of the price of a basket of goods in one country relative to the price of the same basket in that country’s major trading partners.

“The prices of these baskets are expressed in the same currency using the nominal exchange rate with each trading partner. The price of each trading partner’s basket is weighted by its share in imports, exports, or total foreign trade,” the SBP website says.

Foreign hedge funds and private equity funds have increased their presence in Japan even though non-bank financial intermediaries (NBFI) account for just 30% of total financial assets in the country, lower than the global share of 50%, Kamiyama said.

In recent years, private equity funds have increasingly facilitated business restructuring and mergers and acquisitions in Japan, he added.

While NBFIs play a role in promoting economic growth by supplying risk capital, they can pose “potential risks to the entire financial system,” Kamiyama said in the speech, which was delivered at a seminar on Thursday.

BOJ to raise rates with eye on Iran war fallout, central bank official says

“A sudden shift in capital movements by global hedge funds could exacerbate price volatility in bond and stock markets,” he said.

As Japanese financial institutions increase lending to foreign investment funds, there is a risk external shocks could spread instantaneously to domestic markets, Kamiyama said.

“As NBFIs expand their global activities, cooperation among central banks and supervisory authorities across jurisdictions is becoming increasingly important,” he said.