Mumbai: The government has called a two-day meeting with state-owned lenders to brainstorm measures to attract foreign investments, a move aimed at stabilising the rupee and bridging the current-account gap that has widened largely because of the high energy import bill.

The finance ministry has scheduled the annual two-day PSB Manthan with all public sector lenders on August 17 and 18 in New Delhi. Finance minister Nirmala Sitharaman will meet bankers and review their proposals on August 18, senior bankers said.

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The meeting will also focus on improving deposit mobilisation, encouraging investors to set up global capability centres in India, strengthening the flow of funds to medium and small enterprises, and helping scale the agriculture and horticulture sector, they said.

The meeting will be attended by the chiefs of all PSU banks, led by State Bank of India chairman CS Setty. The heads of the National Bank for Financing Infrastructure and Development, Power Finance Corporation, National Housing Bank and Small Industries Development Bank of India, among others, will also attend.

Economists said fresh foreign capital inflows would help build foreign exchange reserves, boost domestic manufacturing and support long-term economic growth.
Lenders will also discuss ways to improve deposit mobilisation which continues to lag credit growth. Latest data released by the Reserve Bank of India for July 15 show bank deposits rose 12.7% while credit grew 17.7% from a year earlier.Foreign capital is essential as India runs a current-account deficit (CAD), which implies that gross domestic savings are not enough to fund domestic investment.

“A growth cycle which is led by investment tends to last longer as it creates capacity and jobs. In FY26, CAD was 0.6% of GDP which is expected to widen to 1.5% to 1.7% of GDP in FY27 due to elevated crude oil prices,” said IDFC First Bank chief economist Gaura Sengupta. “Even China in its initial high-growth phase was critically dependent on FDI to build its domestic manufacturing,” she added.

To encourage foreign currency inflows, the RBI on June 5 announced a dollar-swap facility at concessional rates on foreign currency deposits and external commercial borrowings raised by state-run lenders. India attracted $40 billion in foreign currency inflows, with FCNR deposits alone contributing $36 billion, under this programme until July 30, according to the government.

However, FCNR deposits can only help slow the pace of depreciation of the rupee, which fell 11% in FY26.

“FCNR deposits can’t be used frequently to attract capital. Hence, it’s important to build other more stable forms of foreign capital such as foreign direct investments,” said Sengupta. “Moreover, the FCNR deposit inflows will mature after three to five years. India will need to build forex reserves to pay dollars when these deposits mature.”

A stable currency is positive for foreign investment as it protects returns in dollar terms.

Speaking to the media soon after announcing the monetary policy last week, RBI governor Sanjay Malhotra said FDI is certainly more durable, sticky and preferable. The government is taking several steps, including signing trade agreements, which will indirectly help attract investments, he said.

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Mumbai: Asset reconstruction companies (ARCs) bought ₹26,304 crore of bad loans in the June quarter, up 56% from a year earlier and almost double the amount acquired in the first quarter of FY25, data from the Association of ARCs showed. This came even as the overall level of non-performing assets in the banking system continued to fall.

In the year-ago quarter, ARCs had bought non-performing assets with an outstanding value of ₹16,876 crore. Last quarter’s figure is almost double the ₹13,852 crore acquired in the first quarter of FY25.

The increase in ARC activity comes even as the overall asset quality of banks has improved significantly. The gross non-performing asset (GNPA) ratio of the banking system fell to 1.8% in FY26 from 2.8% in FY24.

Bad loans sold to ARCs have risen despite a decline in banks’ overall bad loan ratio, as a large portion of the loans sold are legacy stressed assets that lenders have been trying to resolve for several years.

The sharp decline in reported bad loans may not fully reflect the actual position, according to a white paper released in February this year by Great Lakes Institute of Management on their website, which said gross NPLs fell to 2.2% of advances in 2025 from 11.2% in 2018 partly due to fewer fresh slippages and because banks wrote off bad loans.

As of March 2025, gross NPLs stood at ₹4.32 lakh crore, while written-off loans were ₹7.88 lakh crore. Including both, the paper said that the banking system’s stressed-loan stock stood at ₹12.20 lakh crore.
Bad loan sales have also risen due to a larger number of transactions now being done in cash, with some deals involving ARCs paying the entire purchase consideration upfront or transactions structured through security receipts (SRs), where the payment is split between cash and SRs, with the proportion of cash being higher.

Mumbai: Overseas investors turned buyers in India’s beaten-down information technology shares in July, with inflows of ₹3,298 crore in the second half and ₹3,358 crore during the month – the first net buying in the sector this year. Consumer durables drew ₹4,958 crore and healthcare ₹3,654 crore from foreign portfolio investors in the July 16-31 period, amid early signs of their renewed appetite for Indian stocks.

FPIs turned net buyers of equities worth ₹4,640 crore in the second half of July, adding to ₹15,560 crore in the first fortnight, according to NSDL data. July was only the second month of net inflows since February.

“It seems like money is slowly moving into broad markets from the index heavyweights,” said Pankaj Pandey, head of fundamental research at ICICI Direct, pointing to Nifty hovering around 24,000 while midcap and smallcap indices scaled fresh highs. The Nifty 50 and Sensex gained nearly 2.1% each in July, while the Nifty Midcap 150 and Smallcap 250 rose 1.6% and 1.1% respectively.Read more: FPIs, trading companies tap Sebi, centre for tax breather

FPIs also remained net buyers in consumer services, automobiles & auto components, construction materials and chemicals, with purchases ranging between ₹532 crore and ₹2,840 crore in the July 16-31 period.
“Domestic demand remains the clearest theme based on the latest trend,” said Raj Gaikar, research analyst at Samco Securities, referring to flows into consumer durables, consumer services and healthcare for three consecutive fortnights.
FPIs, however, sold shares worth between ₹1,056 crore and ₹3,618 crore in metals & mining, power, construction, financial services, telecom and capital goods. Selling in financial services came after two fortnights of buying in June and early July.
Vikas Gupta, CEO at OmniScience Capital, said the shift may reflect tactical trades. “The current selling of financial services and buying into IT could be reflecting a short-term trade. There is significant uncertainty about medium-term revenues and profits of IT companies, while financial services show clearer growth visibility.”

Gaikar said while pressure in IT has eased, he would wait a few more fortnights before calling a bottom for these stocks.

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