Banks in Karnataka have come forward to extend relief package to farmers in 101 drought-hit taluks across the State.

The State Level Bankers’ Committee (SLBC), an apex inter-institutional forum created by the Reserve Bank of India (RBI) under the Lead Bank Scheme to coordinate between the banking sector and the State government, convened a special meeting to deliberate on relief measures for drought-affected borrowers, mostly farmers.

According to an SLBC communique, the meeting assumes importance following the State government’s recent declaration of drought in 101 taluks, including 89 severely affected taluks and 12 moderately affected taluks, spread across 24 districts.

The banking sector has agreed in principle to implement a comprehensive relief package for eligible borrowers of agriculture and allied activity in accordance with RBI guidelines.

This will include a 12-month moratorium on loan repayments; extension of repayment period up to 36 months in moderately affected taluks and 60 months in severely affected taluks, and Coverage of Kisan Credit Card (KCC) on loans, investment credit, dairy, fisheries, sericulture and other allied activities. It also offers a fresh need-based credit support to eligible farmers to ensure continuity of agricultural operations and livelihood activities.

Speaking at the meeting, Uma Mahadevan, Additional Chief Secretary & Development Commissioner, State government, emphasised that the objective of the relief package was to ensure that drought-affected farmers receive timely financial support and would be protected from distress during the current agricultural season.

“The State government and the banking sector must work in close coordination to ensure that every eligible farmer receives the benefit of the restructuring package and fresh credit support,’’ she added.

Ms. Mahadevan stressed a humanitarian approach and directed that banks should maintain a sympathetic view towards affected farmers/borrowers during the drought and distress period. Banks have been advised to invoke the relief measures by October 11, 2026, and complete implementation by January 6, 2027.

Shreenath Joshi, convener, SLBC Karnataka, reiterated that banks across Karnataka were committed to implementing the relief package in a transparent, timely and farmer-friendly manner. “The objective is not merely to defer repayments but also to ensure continued flow of institutional credit so that farmers can sustain agricultural and allied activities despite the drought situation,” he added.

The meeting was also attended by Kaya Tripathi, Regional Director, Reserve Bank of India, Bengaluru, Vishal R, Secretary, Fiscal Reforms (FR), Finance Department, GoK, NABARD and other senior officials of the State Government, and member banks.

SLBC’s primary purpose is to drive economic development across the state and the forum, led by Canara Bank in Karnataka, reviews banking developments, implements government-sponsored welfare programmes, manages priority sector lending (like agriculture and housing), and expands financial literacy and rural branch networks. While the broader committee includes government departments, the RBI, and NABARD, all commercial banks, regional rural banks (RRBs), and major cooperative banks operating within Karnataka are its institutional members.

The Reserve Bank of India (RBI) — the country’s central bank ​and banking regulator — has pre-emptively approached the courts seeking to ‌be heard in any matter filed related ​to the listing of Tata Sons, ⁠a source directly familiar with the matter said.

The move follows the RBI’s rejection of Tata Sons’ application to deregister ‌as a non-banking financial company (NBFC), a decision that pushes the holding company closer ‌to a stock market listing. Reuters reported on ‌Saturday (September 12, 2026) ⁠that the RBI had communicated its decision ⁠in a letter to Tata Sons.

Factions within the group have resisted a listing, according to local media reports.

The RBI ​has filed what in ‌legal parlance is known as a ‘caveat’ in the Bombay High Court which will allow the central bank to be heard if a petitioner ‌challenges its decision or seeks a stay, ​the source said, declining to be identified as they are not authorised to speak ⁠to the media.

This was done “as a routine measure to ensure it is heard in any proceedings ‌challenging the decision or seeking a stay,” the source said.

RBI and Tata Sons did not reply to emailed requests for comment from Reuters.

Tata Sons, the century-old holding company of the Tata Group, has businesses including Tata Consultancy Services, Tata Motors, ‌Tata Steel and Air India.

Shares of group companies rose on ​Tuesday (September 15, 2026).

It falls under the RBI’s purview as it is currently registered as a core ⁠investment company.

Under RBI rules, all non-bank financiers including ⁠core investment companies with assets exceeding ₹1 trillion rupees ($10.45 billion) or access to public ‌funds are required to list.

Tata Sons reported standalone assets of ₹1.75 trillion as of ​March 2025, the latest data available.

The rupee gained 39 paise to 94.89 against the U.S. dollar in early trade on Wednesday (August 5, 2026), supported by falling crude oil prices following progress in U.S.-Iran talks and a pause in planned strikes.

Forex traders said investors are closely awaiting the upcoming RBI monetary policy decision for further cues.

At the interbank foreign exchange market, the rupee opened at 94.90, then touched 94.89, registering a gain of 39 paise from its previous close.

On Tuesday (August 4, 2026), the rupee closed at 95.28 against the American currency.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.80, down 0.06%.

Brent crude, the global oil benchmark, was trading lower by 1.11% at $78.48 per barrel in futures trade.

On the domestic equity market front, the Sensex climbed 375.01 points to 78,803.96 in early trade, while the Nifty was up 62.7 points to 24,677.60.

Foreign institutional investors purchased equities worth ₹2,446.47 crore on a net basis on Tuesday (August 4, 2026), according to exchange data.

Forex traders said attention has now shifted to this week’s RBI policy meeting.

The three-day meeting of the Reserve Bank of India’s rate-setting panel started on Monday (August 3, 2026) amid expectations of a status quo on the benchmark repo rate, with the Monetary Policy Committee slated to announce its decision on August 5.

In June, the Reserve Bank had kept its key policy rate unchanged at 5.25% and adopted a cautious wait-and-watch stance as policymakers assessed the fallout of the West Asia conflict.

The RBI policy decision is widely expected to keep the repo rate unchanged at 5.25%. The real focus, however, will be on the RBI’s tone. Even if rates remain unchanged, any indication that the RBI is becoming more cautious about inflation could have a bigger impact on the rupee than the policy decision itself,” CR Forex Advisors MD Amit Pabari said.

Mr. Pabari further noted that optimism around the Hormuz talks could help the rupee test its support zone of 94.80-95.00. As “long as this holds, the pair may gradually drift back toward 95.80-96.20 over the coming sessions. But if the Hormuz deal actually goes through, the rupee could see a sharper move of 30 to 40 paise on the stronger side,” he said.

The Reserve Bank on Saturday (August 1, 2026) said its concessional swap facility, introduced to encourage foreign currency inflows, has attracted $40.82 billion till July 31.

The swap facility has seen avid interest and attracted steady forex inflows since June 8, 2026, the central bank said in a statement.

A strong mobilisation was witnessed through Foreign Currency Non-Resident (Bank) or FCNR (B) deposits.

Of the total inflows, FCNR (B) deposits accounted for $36.725 billion, while Overseas Foreign Currency Borrowings (OFCBs) contributed $2.575 billion while External Commercial Borrowings (ECBs) amounted to $1.516 billion.

With a view to strengthening the country’s balance of payments and incentivising capital inflows, the Reserve Bank of India (RBI) had announced a series of measures, including a facility for offering concessional swaps for fresh FCNR(B) deposits, OFCB and ECB inflows on June 5.

Based on the data received from authorised dealer banks, the position of forex inflows mobilised till July 31, 2026, under the swap facility was $40.816 billion, the central bank said in a statement.

The facility was operationalised on June 8, 2026, and is available up to September 30, 2026, for the FCNR (B) deposits and up to December 31, 2026, for the OFCBs and ECBs.

The measures were announced as part of the RBI’s efforts to strengthen India’s external sector position and support foreign exchange liquidity amid global market uncertainties.

Reserve Bank Governor Sanjay Malhotra on Friday (June 5, 2026) said the forex reserve stood at a healthy $682.3 billion, adequate to provide import cover for about 11 months.

Various policy initiatives are expected to strengthen the balance of payments, he said while announcing the second bi-monthly monetary policy for the current fiscal.

The initiatives include the recent agreements with major trading partners, allowing 100% FDI in the insurance sector, ethanol blending programme, push for energy transition, easing FDI restrictions for land-bordering countries, liberalisation of the ECB framework, and several others, he said.

“As of May 29, 2026, India’s foreign exchange reserves stood at a healthy $682.3 billion, adequate in terms of the standard metrics of reserve adequacy, including import cover (for about 11 months) and external debt (89.1%),” he said.

“While our foreign exchange reserves provide a strong buffer against external shocks, we have a broad range of regulatory and market-based instruments to respond effectively as may be required. In this regard, we remain vigilant and are fully prepared to do whatever it takes to preserve orderly market conditions,” he said.

India’s forex reserves dropped $7.511 billion to $681.384 billion during the week ended May 22.

The kitty had expanded to an all-time high of $728.494 billion during the week ended February 27 this year, before the onset of the West Asia conflict, which led to several weeks of decline as the rupee came under pressure and the RBI had to intervene in the forex market by selling dollars.

India’s forex reserve stood at $686.801 billion in the week to January 2, 2026.

Mr. Malhotra further said the Reserve Bank will ensure appropriate liquidity in the banking system to meet the productive requirements of the economy and facilitate monetary policy transmission.

Observing that India successfully navigated the challenges of elevated tariffs and trade-related uncertainties in 2025-26 amid a turbulent global economic environment, he said the surge in energy prices and persistent trade policy uncertainties continue to pose upside risks to India’s current account deficit in 2026-27.

Services trade surplus and inward remittances are expected to provide some comfort, he pointed out.

Banks in Karnataka have reported a disbursement of ₹2,47,754 crore towards the agriculture sector in the fourth quarter ended March 31, 2026, as against their target of ₹2,22,203 crore, said Bhavendra Kumar, executive director, Canara Bank, in Bengaluru on Tuesday (May 26).

Speaking at the 175th State Level Bankers’ Committee meeting held at Vidhana Soudha, he said banks have achieved 111% of their allotted target during the fourth quarter. For the MSME sector, they achieved a growth of 106% and the total priority sector grew 108%. Mr. Kumar exhorted the banks to continue the good performance during FY27.

Shalini Rajneesh, State Chief Secretary, who chaired the meeting, reviewed the State’s performance — bank-wise and district-wise — under sub-sectors such as Total Credit, Total Deposits, Priority Sector, and Target Achievements.

She also advised bankers and government departments to work in unison for smooth and seamless integration of development activities for better implementation. Further, she reviewed all development schemes/government-sponsored schemes and advised the banks to clear all pending applications. Ms. Rajneesh also instructed the bankers to on-board the NRLM (National Rural Livelihoods Mission) Self-Help Group Business Correspondent (BC) Sakhis as BC agents in all gram panchayat locations.

Kaya Tripathi, regional director, Reserve Bank of India, emphasised on the preparation of a road map for Financial Inclusion 2025-30. She highlighted the importance of the integrated portal for data updating.

Banks have to work towards the set target and achieve the same well in advance, urged Surendra Babu, chief general manager, NABARD.

Other participants included Uma Mahadevan, additional chief secretary and development commissioner, Government of Karnataka, Shambhu Lal, chief general manager, Canara Bank, Bhaskara Chakravarthy M., general manager, Canara Bank, and Shreenath Joshi, general manager, Canara Bank.

Amidst pressure on the rupee and India’s foreign exchange reserves, the latest data from the Reserve Bank of India (RBI) shows that the total amount of money that left the country in March 2026 exceeded inflows by $11.7 billion. This was the first month after the start of the West Asia crisis.

The overall outflow was driven by the exodus of foreign portfolio investors, which overshadowed the fact that net foreign direct investment (FDI) was positive for the second consecutive month. 

That is, while net FDI was $1.6 billion in March 2026, net foreign portfolio inflows stood at -$13.3 billion. Typically, direct investment involves money flowing into growth-generating assets, while portfolio investment refers to money flowing into short- to medium-term stock holdings.

According to the RBI, the outflow of portfolio investments continued in April and May.

The outflow of dollars from the country has simultaneously eaten into the RBI’s foreign exchange reserves and has led to the depreciation of the rupee.

Positive direct flows

Over the full financial year 2025-26, net FDI stood at $7.6 billion, nearly 700% higher than in 2024-25. This occurred despite six out of the twelve months experiencing more direct investment flowing out than in.

“During 2025-26, both gross and net FDI inflows were higher than the previous year,” the RBI said in its monthly bulletin for April 2026. “In March, net FDI remained positive for the second consecutive month, despite a deceleration in gross FDI, on account of relatively low repatriation and outward FDI.” 

Gross FDI in March 2026, or the total amount of direct investment entering the country that month, stood at $6.2 billion, nearly 31% lower than in February. However, this figure was 6% higher than in March of last year.

On the other hand, total outflows inched up to $4.7 billion in March 2026 from $4.5 billion in the previous month. This figure was 27% lower than in March 2025.

Within the outflows, both repatriation by foreign companies operating in India and outward direct investment by Indian companies decreased as compared to the previous year. 

That is, the quantum of money repatriated and disinvested in March 2026 stood at $2.3 billion, down 40% over March last year, while outward FDI by Indian companies stood at $4.7 billion, down by 27%.

Portfolio investors leave

The data, however, showed that while net FDI was positive in March 2026, net foreign portfolio investments were significantly negative. That is, foreign portfolio investors (FPIs) took out $13.3 billion more from the Indian markets than they invested. 

This situation, the RBI said, continued into April and also in May. 

 “In April and May so far (up to the 20th), FPIs remained net sellers, particularly in the equity segment, amidst persistent geopolitical uncertainty and continued tensions in West Asia,” the RBI said. 

India’s April retail inflation, at a 13-month high of 3.48%, is only marginally higher than its March print of 3.4%, and continues to remain deceptively benign. Wholesale inflation has more than doubled to 8.3% in April from 3.88% in March — a 42-month high — signalling that substantial upstream price pressures are still working their way through the economy. Unsurprisingly, the spike in the Wholesale Price Index (WPI) has been led by soaring fuel and power prices, which rose 24.71%, while petroleum and natural gas prices surged 67.2%. This clearly indicates that the full impact of rising energy costs has not yet been passed on to end-consumers. However, such a pass-through now appears imminent. Union Petroleum Minister Hardeep Singh Puri recently indicated that the Centre may have little choice but to raise retail petrol and diesel prices, with public sector oil marketing companies reportedly absorbing “under-recoveries” of nearly ₹30,000 crore a month since the U.S.-Israeli war with Iran began. Any increase in retail fuel prices will have economy-wide implications.

April retail inflation has already been driven chiefly by food, with the Consumer Food Price Index rising to 4.2% from 3.87% in March. Predictably, restaurants and accommodation services witnessed among the sharper increases, reflecting the cascading effect of rising commercial LPG prices. The price of the widely used 19.2 kg commercial LPG cylinder has risen by roughly ₹850-₹1,000 over revisions since the conflict began, while the 5 kg canister has reportedly seen increases of over ₹200 in several markets. The canister is extensively used by migrant wage labour across the country, directly feeding into food basket costs and potentially dampening consumption demand. This comes even as Prime Minister Narendra Modi has appealed to people to refrain from “extravagant spending on weddings and travel abroad” and to cut back on buying precious metals for a year. Consequently, the Centre doubled import duties on gold and silver in an attempt to discourage safe-haven investments and ease pressure on the rupee, which has depreciated by nearly 8.5% against the U.S. dollar in the past two-and-a-half months since the conflict began. For context, the rupee had depreciated by roughly 2%-3% annually on average over the previous five fiscal years. The current slide is therefore exceptionally sharp. It is increasingly evident that retail inflation is bursting at the seams and will likely find fuller expression in the months ahead. The sharp divergence between the Consumer Price Index and WPI suggests that producers are still absorbing a significant share of rising costs, a situation that is unlikely to remain sustainable. This leaves the Reserve Bank of India with limited room but to eventually tighten monetary policy in order to keep inflation within its tolerance band of 2%-6%. What is unfolding is not merely transient inflation driven by commodity volatility, but also broader systemic inflationary pressure, with limited manoeuvring space for both the government and the central bank.

The Indian economy is giving mixed signals in the wake of the West Asia crisis, with some demand indicators remaining strong, while others weaken, and supply indicators starting to show signs of stress, the Reserve Bank of India noted in its latest analysis on the economy. It added that the possibility of the supply crunch turning into a demand shock in India in the future warrants “careful and continuous assessment”. 

In March, available high-frequency indicators of economic activity displayed divergent trends: demand conditions remained resilient, despite some pockets of slowdown in economic momentum,” the central bank noted in its latest State of the Economy report. “RBI’s forward-looking surveys pointed towards softening consumer confidence on the current situation and moderation in business optimism along with buildup of cost pressures.”