Fintech Brief — June 06, 2026
1. RBI Holds Repo at 5.25%, Slashes Growth Forecast to 6.6% — Hawks Hover
The RBI Monetary Policy Committee unanimously kept the policy repo rate unchanged at 5.25% for the third consecutive meeting, retaining its “neutral” stance. However, the central bank sharply revised its FY27 GDP growth forecast downward from 6.9% to 6.6%, while raising the retail inflation projection from 4.6% to 5.1% — both driven by elevated crude oil prices, West Asia conflict-driven supply chain disruptions, and the risk of a weak monsoon.
Governor Sanjay Malhotra noted that “the global environment has deteriorated” and warned of pressure on rural demand and private consumption. The SDF rate stays at 5% and MSF at 5.5%. While retail inflation remains below the 4% target, price pressures from commercial LPG, base metals, and rubber are expected to intensify in coming quarters. Capital Economics warns that rate hikes “will materialise soon” despite today’s pause.
2. Government Scraps Capital Gains Tax on Foreign Bond Investments, RBI Expands NRI Equity Limits
In a coordinated move to arrest record foreign portfolio outflows, the government exempted foreign investors and the Bank for International Settlements from income tax on interest and capital gains on Indian government securities — effective April 1, 2026. Foreign investors previously faced a 12.5% long-term capital gains tax and 20% withholding tax on bond interest.
Separately, the RBI expanded the Portfolio Investment Scheme (PIS) to all individual Persons Resident Outside India (PROIs) — not just NRIs and OCIs. Individual investment limits per company were doubled from 5% to 10% of paid-up equity, while aggregate limits were raised from 10% to 24%. The RBI also removed limits on short-term investments, concentration, and individual securities for foreign portfolio investors, while expanding the bouquet of government securities available to non-resident investors.
Foreign investors have sold $27.6 billion in Indian equities since January 2026, compared to $18.9 billion in all of 2025, pushing the rupee down over 6% YTD.
3. RBI to Bear Full Hedging Cost on FCNR(B) Deposits to Boost Dollar Inflows
In another dollar-defence measure, the RBI announced it will provide banks a concessional swap facility covering the full hedging cost on fresh FCNR(B) deposit mobilisation with 3–5 year tenure, effective until September 30. Banks raise foreign currency non-resident deposits and convert proceeds to rupees for domestic lending — the hedging subsidy effectively makes it cheaper for banks to attract dollar deposits from overseas Indians.
This incentive, combined with the tax exemptions and expanded investment limits, forms a multi-pronged strategy to shore up the rupee and improve the balance of payments. Governor Malhotra said these measures would allow for a “much better BOP this year” than would have otherwise been the case.
4. GIFT City Talent Wars: Two Foreign Bank Chiefs Exit as Finance Hub Heats Up
GIFT City, India’s international finance hub in Gujarat, is facing a talent crunch as two senior foreign bank executives resigned in quick succession. Saiju Gandhi of Standard Chartered quit after six years at the GIFT City branch, while Taral Shah of DBS Bank also stepped down — both moving to new opportunities within the low-tax centre.
The exits highlight the intense competition for experienced professionals as global banks expand their GIFT City operations, attracted by tax incentives and a lighter regulatory framework. Bloomberg reports that demand for compliance, fintech, and banking specialists has outpaced supply, with firms increasingly poaching from each other rather than importing talent.
Published by CashlessConsumer — tracking India’s fintech & digital public infrastructure.