The Indian banking sector is experiencing a turning point as public sector banks (PSBs) reverse a decade-long slide in market share, outperforming private banks for the first time in 15 years. While credit growth has slowed, PSBs have shown stronger capitalisation and profitability. Private banks like HDFC Bank and ICICI Bank are also performing well, with HDFC poised for earnings recovery and ICICI reporting strong PAT growth. The sector is expected to recover in H2FY26 due to festive demand and margin improvements.

US Bancorp DE reduced its stake in HDFC Bank by 4.9% in Q1, while other institutional investors like FIL Ltd, Temasek Holdings, and Royal Bank of Canada increased their holdings. HDFC Bank reported Q2 earnings missing analyst estimates, with a market cap of $194.99 billion and key financial metrics including a 14.49% net margin and 11.60% return on equity.

Indian banks are experiencing a decline in CASA (current accounts-savings accounts) ratios, which is affecting their net interest margins (NIMs). Top lenders like HDFC Bank, IndusInd Bank, and Kotak Mahindra Bank have seen significant drops in CASA ratios, prompting a shift toward costlier funding sources and higher-yielding term deposits. This trend has led to pressure on core profitability, with some banks adjusting savings account interest rates to mitigate margin erosion.

The Department for Promotion of Industry and Internal Trade (DPIIT) has signed Memoranda of Understanding (MoUs) with HDFC Capital Advisors and Roche Products India to support innovation-led startups in affordable housing and healthcare sectors. The partnerships aim to address systemic gaps through targeted initiatives, including the H@ART program for real estate and PropTech, and Roche's support for early-stage healthcare startups.

The Department for Promotion of Industry and Internal Trade (DPIIT) signed Memoranda of Understanding (MoUs) with HDFC Capital Advisors and Roche Products (India) to support innovation and growth of startups in affordable housing, PropTech, and healthcare sectors. The partnerships aim to enhance regulatory guidance, mentorship, and access to global platforms for startups aligned with India's Atmanirbhar Bharat and Viksit Bharat goals.