● System loan growth started to slowdown: The banking system loan growth slowdown in recent time, despite RBI effort by cutting interest rate faster and higher than anticipated. The management commentarities from NBFC continues to highlight system level slowdown. Further there are intial sign of asset quality issue in MSME, affordable home loan.

● US tariffs would lead to uncertanities: The US government’s 90-day suspension of reciprocal tariffs for most countries (excluding China) has offered temporary relief to Indian markets. However, with recent US decision to levy 25% on India + Penalty came as a surprise to India. This would continue to raise uncertanities.

● GST Collection colled off: After robust GST collection in May-25, the June and July month GST collection continued to grow at midsingle digit of 6% and 7.5% YoY. Respectively. Slowdown in GST collection

● Outlook: Early monsoon arival, weak demand and continued slowdown in central government capex continue to weigh on corporate earnings, rising disposable incomes. The recent government initiatives including direct benefit transfers (DBT) and personal income tax cuts—should support a recovery in consumption. This was further aided by RBI rate cut and CRR cut to boost liquidity in the system. We expect 1HFY26 continues to remain weak, however recovery is expected slow and gradual starting 2HFY26.