Indian banking in 2025: The year in review | The Daily Brief

In today's episode of The Daily Brief, we cover 2 major stories shaping the Indian economy and global markets:

1. Indian Banking in 2025 — Clean Balance Sheets, Hidden Risks
Indian banks ended 2025 with their lowest NPAs in decades, showing strong balance sheets and stable credit growth. But a closer look reveals that much of this improvement came from write-offs, asset sales, and NBFC partnerships, not just better loan repayments. At the same time, deposit growth lagged credit growth, raising questions around funding pressure, margins, and long-term stability. The story looks at how risk hasn’t vanished — it has simply shifted within the system.

2. Falling Inflation Expectations and How Indians Move Their Money
When Indians expect inflation to fall, their investment behaviour changes in unexpected ways. New research shows that wealthier households respond by saving more and shifting money into bank deposits, while lower-income households spend more as uncertainty reduces. Surprisingly, lower inflation expectations don’t push people toward riskier assets like equities — instead, they increase the appeal of safe, liquid bank deposits. The story explains how inflation expectations quietly shape consumption, savings, and debt behaviour in India.

Timestamps:
00:00 Intro
00:34 Unpacking India’s Banking 2025
12:36 When inflation falls, Indians play it safe
21:35 Tidbits

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