On Episode 974 of The Core Report, financial journalist Govindraj Ethiraj talks to Anindya Banerjee, Head of Currency & Commodity Research at Kotak Securities as well as Sachin Seth, Regional Managing Director at CRIF, India & South Asia on the sidelines of the Global Fintech Fest 2026.

SHOW NOTES

(00:00) Stories of the Day

(00:50) The Big Liquidity Drain In Indian Markets

(03:29) Inflation May Have Hit A 20-Month High

(03:56) What To Make Of A Falling Dollar And Rising Yen?

(12:50) The Big Opportunity In India’s Near To Credit Populace

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NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Good morning, it's Thursday, the 10th of September and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital.

Our top stories and themes and by the way, we were there at the Global FinTech Fest 2026 in Mumbai and more on that coming up.

The big liquidity drain in Indian markets.

Inflation may have hit a 20-month high.

What to make of a falling dollar and a rising yen?

And the core report is at the GFF, the big opportunity in India's near-to-credit population.

Markets, IPO, Oil and the Rupee

The markets are now facing unprecedented pressure on multiple fronts from a war in West Asia that's got worse and a war to raise money from investors via a deluge of initial public offers or IPO in Indian markets.

Both factors will ensure a fairly consistent liquidity drain. Add to this the fact that foreign portfolio investors have started selling again and it's not looking very good in the near term given the sense of optimism that seemed to have prevailed just a few weeks ago. It also goes to remind us about the debilitating impact of oil price rise and the overall geopolitical stress that's weighing on the markets.

Brent oil has crossed $100 a barrel for the first time since July as attacks between the United States and Iran as well as a recovery in Chinese oil buying pushed up Brent crude prices. The US military claimed that it had destroyed five Iranian tankers carrying crude in response to attempts to hit a US Navy warship with ballistic missiles overnight. While we have little sense on what's going to happen in West Asia, what is clear is that Chinese crude buying is picking up and it's also believed that it's China's relatively muted buying earlier that could have kept prices under check.

Incidentally, the research arm of Sinopec, the China-owned world's largest energy company, has said that China's oil demand is expected to fall by about 600,000 barrels a day or about 9% in 2026, which also marks a third straight annual decline. Refining capacity is also forecast to shrink up to 5.5% from 2026 levels by 2030. So that's China for you.

Meanwhile, Brent crude is up more than 60% a year as we've pointed out before and is now above $100 for the third time this year. According to a Bloomberg report, that refined products such as diesel have rallied even harder as the West Asia war has broadened. Back home with all of this in the backdrop, the markets took a fresh dive.

The Sensex fell 813 points or more than a percent to 74,764 and the Nifty 50 was down 203 points to 23,431. In the broader markets, the Nifty mid-cap and small-cap were down 0.5 and 0.48% each. The rupee also went past the 95 rupees per dollar mark on Wednesday after the escalating conflict in the Middle East, which also led to Reserve Bank of India intervention, according to Reuters, which added that the Reserve Bank also likely conducted forex swaps maturing in September and October to drain excess rupee liquidity from the banking system.

All of this led to the rupee closing at about 95 rupees 10 paise, but it could have been worse, according to that Reuters report. India's consumer inflation likely rose to a 20-month high in August, thanks to higher food and fuel prices, marking a third straight month above the Reserve Bank of India's 4% medium-term target, according to a Reuters poll of economists. Some 44 economists who were polled between September 3rd to 9th said that average annual consumer price inflation was forecast to rise to 4.8% in August from 4.45% in July.

What to make of a falling dollar and a rising yen?

Now, this is an interesting level of financial market arrogance. U.S. Treasury Secretary Scott Bessen challenged traders to test his resolve on boosting Japan's currency, saying when he wades into markets these days, he's effectively doing so with inside information, according to a Bloomberg report. I'm in the house now, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do, he said at an event in Texas in the United States on Tuesday, and he also said you can bet against me if you want.

Now, these comments, according to that Bloomberg report, were among Bessen's most strident yet in an extraordinary campaign to bend markets to his will, even in the face of investor scepticism. Bessen, who is a former hedge fund executive, recently oversaw the first purchases of yen by U.S. authorities in 30 years and surprised market participants last month with plans to ramp up buybacks of U.S. treasuries to restrain a surge in yields, which, of course, did not go too well. Now, Japan has spent something like $96 billion between July 30th and August 26th to support the yen after it fell to a 40-year low.

Now, this was also announced by U.S. support, though it's not clear how much yen the U.S. government has bought, according to that Bloomberg report. Elsewhere, an unprecedented number of U.S. companies are turning to Europe's bond markets, drawn by liquidity and attractive terms, as their home market strains under the deluge of AI-related debt. Amazon.com was looking to sell its first sterling bond, Uber was making its first Euro debut, and they were joined by others.

And this is the first time Europe has seen such a large number of U.S. issuers in a single day, according to data compiled by Bloomberg, which added that U.S. companies, including banks, are looking for alternative funding sources as the world's largest bond market feels the strain of the immense borrowing by firms in the AI race. Meanwhile, the dollar neared its lowest in nearly seven months as the yen rallied, with traders looking ahead to the U.S. Treasury's buyback announcement and inflation data later this week. The Bloomberg dollar spot index was down as much as 0.2 percent on Wednesday, its weakest since the 18th of February.

Now, that drop has been led by a rise in the yen, which is the second biggest component of the gauge, and the Japanese currency has risen 0.5 percent, which has extended this month's gain to about 4 percent, according to that Bloomberg report. I reached out to Anindya Banerjee, head of research for forex and interest rates at Kotak Securities. I began by asking him how he was viewing these latest currency trends and what could the India impact be, if so.

INTERVIEW TRANSCRIPT

Anindya Banerjee: So in one phrase, I would say Bank of Japan and Japan holds the key to the global financial stability. So basically, the US bond market, the corporate credit market, the sovereign market, as well as the Japanese bond market, the Japanese currency, they are absolutely interlinked. So that's why out of all the central banks and out of all the interventions, it is the Bank of Japan with whom the US Treasury as well as the US Fed also had to get involved because Japan is the largest holder of US sovereign debt at this point in time.

They used to be number two, but the number one has simply not been buying, actually selling their treasuries, that's China. They have become distant second or third. Japan has now taken over their mantle.

The issue is the Japanese yields have been rising. They're at a 30-year high, 35-year high. For an economy which is, again, struggling to grow, inflation is there, is a concern, but inflation has not reached levels which would warrant a 30-35-year kind of a high in the yields.

So basically, it's creating a lot of domestic pressure on the financial institutions, on the government, because the Japanese government debt is substantially high, close to 230%, 250% of GDP. And that is exerting a lot of pressure on the Japanese government's balance sheet, their interest payments, and finally, on the Japanese economy itself. Now, they have to manage this.

One is they simply come and intervene in the currency market. But when they intervene in the currency market, they have to first sell US dollar assets, which is either the treasuries or the US dollar deposits, and then take those dollars, intervene in the spot market and buy yen. So that's one kind of intervention.

The other intervention is that with those yen, they go ahead and buy their own bonds. That second part has not happened, because the Bank of Japan have been reducing their overall balance sheet continuously for the last one year. So that has been putting an extra pressure on the Japanese government bond prices, which means that yields have been pressured upward.

There is another way to intervene, which is to hike rates substantially. The Bank of Japan monetary policy is due. That's on 17th, 18th.

But if they take that path, the issue is it will hit the economy hard. So I think right now, they are choosing to intervene in the yen market verbal intervention through US, as well as some actual intervention. And the market is also getting a little nervous, especially with the monetary policy coming up as some news have been floated that this time, the Bank of Japan may not just do a token 25 bps, they might do a 50 bps.

Govindraj Ethiraj: Got it. At the same time, the dollar has sort of slid down and is at its lowest in nearly seven months. So what does that mean?

I mean, is the dollar falling independently? Or is it linked?

Anindya Banerjee: See, it is actually the dollar market has become very uncorrelated if I look at individual currencies. So the first currency this year to appreciate in a big way out of the major currencies, I would say was the Chinese Yuan, appreciated quite substantially over the last six to eight months. And now we have seen a significant opposition in the Korean currency, the won.

And now we are seeing a position in the yen. So yen, won, and yuan, the three all neighbours, we are seeing a substantial opposition in their currencies. But if you look at the same time, like the Russian currency, or the Indian currency, or even let's take a look at the euro, pound, etc.

They have appreciated but they have not appreciated like these Asian currencies have. So I think that is the dispersion which we are seeing in the currency market because each one is moving because of their own fundamentals. Like the yen is moving because of the change in the monetary policy expectation, because of the massive intervention.

And it's just not a one central bank intervention. It's a joint intervention between the three parties, the jawboning by the US Treasury, because I don't remember the last time US Treasury talked about any currency specifically so explicitly, like they are doing now. And if you look at the Korean won, it's a different set of fundamentals, which is causing that opposition.

So this is the current status of the currency market. It's not really a blanket dollar deposition yet. But it's gradually spreading.

Govindraj Ethiraj: Got it. And this explains the dollar's fall as well. I mean, US dollar independently, and how does this now appear from as viewed from an India lens?

Anindya Banerjee: The reason we are not seeing a blanket fall is because the growth is still holding up. Fed is expected to hike. That's keeping the real rates higher, the US real rates.

So that's the reason why we are not seeing a blanket fall in the dollar. If it would have fallen, the best indicator of that would have been gold and silver. We would have seen a substantial rally in that.

It is not happening as of now. So now coming to USDNR. Actually, Indian rupee enjoyed the benefit of this massive FCNR, the ECB inflow, though it doesn't hit the spot market directly.

But it's a firepower, which the RBI has to exercise when it chooses. I presume it has intervened in the market today. But the oil prices is a concern.

With the Brent now above 100, it's not just the Brent. Actually, if you look at the physical markers like Murban and others, they are trading at a substantial premium to Brent. That's affecting our own import price, the blended import price of our energy.

I think that is now an additional factor for the rupee. Because over the last two days, we have seen a sharp spike in the oil prices and we have seen the rupee reverse from 94, 20, 30 odd to now I think 90. So that is what is driving it now because the FCNR episode has played out.

It's going to be totally on the oil prices. So I think the rupee won't be able to take benefit from the yen appreciation. Because if it was a dollar depreciation across all major currencies, then the rupee would have benefited because that's kind of a risk on environment.

But with the current setup, it's a very country specific thing happening with yen. In fact, it might so happen if it actually leads to a situation where oil prices spike over the next, let's say it goes to 107, 110. Yens begins to appreciate towards 150 odd or lower than that.

And it triggers an unwind of the yen. So if that were to happen, the rupee will actually depreciate against the dollar because of the outflows from SPS.

Govindraj Ethiraj: Got it. Anindya, thank you for explaining and taking us through the dynamics of the yen and dollar trade.

Anindya Banerjee: Thank you.

The Big Opportunity In India's Near-To-Credit Population

India's retail lending market as of March end, in terms of loans outstanding, was about 170 lakh crore rupees, up 16 percent annually. Consumption loans, on the other hand, at that time stood at about 118 lakh crore rupees, up 15 percent year-on-year. Growth was broad-based.

Credit outstanding for personal loans was up 13 percent. Gold loans were up 50 percent, something that we've been referring to elsewhere. Consumer durables at about 21 percent.

Vehicle loans 14 to 15 percent. Home loans is about 9 percent. Now, all these figures are from CRIF, credit information services, which is a credit information company in India and part of the CRIF group, a European leader specialising in and business information systems.

We were at the Global Fintech Fest 2026 in Mumbai yesterday, also being the first day and an opportunity to speak to several players in the fintech and allied spaces. I caught up with CRIF India's head, Sachin Seth, and I spoke to him, not about those who are already in the credit ecosystem, but those who are out of it or new to credit, and began by asking him how he was seeing that market.

INTERVIEW TRANSCRIPT

Sachin Seth: So Govind, new to credit actually, and as you rightly said, Zenzi is coming into credit's life cycle. Last year itself, I think we had almost like 2.9 crore people who got entered into the cycle. Now this includes both the type of people, it includes people who are in rural and hinterlands of the country, and also the people who are, you know, just become 18 plus, etc.

Now what we are doing is that see, credit score works typically wherein there is a credit history. But we have also looked at that alternate data, like, you know, there is a public infrastructure of account aggregator. So what we are doing is that using that, along with income tax, along with GST, etc., we have come out with basically open banking stack. And that is a stack works very well because that provides the cash flow. I mean, yesterday, Prime Minister also talked about it, that even in villages, if people are doing some kind of transactions, they are running a shop, they want to expand the business, this becomes one of the component which can be added in addition to the thin file or the credit score what they have. And this becomes an entry for them to come into the mainstream of credit cycle.

Govindraj Ethiraj: So you talked about 29 million people coming into this space. So you're saying that all these people already have bank accounts or their potential bank accounts then leading into credit assessments?

Sachin Seth: Yeah. So see, post the Jan Dhan scheme, which came in India through, thanks to our, you know, government and Prime Minister's push, everyone who is above 18 generally has a bank account today. I mean, you know, there may be a few percent people here and there.

So what I'm saying is when you say Zenzi, etc., when they become 18 plus, 20 plus, they start first employment, etc., they obviously have a bank account because today salaries are paid by bank or when students are using bank account, right? So bank account is obviously has become the core foundation layer, which is no longer, you know, only for exclusive people. It is for everyone.

And that obviously, UPI being there, that allows them to do the transaction seamlessly, but that also creates a digital footprint, which helps in basically creating a cash flow based credit or basically categorisation of, you know, expense or income. And that becomes a very powerful tool for basically being the, you know, the lever for also deciding the credit.

Govindraj Ethiraj: So when you talk about the open banking stack, now new to credit by definition means it's an area that you don't know much about as opposed to someone who already has some credit history. So what are the challenges that you face in extracting data? And what are the experience or what have the experiences been like so far?

Sachin Seth: So interestingly, one is that obviously it's a consent based mechanism. So there has to be a consent by the borrower. Sometimes education is required for them to give consent because people, because of the lot of fraudulent activity happening in the banking, people are a little bit, you know, hesitant in giving the consent unless they have a trust on the counterparty.

Second point is that many times they end up giving the details of the bank account, which is not a primary account. So let's say somebody has three accounts. And if you give details of only one account, which does not have the core transactions, right?

Then bank will not be able to assess your complete cash flow. Third part also is that, you know, there are people who are trying to game the system and they are doing fraudulent activity by ingesting money through friends, et cetera, in the bank. That also gets somewhere highlighted in the system because we use machine learning models, et cetera, for that.

And so it's a situation where in one side is encouragement is there for people to give consent. It's growing day by day. At the same time, it is also to check that exactly what is the bank account behaviour and is somebody trying to game the bank account behaviour to actually become credit worthy.

So both sides are there. And I think that's what banks try to basically look at it using our solutions. That's where it makes it easier for them.

Govindraj Ethiraj: So one is people who are entering in maybe for the first time. The other is, as we were talking about just a little while ago.

Sachin Seth: Thin file.

Govindraj Ethiraj: Thin file. So that means people have been around but not active for various reasons. Why is that?

I mean, why have they not been active and what does your own system tell you about them? No, thin file does not mean that they have not been active.

Sachin Seth: Thin file means that they have had a lesser footprint in the credit cycle. So which means that somebody, let's say 24-year-old, just have had only a bike loan. So it's only one loan.

Maybe the person takes another, let's say, credit card. Person takes a consumer loan for mobile. Person takes a loan for home.

Then it starts becoming more and more data. So basically thin versus thick is about the of data. If you see the active 25 to let's say 35, that's where the people really build their credit scores.

35 onwards, you will have significant data available. So the file becomes thicker and thicker. Now, there could be people who at the age of 30 also, they've had five loans or they have four credit cards.

In that situation, they would have enough data to call it a thick file. So it's not necessarily about that they are not doing it or it's not becoming. It is about that maybe duration and the type of activities, what they do and the kind of credit they take that makes their data richer and that gives the credit bureaus and other ecosystem lending partners more and more insights about them.

Govindraj Ethiraj: Right. Obviously, those who are coming in for the first time or have a thin layer are relatively less lucrative for people, merchants, or maybe yourself. So how do you see this as a market opportunity for you as a credit bureau that's growing?

Obviously, people are coming in, but in terms of, let's say, the value of what they create. See, there are two parts I will say.

Sachin Seth: If you look at from lender's perspective, thin file does not mean that the customer is not credit worthy enough. In fact, it could be a good sign as well. Because at least the person did not have any defaults or delinquencies.

Maybe because of that the file is thin because the person has not had enough loans. So basically, we all talk about intent and ability. Now, maybe intent can be checked from whatever they have taken if they have not defaulted.

Abilities obviously has to be checked from the cash flow or income. So based on that, the banks normally take decisions. So people who are even in the, let's say, new to credit or early part of the credit, there are levers to understand that they could be potentially better.

Like say, if the income is good and the EMIs are not really up to, let's say, a certain percentage. Naturally, they could borrow more. So that could become a good set of activity for the providers.

Coming to the credit bureau side, we only have one offering which is called basically direct to consumer credit report or we have just launched in the Global Fintech PES score simulator. Now, that offering is where customers who have whatever kind of credit profile, when they want to understand that what exactly is causing their score to go up or down, they can come to credit bureaus, they can look at that and they can use our score simulator and they can also simulate that, okay, if I close this credit card, will it go up? If I take this loan, will it go down?

Or my expense becomes this? Or if I don't pay this EMI, what will be the impact? So that is where credit bureaus are not really directly selling anything to consumer.

They are only selling basically information for the consumers. So that is something which is a model which also creates awareness in the people. But at the same time, like I said, even if the person doesn't have a thick credit file, it depends on the quality of that credit pattern, what has been created or quality of basically, let me say that management person has done in terms of his financial management.

Govindraj Ethiraj: And this credit score, which sounds interesting, as you can project what could happen if I don't pay an EMI or skip an EMI. Do you feel that these are the kind of products Gen Z wants more than maybe others? Absolutely.

See what happens?

Sachin Seth: In fact, we are seeing certain situations wherein people are checking scores every week. They are trying to see it's going up or down. Though obviously, weekly doesn't change.

But they definitely want to keep a track of it, like a health parameter. And it's good as a credit awareness. We are also working towards making people aware.

As you rightly said, typically, the people who are in the younger generation who are more digital savvy, they are doing it also. But interestingly, a lot of people who are in the hinterlands and a lot of people in microfinance and a lot of people are in the rural population, in fact, they also do it. Because they also understand the value of credit score in terms of the loan, what they can get and the rate of interest.

See, very interestingly, if you have good credit history, what it does, it helps you get loan faster. It helps you get loan at a cheaper rate. And basically, it also demonstrates your, let me say your discipline in many other matters.

In fact, there have been situations wherein some of the insurance companies have been giving insurance at certain percentage less price, if you have a better credit score. So, these are the kind of things wherein people can benefit and it is not limited to Zenzi. Even you see this happens in the rural population also, if the awareness is created and they are the ones who are also taking benefit of it.