THIS AFTERNOON: UAE’s new banking rules could slow Indian lenders’ NRI deposit push; BoB settles NMC litigation for USD 600 mn

Good afternoon, friends and happy FRIDAY.

Abu Dhabi is making its biggest bet yet on the Adani Group. International Holding Company’s mining arm and Adani Enterprises are setting up an INR 1.08 tn (USD 11.5 bn) aluminium plant — India’s largest-ever foreign investment in metals and IHC’s biggest single commitment to Adani.

Oman India Fertiliser Company priced its USD 678 mn IPO at the top of its range, pulling in demand worth nearly 18 times the shares on offer.

On the energy front, MENA barrels are still lagging behind: Indian refiners imported a record 4.9 mn bbl/d of crude last month, and more than half of it was Russian. Even as the Strait reopens, Gulf oil is yet to gain its full market share.

UAE rules slow NRI deposit push

The Central bank of the UAE (CBUAE) has tightened rules around facilitative activities for foreign bank representative offices, a move that could slow Indian banks’ efforts to raise USD deposits from UAE-based non-resident Indians (NRIs), Economic Times reports.

The curb covers restricting activities, including documentation support, business facilitation and cross-selling — making it harder for lenders to onboard customers for foreign-currency deposits (FCD). The Reserve Bank of India (RBI) temporarily relaxed norms for fresh three-to-five-year deposits with higher interest rates until 30 September 2026.

FCD allows NRIs to place fixed deposits in foreign currencies, including USD. Indian banks have been offering higher rates on these deposits after the RBI’s temporary relaxation.

Why it matters: The UAE is a key market for the deposit drive because the Gulf is expected to account for more than 70% of FCD inflows. Indian banks have been using their UAE presence to reach out to NRIs after the RBI eased rules to attract foreign-currency deposits.

Operational hurdle: Most Indian banks in the UAE operate through representative offices, which have typically helped with document collection, know-your-customer coordination and liaison with branches in India.

Indian bank settles UAE case

Indian state-owned lender Bank of Baroda (BoB) has agreed to pay INR 57 bn (USD 600 mn) to settle lawsuits tied to UAE’s hospital chain NMC Health, according to a regulatory filing. The bank said the agreement resolves claims brought by the joint administrators of NMC Health, NMC Healthcare and NMC Holding, without any admission of liability or wrongdoing.

Case closed: The settlement relates to insolvency and civil proceedings before the Abu Dhabi Global Market (ADGM) Court of First Instance and the High Court of Justice of England & Wales. BoB said its liability is limited to the settlement amount, while the remaining terms of the agreement are confidential.

The claims: The case centered on allegations that financing and lending arrangements involving BoB helped facilitate, or failed to detect, activity that concealed NMC’s financial position.

NMC was placed under administration in 2020 after disclosures of bns of USD in undisclosed debt and alleged fraud, making its collapse one of the Gulf’s most closely watched corporate failures.

Air India Express restores MENA network

Back to normal programming: Air India Express has restored its full Middle East network, signaling that the India-Gulf air corridor is back to normal after the Iran war forced widespread suspensions. The carrier restarted Kozhikode-Salalah flights yesterday and Kozhikode-Kuwait today, with Bengaluru-Kuwait resuming tomorrow and frequencies to be added in phases, Zawya reports.

With Muscat-Mangaluru also resuming today, the airline will again serve 13 Gulf destinations and operate around 780 weekly flights between 18 Indian cities and the Middle East. The restored routes rebuild direct links on the workforce corridors that matter most — Kerala-Oman, Kerala-Kuwait, and Bengaluru-Kuwait — that move Indian workforce to the Gulf.

By the numbers: Indian airlines had canceled more than 15.5k Middle East flights since 28 February, affecting over 1.36 mn travelers, according to industry estimates cited by CNBC-TV18.

Services lose steam

India’s services sector expanded at its slowest pace in 17 months in June, even as overseas demand improved from markets including Oman, Qatar, and the UAE, according to the HSBC India Services Purchasing Managers’ Index (PMI) (pdf), compiled by S&P Global. The services PMI fell to 57.4 in June from 59.8 in May, but stayed above the 50 mark that separates expansion from contraction.

“External demand held up well as overseas sales stayed robust,” HSBC Chief India Economist Pranjul Bhandari said, adding that price pressures eased as Middle East disruptions began to subside.

Domestic demand cooled: The slowdown came from softer local demand, with total sales rising at the weakest pace since November 2023. Firms cited weaker client interest and tougher market conditions, though some still saw support from competitive pricing, e-commerce activity, customer bookings, and local tourism.

Data point

INR 429 bn (USD 4.5 bn) — That is the institutional investment that India’s real estate sector drew in 1H 2026, up 50% y-o-y and the highest 1H inflow in six years, Fortune India reports, citing Colliers India.

Domestic capital led the inflows, accounting for 57% of the total amount, while the rest was INR 181 bn (USD 1.9 bn) foreign capital. Despite Iran war related concerns around investor sentiment, April-June quarter accounted for much of the increase with investments rising 70% y-o-y.

Market watch

FPI selling of Indian stocks tops USD 29 bn: Foreign portfolio investors (FPIs) extended their selling spree of Indian equities in June, albeit at a slower pace, pulling out INR 493.4 bn (USD 5.2 bn), as per National Securities Depository Limited (NSDL) data.

While overseas investors continued to buy Indian debt, the sustained equity outflows – one of the longest streaks in recent years – underscore growing caution toward one of the world’s fastest growing emerging markets amid global uncertainty. FPIs invested INR 218 bn (USD 2.3 bn) in debt securities.

What’s driving the exodus: The latest withdrawal has taken the total FPI outflows to INR 2.7 tn (USD 29.4 bn) in 2026 – well beyond last year’s INR 1.6 tn (USD 16.9 bn) amid weak corporate earnings, a depreciating INR and elevated US bond yields. A rotation of global capital toward AI- and technology-led investment opportunities in developed markets has soured the foreign investor sentiment.

The big story abroad

The US economy is sending mixed signals this morning: US hiring cooled sharply in June, with employers adding just 57k jobs against forecasts of 110k. Some economists point to a delayed drag from the Middle East war’s energy shock, and traders have all but priced out a near-term Fed rate hike.

Meanwhile, private credit has seen redemption requests outrun payouts in 2Q 2026, leaving USD 14.5 bn trapped against USD 8.6 bn returned — funds are locking up USD 1.70 for every USD 1 an investor gets back.

And Wall Street closed out 1H 2026 on a high — stocks, bonds and commodities posted their best combined first-half return since 2021, despite a Middle East war, an oil price that doubled then collapsed, and wild swings in Fed rate expectations. The S&P 500 is up c. 9% YTD, while Bloomberg’s survey puts the average year-end target at 7,716 — roughly 3% upside from June 30.

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