Avoiding risky lending in the Gulf

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WHAT WE’RE TRACKING TODAY

THIS AFTERNOON: India eyes Chabahar revival; Jaishankar concludes Qatar visit

Good afternoon, friends. Indian lenders stopped extending fresh exposure in Gulf countries in May. Banks are tightening risk filters and may turn more selective in lending as they wait to see whether Gulf uncertainty settles or deepens.

Mubadala-backed Manipal Hospitals has SEBI’s green light for what could be a USD 12 bn listing. Plus: India is fast-tracking a long-delayed transportation project in Iran, wagering that the US-Iran truce will reopen the sanctions waivers that stalled it. Foreign Minister S. Jaishankar wrapped up a Qatar visit thanking Doha for its role in mediating the US-Iran talks.

India eyes Chabahar revival

India is moving to fast-track the long-delayed 700-km rail link connecting Iran’s Chabahar port with Zahedan near the Afghan border to secure trade access to Central Asia and Eurasia, Mint reports, citing unnamed sources.

What’s changed? The renewed push comes on the back of the US-Iran truce agreement, which reopened the possibility of US sanctions waivers. Iran is expected to fund most of the estimated USD 1.5 bn project, with India contributing USD 400-500 mn alongside engineering expertise.

Gateway to Central Asia: The Chabahar-Zahedan corridor is the missing rail link connecting the strategic port to Iran’s national railway network and the International North-South Transport Corridor. Completing it would give India a shorter, cheaper route into Afghanistan, Central Asia, and Eurasia. Building the rail link would enhance the port’s commercial viability and give India a hedge against competing regional trade corridors such as the China-Pakistan Economic Corridor.

Sanctions relief is the real gate: India is cautiously optimistic that the Iran-US peace agreement could ease the sanctions bearing on its Chabahar investments — either through a broader rollback or the restoration of a US sanctions waiver that previously allowed the project to proceed, the Hindu Businessline reports.

That waiver expired in April, stalling India’s expansion plans. The war halted operations entirely despite India Ports Global’s 10-year agreement, signed in May 2024, to run the Shahid Beheshti terminal.

What’s next? New Delhi is monitoring the fragile Iran-US peace process, which includes a roadmap for lifting sanctions. It has raised the issue with Washington, asserting Chabahar’s strategic importance and seeking clarity on future sanctions. These projects are expected to feature in upcoming India-Iran talks as New Delhi looks to revive connectivity initiatives stalled by regional tensions and sanctions.

Jaishankar wraps up Qatar visit

India’s External Affairs Minister S. Jaishankar met with Qatar’s Prime Minister and Foreign Minister Mohammed bin Abdulrahman Al Thani in Doha to discuss bilateral ties, regional issues, and ways to deepen cooperation, according to a statement. The meeting was part of Jaishankar’s visit to Qatar, which concluded on Saturday.

On the table: India and Qatar agreed to explore new avenues for trade, investment, and energy cooperation, reinforcing a relationship that has expanded beyond hydrocarbons. Jaishankar also praised Qatar for its “prominent and proactive” role in facilitating dialogue between the US and Iran, underscoring New Delhi’s support for efforts to preserve stability across the Gulf.

Why it matters: India has a strong economic incentive for Qatar’s mediation to succeed. The Gulf country supplied close to 40% of India’s total LNG imports as of 2025, while QatarEnergy and India’s Petronet LNG signed a 20-year agreement last year to supply around 7.5 mtpa of LNG. Any renewed US-Iran tensions that disrupt shipping through the Strait of Hormuz could threaten those supplies and ripple through India’s energy market.

ICYMI- India is prioritizing its freetrade agreement talks with Qatar while also negotiating a bilateral investment treaty. Doha is one of India’s key trade partners within the GCC bloc, with bilateral trade reaching USD 14.1 bn in FY 2025.

Dispute stalls India’s UAE consular outsourcing transition

India’s diplomatic missions in the UAE were forced to temporarily bring consular services in-house after a judicial dispute delayed the transition to a new outsourced service provider, Times of India reports. Indians living in the UAE are crowding the embassy in Abu Dhabi and the consulate general in Dubai for consular services amid disruptions ahead of the peak summer travel season.

What happened? India awarded the UAE consular outsourcing contract to Alhind Tours & Travels after it emerged as the lowest financial bidder, replacing BLS International which had managed passport and consular services since 2011. However, two unsuccessful bidders challenged the tender process in the Delhi High Court, delaying Alhind’s takeover despite the company completing operational preparations.

Services disrupted: Since 1 July, the embassy and consulate have been directly handling limited consular services while prioritizing emergency cases. The previously announced online appointment system has effectively been deferred until the transition is complete.

Pressure on missions: The temporary arrangement has triggered heavy demand, with more than 1.4k applicants visiting the Dubai consulate on a single day.

What’s next: Alhind said it has completed preparations, including setting up 16 Indian consular application centers across all seven emirates, and will assume operations once court proceedings conclude.

The big story abroad

Nato’s two-day summit kicks off tomorrow in Ankara and discussions are expected to revolve around the ongoing Russia-Ukraine conflict, the US-Iran war, and US President Donald Trump’s comments on Greenland. Trump demanded “loyalty” from the coalition ahead of the summit, where he is scheduled to meet with the heads of state of Turkey, Syria, and Ukraine.

The spread of AI use in financial services has triggered an “arms race” for regulators, according to Sheldon Mills, executive director of the UK’s Financial Conduct Authority. Mills argues that regulators need greater powers to monitor the rapid growth of AI, namely large language models, and underlined concerns over the softwares’ bias, opaque pricing, and personalized manipulation.

Meanwhile, in aviation: British low-cost airline EasyJet has agreed in principle to the fifth takeover bid proposed by global alternative investment firm Castlelake LP, valuing the company at USD 7.3 bn. The budget carrier has been struggling with rising jet fuel prices and muted demand since the regional war broke out.

Trump finagles Balogun favor from FIFA? FIFA will allow the US top goal scorer Folarin Balogun to play in the upcoming showdown with Belgium — despite the footballer earning a red card in his last match — after Trump urged FIFA President Gianni Infantino to review the suspension. This move marks the first reversal of its kind since 1962 and has drawn criticism from many, including the Belgian federation.

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After the Iran war, Indian banks apply 'tighter filters' before approving Gulf lending

The aftermath of the US-Iran war could push the India-Gulf capital relationship in a new direction — one where capital flows remain intact, but Indian lenders price risk more carefully.

Fresh pause: Indian banks stopped fresh lending in Gulf countries in May, focusing on monitoring existing relationships. The country’s two leading state-owned lenders, State Bank of India and Punjab National Bank, decided to withhold new business in the GCC until there is more clarity.

“The broader India-Gulf relationship remains strong, and capital flows are still active [...] but there can be a temporary asymmetry in the corridor. The India side is still attracting Gulf capital, while Indian banks may be more selective in extending fresh risk back into the Gulf,” Kranthi Bathini, equity strategist at WealthMills Securities, tells EnterpriseAM.

Guards up: Indian banks are applying “tighter risk filters” as geopolitical uncertainty in the Gulf has implications for crude oil, shipping, trade flows, and financial-market sentiment, Bathini tells us. “Even if banks are not cutting existing exposure, they may become more careful on trade finance, credit assurances, letters of credit, and working-capital renewals,” he adds.

On the flipside, Gulf investors continue to view India as an attractive market. The Emirates NBD-RBL Bank transaction is one example of Gulf capital showing interest in Indian financial services. Indian banks are also trying to mobilize foreign capital from the region, including through foreign currency deposits from the Middle East.

These banks could ask exporters for stronger cover or tighter documentation before extending or renewing limits if shipping disruptions, delayed documentation, higher ins. costs, currency volatility, and the timing of receivables raise default risk, Bathini says.

Who feels the pressure?

Scale shields: Funding shock or tighter guardrails may not affect large Indian companies with strong balance sheets and established banking relationships; they would affect mid-sized companies. “Mid-sized contractors, exporters, subcontractors, and companies dependent on relationship banking could face difficulty in raising credit assurances, working-capital lines, trade finance or project-linked funding,” Bathini tells us.

Who fills the gap?

“The first natural replacement would be Gulf banks” if Indian banks become more selective, Bathini says, adding, “Emirates NBD, First Abu Dhabi Bank, Mashreq and Abu Dhabi Islamic Bank can step in for some India-linked trade, corporate and project-finance requirements.”

Japanese and European lenders may also participate in larger transactions, depending on the project and sponsor, but they are not a universal replacement for Indian banks, he adds.

Not a structural shift

“I would read this as a temporary risk-management response rather than a structural pullback from the Gulf,” Bathini tells us. The broader India-Gulf relationship, he says, remains strong and capital flows are still active. “The next three to six months will show whether the current caution is a temporary pause or a deeper recalibration,” he says.

Mubadala-backed Manipal Hospitals heads for USD 1.2 bn listing

Manipal gets SEBI green light: Mubadala-backed Manipal Hospitals — India’s largest hospital operator by bed count — secured approval from the Securities and Exchange Board of India to proceed with its IPO plans, Reuters reports, citing sources familiar with the matter. The offering includes a fresh issue of INR 80 bn (c. USD 838.3 mn) plus a secondary sale of 43.2 mn shares by existing investors. The group is reportedly targeting a market debut in late July or early August.

REMEMBER- Manipal filed draft papers in March to raise up to USD 1.2 bn, placing the listing among India’s largest-ever healthcare IPOs. Mubadala, alongside two other funds, bought an 8% minority stake in Manipal from Singapore’s Temasek (which holds a majority stake) for an undisclosed sum back in 2024. However, Mubadala is not offloading its stake.

Why it matters: Manipal’s performance will serve as a test for investor appetite for specialty healthcare amid the geopolitical volatility brought on by the Iran war. Foreign portfolio investors have pulled a record USD 29.2 bn from Indian equities this year, dragging the Nifty benchmark down 7%, according to the newswire.

IN CONTEXT- India’s medical tourism sector is growing. Future Market Insights sizes the market at USD 20.4 bn in 2026, forecasting it will climb to USD 65.1 bn by 2036, with international patients accounting for 82% of that revenue and patients from the Middle East, Africa, and South Asia representing the largest share of inbound medical tourism to India.

ADVISORS- Kotak Mahindra Capital, Axis Capital, Goldman Sachs Securities, Jefferies India, JPMorgan India, UBS Securities India, and DBS Bank India are bookrunning lead managers, with KFin Technologies as registrar to the issue.

India rolls back CNG rationing as Hormuz shipping resumes

India has rolled back emergency natural gas allocation rules introduced during the Iran war, after liquefied natural gas (LNG) shipments through the Strait of Hormuz resumed, according to a government notice (pdf). The Petroleum Ministry removed provisions that allowed it to redirect domestic gas, imported LNG, and regasified LNG toward priority sectors.

These measures were introduced in March to ration gas supplies after MENA cargoes were disrupted and suppliers invoked force majeure. The provisions were no longer needed after a ceasefire, ongoing negotiations, and the resumption of maritime traffic through the strait, the ministry said.

Why it matters: The rollback shows India’s Hormuz-linked energy shock is easing. India could tap into alternate crude suppliers during the disruption, while LNG was harder to reroute because most Qatari cargoes pass through Hormuz, which is what forced the rationing in the first place.

Who was protected: The emergency rules prioritized household piped gas, CNG for transport, and higher domestic liquefied petroleum gas (LPG) production, while fertilizer plants and industrial users were given lower supply thresholds, subject to operational availability.

Part of a wider rollback: This is the latest in a series of fuel rationing measures that India has unwound as supply risks ease. Last week, the Petroleum Ministry restored industrial and commercial LPG supplies to pre-crisis levels and withdrew sector-specific supply limits.

Keeping refinery push alive

India is continuing to expand its refining capacity as part of its energy security strategy. Prime Minister Narendra Modi inaugurated a 180k bbl / d refinery in Rajasthan, India’s first new refinery in a decade. “In the United States, not a single new refinery has been built in the past 50 years. Europe’s refinery capacity has steadily declined,” Modi said, highlighting India’s energy priorities.

The project: The INR 790 bn (USD 8.3 bn) refinery is a joint venture between state-run Indian refiner Hindustan Petroleum and the Rajasthan government. The facility is set to process around 150k bbl / d of imported crude and mainly produce diesel, gasoline, and petrochemicals.

The refinery does not reduce India’s dependence on imported crude, but it adds processing capacity at home and gives refiners more room to handle different grades of oil. That matters after the Hormuz shock, which showed that fuel security is not only about sourcing crude, but also about having enough domestic refining depth to keep supplies stable.

Capacity push: The Rajasthan project will lift India’s installed refining capacity by around 3.5% to 5.4 mn bbl / d. India is on track to expand refining capacity to 6.2 mn bbl / d by the end of the decade, according to Bloomberg.

Saudi Aramco has also been looking for a downstream foothold in India. The company was eyeing an equity slot in Bharat Petroleum’s planned USD 10.5 bn refinery-cum-petrochemicals complex near Ramayapatnam Port in Andhra Pradesh. That followed earlier talks for Aramco to acquire a 20% stake in the project, with discussions also covering a long-term crude supply agreement.

GCC insurers weather the geopolitical storm

The Middle East conflict is impacting Gulf ins. company growth, but the risk remains under control. Saudi Arabia, Kuwait, Qatar, and the UAE are not expected to see a major hit to profitability, but the war is still quietly reshaping the ins. sector and hitting top lines, Associate Director at S&P Global Ratings Mario Chakar said in a webinar attended by EnterpriseAM.

The expectations: Saudi Arabia — the region’s fastest-growing market over the past several years — is expected to decelerate to 8-12% growth this year from a run of double digits, and the UAE is set to drop to around 10% from nearly 20% in 2025, while a broader economic slowdown quietly reduces claims as fewer people drive and travel, Director and Lead Analyst Emir Mujkic said. Kuwait is expected to hold at 6-8%, largely carried by Vision 2035 infrastructure spending.

The pressure that matters is structural, and it sits at the bottom of the market. In Saudi Arabia, Bupa and Tawuniya are racking up most of the income, while smaller players fight over what’s left, a gap the agency expects will widen, Chakar said. Motor underwriting ran a 107% combined ratio last year (anything above 100% loses money), and a soft pricing cycle that lasted longer than S&P expected only began correcting late in 2025.

A new risk-based capital regime is set to take effect on 1 January 2027, with a soft launch this year. Seven listed Saudi insurers already carry accumulated losses above 20% of share capital, and Chakar expects the rules to catalyze consolidation among the weakest. The market has already shrunk from 33-34 companies a decade ago to 25 listed today, against just 11 listed banks. Expect more mergers through 2026-2027, although S&P says that deals have moved more slowly than billed, with signed MoUs stalling before close.

Qatar's catalyst is a delayed law: A mandatory health ins. scheme, on the books since 2022 and pushed back repeatedly, is expected to lift market growth from around 5% this year to 15-20% once live, mirroring what happened when Dubai, Abu Dhabi, and Saudi mandated coverage. S&P Associate Director Sachin Sahni said Qatar is the most profitable of the four markets, with 85-90% combined ratios and 6-8% ROE, but warned that ins. companies may need to raise capital to write the new business.

The UAE is crowded and cushioned. The top three companies hold roughly 50% of the ins. market, and about half of all business is ceded to reinsurers — a margin drag that earned its keep during the 2024 floods, Mujkic said. Too many companies writing similar coverage keeps consolidation pressure on, with several listed players running near or below minimum solvency requirements.

The diversification trap. A handful of GCC ins. companies are pushing into India, Turkey, and Africa for growth — all markets S&P rates higher-risk. Turkish underwriting loses money across the board (110-115% combined ratios, propped up only by ~40% deposit yields against 30%-plus inflation) and Indian margins are thin. Growth that comes with deteriorating performance can be a ratings negative, not a diversification win, according to Sahni.

MARKETS THIS MORNING-

Asia-Pacific markets were trading mostly higher this morning, buoyed by investor optimism ahead of the upcoming earnings season. South Korea’s Kospi was up 0.7%, and the Shanghai Composite was up 0.2%. Japan’s Nikkei dipped 0.3%, and the Hang Seng was flat. Wall Street futures are in the green.

Sensex	78,315	+0.7% (YTD: -8.1%)
NIFTY 50	24,434	+0.6% (YTD: -6.4%)
ADX	9,923	+0.2% (YTD: -0.6%)
DFM	6,072	+0.2% (YTD: +0.4%)
Tadawul	10,809	+0.1% (YTD: +3%)
EGX30	52,249	+2.2% (YTD:+24.9%)
Boursa Kuwait	9,163	+0.5% (YTD: +6.7%)
QSE	10,228	-0.18% (YTD: -4.9%)
S&P 500	7,483	+0.0% (YTD: +9.3%)
FTSE 100	10,684	+0.04% (YTD: +7.4%)
Euro Stoxx 50	6,409	-0.05% (YTD: +10.6%)
Brent crude	USD 71.7	-0.5%
Natural gas (Nymex)	USD 3	+0.97%
Gold	USD 4,154	+0.7%
BTC	USD 62,705	-0.05%

The values in the table above are listed according to the market position as of 3:30pm IST / 2pm GST.

CALENDAR

JULY

8-10 July (Wednesday-Friday): India Energy Storage Week, New Delhi.

14-17 July (Tuesday-Friday): Bharat Tex, New Delhi.

22-24 July (Wednesday-Friday): Rail & Metro Technology Conclave, Bharat Mandapam, New Delhi.

Dates TBA: Monsoon Session of Parliament, New Delhi.

AUGUST

15 August (Saturday): Independence Day.

26 August (Wednesday): Prophet Mohammad’s Birthday.

SEPTEMBER

1-3 September (Tuesday-Thursday): India Energy Week, Dwarka, New Delhi.

1-6 September (Monday-Saturday): Dubai Fashion Week, Dubai Design District.

7 September (Sunday): Opec+ meet to discuss production policy for October.

7-9 September (Monday-Wednesday): iPHEX 2026 International Pharmaceutical Exhibition, Bharat Mandapam, New Delhi.

8-11 September (Tuesday-Friday): Global Fintech Fest, Mumbai.

9 September (Tuesday): Envision 2025, Atlantis, The Royal, Dubai.

17-19 September (Thursday-Saturday): Semicon India Conference, Yashobhoomi, Delhi.

OCTOBER

2 October (Friday): Gandhi Jayanti (Mahatma Gandhi’s Birthday).

5-7 October (Monday-Wednesday): Reserve Bank of India’s Monetary Policy Committee meeting for the October / September policy cycle.

7-10 October (Wednesday-Saturday): India Mobile Congress, Yashobhoomi, New Delhi.

20 October (Tuesday): Dussehra.

NOVEMBER

24 November (Tuesday): Guru Nanak Jayanti.

DECEMBER

8-11 December (Tuesday-Thursday): Expand North Star, Dubai.

25 December (Friday): Christmas Day.

JANUARY 2027

30 January-3 February (Saturday-Wednesday): Printpack India, India Expo Centre, Greater Noida (Delhi NCR).

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