Financial Services Sector

Overview

In recent times, the financial services sector has seen strong growth especially in the banking, insurance and the asset management segments. Deposits in banks have grown significantly due to the stricter asset quality norms implemented by Reserve Bank of India.

After the year 2016 demonetisation in India, inflows in mutual fund products increased to ~USD 54 billion during the year and total assets under management grew substantially to reach USD 300 billion. Corporate investors accounted for around 46% of total Asset Under Management (AUM)in India while the high net worth individuals and retail investors account for ~28% and ~23% percent, respectively. Large players in the fund management industry are exploring investment opportunities and even setting up their business presence in India.

The government and the Reserve Bank of India (RBI) have undertaken several steps to facilitate ease of doing business in India for enterprises of all sizes including micro, small and medium sized enterprises (MSMEs). India scored a perfect 10 in terms of protecting shareholders’ rights due to the reforms that were implemented by the Securities Exchange Board of India (SEBI).

Growth Drivers

  • The relaxation of foreign investment rules has received a positive response from the insurance sector, with many companies announcing plans to increase their stakes in joint ventures with Indian companies. Over the coming year, there could be a series of joint venture deals between global insurance giants and local players.
  • With active advertising and increase in the number of trading platforms, the number of transactions the and amount of investments in the Indian financial industry has been continuously increasing due to the increase in financial awareness amongst the general public.

Key Players

International

  • BNP Paribas
  • Franklin Templeton
  • Invesco
  • Mirae
  • Black Rock
  • Citigroup
  • Barclays

Indian

  • Edelweiss
  • IDFC
  • IIFCL
  • India Bulls
  • Motilal Oswal
  • Reliance
  • ICICI

Market Statistics

  • The Indian Financial services sector is valued at ~USD 1.9 trillion in 2017.
  • Total AUM of the industry stood at ~USD 360.9 billion as of April 2018. At the same time the number of Mutual fund equity portfolios reached a record high of ~ USD 2.3 billion in February 2018.
  • The total first year premium of life insurance companies grew ~17.3% year-on-year to reach ~USD 25.4 billion during April 2017-February 2018.
  • The total value of M&A in India rose 53.3% year-on-year to USD 77.6 billion in 2017.