Financial Services
The financial services sector provides financial services to people and corporations. This segment of the economy is made up of a variety of financial firms including banks, investment houses, lenders, finance companies, real estate brokers, and insurance companies.
| BANKING |
| FINANCIAL SERVICES |
| INSURANCE |
Banking
India’s banking sector is sufficiently capitalized and well-regulated. The financial and economic conditions in the country are far superior to any other country in the world. Credit, market, and liquidity risk studies suggest that Indian banks are generally resilient and have withstood the global downturn well.
The Indian banking industry has recently witnessed the rollout of innovative banking models like payments and small finance banks. RBI’s new measures may go a long way in helping the restructuring of the domestic banking industry. The digital payments system in India has evolved the most among 25 countries with India’s Immediate Payment Service (IMPS) being the only system at level five in the Faster Payments Innovation Index (FPII).
Road Ahead
Enhanced spending on infrastructure, speedy implementation of projects, and continuation of reforms are expected to provide further impetus to growth in the banking sector. Also, the advancement in technology has brought mobile and internet banking services to the fore.
The banking sector is laying greater emphasis on providing improved services to their clients and upgrading their technology infrastructure to enhance customer’s overall experience as well as give banks a competitive edge. An increase in the working population and growing disposable income will raise the demand for banking and related services. Rural banking is expected to increase in the future.
References: Media Reports, Press releases, Reserve Bank of India, Press Information Bureau, www.pmjdy.gov.in, IBEF.
Disclaimer: This information has been collected through secondary research and Infominer is not responsible for any errors in the same.
Financial Services
India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth of existing financial services firms and new entities entering the market. The sector comprises commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds, and other smaller financial entities. The banking regulator has allowed new entities such as payment banks to be created recently, thereby adding to the type of entities operating in the sector. However, the financial sector in India is predominantly a banking sector with commercial banks accounting for more than 64% of the total assets held by the financial system.
Road Ahead:
India is expected to be the fourth largest private wealth market globally by 2028. India is today one of the most vibrant global economies on the back of robust banking and insurance sectors. Credit, insurance, and investment penetration is rising in rural areas. Rising income is driving the demand for financial services across income brackets
References: Media Reports, Press Releases, IRDAI, General Insurance Council, Reserve Bank of India, IBEF
Disclaimer: This information has been collected through secondary research and Infominer is not responsible for any errors in the same.
Insurance
The insurance industry of India has 57 insurance companies 24 are in the life insurance business, while 34 are non-life insurers. Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company. There are six public sector insurers in the non-life insurance segment. In addition to these, there is a sole national re-insurer, namely the General Insurance Corporation of India (GIC Re).
The future looks promising for the life insurance industry with several changes in the regulatory framework which will lead to further change in the way the industry conducts its business and engages with its customers. The insurance industry in the country is expected to increase by 14-15% annually for the next three to five years.
Road Ahead
A growing middle-class, coupled with the rising burden of new diseases, are boosting the demand for health insurance coverage. The relaxation of foreign investment rules has received a positive response from the insurance sector, with many global companies announcing plans to increase their stakes in joint ventures with Indian companies. Over the coming quarters, there could be a series of joint venture deals between global insurance giants and local players.
The high penetration rate for digital platforms, with an average of 90% using digital platforms at least once a week.
Insurance Regulatory and Development Authority of India (IRDAI) allowed insurers to invest in debt securities of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs); this is expected to provide more investment options for the country’s emerging start-up ecosystem.
References: Media Reports, Press Releases, Press Information Bureau, Union Budget 2021-22, Insurance Regulatory and Development Authority of India (IRDA), Crisil, IBEF
Disclaimer: This information has been collected through secondary research and Infominer is not responsible for any errors in the same.