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Financial Services in India

July, 2013

Financial Services in India- Brief Overview

The Indian financial services sector is one of the most complex, yet one of the most robust service segments of the Indian economy. Spanning from insurance to capital markets, banking to foreign direct investments (FDI) and from mutual funds to private equity (PE) investments, the financial services sector covers all related segments under its umbrella. Having major effects in its abstract as well as physical form post liberalisation, the financial services segment is undoubtedly the mainstay of Indian economy.

Today it is at par with the international financial frameworks and promises to surpass them in terms of performance in the years to come. This is very much evident from the fact that Indian financial services industry was amongst the least affected during the crisis the world faced in 2010-11.

Major developments pertaining to the sub-segments of Indian financial services industry are discussed hereafter.

Insurance Sector

  • Indian life insurance sector collected new business premiums worth Rs 11,742.7 crore (US$ 1.96 billion) for April-May 2013, according to data from the Insurance Regulatory and Development Authority (IRDA). Life insurers collected Rs 1, 07, 010.7 crore (US$ 17.84 billion) worth of new premiums for the financial year ended March 31, 2013
  • Meanwhile, the general insurance industry grew by 19.6 per cent in April-May period of FY14, wherein the non-life insurers collected premium worth Rs 13,552.46 crore (US$ 2.26 billion)

Banking Services

  • According to the Reserve Bank of India (RBI)’s ‘Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks’, September 2012, Nationalised Banks accounted for 52.0 per cent of the aggregate deposits, while the State Bank of India (SBI) and its Associates accounted for 22.3 per cent. The share of New Private Sector Banks, Old Private Sector Banks, Foreign Banks, and Regional Rural Banks in aggregate deposits was 13.6 per cent, 4.8 per cent, 4.3 per cent and 2.9 per cent, respectively

    Nationalised Banks accounted for the highest share of 50.9 per cent in gross bank credit followed by State Bank of India and its Associates (22.1 per cent) and New Private Sector Banks (14.7 per cent). Foreign Banks, Old Private Sector Banks and Regional Rural Banks had shares of around 4.9 per cent, 4.9 per cent and 2.6 per cent, respectively
  • India's foreign exchange (forex) reserves stood at US$ 280.167 billion for the week ended July 5, 2013, according to data released by the central bank. The value of foreign currency assets (FCA) - the biggest component of the forex reserves – stood at US$ 252.103 billion, according to the weekly statistical supplement released by the RBI

Mutual Funds Industry in India

India’s asset management companies (AMCs) have witnessed growth for the fifth consecutive quarter wherein their average assets under management (AUM) during April-June 2013 increased by 3.68 per cent. The AUM’s value touched a new high of Rs 8.47 lakh crore (US$ 141.17 billion), according to the latest statistics available from industry body Association of Mutual Funds in India (AMFI).