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Indian Financial Services Industry Analysis

April, 2014

India’s gross domestic savings (GDS) as a percentage of gross domestic product (GDP) has mostly remained above 30 per cent since 2004. The Reserve Bank of India (RBI) estimates domestic savings to reach 39 per cent of the GDP at the end of 12th Five Year Plan (FY 13–17).

The asset management industry in India is among the fastest-growing in the world. Total asset under management (AUM) of the mutual fund industry clocked a compound annual growth rate (CAGR) of 16.8 per cent over FY 07–13 to reach US$ 150 billion. Non-Banking Financial Company (NBFC) managed credit grew at a CAGR of 35 per cent over FY 07–12.

Retail credit registered a growth of 36 per cent in FY 12. Rising incomes are driving the demand for financial services across income brackets. Product innovation is leading to healthy growth in insurance and NBFCs. India benefits from a large cross-utilisation of channels to expand the reach of financial services. The financial inclusion drive from the RBI has expanded the target market to semi-urban and rural areas.

The Government of India has taken various steps for deepening the reforms in the capital markets, including simplification of initial public offering (IPO) process and allowing qualified foreign investors (QFIs) to access the Indian bond markets. The government has also proposed simplification of procedures and prescribing uniform registration and other norms for the entry for foreign portfolio investors.

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