Last Updated: August 05, 2020
Last Updated: June, 2020
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, financial sector in India is predominantly a banking sector with commercial banks accounting for more than 64 per cent of the total assets held by the financial system.
The Government of India has introduced several reforms to liberalise, regulate and enhance this industry. The Government and Reserve Bank of India (RBI) have taken various measures to facilitate easy access to finance for Micro, Small and Medium Enterprises (MSMEs). These measures include launching Credit Guarantee Fund Scheme for MSMEs, issuing guideline to banks regarding collateral requirements and setting up a Micro Units Development and Refinance Agency (MUDRA). With a combined push by Government and private sector, India is undoubtedly one of the world's most vibrant capital markets. In 2017, a new portal named 'Udyami Mitra' was launched by Small Industries Development Bank of India (SIDBI) with an aim to improve credit availability to MSMEs in the country. India has scored a perfect 10 in protecting shareholders' rights on the back of reforms implemented by Securities and Exchange Board of India (SEBI).
Mutual Fund industry’s AUM grew from Rs 10.96 trillion (US$ 156.82 billion) in October 2014 to Rs 23.93 trillion (US$ 339.55 billion) in April 2020. Inflow in India's mutual fund schemes via the Systematic Investment Plan (SIP) route reached Rs 82,453 crore (US$ 11.70 billion) in 2019. Equity mutual funds registered a net inflow of Rs 8.04 trillion (US$ 114.06 billion) by end of December 2019.
Another crucial component of India’s financial industry is the insurance industry. Insurance industry has been expanding at a fast pace. The total first year premium of life insurance companies reached Rs 2.59 lakh crore (US$ 36.73 billion) in FY20.
Along with the secondary market, the market for Initial Public Offers (IPOs) has also witnessed rapid expansion. In 2019, US$ 2.5 billion was raised across 17 IPOs.
Furthermore, India’s leading bourse, Bombay Stock Exchange (BSE), will set up a joint venture with Ebix Inc to build a robust insurance distribution network in the country through a new distribution exchange platform.
Note: Conversion rate used in April 2020, Rs 1 = US$ 0.013123
References: Media Reports, Press Releases, IRDAI, General Insurance Council, Reserve Bank of India, Union Budget 2019-20
Notes - * - Private Equity Deal Tracker report by EY
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
Last Updated: August 05, 2020
On July 29, 2020, Union Cabinet approved the National Education Policy (NEP) 2020, which is the first education policy of the 21st century and has replaced the...
The world is going through an unprecedented crisis with COVID-19. Scientists are working aggressively to find vaccine for the disease. In the meantime, the solution is to...
India was manufacturing nearly zero PPE kits until January 2020. It was manufacturing only medical gowns, which was just one of the components of the kit, whereas, no PPE...
At a time when the world is suffering from a deadly pandemic, India plans to convert this crisis into an opportunity and strengthen its fight by becoming Aatmanirbhar or ...
Smartphones market in India have witnessed a phenomenal growth in the past few years. India overtook the United States (US) to become the second-largest smartphone market...
The technology sector in India has witnessed its largest foreign direct investment (FDI) as Facebook announced its investment in Jio Platforms, a unit of Reliance Industr...