Indian Financial Services Industry Analysis

The country’s financial services sector consists of the capital markets, insurance sector and non-banking financial companies (NBFCs). India’s gross national savings (GDS) as a percentage of Gross Domestic Product (GDP) stood at 30 per cent in 2017. The total amount of Initial Public Offerings increased to Rs 84,357 crore (US$ 13,089 million) by the end of FY18. In FY19*, 37 IPOs were raised of US$ 1.2 billion. In FY17, individual wealth in India expanded to Rs 344 lakh crore (US$ 5,337.47 billion) from Rs 310 lakh crore (US$ 4,620.66 billion) in FY16.

The asset management industry in India is among the fastest growing in the world. In June 2018, corporate investors AUM stood at US$ 149.81 billion, while HNWIs and retail investors reached US$ 100.17 billion and US$ 82.32 billion, respectively. In the Asia-Pacific, India is among the top five countries in terms of HNWIs.

The Government of India has launched the 'Bharat 22' exchange traded fund (ETF), which will be managed by ICICI Prudential Mutual Fund, and is looking to raise Rs 8,000 crore (US$ 1.22 billion) initially.

The Securities and Exchange Board of India (SEBI) has allowed exchanges in India to operate in equity and commodity segments simultaneously, starting from October 2018.

During the month of August 2018, equity mutual funds have registered a record net inflow of Rs 46,208 crore (US$ 6.89 billion).Total equity funding's of microfinance sector grew at the rate of 39.88 to Rs 96.31 billion (Rs 4.49 billion) in 2017-18 from Rs 68.85 billion (US$ 1.03 billion) in 2016-17.^The public deposit of NBFCs increased from US$ 293.78 million in FY09 to Rs 409.15 billion (US$ 6,089.52 million) in FY17, registering a compound annual growth rate (CAGR) of 46.10 per cent.

In April 2018, the Government of India issued minimum FDI capital requirement of US$ 20 million for unregistered /exempt financial entities engaged in ‘fund based activities’ and threshold of US$ 2 million for unregistered financial entities engaged in ‘non-fund based activities’.

The Government of India has taken various steps to deepen the reforms in the capital markets, including simplification of the Initial Public Offer (IPO) process which allows qualified foreign investors (QFIs) to access the Indian bond markets.

Note: ^ - According to Microfinance Institution Network, * - April-June 2018