FINANCIAL SERVICES

For updated information, please visit www.ibef.org May 2018

Table of Content

Executive Summary………………….……3

Advantage India…………………….……. 4

Market Overview ……………………..…...6

Recent Trends and Strategies....……….17

Growth Drivers and Opportunities……….20

Case studies…..………….…………….....30

Key Industry Organizations...…….....….. 33

Useful Information……….……….......….. 35
 EXECUTIVE SUMMARY

Gross national savings

above 30 per cent of  In 2017, India’s Gross National Savings (GNS), as a percentage of GDP, stood at 30.0 per cent.
GDP

India’s HNWI population  The number of HNWI increased to 330,400 in 2017 and the population of HNWIs is expected to double by
to double by 2020 2020.

 For the year 2017-18, the assets under management of the mutual fund industry stood at Rs 23.26 lakh crore
(US$ 360.90 billion).

Robust AUM growth  Mutual fund industry AUM recorded a CAGR (in Rs) of 15.51 per cent over FY07–18. India is considered one
of the preferred investment destinations globally. The Association of Mutual Funds in India (AMFI) is
targeting nearly five fold growth in assets under management (AUM) to INR 95 lakh crore (US$ 1.47 trillion)
and a more than three times growth in investor accounts to 130 million by 2025.

 A total of 153 initial public offers (IPOs) were issued in the Indian stock markets in 2017, which raised a total
Fundraising via IPOs on of US$ 11.6 billion.^
the rise  The total amount of Initial Public Offerings increased to Rs 84,357 crore (US$ 13,089 million) by the end of
FY18.

Note: HNWI – High Net Worth Individual, NBFC – Non-Banking Financial Company, AUM – Assets Under Management
Source: IMF, ICRA, Economic Times, Capgemini Wealth Report, Aranca Research, ^ - as per a report by EY

3 Financial Services For updated information, please visit www.ibef.org

 Financial Services

ADVANTAGE INDIA
 ADVANTAGE INDIA

 Rising incomes are driving the demand for  India benefits from a large cross-utilisation of
financial services across income brackets channels to expand reach of financial services

 Financial inclusion drive from RBI has  Maharashtra has launched its mobile wallet
expanded the target market to semi-urban and facility allowing transferring of funds from other
rural areas mobile wallets. Maharashtra is the first state to
launch it.
 Investment corpus in Indian insurance sector
can rise to US$ 1 trillion by 2025  Airtel recently got the payments bank license
from the RBI and is starting its pilot services
across 12000 outlets in Karnataka in
supplement to Andhra Pradesh and Telangana

ADVANTAGE
INDIA
 Government has approved new banking
 Credit, insurance and investment penetration is
licenses and increased the FDI limit in the
rising in rural areas
insurance sector
 HNWI participation is growing in the wealth
management segment  Gold Monetization Scheme, 2015, Atal
 Lower mutual fund penetration of 5–6 per cent Pension Scheme, Pradhan Mantri Suraksha
reflects latent growth opportunities Bima Yojana, Pradhan Mantri Jeevan Jyoti
 In January 2017, Central Government Bima Yojana
inaugurated the INX (International stock
exchange), subsidiary of BSE Ltd., in the
International Finance Services Centre, Gujarat.

Note: HNWI – High Net Worth Individual, NBFC – Non-Banking Financial Company, F – Forecast, NRFIP – National Rural Financial Inclusion Plan
Source: IMF, World Bank, KPMG report “Indian Mutual Fund Industry”, Ministry of External Affairs

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 Financial Services

MARKET
OVERVIEW
 SEGMENTS OF THE FINANCIAL SERVICES SECTOR

Financial services

Capital markets Insurance NBFCs

Asset Management Life Asset finance company

Broking Non-life Investment company

Wealth Management Loan company

Investment
Banking

Note: NBFC - Non Banking Financial Company

Source: Aranca Research

7 Financial Services For updated information, please visit www.ibef.org

 ASSETS UNDER MANAGEMENT HAVE MORE THAN
DOUBLED SINCE FY08

 The asset management industry in India is among the fastest Mutual fund
Visakhapatnam
assets under port
management*
traffic (million
(AUM)tonnes)
(in US$ billion)
growing in the world. As of November 2017, 42 asset management
companies were operating in the country
400.00
CAGR (in Rs): 15.51%
 As of April 2018, the assets under management of the mutual fund
industry stood at Rs 23.26 lakh crore (US$ 360.90 billion).
350.00

360.9
 Inflows in India's mutual fund schemes via the systematic investment

331.4
plan (SIP) route reached Rs 536 billion (US$ 8.34 billion) between
April-January 2018. 300.00

 Equity mutual funds have registered a net inflow of Rs 6,230 crore

272.6
(US$ 966.63 million), thereby taking their asset base to Rs 6.58 lakh 250.00

252.1
crore (US$ 102.09 billion) in April 2018.

 The number of mutual fund (MF) portfolios have increased to 66.5 200.00
million as of December 2017, backed by rising interest in MFs

179.6
among investors.
150.00

136.9
129.8
129.5

129.2
125.4

125.3
100.00

90.4
50.00

0.00
FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19*
Note: AUM – Assets Under Management, * - as on April 2018* - Exchange rate used is average of 2017-18 i.e. 64.45
Source: AMFI, Aranca Research

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 CORPORATE INVESTORS ARE BY FAR THE LARGEST
INVESTOR IN MUTUAL FUNDS CATEGORY

 In March 2018, corporate investors accounted for around 43.44 per Investor breakup (as of March 2018)
cent of total AUM in India, while HNWIs and retail investors
accounted for 30.09 per cent and 24.79 per cent, respectively.

 As of November 2017, India stood at fourth position with it’s 0.63%

1.06%
contribution of 4 per cent in terms of individual market share in HNWI
population growth in APAC (Asia Pacific) region

 Category 3 Alternative Investment Funds (AIFs) in India, which are

hedge funds investing in public markets, have raised Rs 8,521 crore
(US$ 1.3 billion) during the first nine months of 2017.
24.79%

43.44%
Leading AMCs in India (as of March 2018)

Top 5 AMCs in India AUM (US$ billion)

ICICI Prudential Asset Management Co. Ltd 47.48

HDFC Asset Management Co. Ltd 46.70 30.09%

Reliance Nippon Life Asset Management Ltd 38.01

Birla Sun Life Asset Management Co. Ltd 38.48

SBI Funds Management Private Limited 33.82 Corporates HNWI Retail Banks/FI FII

UTI Asset Management Company Ltd 24.05

Note: HNWI - High Net Worth Individuals, AMC - Asset Management Company
Source: AMFI, Aranca Research, Money Control

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 BROKING: EQUITY MARKET TURNOVER INCREASED
SIGNIFICANTLY IN RECENT YEARS

 Indian stocks markets, S&P Sensex and Nifty 50, rose 27.9 per cent and 28.6 per cent respectively in CY 2017, thereby yielding the best returns
since 2014.

 The number of companies listed on the NSE rose from 135 in 1995 to 1,890 by the end of April 2018.

 India has scored a perfect 10 in protecting shareholders' rights on the back of reforms implemented by Securities and Exchange Board of India
(SEBI).^

Listed companies on major stock exchanges in Asia-Pacific countries

(as on April 2018)
2,500

2,000 2,251 2,186 2,193

1,890
1,500
1,466
1,000

500

0
Australian SE Hong Kong SE Korea SE Shanghai SE NSE India

Note: CAGR – Compounded Annual Growth Rate; NSE – National Stock Exchange, ^ - as per World Bank's Ease of Doing Business 2018 report, CY – calendar year
Source: National Stock Exchange, SEBI,

10 Financial Services For updated information, please visit www.ibef.org

 VIBRANT CAPITAL MARKET EVIDENT THROUGH
LARGE NUMBER OF LISTINGS

 The number of listed companies on NSE and BSE were 7,501 in Companies listed on NSE and BSE
March 2018.
9,000
 The revenues of the brokerage industry in India are estimated to 8,000
grow by 15-20 per cent to reach Rs 18,000-19,000 crore (US$ 2.80- 7,000

7,719

7651

7501
7,357
7,024
6,877
2.96 billion) in FY 2017-18, backed by healthy volumes and a rise in 6,000

6,779
6,641
6,445
6,361
6,268
6,049
5,850
the share of the cash segment.^ 5,000
4,000
 The total amount raised by 14 companies through Initial Public Offers 3,000
2,000

1890
increased to Rs 18,591 crore (US$ 2.88 billion) first three months of
1,000
2018 due to introduction of long term capital gains tax, as per the
0
data from Prime Database.

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19*
 The total amount of initial public offerings increased to Rs 84,357
crore (US$ 13,089 million) by the end of 2017-18.

 During 2017-18, 155 SME IPOs raised Rs. 2,247 crore (US$ 348.64 Amount raised by IPOs (US$ million)
million)
14,000
12,000

13,089
10,000

5,173
8,000

4,535
3,899
6,000

2,315
1,015
921
4,000

318

188

472
2,000
0 2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18
Note: FII – Foreign Institutional Investors, NSE – National Stock Exchange,
BSE – Bombay Stock Exchange, ^ - as per a study by rating agency ICRZ, * - from 1st - 30 April 2018 only NSE data
Source: SEBI, ^ - as per a report by EY

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 WEALTH MANAGEMENT: AN EMERGING SEGMENT

 The number of HNWIs in India reached 3,30,400 by the end of 2017. Visakhapatnam
Numberport
of HNWIs
traffic in
(million
India tonnes)
Between 2011 and 2017, number of HNWIs in India has seen a
steady rise at a CAGR of 18.67 per cent. By the end of 2025, global
350,000
HNWI wealth is estimated to grow to over US$ 100 trillion.

330,400
High net worth households would grow at an even faster rate till
2019 growing at a CAGR of about 21.5 per cent 300,000

 Advisory asset management and tax planning has one of the highest
demand among wealth management services by HNWIs; this is 250,000
followed by financial planning

219,000
200,000

200,000
198,000
150,000

156,000
153,000

153,000
125,000
120,000
100,000

84,000
50,000

-
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Note: HNWI – High Net Worth Individuals

Source: World Wealth Report, Capgemini

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 THE LIFE INSURANCE SEGMENT HAS GROWN
SIGNIFICANTLY IN RECENT YEARS

 The life insurance market in FY 17 valued at US$ 64.64 billion. Life insurance segment (US$ billion)
 Over FY02–17, life insurance premiums witnessed growth at a
70 CAGR 13.25%
CAGR of 13.25 per cent.
60

46
45
42
 Business of life insurance companies from first year premium stood 50

41
39
38
39
37
34
at Rs 1,64,694.92 crore (US$ 25.44 billion) for the period ended 40

29
February 28th 2018. 30

28
20

21
FY05 2 17

19
FY04 1 14

18
18
17
10

16
15
11

13
FY09 14

FY13 14
0 10

FY08 13
FY07 6
FY06 3
0

FY02
FY03

FY10
FY11
FY12

FY14
FY15
FY16
FY17
0
Private Public

Major private players in the life insurance segment (as of FY18)

Name Total premiums (US$ billion)

ICICI Prudential 1.41

HDFC Standard 1.76

SBI Life 1.70

Bajaj Allianz 0.67

Max Life 0.67

Note: YoY – Year on Year
Source: IRDA, Swiss Re

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 NON-LIFE INSURANCE SEGMENT HAS BEEN RISING

 Non-Life insurance premiums were Rs 1.09 lakh crore (US$ 16.91 Visakhapatnam
Non-life insurance
portpremiums
traffic (million
(US$ tonnes)
billion)
billion) during April-December 2017.

 The non-life insurance market grew from US$ 2.6 billion in FY02 to 25.0 CAGR 14.46 %
US$ 19.71 billion in FY17.

 During FY02–17, increase in non-life insurance premiums witnessed

at a CAGR of 14.46 per cent while premiums generated by private 20.0

10.5
players surged at a CAGR of 35.2 per cent and premiums from
public sector companies increased at a CAGR of 10.05 per cent
during the same period. 15.0

7.6
7.7
7.3
7.2
6.8
6.7
10.0

5.8

9.2
4.6

7.4
4.4
4.2

6.3
6.1
5.0

5.7
3.8

5.1
3.6

4.7
FY05 0.8 3.3

3.8
FY04 0.5 3.1
FY03 0.32.8

2.9
2.7
2.7
2.5

FY07 1.9
FY02 0.1

FY061.2
-

FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18*
Private Public

Note: YoY – Year on Year, * - from April 2017-December 2017, CAGR till FY 2017
Source: IRDA, General Insurance Council

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 NBFC: GROWING IN PROMINENCE

 NBFCs are rapidly gaining prominence as intermediaries in the retail Visakhapatnam

NBFC Publicport
Deposit
traffic
(in (million
US$ million)
tonnes)
finance space

 NBFCs finance more than 80 per cent of equipment leasing and hire 7,000
purchase activities in India

 The public deposit of NBFCs increased from US$ 293.78 million in 6,000

6,098.52
FY09 to US$ 6,089.52 million in FY17, registering a compound

5,651.21
annual growth rate (CAGR) of 46.10 per cent.
5,000
 The gross loans of India’s Non- Banking Finance Company-
Microfinance Institutions (NBFC-MFIs) increased 24 per cent year-

4,313.76
4,000
on-year in Q2 FY18 to Rs 38,288 crore (US$ 5.89 billion). ^

 NBFC’s market share in commercial loans increased to 2.8 per cent

3,000
in 2016-17 from 2 per cent in 2015-16*.

1,056.04
2,000

854.82
610.82

1,610.97
421.97
293.78
1,000

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17 P
Note: NBFC - Non Banking Financial Company,; P-Provisional, ^ - according to Microfinance Institutions Network (MFIN), * - as per latest data available.
Source: RBI

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 Porter’s Five Force Framework Analysis

Threat of Substitutes

 Low – Less number of substitutes

available for financial products

Bargaining Power of Suppliers Competitive Rivalry Bargaining Power of Buyers

 Low– Low bargaining power of
suppliers as the industry is highly
regulated by RBI
 High – Competitive rivalry between
big players is intense in the industry
 Financial services companies often
compete on the basis of offering lower
financing rates, higher deposit rates
and investment services
 Moderate – Although customers do
not have much bargaining power, they
can easily switch to another company
based on the terms and quality of
services provided

Threat of New Entrants

 Low – Stringent regulatory norms

prevent new entrants
Positive Impact
 Customers prefer to invest their
Neutral Impact money with a reputed financial
services company offering a wide
Negative Impact
range of services

Source: Aranca Research, Media Sources

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 Financial Services

RECENT TRENDS
AND STRATEGIES
 RECENT TRENDS

 New distribution channels such as bancassurance, online distribution and NBFCs have widened the reach and
reduced operational costs
 The life insurance sector has witnessed the launch of innovative products such as Unit Linked Insurance Plans
(ULIPs)
Insurance Sector
 Most general insurance public companies are planning to expand beyond Indian markets, especially in South-
East Asia and the Middle East
 Government announced to divest US$ 1.63 billion worth of stake in PSU general insurance companies to execute
the steep disinvestment target of US$ 10.78 billion, next fiscal year.

 As the Reserve Bank of India (RBI) allows more features such as unlimited fund transfers between wallets and
bank accounts, mobile wallets will become strong players in the financial ecosystem,
Mobile Wallets
 India's mobile wallet industry is estimated to grow at a compound annual growth rate (CAGR) of 148 per cent to
reach US$ 4.4 billion by 2022. ^

 Indian companies are strengthening their footprint on foreign shores, enhancing geographical exposure. Digital
transactions reached an all-time high of 1.11 billion in January 2018. India's digital payments are estimated
Digital Transactions
to increase to US$ 1 trillion by 2023, backed by global technology majors boosting infrastructure as aggregators
for retail payments. *

 NBFCs have served the unbanked customers by pioneering into retail asset-backed lending, lending against
securities and microfinance. NBFCs aspire to emerge as a one-stop shop for all financial services
 The sector has witnessed moderate consolidation activities in recent years, a trend expected to continue in the
near future
NBFCs
 New banking licence-related guidelines issued by RBI in early 2013 place NBFCs ahead in competition for
licenses owing largely to their rural network
 New RBI guidelines on NBFCs with regard to capital requirements, provisioning norms and enhanced disclosure
requirements are expected to benefit the sector in the long run
Note: ^ - according to the 'World Payment Report 2017' by Capgemini, * - according to Credit Suisse.
Source: Aranca Research

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 Financial Services

GROWTH
DRIVER AND
OPPORTUNITIES
 GROSS NATIONAL SAVINGS TO CONTINUE GROWING
AT A HEALTHY PACE

 Gross National Savings as percentage of GDP was 30.00 per cent in Visakhapatnam
Gross national savings
port traffic
as per
(million
cent tonnes)
of GDP
2017.

 India’s HNWIs wealth is likely to expand at a CAGR of 19.7 per cent 34.00
and reach around US$ 3 trillion by 2020

 As per the Union Budget 2018-19, the recapitalisation of public 33.00

sector banks is expected to allow banks to lend additional Rs 5 lakh 33.00

crore (US$ 77.23 billion). 32.00

31.60 31.60
31.00
31.00
30.60
30.00
30.00

29.00
28.90

28.00

27.00

26.00
2011 2012 2013 2014 2015 2016 2017

Note: F – Forecast, Deloitte Center for Financial Services

Source: IMF, Reserve Bank of India,

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 CONTINUED GROWTH IN EQUITIES AND INNOVATIVE
PRODUCTS
 The Indian equity market is expanding in terms of listed companies
and market cap, widening the playing field for brokerage firms.
Number of listed companies - NSE
Sophisticated products segment is growing rapidly, reflected in the
steep rise in growth of derivatives trading
2,000
 With the increasing retail penetration there is immense potential to 1,800

1,890
1,872
1,817
1,808
tap the untapped market. Growing financial awareness is expected to 1,600

1,736
1,688
1,666
1,646
1,400

1,574
increase the fraction of population participating in this market

1,470
1,432
1,200

1,381
 Total wealth held by individuals in unlisted equities is projected to

1,228
1,000

1,069
grow at a CAGR of 19.54 per cent to reach Rs 17.64 lakh crore (US$ 800
273.69 billion) by FY22.^ 600
400
 Private equity (PE) investments in India increased 59 per cent to 200
US$ 24.4 billion in 2017, with average deal size of US$ 42.8 0

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19*
million.@
 Private equity and venture capital firms recorded investments worth
US$ 7.9 billion with 180 deals during January- March 2018.
 The total number of companies listed on National Stock Exchange
Turnover for derivatives segment (US$ billion)
end of April 2018 was 1,890.
 Turnover for derivatives segment for 2017-18 was Rs 1,649.85 lakh

25,599
crore (US$ 25,599 billion). 30,000
25,000

14,750
20,000

10,254
9,225
15,000

6,539
6,418

6,339
5,806
10,000
5,000
0
FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18
Note: * - As of April 2018, ^ - as per Karvy India Wealth Report 2017, @ - according to data provided by Venture Intelligence
Source: National Stock Exchange

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 WEALTH MANAGEMENT TO RIDE THE WAVE OF
RISING LIQUID ASSETS

The HNWI population in India is estimated to

The fraction of management services is
double by 2020 adding to the addressable
growing, with a current estimated level of 20
market of wealth management.
per cent HNWIs who use wealth

Wealth
Management

Remittances from Non-resident Indians

With a fast rising economy, the investable
(NRIs) and People of Indian Origin (PIOs)
wealth of HNWI segment is rising, creating a
estimated at US$ 69 billion in 2017
need for wealth services.

Source: World Bank – Migration and Development Brief

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 STRATEGIES ADOPTED

 In May 2017, financial services company JM Financial Ltd. voiced plans to extend its real estate lending business
and set up an affordable housing finance unit - JM Financial Home Loans Ltd. The company has received
approval for the new unit from National Housing Bank (NHB) in November 2017.

 In insurance industry, several new and existing players have introduced innovative insurance-based products,
Innovation value add-ons and services. Few foreign companies have also entered the domain, including Tokio Marine, Aviva,
Allianz, Lombard General, AMP, New York Life, Standard Life AIG and Sun Life.

 HDFC Capital Advisors Ltd has raised US$ 550 million for its second affordable housing fund, HDFC Capital
Affordable Real Estate Fund-2 (H-CARE-2), which will invest in affordable and mid-income and residential
projects in 15 cities across India.

 In 2017, 101 deals of Merger and Acquisition took place in various industries* of Financial Sector. The total value
Mergers and of such transactions was US$ 4,608 million
Acquisition  Ebix Inc, which entered India in May 2017 with its acquisition of ItzCash in May 2017, is planning to invest
additional US$ 200 million for acquisitions in newer segments in India.

 The explosion of mobile phones, uptake of technologies such as cloud computing and rising pace of convergence
Stepped up IT
and interconnectivity have led companies in the financial services industry to ramp up investment in Information
expenditure
Technology (IT) to better serve their end-customers

 Indian companies are strengthening their footprint on foreign shores, enhancing geographical exposure.
Expanding
 KrazyBee, one of India's largest micro-lending platforms that focuses on financing students' education, has
geographical presence
planned expansion of its business in 11 more cities across India in FY2017-18.
Note: * – Includes industries – Assets Management, Capital Markets, Diversified Financial Services, Insurance, Investment Companies, NBFC, Online Financial Services, Payment
Solutions.
Source: Ministry of External Affairs, RBI, EY Annual Report 2018

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 INSURANCE TO BENEFIT FROM WIDENING REACH
ACROSS SEGMENTS

 Passenger car sales in the country grew at

a YoY of 3.33 per cent in FY18, in
 Targeted at rural segment, potentially comparison with previous year
addressing two-thirds of Indian population  Increasing number of insurance registered
policy incentives are driving growth for passenger cars and for construction
activities will rise with India’s infrastructure
growth plans

Insurance

 Demand for agricultural and livestock

 Only 1 per cent population covered
insurance growing on the back of rising
currently, suggesting that the vast market
awareness among rural population
is yet to be tapped. Health insurance
accounts for 1.2 per cent of total
healthcare spend

Note: F – Forecasts, E –Estimated, Deloitte Center for Financial Services

Source: YoY – Year on Year

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 HUGE UNTAPPED POTENTIAL AT THE ‘BOTTOM OF
THE PYRAMID’ …

 Two-thirds of India’s population lives in rural areas where financial services have made few inroads so far. Rural India, however, has seen steady
rise in incomes creating an increasingly significant market for financial services.

 There are several standalone networks of SHG, NGO’s and MFI’s in different parts of rural India. Cross-utilisation of these channels can facilitate
faster penetration of a wider suite of financial services in rural India.

 Increasing use of technology to reach rural India is the paradigm-shifting enabler. Internet kiosk based channels are expected to become the
bridge that connects rural India to financial services.

 Rural credit segment is a large market, which can be tapped by ensuring timely loans which are critical to
Credit agricultural sector.

 Self Help Groups and NGOs are useful vehicles to make inroads into rural India.

 Safe investment options have a potential to tap into rural household savings.
Investments  Some private players are coming up with innovative products like 3rd party money market mutual funds to
cater to rural investment needs.

 Agricultural, livestock and weather insurance are potentially large markets in rural India.

Insurance  Harnessing existing networks of MFIs, NGOs can speed up the process.

 Market size to reach US$ 350-400 billion by 2020.

Note: MFI – Micro Finance Institutions; NGO – Non Governmental Organisation; SHG – Self Help Groups
Source: Aranca Research

25 Financial Services For updated information, please visit www.ibef.org

 ... AS WELL AS AT THE OTHER END OF THE
SPECTRUM

 India is one of the fastest growing wealth management markets in the world.

 The HNWI population in India is young and therefore more receptive towards sophisticated financial products.

 India has over 3,30,400 individuals with net worth of more than US$ 1 million with assets close to US$ 8,230 billion in 2017.

 The regulatory environment for fiduciary duties in wealth management is evolving; players will benefit greatly
Investor protection
from quickly adopting new investor protection measures

 Brand building coupled with partnership based model will improve the advisory penetration. Greater focus on
Brand building
transparency will speed up the process

 Investment in required technologies, imbibing state-of-the-art best practices of advisory and creating
Innovation
customised and innovative products will enable growth

Source: Aranca Research

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 HNWI POPULATION TO DOUBLE BY 2020

 HNWI population in India is expected to expand rapidly over the next seven years

 Total wealth holdings by HNWI in India is estimated to be US$ 1.5 trillion and is expected to reach US$ 3 trillion by 2020

 In Asia-Pacific, India is among the top 5 countries in terms of HNWIs

High-net-worth population and wealth in India

Year Population Wealth (US$ billion)

2010 153,000 582

2011 126,000 477

2012 153,000 589

2013 156,000 612

2014 198,000 785

2015 200,000 797

2016 219,000 877

2017 330,400 8,230

Source: Deloitte Center for Financial Services, Capgemini Asia Pacific Wealth Report 2017

27 Financial Services For updated information, please visit www.ibef.org

 FAVOURABLE POLICY MEASURES AND
GOVERNMENT INITIATIVES…(1/2)

 Under the Union Budget 2018-19, the government has allocated Rs 3 trillion (US$ 46.34 billion) towards the
Mudra (Micro-Units Development & Refinance Agency Ltd) Scheme.
Budgetary Measures
 As per the Union Budget 2018-19, the recapitalisation of PSBs is expected to allow banks to lend additional Rs 5
lakh crore (US$ 77.23 billion).

 The Goods and Services Tax (GST) on financial services transactions like banking transactions, mutual funds,
Goods and Services insurance and stock market has been increased from the current 15 per cent to 18 per cent.
Tax (GST)  The Government of India is planning to introduce a two percentage point discount in the Goods and Services Tax
(GST) on business-to-consumer (B2C) transactions made via digital payments.

FDI requirement for

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

Note: QFI – Qualified Foreign Investors

Source: Dun and Bradstreet., Media articles

28 Financial Services For updated information, please visit www.ibef.org

 FAVOURABLE POLICY MEASURES AND
GOVERNMENT INITIATIVES…(2/2)

 Insurance products are covered under the EEE (exempt, exempt, exempt) method of taxation. This translates to
an effective tax benefit of approximately 30 per cent on select investments (including life insurance premiums)
every financial year
 Reduction in securities transaction tax from 0.125 per cent to 0.1 per cent on cash delivery transactions and from
Tax incentives
0.017 per cent to 0.1 per cent on equity futures
 Indian tax authorities plan to sign a bilateral advance pricing agreement with a number of companies in Japan.
The agreement is aimed at avoiding conflicts with multinational companies over sharing of taxes between India
and the countries where these firms are based

 SBI and FTSE Russell, the arm of the London Stock Exchange, announced plans to jointly develop a Bond Index
for global investors to benchmark Indian bond market, against that of its competitors

 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.
Other initiatives  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.

 SEBI has decided to allow strategic investors such as registered Non-Banking Financial Companies (NBFCs) and
international multilateral financial institutions to invest upto 25 per cent of the total offer size of Real Estate
Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

Source: Media articles

29 Financial Services For updated information, please visit www.ibef.org

 Financial Services

CASE STUDIES
 SHRIRAM TRANSPORT FINANCE CO LTD

 Shriram Transport Finance Co Ltd is India’s largest player in Visakhapatnam

Net profit
port(US$
traffic
million)
(million tonnes)
commercial vehicle finance, with a niche presence in financing pre-
owned and small truck owners
300.0
 Services – Truck financing, passenger vehicle financing, farm
equipment financing, construction vehicle and equipment financing
250.0
 Features – Number of customers covered: 1.1 million

243.3
 AUM: US$ 11.12 million
200.0

211.1
 Number of branches: 853

196.2
195.1

195.1
192.1
190.8

182.8
150.0

135.5
100.0

95.0
50.0

0.0

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18
Note: Conversion rate: US$ = Rs. 64.45
Source: Company website

31 Financial Services For updated information, please visit www.ibef.org

 MUTHOOT FINANCE LTD

 Muthoot Finance Ltd. is the largest gold financing company in India Visakhapatnam
Net profit
port(US$
traffic
million)
(million tonnes)
in terms of loan portfolio. The company provides personal and
business loans secured by gold jewellery
300.00
 Divisions – Financing, Power Generation and FM Radio

 Features – Number of branches1: 4,200+

266.92
250.00
 Gold loans under management1: US$ 3.8 billion

 Number of employees1: 23,070

200.00

183.06

150.00

121.03 125.61
100.00
104.04

50.00

0.00
FY 14 FY 15 FY 16 FY 17 FY 18

Note: Conversion rate: US$ = Rs. 64.45

Source: Company website

32 Financial Services For updated information, please visit www.ibef.org

 Financial Services

KEY INDUSTRY
ORGANISATIONS
 INDUSTRY ORGANISATIONS

Insurance Brokers Association of India (IBAI) Association of Mutual Funds in India (AMFI)

Maker Bhavan No 1, 4th Floor, One Indiabulls Centre,

Sir V T Marg, Mumbai – 400 020 Tower 2, Wing B, 701,
India 841 Senapati Bapat Marg,
Phone: 91 11 22846544 Elphinstone Road, Mumbai – 400 013
E-mail: ibai@ibai.org India
Phone: 91 11 24210093 / 24210383
Fax: 91 11 43346712
E-mail: contact@amfiindia.com

Finance Industry Development Council (FIDC)

222, Ashoka Shopping Centre,

II Floor, L T Road, Near G T Hospital
Mumbai – 400 001
India
Phone: 91 11 2267 5500
Fax: 91 11 2267 5600
E-mail: info@fidcindia.com

34 Financial Services For updated information, please visit www.ibef.org

 Financial Services

USEFUL
INFORMATION
 GLOSSARY

 AUM: Assets Under Management

 BSE: Bombay Stock Exchange

 CAGR: Compound Annual Growth Rate

 FII’s: Foreign Institutional Investors

 GDP: Gross Domestic Product

 HCV: Heavy Commercial Vehicle

 HNWIs: High-Net-Worth Individuals

 IRDA: Insurance Regulatory and Development Authority

 LIC: Life Insurance Corporation

 NBFCs: Non Banking Financial Company

 NSE: National Stock Exchange

 RBI: Reserve Bank of India

 SEBI: Securities and Exchange Board of India

 US$ : US Dollar

36 Financial Services For updated information, please visit www.ibef.org

 EXCHANGE RATES

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year INR INR Equivalent of one US$ Year INR Equivalent of one US$

2004–05 44.95 2005 44.11

2005–06 44.28 2006 45.33

2006–07 45.29 2007 41.29
2007–08 40.24
2008 43.42
2008–09 45.91
2009 48.35
2009–10 47.42
2010 45.74
2010–11 45.58
2011 46.67
2011–12 47.95
2012 53.49
2012–13 54.45
2013 58.63
2013–14 60.50
2014 61.03
2014-15 61.15

2015-16 65.46 2015 64.15

2016-17 67.09 2016 67.21

2017-18 64.45 2017 65.12

Source: Reserve bank of India, Average for the year

37 Financial Services For updated information, please visit www.ibef.org

 DISCLAIMER

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38 Financial Services For updated information, please visit www.ibef.org