FINANCIAL SERVICES - ibef.org Financial Services For updated information, ... ICRA, Economic Times, Capgemini Wealth Report, Aranca Research, ^ ... 28.6 per cent and 22.3 per cent,

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

FINANCIAL SERVICES

Table of Content

Executive Summary………………….……3

Advantage India…………………….……. 4

Market Overview ……………………..…...6

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

Case studies…..………….…………….....30

Growth Drivers and Opportunities……….20

Key Industry Organisations...…….....….. 33

Useful Information……….……….......….. 35

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

EXECUTIVE SUMMARY

Source: IMF, ICRA, Economic Times, Capgemini Wealth Report, Aranca Research, ^ - as per a report by EY

In 2016, India’s Gross National Savings (GNS), as a percentage of GDP, stood at 28.9 per cent, as against

the GNS of developed nations like the UK (15.1 per cent) and that of emerging nations like Brazil (15.8 per

cent) and Russia (28.6 per cent).

Gross national savings

above 30 per cent of

GDP

India has 219,000 high net worth individuals having net wealth of US$ 877 billion as of 2016, and the

population of HNWIs is expected to double by 2020.

India’s HNWI population

to double by 2020

Mutual fund industry AUM recorded a CAGR of 15.25 per cent over FY07–17. 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.

Robust AUM growth

A total of 153 initial public offers (IPOs) were issued in the Indian stock markets in 2017, which raised a total of

US$ 11.6 billion.^

Fundraising via IPOs on

the rise

Note: HNWI – High Net Worth Individual, NBFC – Non-Banking Financial Company, AUM – Assets Under Management

Financial Services

ADVANTAGE INDIA


ADVANTAGE INDIA

Rising incomes are driving the demand for

financial services across income brackets

Financial inclusion drive from RBI has

expanded the target market to semi-urban and

rural areas

Investment corpus in Indian insurance sector

can rise to US$ 1 trillion by 2025

India benefits from a large cross-utilisation of

channels to expand reach of financial services

Maharashtra will be the 1st state, to launch its

mobile wallet facility allowing transferring of

funds from other mobile wallets.

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

Credit, insurance and investment penetration is

rising in rural areas

HNWI participation is growing in the wealth

management segment

Lower mutual fund penetration of 5–6 per cent

reflects latent growth opportunities

In January 2017, Central Government

inaugurated the INX (International stock

exchange), subsidiary of BSE Ltd., in the

International Finance Services Centre, Gujarat.

Government has approved new banking

licenses and increased the FDI limit in the

insurance sector

Gold Monetization Scheme,2015, Atal Pension

Scheme, Pradhan Mantri Suraksha Bima

Yojana, Pradhan Mantri Jeevan Jyoti Bima

Yojana

ADVANTAGE

INDIA

Source: IMF, World Bank, KPMG report “Indian Mutual Fund Industry”, Ministry of External Affairs

Note: HNWI – High Net Worth Individual, NBFC – Non-Banking Financial Company, F – Forecast, NRFIP – National Rural Financial Inclusion Plan

Financial Services

MARKET

OVERVIEW


SEGMENTS OF THE FINANCIAL SERVICES SECTOR

Source: Aranca Research

Note: NBFC - Non Banking Financial Company

Financial services

Asset Management

Broking

Wealth Management

Investment Banking

Life

Non-life

Asset finance company

Investment company

Loan company

Capital markets Insurance NBFCs


ASSETS UNDER MANAGEMENT HAVE MORE THAN

DOUBLED SINCE FY07

Source: AMFI, Aranca Research

72

.3

12

5.4

90

.4

12

9.5

12

9.8

12

5.3

12

9.2

13

6.9

17

9.6

25

2.1

27

2.6

32

8.5

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18*

The asset management industry in India is among the fastest

growing in the world. As of November 2017, 42 asset management

companies were operating in the country

At the end of December 2017, the assets under management of the

mutual fund industry stood at Rs 21.27 lakh crore (US$ 328.49

billion.)

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

plan (SIP) route reached Rs 47,002 crore (US$ 7.26 billion) between

April-December 2017.

India registered a record inflow of amount of US$ 51.02 billion in

mutual funds in FY 2016-17. According to the Association of Mutual

Funds in India (AMFI) data, this was the highest investment in

mutual fund schemes since the fiscal 1999-2000.

Equity mutual funds have registered a net inflow of Rs 14,921 crore

(US$ 2.3 billion), thereby taking their asset base to Rs 6.90 lakh

crore (US$ 106.58 billion) in December 2017.

The number of mutual fund (MF) portfolios have increased to 66.5

million as of December 2017, backed by rising interest in MFs

among investors.

Mutual fund (MF) equity portfolios in India reached a 10-year high of

49.3 million, by end of 2017.

Visakhapatnam port traffic (million tonnes) Mutual fund assets under management (AUM) (in US$ billion)

CAGR: 15.25%

Note: AUM – Assets Under Management, * - data from April-December 2017


CORPORATE INVESTORS ARE BY FAR THE LARGEST

INVESTOR IN MUTUAL FUNDS CATEGORY

In September 2017, corporate investors accounted for around 46.26

per cent of total AUM in India, while HNWIs and retail investors

accounted for 28.01 per cent and 22.96 per cent, respectively.

In 2016, corporate investors accounted for around 46.9 per cent of

total AUM in India, while HNWIs and retail investors accounted for

28.6 per cent and 22.3 per cent, respectively.

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.

Source: AMFI, Aranca Research, Money Control

Leading AMCs in India (as of September 2017)

46.26%

28.01%

22.96%

2.14% 0.63% Corporates

HNWI

Retail

Banks/FI

FII

Note: HNWI - High Net Worth Individuals, AMC - Asset Management Company

Top 5 AMCs in India AUM (US$ billion)

ICICI Prudential Asset Management Co. Ltd 43.40

HDFC Asset Management Co. Ltd 41.84

Reliance Nippon Life Asset Management Ltd 35.93

Birla Sun Life Asset Management Co. Ltd 34.84

SBI Funds Management Private Limited 29.24

UTI Asset Management Company Ltd 23.49

Investor breakup (as of September 2017)


BROKING: EQUITY MARKET TURNOVER INCREASED

SIGNIFICANTLY IN RECENT YEARS

Source: National Stock Exchange, SEBI,

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

Steadily rising turnover in financial

markets has led to rapid expansion of

the brokerage segment

Between FY96 and FY17, the annual

turnover value in NSE witnessed

growth at a CAGR of 19.13 per cent

reaching a value of US$ 790.21

billion in FY17

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

1,885 in November 2017.

India has scored a perfect 10 in

protecting shareholders' rights on the

back of reforms implemented by

Securities and Exchange Board of

India (SEBI).^

Turnover on NSE (Capital markets segment) in US$ billion

2,242 2,118 2,196

1,444

1,885

0

500

1,000

1,500

2,000

2,500

Australian SE Hong Kong SE Korea SE Shanghai SE NSE India

20

83

10

0

99

19

4

29

4

10

8

12

8

24

0

25

4

35

4

43

0

88

2

59

9

87

3

78

5

58

6

49

9

46

6

71

8

64

7 79

0

0100200300400500600700800900

1,000

FY

96

FY

97

FY

98

FY

99

FY

00

FY

01

FY

02

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

CAGR 19.13 %

Listed companies on major stock exchanges in Asia-Pacific countries

(2017)


VIBRANT CAPITAL MARKET EVIDENT THROUGH

LARGE NUMBER OF LISTINGS

Companies listed on NSE and BSE

Amount raised by IPOs (US$ million)

5,8

50

6,0

49

6,2

68

6,3

61

6,4

45

6,6

41

6,7

79

6,8

77

7,0

24

7,3

57

7,7

19

76

51

75

01

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18*

31

8

3,8

99

5,1

73

92

1

1,0

15

18

8

47

2

2,3

15

4,5

35

10

,88

8

0

2,000

4,000

6,000

8,000

10,000

12,000

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18*

Source: SEBI, ^ - as per a report by EY

Note: FII – Foreign Institutional Investors, NSE – National Stock Exchange, BSE – Bombay Stock Exchange, * - As of December 2017, ^ - as per a study by rating agency ICRA

The number of listed companies on NSE and BSE increased from

6,445 in FY10 to 7,501 in December 2017.

The market capitalisation of all the companies listed on the BSE

reached a record Rs 150 lakh crore (US$ 2.33 trillion) backed by

high gains in the broader market.

The revenues of the brokerage industry in India are estimated to

grow by 15-20 per cent to reach Rs 18,000-19,000 crore (US$ 2.80-

2.96 billion) in FY 2017-18, backed by healthy volumes and a rise in

the share of the cash segment.^

The amount raised by IPOs in India increased from US$ 318 million

in FY 2008-09 to US$ 10,888 million in FY 2017-18*.

Initial Public Offers (IPOs) by small and medium enterprises (SMEs)

in India received record funding of Rs 16.79 billion (US$ 259.35

million) in 2017 through 133 issues.

A total of 153 initial public offers (IPOs) were issued in the Indian

stock markets in 2017, which raised a total of US$ 11.6 billion.^


84

,00

0 1

,20

,00

0 1,5

3,0

00

1,2

5,0

00

1,5

3,0

00

1,5

6,0

00

1,9

8,0

00

2,0

0,0

00

2,1

9,0

00

-

50,000

1,00,000

1,50,000

2,00,000

2,50,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

WEALTH MANAGEMENT: AN EMERGING SEGMENT

Between 2011 and 2016, number of HNWIs in India has seen a

steady rise at a CAGR of 12.73 per cent

High net worth households would grow at an even faster rate till

2019 growing at a CAGR of about 21.5 per cent

By the end of 2025, global HNWI wealth is estimated to grow to over

US$ 100 trillion.

Advisory asset management and tax planning has one of the highest

demand among wealth management services by HNWIs; this is

followed by financial planning

Visakhapatnam port traffic (million tonnes) Number of HNWIs in India

Source: World Wealth Report, Capgemini

Note: HNWI – High Net Worth Individuals


THE LIFE INSURANCE SEGMENT HAS GROWN

SIGNIFICANTLY IN RECENT YEARS

The life insurance market has grown from US$ 10 billion in FY02 to

US$ 64.64 billion in FY17.

Over FY02–17, life insurance premiums witnessed growth at a

CAGR of 13.25 per cent.

Business of life insurance companies from first year premium stood

at Rs 1,38,254 crore (US$ 21.36 billion) for the period ended

December 31, 2017

Source: IRDA, Swiss Re

Major private players in the life insurance segment (as of FY17)

Note: YoY – Year on Year

Name Total premiums (US$ billion)

ICICI Prudential 1.22

HDFC Standard 1.35

SBI Life 1.57

Bajaj Allianz 0.51

Max Life 0.57

0

0

1 2

3

6

13

14

17

19

18

14

13

15

16

18

10

11

14

17

21

28

37

34

29

45

42

38

39

39

41

46

0

10

20

30

40

50

60

70

FY

02

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

Private Public Column1

CAGR 13.25%

Life insurance segment (US$ billion)


NON-LIFE INSURANCE SEGMENT HAS BEEN RISING

The non-life insurance market grew from US$ 2.6 billion in FY02 to

US$ 19.71 billion in FY17.

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

at a CAGR of 14.47 per cent while premiums generated by private

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.

Visakhapatnam port traffic (million tonnes) Non-life insurance premiums (US$ billion)

Source: IRDA, General Insurance Council

Note: YoY – Year on Year

0.1

0.3

0.5

0.8

1.2

1.9

2.7

2.7

2.9

3.8

4.7

5.1

5.7

6.3

6.1

9.2

2.5

2.8

3.1

3.3

3.6

3.8

4.4

4.2

4.6

5.8

6.7

6.8

7.2

7.7

7.3

10

.5

-

5.0

10.0

15.0

20.0

25.0

FY

02

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

Private Public

CAGR 14.47 %


29

3.7

8

42

1.9

7

61

0.8

2

85

4.8

2

1,0

56

.04

1,6

10

.97

4,3

13

.76

5,6

51

.21

6,0

98

.52

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17 P

NBFC: GROWING IN PROMINENCE

NBFCs are rapidly gaining prominence as intermediaries in the retail

finance space

NBFCs finance more than 80 per cent of equipment leasing and hire

purchase activities in India

The public deposit of NBFCs increased from US$ 293.78 million in

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

annual growth rate (CAGR) of 46.10 per cent.

The gross loans of India’s Non- Banking Finance Company-

Microfinance Institutions (NBFC-MFIs) increased 24 per cent year-

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

Visakhapatnam port traffic (million tonnes) NBFC Public Deposit (in US$ million)

Source: RBI

Note: NBFC - Non Banking Financial Company,; P-Provisional, ^ - according to Microfinance Institutions Network (MFIN)


Porter’s Five Force Framework Analysis

Low– Low bargaining power of

suppliers as the industry is highly

regulated by RBI

Bargaining Power of Suppliers

Low – Less number of substitutes

available for financial products

Threat of Substitutes

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

Competitive Rivalry

Low – Stringent regulatory norms

prevent new entrants

Customers prefer to invest their

money with a reputed financial

services company offering a wide

range of services

Threat of New Entrants

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

Bargaining Power of Buyers

Positive Impact

Neutral Impact

Negative Impact

Source: Aranca Research, Media Sources

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)

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,

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. ^

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

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

Insurance Sector

Mobile Wallets

NBFCs

Note: ^ - according to the 'World Payment Report 2017' by Capgemini.

Indian companies are strengthening their footprint on foreign shores, enhancing geographical exposure. Digital

transactions reached an all-time high of 1.06 billion in December 2017. Digital Transactions

Financial Services

GROWTH

DRIVER AND

OPPORTUNITIES


GROSS NATIONAL SAVINGS TO CONTINUE GROWING

AT A HEALTHY PACE

Gross national savings are estimated to increase from US$669

billion in 2015 to US$ 940 billion in 2019, growing at a CAGR of 8.87

per cent

India’s HNWIs wealth is likely to expand at a CAGR of 19.7 per cent

and reach around US$ 3 trillion by 2020

As per Union Budget 2017-18, government has allocated US$ 1.48

billion for recapitalisation of Public Sector Banks in the country

Visakhapatnam port traffic (million tonnes) Gross national savings (US$ billion)

Source: IMF, Reserve Bank of India,

Note: F – Forecast, Deloitte Center for Financial Services

620 632

682 648

669 655

765

846

940

0

100

200

300

400

500

600

700

800

900

1000

2011 2012 2013 2014 2015 2016 2017 F2018 F2019 F


CONTINUED GROWTH IN EQUITIES AND INNOVATIVE

PRODUCTS

Number of listed companies - NSE

Growth in turnover for derivatives segment (US$ billion)

Source: National Stock Exchange

1,0

69

1,2

28

1,3

81

1,4

32

1,4

70

1,5

74

1,6

46

1,6

66

1,6

88

1,7

36

1,8

08

1,8

17

1,8

85

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18*

46

4

56

7

1,0

89

1,6

25

3,2

53

2,3

98

3,7

26

6,4

18

6,5

39

5,8

06

6,3

39

9,2

25

10

,25

4

14

,75

0

0

2000

4000

6000

8000

10000

12000

14000

16000

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

The Indian equity market is expanding in terms of listed companies

and market cap, widening the playing field for brokerage firms.

Sophisticated products segment is growing rapidly, reflected in the

steep rise in growth of derivatives trading

With the increasing retail penetration there is immense potential to

tap the untapped market. Growing financial awareness is expected to

increase the fraction of population participating in this market

As of February 2017, National Payments Corporation of India (NPCI)

is planning to make Hyderabad as its hub. The company will set up

its office and data centre in the city. NPCI is an origination for all

retail cashless payments in the country, which will play a main role in

the push for making a cashless economy.

ChrysCapital, a private equity firm, raised its 7th funding worth US$

600 million, in February 2017, from various investors such as

Harvard Management Company and Singapore Investment

Corporation (GIC).

Total wealth held by individuals in unlisted equities is projected to

grow at a CAGR of 19.54 per cent to reach Rs 17.64 lakh crore (US$

273.69 billion) by FY22.^

Private equity (PE) investments in India increased 59 per cent to

US$ 24.4 billion in 2017, with average deal size of US$ 42.8

million.@

Note: * - As of November 2017, ^ - as per Karvy India Wealth Report 2017, @ - according to data provided by Venture Intelligence


WEALTH MANAGEMENT TO RIDE THE WAVE OF

RISING LIQUID ASSETS

The fraction of management services is

growing, with a current estimated level of 20

per cent HNWIs who use wealth

The HNWI population in India is estimated to

double by 2020 adding to the addressable

market of wealth management.

With a fast rising economy, the investable

wealth of HNWI segment is rising, creating a

need for wealth services.

Remittances from Non-resident Indians

(NRIs) and People of Indian Origin (PIOs)

estimated at US$ 62.7 billion in 2016

Wealth

Management

Source: World Bank – Migration and Development Brief


STRATEGIES ADOPTED

Source: Ministry of External Affairs, RBI

Indian companies are strengthening their footprint on foreign shores, enhancing geographical exposure.

KrazyBee, one of India's largest micro-lending platforms that focuses on financing students' education, has

planned expansion of its business in 11 more cities across India in FY2017-18.

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,

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.

Innovation

In May 2017, TimesPro collaborated with Vishwa Vishwani Institute of Systems and Management (VVISM) to

launch PGDM programme in Banking and Financial Services.

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.

Mergers and

Acquisition

The explosion of mobile phones, uptake of technologies such as cloud computing and rising pace of convergence

and interconnectivity have led companies in the financial services industry to ramp up investment in Information

Technology (IT) to better serve their end-customers

Stepped up IT

expenditure

Expanding

geographical presence


INSURANCE TO BENEFIT FROM WIDENING REACH

ACROSS SEGMENTS

Targeted at rural segment, potentially

addressing two-thirds of Indian population

policy incentives are driving growth

Passenger car sales in the country grew at

a YoY of 9.23 per cent in FY17, in

comparison with previous year

Increasing number of insurance registered

for passenger cars and for construction

activities will rise with India’s infrastructure

growth plans

Only 1 per cent population covered

currently, suggesting that the vast market

is yet to be tapped. Health insurance

accounts for 1.2 per cent of total

healthcare spend

Demand for agricultural and livestock

insurance growing on the back of rising

awareness among rural population

Insurance

Source: YoY – Year on Year

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


HUGE UNTAPPED POTENTIAL AT THE ‘BOTTOM OF

THE PYRAMID’ …


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

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

agricultural sector.

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

Credit

Safe investment options have a potential to tap into rural household savings.

Some private players are coming up with innovative products like 3rd party money market mutual funds to

cater to rural investment needs.

Investments

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

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

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

Insurance


... 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 286,000 households with net worth of more than US$ 1 million with assets close to US$ 584 billion.

The regulatory environment for fiduciary duties in wealth management is evolving; players will benefit greatly

from quickly adopting new investor protection measures Investor protection

Brand building coupled with partnership based model will improve the advisory penetration. Greater focus on

transparency will speed up the process Brand building

Investment in required technologies, imbibing state-of-the-art best practices of advisory and creating

customised and innovative products will enable growth Innovation


HNWI POPULATION TO DOUBLE BY 2020

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

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


FAVOURABLE POLICY MEASURES AND

GOVERNMENT INITIATIVES

Source: Dun and Bradstreet., Media articles

The government has proposed simplification of procedures and prescribing uniform registration and other norms

for the entry for foreign portfolio investors

It has been proposed to allow stock exchanges to introduce a dedicated debt segment on the exchange

The composite cap on Foreign Direct Investment (FDI) in the insurance segment has been increased to 49 per

cent from 26 per cent currently

Union Budget 2017-18 has promised to allot a capital infusion of US$ 1.48 billion in PSBs. The government also

proposed to tax interest receivable on actual receipt instead of accrual basis in respect of NPA accounts of all

non-scheduled cooperative banks also at par with scheduled banks.

Budgetary Measures

Note: QFI – Qualified Foreign Investors

The Goods and Services Tax (GST) on financial services transactions like banking transactions, mutual funds,

insurance and stock market has been increased from the current 15 per cent to 18 per cent.

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.

Goods and Services

Tax (GST)


FAVOURABLE POLICY MEASURES AND

GOVERNMENT INITIATIVES

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.

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.

Other initiatives

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

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

Tax incentives

Source: Media articles

Financial Services

CASE STUDIES


SHRIRAM TRANSPORT FINANCE CO LTD

Source: Company website

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

commercial vehicle finance, with a niche presence in financing pre-

owned and small truck owners

Services – Truck financing, passenger vehicle financing, farm

equipment financing, construction vehicle and equipment financing

Features – Number of customers covered: 1.1 million

AUM: US$ 11.12 million

Number of branches: 853

Visakhapatnam port traffic (million tonnes) Net profit (US$ million)

10

.9

32

.2

42

.1

96

.8

13

2.6

18

4.1

26

9.6

26

8.2

25

0.5

20

9.7

20

5.3

18

0

19

6.1

9

0

50

100

150

200

250

300

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17


MUTHOOT FINANCE LTD

Source: Company website

Muthoot Finance Ltd. is the largest gold financing company in India

in terms of loan portfolio. The company provides personal and

business loans secured by gold jewellery

Divisions – Financing, Power Generation and FM Radio

Features – Number of branches1: 4,200+

Gold loans under management1: US$ 3.8 billion

Number of employees1: 23,070

Visakhapatnam port traffic (million tonnes) Net profit (US$ million)

108.3

190.3 184.9

129.4

111.2

126.92

188.43

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

FY11 FY12 FY13 FY14 FY15 FY16 FY17

Financial Services

KEY INDUSTRY

ORGANISATIONS


INDUSTRY ORGANISATIONS

Maker Bhavan No 1, 4th Floor,

Sir V T Marg, Mumbai – 400 020

India

Phone: 91 11 22846544

E-mail: [email protected]

Insurance Brokers Association of India (IBAI)

One Indiabulls Centre,

Tower 2, Wing B, 701,

841 Senapati Bapat Marg,

Elphinstone Road, Mumbai – 400 013

India

Phone: 91 11 24210093 / 24210383

Fax: 91 11 43346712


Association of Mutual Funds in India (AMFI)

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


Finance Industry Development Council (FIDC)

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


EXCHANGE RATES

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

Year INR Equivalent of one US$

2004–05 44.81

2005–06 44.14

2006–07 45.14

2007–08 40.27

2008–09 46.14

2009–10 47.42

2010–11 45.62

2011–12 46.88

2012–13 54.31

2013–14 60.28

2014-15 61.06

2015-16 65.46

2016-17 67.09

Q1 2017-18 64.46

Q2 2017-18 64.29

Year INR Equivalent of one US$

2005 43.98

2006 45.18

2007 41.34

2008 43.62

2009 48.42

2010 45.72

2011 46.85

2012 53.46

2013 58.44

2014 61.03

2015 64.15

2016 67.21

H1 2017 65.73

Source: Reserve bank of India, Average for the year


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