FINANCIAL SERVICES

August 2024
For updated information, please visit www.ibef.org
Table of Contents

Executive Summary 3

Advantage India 4

Market Overview 6

Recent Trends and Strategies 16

Growth Drivers and Opportunities 20

Key Industry Contacts 29

Appendix 31

2
Executive summary

2. INDIA’S UHNWI 3. ROBUST AUM GROWTH

POPULATION INCREASING • As of July 2024, AUM managed by the mutual funds industry
TREND stood at Rs. 64.97 trillion (US$ 780.70 billion) which is more
than 6-fold increase in the span of 10 years.
• The number of Ultra High Net Worth • The industry's strong AUM growth was reflected in record-high
Individuals (UHNWI) is estimated to increase 17.78 crore folios, attracting 4.46 crore new investors.
from 12,069 in 2022 to 19,119 in 2027. • Mutual fund assets increased by 35% YoY, reaching a record
• India’s UHNWIs are likely to expand by 58.4% high of Rs. 53.40 lakh crore (US$ 641.75 billion) in FY24.
in the next 5 years.

4. FUNDRAISING VIA
1. GROSS SAVINGS 2 3 IPOS ON THE RISE
NEAR 30.73% OF
• Fundraising from IPOs amounted
GDP to US$ 7.25 billion in FY24 as of
March 2024.
• In 2021, India’s gross savings
was at 29.3% of GDP amounting
to US$ 930.56 billion. 1 4
• In 2023, India’s gross savings
stood at 30.2% of GDP.

Note: NBFC - Non-Banking Financial Company

Source: AMFI, IMF, ICRA, Economic Times, Capgemini Wealth Report, EY report

3
Advantage India

4
Advantage India

2. INNOVATION 3. POLICY SUPPORT

• India benefits from a large cross-utilisation of channels • The government has approved 100% FDI for insurance
to expand reach of financial services. intermediaries and increased FDI limit in the insurance
• Emerging digital gold investment options. sector to 74% from 49% under the Union Budget 2021-22.
• In September 2021, 8 Indian banks announced that • International Financial Services Centres Authority
they are rolling out—or about to roll out—a system (Banking) Regulations, 2020, are expected to drive and
called ‘Account Aggregator’ to enable consumers to facilitate the constituent operations in the IFSC and help
consolidate all their financial data in one place. the sector reach its potential.

1. GROWING DEMAND
• Rising income is driving the
demand for financial services
4. GROWING
across income brackets. PENETRATION
• Financial inclusion drive from
the Reserve Bank of India • Credit, insurance and
(RBI) has expanded the target
market to semi-urban and rural 2 3
investment penetration is
rising in rural areas.
areas. • HNWI participation is growing
• Investment corpus in Indian in the wealth management
insurance sector might rise to segment.
US$ 1 trillion by 2025. • Lower mutual fund
• With >2,100 fintechs operating penetration of 5-6% reflects
currently, India is positioned to
become one of the largest
1 4
latent growth opportunities.

digital markets with rapid

expansion of mobile and
internet.

Note: FDI - Foreign Direct Investment, IIM - Indian Institute of Management

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

5
 Market Overview

MARKET OVERVIEW

6
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

7
Assets under management have more than doubled since
FY08
Mutual fund assets under management (in US$ billion)

▪ In FY25*, AUM managed by the mutual funds industry stood at Rs. 900
64.97 lakh crore (US$ 780.70 billion) .
▪ In May 2021, the mutual fund industry crossed over 10 crore folios.
800
▪ Inflow in India's mutual fund schemes via systematic investment
plans (SIP) from April 2023 to March 2024 stood at Rs. 2 lakh crore

780.70
(US$ 24.04 billion).
700
▪ Growth in B30 (beyond the top 30) cities, sustainability of alpha,
alternative investments and regulatory norms are expected to shape
the mutual fund industry in the coming years.

641.75
600
▪ About 18% of assets in the mutual fund industry were generated
from B30 locations in April 2024.
▪ These assets increased by 3%, from Rs. 9.83 lakh crore (US$ 500
118.13 billion) in March 2024 to Rs. 10.16 lakh crore (US$ 122.10

482.40
481.77
billion) in April 2024.

425.87
400
▪ The assets under management growth is expected to double to Rs.

404.73
100 trillion (US$ 1207 billion) by 2030 implying a CAGR of 14% from
FY24 to FY30.

340.48
331.42
300
▪ In November 2020, an agreement with the World Bank was signed
by the Department of Investment and Public Asset Management

272.62
252.06
(DIPAM).
200
• Under the agreement, the World Bank is expected to provide
DIPAM with asset monetization advisory services.
• This project is established to encourage and speed up the 100
monetization of non-core assets and help unlock the value of
these unused/marginally used assets that have the potential to
dramatically increase financial capital for further investment and 0
FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25*
development.

*Note- * As of July 2024

Source: Association of Mutual Funds - AMFI

8
Corporate investors are by far the largest investor in mutual
funds category
Leading AMCs in India (Fourth quarter of 2024)

Top 5 AMCs in India AUM (US$ billion) Investor breakdown as of December 2023

SBI Mutual Fund 109.96

Corporates

27.5%
ICICI Prudential Mutual Fund 85.45 Banks/FIs
36.5%

US$ 613.26 FIIs

HDFC Mutual Fund 74.15
billion
High Networth
Individuals*
Kotak Mutual Fund 74.15 1.3%
0.1% Retail
34.7%
Nippon India Mutual Fund 52.04

▪ As of December 2023, corporate investors AUM stood at US$ 223.73 billion, while HNWIs and retail investors reached US$ 212.67 billion and
US$ 168.52 billion, respectively.

▪ During fourth quarter of 2024, AUM for SBI Mutual Fund stood at US$ 109.96 billion.

Note: HNWI - High Net Worth Individuals, AMC - Asset Management Company, AUM - Assets Under Management * - individuals investing 500,000 and above
Source: AMFI, Money Control, India Private Equity Report 2019 by Bain and Co, Economic Times

9
Indian equity market meeting the global pace

▪ Indian stock market rally made investors Rs. 80.62 lakh crore (US$ Listed companies on major stock exchanges in Asia-Pacific
973.67 billion) in 2023 and Sensex reached an all-time high of 79,672 countries
on June 28, 2024.
3,000
▪ The number of Demat accounts in India reached 154 million in April
2024.
2,683
▪ The number of companies listed on the BSE increased from 135 in 2,500 2,607
1995 to 5,415 as of June 2024.
2,381
▪ According to the statistics by the Futures Industry Association (FIA), a 2,273
2,190
derivatives trade association, the National Stock Exchange of India 2,000
Ltd. (NSE) emerged as the world’s largest derivatives exchange in
2020 in terms number of contracts traded. NSE was ranked 4th
worldwide in cash equities by number of trades as per the statistics 1,500
maintained by the World Federation of Exchanges (WFE) for
CY2020.

▪ India has scored a perfect 10 in protecting shareholders' rights on the 1,000

back of reforms implemented by the Securities and Exchange Board
of India (SEBI) in the World Bank's Ease of Doing Business 2020
report.
500
▪ According to Goldman Sachs, investors have been pouring money
into India’s stock market, which is likely to reach >US$ 5 trillion,
surpassing the UK, and become the fifth-largest stock market
0
worldwide by 2024. Australian Hong Kong Korea SE NSE India Shanghai SE
SE SE

Source: National Stock Exchange, SEBI, Livemint

10
Vibrant capital market evident through large number of
listings

Companies listed on NSE and BSE Amount raised by IPOs (US$ billion)

7,800 16.00 14.55

14.00 13.01
7,600
7,719

7,681
7,651

7,586
12.00

7,547
7,400
7,501

7,462
7,200 10.00

7320
8.00 7.00 7.25
7,172
7,000
6,800 6.00 4.54 4.25

6,819
6,600 4.00 2.31 2.85 2.87
6,400 2.00
6,200 -

FY19
FY16

FY17

FY18

FY20

FY21

FY22

FY23

FY24
FY21
FY16

FY17

FY18

FY19

FY20

FY22

FY23

FY24

FY25*
▪ In FY24 as of June 2024, the number of listed companies on the NSE and BSE were 2,266, and 5,415 respectively.

▪ In FY22, US$ 14.55 billion was raised across 127 initial public offerings (IPOs).

▪ In FY24, US$ 7.25 billion was raised.

▪ In first half of 2025, a total of 35 mainboard IPO were launched raising Rs. 32,000 crore (US$ 3.85 billion).

▪ The December quarter in CY23 was a remarkable phase for the primary market in India with the launch of 92 IPOs, including 61 from the small
and medium enterprises and 31 main board public issues.

Note:, NSE - National Stock Exchange, SME - Small and Medium-sized Enterprises, BSE - Bombay Stock Exchange, India IPO Market Insight report by EY,* as on June 2024
Source: BSE, NSE

11
Wealth management: An emerging segment

▪ The number of HNWIs in India reached 797,714 by the end of 2022. Visakhapatnam
Numberport
of HNWIs
traffic in
(million
India tonnes)
Between 2014 and 2020, the number of HNWIs in India posted a
steady rise, increasing at a CAGR of 4.1%. By the end of 2025,
global HNWI wealth is estimated to grow to over US$ 100 trillion.

▪ India is expected to have 16.57 lakh HNWIs in 2027.

16,57,272
▪ HNWI households grew at an even faster rate until 2019, growing at
a CAGR of about 21.5%.

▪ Advisory asset management and tax planning have one of the

highest demands among wealth management services by HNWIs.

7,97,714
This is followed by financial planning.

▪ India is expected to be the fourth largest private wealth market

globally by 2028.

▪ According to the Knight Frank Report, the number of ultra-high-net-

3,08,000
worth individuals (UHNWIs), with a wealth of US$ 30 million or more,

2,78,000
2,63,000
2,56,000
2,55,000
2,26,000
2,19,000
is expected to rise 63% between 2020 and 2025 to 11,198.

2,00,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2027F

Note: HNWI - High Net Worth Individuals, 2025F - Forecast

Source: World Wealth Report by Capgemini, Asia Pacific Wealth Report 2021 by Capgemini

12
The life insurance segment has grown significantly in recent
years

Major private players in the life insurance segment in FY23

Life insurance premium (US$ billion)

60.0 Name Total premiums (US$ billion)

50.0

49.5
LIC India 57.33

44.8
45.6
40.0
43.9

42.3
42.0
41.0

40.1
37.1
36.7

30.0 SBI Life 8.13

30.7
30.1

20.0
HDFC life 6.95
10.0

0.0 ICICI Prudential Life 4.82

FY18 FY19 FY20 FY21 FY22 FY23

New Business Premium Renewal Premium Bajaj Allianz 2.35

▪ India’s insurance industry has huge growth potential and is expected to reach US$ 250 billion by 2025. There are 24 life insurance companies in
India.

▪ The gross premium collected by life insurance companies in India increased from US$ 39.7 billion in FY12 to US$ 89.3 billion in FY22.

▪ In FY23, premiums from new businesses of life insurance companies in India stood at US$ 44.8 billion, and renewal premiums stood at US$ 49.5
billion.

▪ According to the data compiled by the Life Insurance Council, in March 2021, a new business premium of 24 life insurers increased by 70% YoY
at Rs. 43,416.69 crore (US$ 5.81 billion). For FY21, new business premiums for life insurers increased by 7.5% YoY at Rs. 2.78 trillion (US$
37.17 billion).

Note: Renewable Premium Value in India is until March 2021 (FY21)

Source: IRDAI

13
Non-life insurance segment has been rising as well

▪ The non-life insurance industry is made up of general insurers, Visakhapatnam

Gross premiums written port
off bytraffic (million
non-life tonnes)
insurers (US$ billion)
standalone health insurers, and specialised PSU insurers.
▪ In India, gross premiums written off by non-life insurers reached Rs.
289,737.87 crore (US$ 34.82 billion) in FY24 (between April 2023- 40
March 2024), from Rs. 256912.14 crore (US$ 30.88 billion) in FY23
(between April 2022-March 2023), driven by strong growth from 35
general insurance companies. 34.82

30
▪ Non-life Insurance industry reported a five-month high growth rate of 31.00

15.9% in January 2022 which was at Rs. 21,401.1 crore (US$ 2.83 28.17
billion). 25 26.49 26.52
24.32
23.38
20
19.11

15
14.72

10

0
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24

Source: IRDA, General Insurance Council

14
NBFC: Growing in prominence
▪ Non-banking financial companies (NBFCs) are rapidly gaining prominence as Top 5 NBFCs market capitalization in India (2024*)
intermediaries in the retail finance space

▪ NBFCs finance more than 80% of equipment leasing and hire purchase activities
in India

▪ The public funds of NBFCs increased from US$ 278.23 billion in 2016 to US$ Bajaj Finance Ltd
470.74 billion in 2020 at a CAGR of 14.04%.

▪ There were 9,356 NBFCs registered with the RBI as of September, 2023.
Cholamandalam
▪ In December 2020, the Reserve Bank of India issued a draft circular on the Investment and
declaration of dividends by NBFCs, wherein it proposed that NBFCs should have 7% Finance Company
12% Ltd
at least 15% Capital to Risk-Weighted Assets Ratio (CRAR) for the last 3 years,
Bajaj Holdings and
including the accounting year for which it proposes to declare a dividend. Investment Ltd
13%
▪ In July 2021, Rajya Sabha approved the Factoring Regulation (Amendment) Bill 56%
in 2020, enabling ~9,000 NBFCs to participate in the factoring market. The bill
12% Shriram Finance Ltd
also gives the central bank the authority to establish guidelines for improved
oversight of the US$ 6 billion factoring sector.

▪ On September 30, 2021, the Reserve Bank of India communicated that the Muthoot Finance Ltd
applicable average base rate to be charged by non-banking financial companies
- micro finance institutions (NBFC-MFIs) to their borrowers for the quarter
beginning October 1, 2021, will be 7.95%.

▪ On September 29, 2021, SBI announced that it has signed an agreement with
three non-banking finance company-microfinance institutions (NBFC-MFIs) for
co-lending to joint liability groups (JLGs).

▪ On January 25, 2023, Legal and insolvency financing start-up LegalPay entered
into a joint venture with Goldi Solar Group to launch Padmalaya Finserve. The
NBFC plans to disburse Rs. 1,000 crore (US$ 121 million) towards legal
expenses by FY24.
Note: NBFC - Non-Banking Financial Company
Source: RBI, Microfinance Institutions Network (MFIN)

15
 Recent Trends and Strategies

RECENT TRENDS AND STRATEGIES

16
Recent Trends

2. MOBILE WALLETS 3. DIGITAL TRANSACTIONS

• As the RBI allows more features such as • Indian companies are strengthening their footprint on foreign shores, enhancing geographical
unlimited fund transfer between wallets and exposure. India's digital payment is estimated to increase to US$ 1 trillion by 2023.
bank accounts, mobile wallets will become • In the Union budget of 2022-23, India has announced plans for a central bank digital currency
strong players in the financial ecosystem. (CBDC) which will be known as Digital Rupee.
• India's mobile wallet industry is estimated to • The number of transactions through immediate payment service (IMPS) reached 534.6 million
grow at a CAGR of 23.9% between 2023 and (by volume) and amounted to Rs. 5.58 trillion (US$ 68.61 billion) in February 2024.
2027 to reach US$ 5.7 trillion. • In August 2021, Prime Minister Mr. Narendra Modi launched e-RUPI, a person and purpose-
• In July 2024, Unified Payments Interface (UPI) specific digital payment solution.
recorded 14.44 billion transactions worth Rs. • Digital payment platforms for rural India:
20.44 lakh crore (US$ 245.61 billion). – In August 2021, Neokred, an open banking stack that delivers curated versions of issuance in
the payment ecosystem, teamed with Virenxia, a provider of integrated and sustainable
solutions for rural transformation and development, to launch the ‘The Kisan Card,' a special
payment card for Indian farmers.

1. INSURANCE SECTOR 4. NBFCs

• New distribution channels such as • NBFCs have served the non-banking
bank assurance, online distribution customers by pioneering into retail
and Non-Banking Financial asset-backed lending, lending against
Companies (NBFCs) have widened securities and microfinance. NBFCs
the reach and reduced operational
costs. 2 3 aspire to emerge as a one-stop shop
for all financial services.
• In November 2020, LIC took • In July 2021, Rajya Sabha approved
initiatives to facilitate quicker Factoring Regulation (Amendment) Bill
proposal completion by launching a in 2020, enabling ~9,000 NBFCs to
digital application – ANANDA. participate in the factoring market. The
• India’s general insurance market is
expected to grow at a compound
1 4 bill also gives the central bank the
authority to establish guidelines for
annual growth rate (CAGR) of 7.1% improved oversight of the US$ 6 billion
during 2024-2028. factoring sector.

Source: Capgemini, Credit Suisse, Crisil, The Economist Intelligence Unit commissioned by payments company Visa

17
Strategies adopted….(1/2)
1
Innovation
▪ In the 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.

2
Merger and Acquisition (M&A)
▪ In May 2023, India Grid Trust acquired Virescent Renewable Energy Trust at a value of US$ 487 million.
▪ The merger and acquisition market led to an all-time high in 2021 and was mainly driven by first-time buyers. India saw 85
strategic deals valued at more than US$ 75 million.
▪ In April 2022, HDFC Bank and HDFC Limited announced a transformational merger.
▪ In 2021, Piramal Group completed the acquisition of Dewan Housing Finance Limited (DHFL) for US$ 4.7 billion.

3
Stepped up IT expenditure
▪ 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.

Source: News Articles

18
Strategies adopted….(2/2)

4
Expanding geographical presence
▪ Indian companies are strengthening their footprint on foreign shores, enhancing geographical exposure.
▪ In April 2022, UPI went live in Neopay terminals across UAE.
▪ In September 2021, the international branch of the National Payments Corporation of India (NPCI), NPCI International Payments (NIPL), has
teamed with Liquid Group, a cross-border digital payments provider, to enable QR-based UPI payments to be accepted in 10 countries in
north and southeast Asia.
▪ In August 2020, the National Payments Corporation of India (NPCI) has launched an international arm—NPCI International Payments (NIPL).
The primary aim of NIPL will be to take its indigenously developed digital payment products such as RuPay and UPI to a global level.

19
 Growth drivers and opportunities

GROWTH DRIVERS

20
Growth drivers in financial sector

1 2 3

SHIFT TO FINANCIAL ASSET GOVERNMENT INITIATIVES OTHERS

CLASS
▪ In 2023, the government revamped the credit guarantee ▪ In January 2021, the National
▪ Financial sector growth can be scheme. The inflow of Rs. 9,000 crore (US$ 1,080.97 Stock Exchange (NSE) launched
attributed to rise in equity markets million) into the corpus of the Credit Guarantee Fund derivates on the Nifty Financial
and improvement in corporate Trust for Micro and Small Enterprises (CGTMSE) will Service Index. This service index is
earnings. give MSMEs more access to collateral-free loans. likely to provide institutions and
▪ By 2022, India’s personal wealth is retail investors more flexibility to
▪ In January 2021, the Central Board of Direct Taxes
forecast to reach US$ 5 trillion at a manage their finances.
launched an automated e-portal on the e-filing website
CAGR of 13%. It stood at US$ 3 of the department to process and receive complaints of ▪ On December 02, 2020, the
trillion in 2017. tax evasion, foreign undisclosed assets and register International Financial Services
complaints against ‘Benami’ properties. Centres Authority (IFSCA) obtained
membership to the International
▪ In December 2020, a US$ 50-million policy-based loan Association of Insurance
to enhance financial management practices and Supervisors (IAIS).
operational efficiencies aimed at achieving greater fiscal ▪ Investment by FPIs in India’s
savings, fostering informed decision-making and capital market reached a net Rs.
enhancing service delivery in West Bengal was signed 11,631 crore (US$ 1.42 trillion) in
by the Asian Development Bank (ADB) and the April 2023.
Government of India.

Note: IT - Information and Technology

Source: NSE, News articles, Microfinance Institution Network, Boston Consulting Group (BCG)

21
Gross national savings

• In 2023, India’s gross savings was at 30.2% of GDP.

Visakhapatnam
Gross national
port
savings
traffic as
(million
% of GDP
tonnes)
▪ The contribution by small savings schemes such as Senior Citizen
Savings Scheme (SCSS), 15-Year Public Provident Fund (PPF), 40
National Savings Certificate and Sukanya Samriddhi is major in
gross national saving income. 35.1 35.3
35 34.3
33.5
32.5
31.7 31.3 31.2
30.8 30.7
29.9 30.2
30 29.3

25

20

15

10

0
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023
Source: World Bank, Reserve Bank of India

22
Continued growth in equities and innovative products

▪ The Indian equity market is expanding in terms of listed companies

Total Turnover for derivatives segment (US$ trillion)
and market capitalization, widening the playing field for brokerage
firms. Sophisticated products segment is growing rapidly, reflected in
the steep rise in growth of derivatives trading. 1,000.00 947.24

▪ With the increasing retail penetration, there is an immense potential 900.00

to tap the untapped market. Growing financial awareness is expected 800.00
to increase the fraction of population participating in this market. 700.00
600.00
▪ Total wealth held by individuals in unlisted equities is projected to 461.63
500.00
grow at a CAGR of 19.54% to reach Rs. 17.64 lakh crore (US$
400.00
273.69 billion) by FY22.
300.00 204.73
▪ India’s PE/VC investment crossed US$ 60 billion in 2023. 200.00
77.73
▪ Turnover from the derivatives segment reached US$ 947.24 trillion in 100.00 28.69 41.60
FY24 and stood at US$ 461.63 billion in FY23. 0.00
FY19 FY20 FY21 FY22 FY23 FY24
▪ In July 2021, India's largest commodities derivatives exchange, Multi
Commodity Exchange of India Ltd., and European Energy Exchange
AG (EEX) signed a memorandum of understanding (MOU) with the
goal of knowledge sharing and expertise exchange on electricity
derivative products.
– This MoU will make it easier for the two exchanges to collaborate
in areas including knowledge sharing, education and training, and
event planning in the field of electricity derivatives.

Source: National Stock Exchange, Venture Intelligence Karvy India Wealth Report 2017, Private Equity Deal Tracker report by EY

23
Rising scope for wealth management

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

▪ India is expected to have 16.57 lakh HNWIs in 2027.

▪ India’s UHNWIs is likely to expand by 63% in the next five years.

▪ 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: News Articles, Knight Frank Report

24
Insurance to benefit from widening reach across segments

2. AUTO/ ENGINEERING
▪ Sales of passenger vehicles in the local
market rose by 8.4% to a record high of 4.22
million units in FY24, driven by improved
supply and consistent consumer demand.
Two-wheeler sales also rebounded, 3. AGRICULTURE
increasing by over 13% to reach 17.9 million
• Demand for agricultural and livestock
units. insurance growing on the back of rising
▪ Increasing number of insurance registered awareness among rural population.
for passenger cars and for construction
activities will rise with India’s infrastructure
growth plans.

2 3
1. MICRO INSURANCE
• It is targeted at rural segment, 4. HEALTH
addressing about two-thirds of • Only 1% population covered
Indian population. currently, suggesting that the vast
• The policy incentives acts as
drivers for the growth of micro- 1 4
market is yet to be tapped. Health
insurance accounts for 1.2% of
insurance sector. the total healthcare spend.

Source: News Articles

25
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 that are critical for the
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.
Investment ▪ Some private players are producing innovative products like third 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 and NGOs can speed up the process.

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

26
Favourable policy measures and government initiatives… (1/2)

1
Budgetary measures
▪ Under the Union Budget 2024-25, the government allocated Rs. 1,858,158.52 crore (US$ 223.28 billion) to the Ministry of Finance.
▪ The STT on futures has been increased to 0.02%, and on options to 0.01%.
▪ The Long-Term Capital Gains (LTCG) tax has been raised to 12.5% from 10%.
▪ The Short-Term Capital Gains (STCG) tax on certain assets has been increased to 20%.
▪ The angel tax has been abolished for all classes of investors.

2
International Financial Services Centres Authority (Banking) Regulations, 2020
▪ In November 2020, the IFSC Authority has approved the International Financial Services Centres Authority (Banking) Regulations, 2020.
▪ Key highlights of the regulation include the following:
– Outlining the criteria for establishment of the IFSC Banking Units (IBUs).
– Permission to open foreign currency accounts in any freely convertible currency at IFSC Banking Units for people residing outside India
(IBUs).
– Allowing individuals residing in India to open foreign currency accounts at IFSC Banking Units (IBUs) in any freely convertible currency
to pursue any permissible current account.
▪ On September 30, 2021, the IFSC Authority constituted an expert committee to recommend approach towards development of sustainable
finance hub and provide road map for the same.

3
FDI requirement for fund based and non fund based financial entities
▪ In April 2018, the Government 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 has approved 100% FDI for insurance intermediaries and increased FDI limit in the insurance sector to 74% from 49%
under the Union Budget 2021-22.
Source: Union Budget 2022-23, Company websites, Media sources

27
Favourable policy measures and government initiatives… (2/2)

4
Tax incentives
▪ Insurance products are covered under the EEE (exempt, exempt, exempt) method of taxation. This translates to an effective tax benefit of
approximately 30% on select investments (including life insurance premiums) every financial year.
▪ Reduction in securities transaction tax from 0.125% to 0.1% on cash delivery transactions and from 0.017% to 0.1% on equity futures.
▪ Indian tax authorities plan to sign 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.

5
Other initiatives
▪ In August 2020, the IRDAI modified its dividend criteria for investment—in which insurers are now permitted to classify investments in
preference and equity shares as part of "approved investments“, if such shares have paid dividend for at least two out of three consecutive
years immediately preceding. This relaxation is valid from April 1, 2020 to March 31, 2021.
▪ In May 2021, the Union Cabinet, chaired by Prime Minister Narendra Modi approved signing of a Memorandum of Understanding (MoU)
between the Institute of Chartered Accountants of India (ICAI) and Qatar Financial Centre Authority (QFCA). The MoU would enhance
cooperation between the institutes to work together to strengthen the accounting profession and entrepreneurship base in Qatar.
▪ In July 2021, Rajya Sabha approved the Factoring Regulation (Amendment) Bill in 2020, enabling ~9,000 NBFCs to participate in the
factoring market. The bill also gives the central bank the authority to establish guidelines for improved oversight of the US$ 6 billion factoring
sector.
▪ In August 2021, Prime Minister Mr. Narendra Modi launched e-RUPI, a person and purpose-specific digital payment solution.
– e-RUPI is a QR code or SMS string-based e-voucher that is sent to the beneficiary’s cell phone. Users of this one-time payment
mechanism will be able to redeem the voucher at the service provider without the usage of a card, digital payments app, or internet
banking access.
▪ In September 2021, Bank of India announced it has entered a co-lending arrangement for micro, small and medium enterprise (MSME) loans
with an Ahmedabad-based non-bank financier MAS Financial Services Ltd.

Source: Company websites, Media sources

28
Key Industry Contacts

29
Key Industry Contacts

Agency Contact Information

Maker Bhavan No 1, 4th Floor,

Sir V T Marg, Mumbai - 400 020
India
Insurance Brokers Association of India (IBAI) Phone: 91 11 22846544
E-mail: ibai@ibai.org
Website: https://ibai.org/

One Indiabulls Centre,

Tower 2, Wing B, 701,
841 Senapati Bapat Marg,
Elphinstone Road, Mumbai - 400 013
Association of Mutual Funds in India (AMFI) India
Phone: 91 11 24210093 / 24210383
Fax: 91 11 43346712
E-mail: contact@amfiindia.com
Website: https://www.amfiindia.com/

101/103, Sunflower, 1st Floor, Rajawadi Road No.2, Ghatkopar

Finance Industry Development Council (East), Mumbai - 400 077 (India)
(FIDC) Phone: 91-22-21027324
E-mail: info@fidcindia.com

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Appendix

31
Glossary

▪ AUM: Assets Under Management

▪ CAGR: Compound Annual Growth Rate

▪ FII’s: Foreign Institutional Investors

▪ GDP: Gross Domestic Product

▪ HCV: Heavy Commercial Vehicle

▪ HNWIs: High-Net-Worth Individuals

▪ IRDAI: Insurance Regulatory and Development Authority of India

▪ LIC: Life Insurance Corporation

▪ NBFCs: Non Banking Financial Company

▪ NSE: National Stock Exchange

▪ BSE: Bombay Stock Exchange

▪ RBI: Reserve Bank of India

▪ SEBI: Securities and Exchange Board of India

▪ US$ : US Dollar

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Exchange rates

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

Year Rs. Equivalent of one US$ Year Rs. 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
2012-13 54.45 2012 53.49
2013-14 60.50 2013 58.63
2014-15 61.15 2014 61.03
2015-16 65.46 2015 64.15
2016-17 67.09 2016 67.21
2017-18 64.45
2017 65.12
2018-19 69.89
2018 68.36
2019-20 70.49
2019 69.89
2020-21 73.20
2020 74.18
2021-22 74.42 2021 73.93
2022-23 78.60 2022 79.82
2023-24 82.80 2023 82.61
2024-25** 83.42 2024* 83.22

Note: *- Until June 2024, **- April-June 2024

Source: Foreign Exchange Dealers’ Association of India

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