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

4. FUNDRAISING VIA
1. GROSS SAVINGS 2 3 IPOS ON THE RISE
NEAR 30.73% OF • Fundraising from IPOs
GDP amounted 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 1 4
billion.
• 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 • The government has approved 100% FDI for
channels to expand reach of financial services. insurance intermediaries and increased FDI limit in
• Emerging digital gold investment options. the insurance sector to 74% from 49% under the
• In September 2021, 8 Indian banks announced Union Budget 2021-22.
that they are rolling out—or about to roll out—a • International Financial Services Centres Authority
system called ‘Account Aggregator’ to enable (Banking) Regulations, 2020, are expected to drive
consumers to consolidate all their financial data and facilitate the constituent operations in the
in one place. IFSC and help the sector reach its potential.
1. GROWING DEMAND
• Rising income is driving the
demand for financial
4. GROWING
services across income PENETRATION
brackets.
• Financial inclusion drive • Credit, insurance
from the Reserve Bank of
India (RBI) has expanded 2 3
investme
nt
rising in ruraland
the target market to semi- • areas.
HNWI penetration is
participation
urban and rural areas. growing in the wealth
• Investment corpus in management segment.
Indian insurance sector • Lower is fun
might rise to US$ 1 trillion mutual
penetration of 5-6% d

•
by 2025.
With >2,100 fintechs
1 4
reflects latent growth
opportunities.
operating currently, India
is positioned
expansion of tomobile
become
one
and of the largest digital
internet.
markets with rapid

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 Lif Asset finance

management e company

Brokin Non- Investment

g life company

Wealth Loan
management company

Investme
nt
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

90
stood at Rs. 0
64.97 lakh crore (US$ 780.70 billion) .
 In May 2021, the mutual fund industry crossed over 10 crore 80
folios. 0

780.7
 Inflow in India's mutual fund schemes via systematic
investment plans (SIP) from April 2023 to March 2024 stood 70

0
at Rs. 2 lakh crore (US$ 24.04 billion). 0

 Growth in B30 (beyond the top 30) cities, sustainability of

641.7
60
alpha, alternative investments and regulatory norms are
0
expected to shape the mutual fund industry in the coming

5
years.
50
 About 18% of assets in the mutual fund industry were 0
generated from B30 locations in April 2024.

482.4
481.7
 These assets increased by 3%, from Rs. 9.83 lakh crore 40

0
7
425.8
(US$ 0

404.7
118.13 billion) in March 2024 to Rs. 10.16 lakh crore (US$

7
3
122.10 billion) in April 2024.

340.4
30

331.4
 The assets under management growth is expected to double 0

8
2
272.6
to Rs. 100 trillion (US$ 1207 billion) by 2030 implying a

252.0
CAGR of 14% from FY24 to FY30. 20

2
0

6
 In November 2020, an agreement with the World Bank was
signed by the Department of Investment and Public Asset
Management (DIPAM). 10
0
• Under the agreement, the World Bank is expected to
provide DIPAM with asset monetization advisory services.
0
• This project is established to encourage and speed up the
FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25
monetization of non-core assets and help unlock the

*
value
*Note- * As of Julyof
2024these unused/marginally used assets that have
the potential
Source: Association toFunds
of Mutual dramatically
- AMFI increase financial capital for
further investment and development.
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

Corporate
s
27.5
ICICI Prudential Mutual Fund 85.45 Banks/
% 36.5 FIs
%
US$ 613.26 FIIs
HDFC Mutual Fund 74.15
billion
High
Kotak Mutual Fund 74.15 Networth
1.3 Individuals*
%
34.7 Retail
0.1%
%
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 Listed companies on major stock exchanges in Asia-Pacific
crore (US$ countries
973.67 billion) in 2023 and Sensex reached an all-time high
of 79,672 on June 28, 2024. 3,000

 The number of Demat accounts in India reached 154 million

in April 2024. 2,683
2,50
 The number of companies listed on the BSE increased from 0 2,607
135 in 2,38
1 2,273
1995 to 5,415 as of June 2024. 2,190
2,000
 According to the statistics by the Futures Industry Association
(FIA), a derivatives trade association, the National Stock
Exchange of India Ltd. (NSE) emerged as the world’s largest
derivatives exchange in 2020 in terms number of contracts 1,500

traded. NSE was ranked 4th worldwide in cash equities by

number of trades as per the statistics maintained by the
World Federation of Exchanges (WFE) for CY2020. 1,000

 India has scored a perfect 10 in protecting shareholders'

rights on the back of reforms implemented by the Securities
and Exchange Board of India (SEBI) in the World Bank's Ease 500
of Doing Business 2020 report.
 According to Goldman Sachs, investors have been pouring
money into India’s stock market, which is likely to reach 0
Australia Hong Korea NSE India Shanghai
>US$ 5 trillion, surpassing the UK, and become the fifth- n SE Kong SE SE
largest stock market worldwide by 2024. 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 14.5

14.00 13.01 5
7,60
7,71

7,68
0
7,65

12.00
7,58

7,54
9

7,50

1
7,46
7,40 10.00
1

7
732
0
1

2
8.00 7.00 7.25
7,17

0
7,20
2 6.00 4.2
0 2.85 5

6,81
7,00 2.31 2.87
4.54 4.00

9
0
2.00
-
6,80

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24
FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25
0
6,60

*
0
 6,40
In FY24 as of June 2024, the number of listed companies on the NSE and BSE were 2,266, and 5,415 respectively.
0
 6,20
In FY22, US$ 14.55 billion was raised across 127 initial public offerings (IPOs).
0
 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

Numberport
Visakhapatnam of HNWIs in India tonnes)
traffic (million
2022. 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.

16,57,27
 HNWI households grew at an even faster rate until 2019,
growing at

2
a CAGR of about 21.5%.
 Advisory asset management and tax planning have one of
the highest demands among wealth management services

7,97,71
by HNWIs. This is followed by financial planning.

4
 India is expected to be the fourth largest private wealth
market globally by 2028.
 According to the Knight Frank Report, the number of ultra-

3,08,00
2,78,00
2,63,00
2,56,00
2,55,00
high-net- worth individuals (UHNWIs), with a wealth of US$

2,26,00
2,19,00

2,00,00
30 million or more, is expected to rise 63% between 2020

0
0
0
0
0
and 2025 to 11,198.

0
0

0
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
LIC India 57.33

49.
44.
40.0

5
45.
43.

8
42.
42.

6
41.

40.
9

3
0
0

37.
SBI Life 8.13
36.

1
1
7
30.
30.

30.0
1

HDFC life 6.95

20.0

10.0 ICICI Prudential Life 4.82

FY18 FY19 FY20 FY21 FY22 FY23
0.0
New Business Renewal Bajaj Allianz 2.35
Premium Premium

 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)

13
Source: IRDAI
Non-life insurance segment has been rising as
well
 The non-life insurance industry is made up of general
Visakhapatnam
Gross premiums written port traffic
off by (million
non-life tonnes)
insurers (US$ billion)
insurers, standalone health insurers, and specialised PSU
insurers.
 In India, gross premiums written off by non-life insurers 40
reached Rs. 289,737.87 crore (US$ 34.82 billion) in FY24
(between April 2023- March 2024), from Rs. 256912.14 crore 35
(US$ 30.88 billion) in FY23 (between April 2022-March 34.8
2
2023), driven by strong growth from general insurance 3
 Non-life Insurance industry reported a five-month high
companies. 0
growth rate of 15.9% in January 2022 which was at Rs. 31.00 28.1
21,401.1 crore (US$ 2.83 billion). 25 26.5 7
26.49 2
24.3
23.3 2
20 8

19.1
1
1
5 14.7
2
1
0

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
Top 5 NBFCs market capitalization in India (2024*)
prominence as 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 Bajaj Finance Ltd
to US$
470.74 billion in 2020 at a CAGR of 14.04%.
 There were 9,356 NBFCs registered with the RBI as of September, Cholamandalam
2023. Investment and
7% Finance
 In December 2020, the Reserve Bank of India issued a draft circular on 12% Company Ltd
the declaration of dividends by NBFCs, wherein it proposed that NBFCs Bajaj Holdings
should have at least 15% Capital to Risk-Weighted Assets Ratio (CRAR) and Investment
13%
56% Ltd
for the last 3 years, including the accounting year for which it proposes
to declare a dividend. 12%
 In July 2021, Rajya Sabha approved the Factoring Regulation Shriram Finance
Ltd
(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
Muthoot Finance
factoring sector.
Ltd
 On September 30, 2021, the Reserve Bank of India communicated that
 On
the September
applicable 29, 2021,base
average SBI rate
announced that it by
to be charged hasnon-banking
signed an
agreement with
financial companies three non-banking finance company-microfinance
institutions (NBFC-MFIs)
- micro finance for co-lending
institutions to joint
(NBFC-MFIs) liability
to their groups (JLGs).
borrowers for the
quarter
 On beginning
January October
25, 2023, Legal1, 2021,
and will be 7.95%.
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
unlimited fund transfer between wallets geographical exposure. India's digital payment is estimated to increase to US$ 1
and bank accounts, mobile wallets will trillion by 2023.
become strong players in the financial • In the Union budget of 2022-23, India has announced plans for a central bank
ecosystem. digital currency (CBDC) which will be known as Digital Rupee.
• India's mobile wallet industry is • The number of transactions through immediate payment service (IMPS) reached
estimated to grow at a CAGR of 23.9% 534.6 million (by volume) and amounted to Rs. 5.58 trillion (US$ 68.61 billion) in
between 2023 and 2027 to reach US$ February 2024.
5.7 trillion. • In August 2021, Prime Minister Mr. Narendra Modi launched e-RUPI, a person and
• In July 2024, Unified Payments Interface purpose- specific digital payment solution.
(UPI) • Digital payment platforms for rural India:
recorded 14.44 billion transactions – In August 2021, Neokred, an open banking stack that delivers curated versions of
worth Rs. issuance in the payment ecosystem, teamed with Virenxia, a provider of
20.44 lakh crore (US$ 245.61 billion). integrated and sustainable solutions for rural transformation and development, to
1. INSURANCE SECTOR launch the ‘The Kisan Card,' a special payment card for Indian farmers.
• New distribution channels such • NBFCs have served the non-
as bank assurance, online 4. NBFCs
banking customers by pioneering
distribution and Non-Banking into retail asset-backed lending,
Financial Companies (NBFCs) lending against securities and
have
the widened
reach
operational costs.
and reduced
2 3 microfinance. NBFCs aspire to
emerge as a one-stop shop for all
• In November 2020, LIC took financial services.
initiatives to facilitate quicker • In July 2021, Rajya Sabha
proposal completion by approved Factoring Regulation
launching a digital application – (Amendment) Bill in 2020,

•
ANANDA.
India’s general insurance
1 4 enabling ~9,000 NBFCs to
participate in the factoring
market is expected to grow at a market. The bill also gives the
compound annual growth rate central bank the authority to
(CAGR) of 7.1% during 2024- establish guidelines for improved
2028. oversight of the US$ 6 billion
Source: Capgemini, Credit Suisse, Crisil, The Economist Intelligence Unit commissioned by payments company Visa factoring sector.

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

Gross national
Visakhapatnam savings
port traffic as % of GDP
(million tonnes)
 The contribution by small savings schemes such as Senior
Citizen Savings Scheme (SCSS), 15-Year Public Provident 40
Fund (PPF), National Savings Certificate and Sukanya
35.1 35.3
Samriddhi is major in gross national saving income. 34.3
3 33.
5 5 32.
5 30.8 31.7 31.3 31.
30.7 30.
3 29.9 29. 2 2
0 3

2
5

2
0

1
5

1
0

5
201

201

201

201

201

201

201

201

201

202

202

202

202
1

3
0

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

Total Turnover for derivatives segment (US$ trillion)
companies and market capitalization, widening the playing
field for brokerage firms. Sophisticated products segment is
growing rapidly, reflected in the steep rise in growth of 947.24
1,000.00
derivatives trading.
900.00
 With the increasing retail penetration, there is an immense 800.00
potential to tap the untapped market. Growing financial 700.00
awareness is expected to increase the fraction of population
participating in this market. 600.00
500.00 461.63
 Total wealth held by individuals in unlisted equities is
projected to grow at a CAGR of 19.54% to reach Rs.
17.64 lakh crore (US$ 400.00
77.7
41.6
273.69 billion) by FY22. 3
0
 India’s PE/VC investment crossed US$ 60 billion in 2023. 300.00
FY19 FY20 FY21 204.73 FY23
FY22 FY24
 Turnover from the derivatives segment reached US$ 947.24 200.00
100.00
trillion in FY24 and stood at US$ 461.63 billion in FY23.
 In July 2021, India's largest commodities derivatives 28.69

exchange, Multi Commodity Exchange of India Ltd., and 0.00

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
Investor
benefit greatly from quickly adopting new investor protection measures.
protection

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

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

Innovatio
creating customised and innovative products will enable growth.
n

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
Two-wheelerdemand.
sales also rebounded, 3. AGRICULTURE
increasing by over 13% to reach 17.9 • Demand for agricultural and livestock
million units. insurance growing on the back of
 Increasing number of insurance rising awareness among rural
registered for passenger cars and for population.
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
• The policy incentives acts as
drivers for the growth of 1 4
vast market is yet to be
tapped. Health insurance
micro- insurance sector. accounts for 1.2% of 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
Credi critical for the agricultural sector.
t  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.
Investme  Some private players are producing innovative products like third party money market mutual
nt funds to cater to rural investment needs.

 Agricultural, livestock and weather insurance are potentially large markets in rural India.
Insuranc
 Harnessing existing networks of MFIs and NGOs can speed up the process.
e

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%
Source: Union from
Budget 49% Company
2022-23, under websites,
the Union Budget
Media sources 2021-22.

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 Phone: 91 11 22846544
(IBAI) E-mail: ibai@ibai.org
Website:
https://ibai.org/

One Indiabulls Centre,

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

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

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

30
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

32
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

33
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34