FINANCIAL SERVICES

For updated information, please visit www.ibef.org December 2017

Table of Content

Executive Summary………………….……3

Advantage India…………………….……. 4

Market Overview ……………………..…...6

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

Growth Drivers and Opportunities……….20

Case studies…..………….…………….....30

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

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

Gross national savings  In 2016, India’s Gross National Savings (GNS), as a percentage of GDP, stood at 28.9 per cent, as against
above 30 per cent of the GNS of developed nations like the UK (15.1 per cent) and that of emerging nations like Brazil (15.8 per
GDP cent) and Russia (28.6 per cent).

India’s HNWI population  India has 2083 ultra high net worth individuals having net wealth of US$ 50 million and 940 people in India
to double by 2020 hold more than US$ 100 million assets

 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
Robust AUM growth
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.

Fundraising via IPOs on  Fund-raising through initial public offerings (IPOs) in India has hit a record high, with 122 companies raising
the rise a total of Rs 700 billion (US$ 10.89 billion) in April-November 2017.

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

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

 Financial Services

ADVANTAGE INDIA
 ADVANTAGE INDIA

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

 Financial inclusion drive from RBI has  Maharashtra will be the 1st state, to launch its
expanded the target market to semi-urban and mobile wallet facility allowing transferring of
rural areas funds from other mobile wallets.

 Investment corpus in Indian insurance sector  Airtel recently got the payments bank license
can rise to US$ 1 trillion by 2025 from the RBI and is starting its pilot services
across 12000 outlets in Karnataka in
supplement to Andhra Pradesh and Telangana

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

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

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

 Financial Services

MARKET
OVERVIEW
 SEGMENTS OF THE FINANCIAL SERVICES SECTOR

Financial services

Capital markets Insurance NBFCs

Asset Management Life Asset finance company

Broking Non-life Investment company

Wealth Management Loan company

Investment
Banking

Note: NBFC - Non Banking Financial Company

Source: Aranca Research

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

 ASSETS UNDER MANAGEMENT HAVE MORE THAN
DOUBLED SINCE FY07

 The asset management industry in India is among the fastest Mutual fund
Visakhapatnam
assets underport
management
traffic (million
(AUM) tonnes)
(in US$ billion)
growing in the world

 As of November 2017, 42 asset management companies were 400.00

CAGR: 15.25%
operating in the country

 At the end of November 2017, the assets under management of the 350.00

354.5
mutual fund industry stood at Rs 22.79 lakh crore (US$ 354.49
billion.)
300.00
 Inflows in India's mutual fund schemes via the systematic investment
plan (SIP) route reached Rs 40,780 crore (US$ 6.34 billion) between

272.6
April-November 2017. 250.00

252.1
 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 200.00
Funds in India (AMFI) data, this was the highest investment in

179.6
mutual fund schemes since the fiscal 1999-2000.
150.00
 Equity mutual funds have registered a net inflow of Rs 19,508 crore

136.9
(US$ 3.03 billion), thereby taking their asset base to Rs 6.56 lakh

129.8
129.5

129.2
125.4

125.3
crore (US$ 102.07 billion) in November 2017. 100.00

90.4
 The number of mutual fund (MF) portfolios have increased to 62.05

72.3
million as of September 2017, backed by rising interest in MFs 50.00
among investors.

 Mutual fund (MF) equity portfolios in India reached a record high of 0.00
FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18*
46.63 million, of which 7.6 million portfolios were added between
January-October 2017.
Note: AUM – Assets Under Management, * - data from April-November 2017
Source: AMFI, Aranca Research

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

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

 In September 2017, corporate investors accounted for around 46.26 Investor breakup (as of September 2017)
per cent of total AUM in India, while HNWIs and retail investors
accounted for 28.01 per cent and 22.96 per cent, respectively.
2.14% 0.63%
Corporates
 In 2016, corporate investors accounted for around 46.9 per cent of
total AUM in India, while HNWIs and retail investors accounted for 22.96% HNWI
28.6 per cent and 22.3 per cent, respectively.
46.26% Retail
 Category 3 Alternative Investment Funds (AIFs) in India, which are
hedge funds investing in public markets, have raised Rs 8,521 crore Banks/FI
28.01%
(US$ 1.3 billion) during the first nine months of 2017.
FII

Leading AMCs in India (as of September 2017)

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

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

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

 BROKING: EQUITY MARKET TURNOVER INCREASED
SIGNIFICANTLY IN RECENT YEARS

 Steadily rising turnover in financial Turnover on NSE (Capital markets segment) in US$ billion
markets has led to rapid expansion of
the brokerage segment CAGR 19.13 %

882

873
 Between FY96 and FY17, the annual 1,000

790
785

718
900

647
turnover value in NSE witnessed

599
800

586
499
700

466
growth at a CAGR of 19.13 per cent

430
600

354
500

294
reaching a value of US$ 790.21

254
240
400

194

128
billion in FY17

108
100
300

99
83
200

20
 The number of companies listed on 100
0
the NSE rose from 135 in 1995 to

FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
1,851 in September 2017.

 On 2nd June 2017, both BSE Sensex

and Nifty hit all time highs of 31,332 Listed companies on major stock exchanges in Asia-Pacific countries
and 9,673, respectively. (2017)
 India has scored a perfect 10 in 2,500
protecting shareholders' rights on the 2,000 2,238 2,192
back of reforms implemented by 2,096
1,500 1,851
Securities and Exchange Board of
1,435
India (SEBI).^ 1,000

500

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

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

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

 VIBRANT CAPITAL MARKET EVIDENT THROUGH
LARGE NUMBER OF LISTINGS

 The number of listed companies on NSE and BSE increased from Companies listed on NSE and BSE
6,445 in FY10 to 7,547 in November 2017.
9,000
 The amount raised by IPOs in India increased from US$ 318 million 8,000
in FY 2008-09 to US$ 10,888 million in FY 2017-18*. 7,000

7,719

7,651

7,547
7,357
7,024
6,877
6,000

6,779
6,641
 Indian enterprises are expected to raise record funds worth Rs 2.5

6,445
6,361
6,268
6,049
5,850
5,000
lakh crore (US$ 39.14 billion) from the financial markets with more 4,000
than 150 companies interested in initial public offerings (IPOs), 3,000
qualified institutional placements (QIPs), and follow-on public 2,000
1,000
offerings, according to Prime Database.
0

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18*
 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.^
Amount raised by IPOs (US$ million)
 As on October 19, 2017, 105 Small and medium enterprises (SMEs)
have launched their initial public offerings on the SME platform, 12,000
raising a total of Rs 1,267 crore (US$ 194.7 million), which is roughly 10,000

10,888
equal to the total amount raised on the platform during past four
8,000
years since inception.
6,000

5,173
4,000

4,535
1,015
3,899

921

2,315
318

472
2,000

188
0
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18*

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

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

 WEALTH MANAGEMENT: AN EMERGING SEGMENT

 Between 2011 and 2016, number of HNWIs in India has seen a Visakhapatnam
Numberport
of HNWIs
traffic in
(million
India tonnes)
steady rise at a CAGR of 13.8 per cent

 High net worth households would grow at an even faster rate till 2,50,000
2019 growing at a CAGR of about 21.5 per cent

2,36,000
 By the end of 2025, global HNWI wealth is estimated to grow to over
US$ 100 trillion.
2,00,000

2,00,000
1,98,000
 Advisory asset management and tax planning has one of the highest
demand among wealth management services by HNWIs; this is
followed by financial planning
1,50,000

1,56,000
1,53,000

1,53,000
1,25,000
1,20,000
1,00,000

84,000
50,000

-
2008 2009 2010 2011 2012 2013 2014 2015 2016

Note: HNWI – High Net Worth Individuals

Source: World Wealth Report, Capgemini

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

 THE LIFE INSURANCE SEGMENT HAS GROWN
SIGNIFICANTLY IN RECENT YEARS

 The life insurance market has grown from US$ 10 billion in FY02 to Life insurance segment (US$ billion)
US$ 56.05 billion in FY16
70 CAGR 10.52 %
 Over FY02–16, life insurance premiums witnessed growth at a
60

45
CAGR of 10.52 per cent

42
50

40.55
39.3
38

39
37
 Business of life insurance companies from first year premium stood

34
40

29
at US$ 19.12 billion for the period ended November 30, 2017 30

28
20

21
FY05 2 17

19
FY04 1 14

FY16 15.5
FY15 14.5
18
17
10

11

13
FY09 14

FY13 14
0 10

FY08 13
FY07 6
FY06 3
0

FY02

FY03

FY10

FY11

FY12

FY14
0
Public Private

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

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

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

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

 NON-LIFE INSURANCE SEGMENT HAS BEEN RISING

 The non-life insurance market grew from US$ 2.6 billion in FY02 to Visakhapatnam
Non-life insurance
portpremiums
traffic (million
(US$ tonnes)
billion)
US$ 19.71 billion in FY17.

 During FY02–17, increase in non-life insurance premiums witnessed 25.0 CAGR 14.47 %
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 20.0
during the same period.

10.5
15.0

7.7
7.3
7.2
6.8
6.7
10.0

5.8

9.2
4.6
4.4
4.2

6.3
6.1
5.0

5.7
3.8

5.1
3.6

4.7
FY05 0.8 3.3

3.8
FY04 0.5 3.1
FY03 0.32.8

2.9
2.7
2.7
2.5

FY07 1.9
FY02 0.1

FY061.2
-

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

Note: YoY – Year on Year

Source: IRDA, General Insurance Council

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

 NBFC: GROWING IN PROMINENCE

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

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

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

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

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

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

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

3,000

1,056.04
2,000

854.82
610.82

1,610.97
421.97
293.78
1,000

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17 P
Note: NBFC - Non Banking Financial Company,; P-Provisional, ^ - according to Microfinance Institutions Network (MFIN)
Source: RBI

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

 Porter’s Five Force Framework Analysis

Threat of Substitutes

 Low – Less number of substitutes

available for financial products

Bargaining Power of Suppliers Competitive Rivalry Bargaining Power of Buyers

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

Threat of New Entrants

 Low – Stringent regulatory norms

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

Source: Aranca Research, Media Sources

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

 Financial Services

RECENT TRENDS
AND STRATEGIES
 RECENT TRENDS

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

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

 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
NBFCs 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
Note: ^ - according to the 'World Payment Report 2017' by Capgemini.
Source: Aranca Research

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

 STRATEGIES ADOPTED

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

 In May 2017, TimesPro collaborated with Vishwa Vishwani Institute of Systems and Management (VVISM) to
Mergers and launch PGDM programme in Banking and Financial Services.
Acquisition  Ebix Inc, which entered India in May 2017 with its acquisition of ItzCash in May 2017, is planning to invest
additional US$ 200 million for acquisitions in newer segments in India.

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

Expanding
 Indian companies are strengthening their footprint on foreign shores, enhancing geographical exposure
geographical presence

Source: Ministry of External Affairs, RBI

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

 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 Visakhapatnam

Gross national
port
savings
traffic (US$
(million
billion)
tonnes)
billion in 2015 to US$ 940 billion in 2019, growing at a CAGR of 8.87
per cent
1000
 India’s HNWIs wealth is likely to expand at a CAGR of 19.7 per cent
and reach around US$ 3 trillion by 2020 900 940

 As per Union Budget 2017-18, government has allocated US$ 1.48 846
800
billion for recapitalisation of Public Sector Banks in the country
765
700
682 669
600 648 655
620 632

500

400

300

200

100

0
2011 2012 2013 2014 2015 2016 2017 F 2018 F 2019 F

Note: F – Forecast, Deloitte Center for Financial Services

Source: IMF, Reserve Bank of India,

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

 CONTINUED GROWTH IN EQUITIES AND INNOVATIVE
PRODUCTS

 The Indian equity market is expanding in terms of listed companies Number of listed companies - NSE
and market cap, widening the playing field for brokerage firms.
Sophisticated products segment is growing rapidly, reflected in the 2,000
1,800
steep rise in growth of derivatives trading

1,851
1,817
1,808
1,600

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

1,574
 With the increasing retail penetration there is immense potential to

1,470
1,432
1,200

1,381
tap the untapped market. Growing financial awareness is expected to

1,228
1,000

1,069
increase the fraction of population participating in this market 800
600
 As of February 2017, National Payments Corporation of India (NPCI) 400
is planning to make Hyderabad as its hub. The company will set up 200
0
its office and data centre in the city. NPCI is an origination for all

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18*
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$
Growth in turnover for derivatives segment (US$ billion)
600 million, in February 2017, from various investors such as

14,750
Harvard Management Company and Singapore Investment
Corporation (GIC). 16000

10,254
14000

9,225
 Total wealth held by individuals in unlisted equities is projected to 12000

6,539
6,418

6,339
grow at a CAGR of 19.54 per cent to reach Rs 17.64 lakh crore (US$ 10000

5,806
273.69 billion) by FY22.^ 8000

3,726
3,253

2,398
6000

1,625
1,089
4000

567
2000 464
0
FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17
Note: * - As of September 2017, ^ - as per Karvy India Wealth Report 2017
Source: National Stock Exchange

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

 WEALTH MANAGEMENT TO RIDE THE WAVE OF
RISING LIQUID ASSETS

The HNWI population in India is estimated to

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

Wealth
Management

Remittances from Non-resident Indians

With a fast rising economy, the investable
(NRIs) and People of Indian Origin (PIOs)
wealth of HNWI segment is rising, creating a
estimated at US$ 62.7 billion in 2016
need for wealth services.

Source: World Bank – Migration and Development Brief

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

 INSURANCE TO BENEFIT FROM WIDENING REACH
ACROSS SEGMENTS

 Passenger car sales in the country grew at

a YoY of 9.23 per cent in FY17, in
 Targeted at rural segment, potentially comparison with previous year
addressing two-thirds of Indian population  Increasing number of insurance registered
policy incentives are driving growth for passenger cars and for construction
activities will rise with India’s infrastructure
growth plans

Insurance

 Demand for agricultural and livestock

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

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

Source: YoY – Year on Year

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 India has over 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
Investor protection
from quickly adopting new investor protection measures

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

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

Source: Aranca Research

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

 HNWI POPULATION TO DOUBLE BY 2020

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

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

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

High-net-worth households in India (estimates)

Net worth 2009 2010 2011 2015 2020

US$ 1–5 million 157,000 183,333 210,000 315,000 508,127

US$ 5–30 million 36,000 43,000 50,000 84,000 13,280

Above US$ 30 million 17,000 21,000 26,000 40,000 56,000

Total wealth holdings of

361.8 503.1 584.5 1,559.1 2,950.1
millionaires (US$ billion)

Source: Deloitte Center for Financial Services

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

 FAVOURABLE POLICY MEASURES AND
GOVERNMENT INITIATIVES

 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
Budgetary Measures
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.

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

Note: QFI – Qualified Foreign Investors

Source: Dun and Bradstreet., Media articles

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

 FAVOURABLE POLICY MEASURES AND
GOVERNMENT INITIATIVES

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

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

Source: Media articles

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

 Financial Services

CASE STUDIES
 SHRIRAM TRANSPORT FINANCE CO LTD

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

Net profit
port(US$
traffic
million)
(million tonnes)
commercial vehicle finance, with a niche presence in financing pre-
owned and small truck owners
300
 Services – Truck financing, passenger vehicle financing, farm
equipment financing, construction vehicle and equipment financing

269.6

268.2
250
 Features – Number of customers covered: 1.1 million

250.5
 AUM: US$ 11.12 million

 Number of branches: 853 200

209.7

205.3

196.19
184.1

180
150

132.6
100

96.8
32.2
50

42.1
10.9
0

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17
Source: Company website

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

 MUTHOOT FINANCE LTD

 Muthoot Finance Ltd. is the largest gold financing company in India Visakhapatnam
Net profit
port(US$
traffic
million)
(million tonnes)
in terms of loan portfolio. The company provides personal and
business loans secured by gold jewellery
200.0
 Divisions – Financing, Power Generation and FM Radio
180.0 190.3 188.43
 Features – Number of branches1: 4,200+ 184.9

 Gold loans under management1: US$ 3.8 billion 160.0

 Number of employees1: 23,070

140.0

120.0 129.4 126.92

108.3 111.2
100.0

80.0

60.0

40.0

20.0

0.0
FY11 FY12 FY13 FY14 FY15 FY16 FY17

Source: Company website

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

 Financial Services

KEY INDUSTRY
ORGANISATIONS
 INDUSTRY ORGANISATIONS

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

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

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

Finance Industry Development Council (FIDC)

222, Ashoka Shopping Centre,

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

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

 Financial Services

USEFUL
INFORMATION
 GLOSSARY

 AUM: Assets Under Management

 BSE: Bombay Stock Exchange

 CAGR: Compound Annual Growth Rate

 FII’s: Foreign Institutional Investors

 GDP: Gross Domestic Product

 HCV: Heavy Commercial Vehicle

 HNWIs: High-Net-Worth Individuals

 IRDA: Insurance Regulatory and Development Authority

 LIC: Life Insurance Corporation

 NBFCs: Non Banking Financial Company

 NSE: National Stock Exchange

 RBI: Reserve Bank of India

 SEBI: Securities and Exchange Board of India

 US$ : US Dollar

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

 EXCHANGE RATES

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

Year INR Equivalent of one US$ Year INR Equivalent of one US$
2004–05 44.81 2005 43.98
2005–06 44.14
2006 45.18
2006–07 45.14
2007 41.34
2007–08 40.27
2008 43.62
2008–09 46.14
2009 48.42
2009–10 47.42

2010–11 45.62 2010 45.72

2011–12 46.88 2011 46.85

2012–13 54.31 2012 53.46
2013–14 60.28
2013 58.44
2014-15 61.06
2014 61.03
2015-16 65.46
2015 64.15
2016-17 67.09

Q1 2017-18 64.46 2016 67.21

Q2 2017-18 64.29 H1 2017 65.73

Source: Reserve bank of India, Average for the year

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 DISCLAIMER

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