MSME Financing Market in India 2020

Micro, small and medium enterprises (MSMEs) play a pivotal role in the Indian economy. About 63.38 Mn enterprises operational in various industries have provided employment to more than 111 Mn people. The MSME sector accounts for 30% of the country’s GDP, which is likely to touch 50% in 2025. The in...

43983 | Banking, Financial and Insurance Services (BFSI)

Pension Fund Market in India 2020

The Indian pension industry is a complex and fragmented system. However, the current demographic structure makes it one of the most feasible markets for pension fund providers. The fertility rate in the country has decreased drastically from 2.50 in 2011 to 2.22 in 2018. Further, the country’s rich ...

43983 | Banking, Financial and Insurance Services (BFSI)

Gold Loan Market in India 2020

In India, gold is considered to be a sign of social status, financial security and cultural legacy. As of 2019, households in India assembled about 25,000 tons of gold, making the country the largest holder of the yellow metal in the world. Rural communities account for ~65% of the total gold demand...

43952 | Banking, Financial and Insurance Services (BFSI)

Fintech Market in India 2020

India is one of the fastest-growing fintech markets in the world. As of March 2020, India, alongside China, accounted for the highest fintech adoption rate (87%), out of all the emerging markets in the world. On the other hand, the global average adoption rate stood at 64%. With the burgeoning numbe...

43922 | Banking, Financial and Insurance Services (BFSI)

Non-life Insurance Market in India 2019

Amidst the ongoing economic slowdown across India, the insurance sector is expected to witness an expansion mainly due to the proposed increase in foreign investment limit on insurance intermediaries from 49% to 100%. The non-life insurance market is expected to reach INR 3,662.94 Bn by FY 2024, exp...

43739 | Banking, Financial and Insurance Services (BFSI)

Mobile Banking Market in India 2019

In India, mobile banking activities have surged over the years, with an increasing number of consumers adopting digital tools to monitor their finances. Mobile banking facilities are provided across the country by ~96,068 scheduled commercial banks (SCBs), through wireless application protocol (WAP)...

43800 | Banking, Financial and Insurance Services (BFSI)

Life Insurance Market in India 2019

The Indian financial services sector is a highly volatile sector, influenced by fiscal and monetary policies, government regulations, trade rules, tax changes, and technology changes. The insurance industry in India is regulated by the Insurance Regulatory and Development Authority of India (IRDAI),...

43770 | Banking, Financial and Insurance Services (BFSI)

E-payment Solutions Market in India 2020

As online payment rose in popularity, paper-based clearing methods experienced a sharp blow within the overall retail payments sector (both in terms of value and volume) in FY 2019. The e-payment solutions market in India is expected to expand at a compound annual growth rate (CAGR) of ~21.74% durin...

43831 | Banking, Financial and Insurance Services (BFSI)

Wealth Management Market in India 2019

The wealth management market, an integral part of the financial services sector in India, was valued at INR 113.32 Tn in 2018 and is expected to reach INR 338.67 Tn by 2024, expanding at a compound annual growth rate (CAGR) of ~20.02% during the 2019-2024 period. For the past few years, India has be...

43678 | Banking, Financial and Insurance Services (BFSI)

Retail Banking Industry in India 2019

The retail banking sector, currently comprises a network of ~96,068 branches of public sector, private sector, foreign, regional, rural, and cooperative banks (urban and rural). During the FY 2014-FY 2019 period, deposit at SCBs expanded at a compound annual growth rate (CAGR) of ~10.39% to reach I...

43770 | Banking, Financial and Insurance Services (BFSI)

Micro, small and medium enterprises (MSMEs) play a pivotal role in the Indian economy. About 63.38 Mn enterprises operational in various industries have provided employment to more than 111 Mn people. The MSME sector accounts for 30% of the country’s GDP, which is likely to touch 50% in 2025. The industry's financing needs depend on the nature, size, customer segments and stage of development of the different businesses. Financial institutions have limited their lending exposure to the Indian MSME industry due to the high cost of service, small ticket size of loans and limited ability of MSMEs to offer immovable collaterals. As of 2019, the overall addressable demand for external credit was ~INR 41.64 Tn, while the total supply of fund stood at INR 13.54 Tn. Therefore, the credit gap in the MSME industry accounted for ~INR 28.10 Tn in 2019. Debt demand of the MSME sector in India: The consolidated debt demand (both short-term and long-term finance) by Indian MSMEs accounted for ~99.39 Tn in 2019. Microenterprise debt demand accounted for INR 13.32 Tn, small enterprise accounted for INR 24.57 Tn, and medium enterprise accounted for INR 3.75 Tn of the total debt demand in the industry. Medium and small firms being more formalized in operations are better at securing collaterals with NBFCs and banks than micro-enterprises. Credit supply to the MSME sector in India: The overall credit supply, including both the formal and the informal sectors, is worth INR 86.08 Tn. The formal and the informal sectors contribute ~INR 13.54 Tn and INR 72.54 Tn, respectively to the overall credit supply. Banking and other financial institutions account for ~INR 11.68 Tn of the overall formal finance supply to the Indian MSME industry. Credit gap in the MSME sector in India: The overall credit gap is estimated to be ~INR 28.10 Tn, which can be attributed to underserved micro and small units. Further, lack of awareness among entrepreneurs about the various loan products and lack of proper documentation have considerably reduced the supply of debt. Impact of COVID-19: Small businesses are the most vulnerable to an unexpected crisis like COVID-19 because of their size, scale of business operation and limited financial management resources. However, the government has announced several policy measures to minimize the losses. The announcement of a targeted long-term repo operation (TLTRO) of INR 500 Bn, a grant of INR 3 Tn collateral-free automatic loans, INR 200 Bn subordinated debt to stressed MSMEs, and a complete ban on global tenders for procurement of goods and services for up to INR 2 Bn are a few of the crucial policy mandates. Companies covered: • Axis Bank of India • Bajaj Finserv Limited • Central Bank of India • Federal Bank Limited • HDFC Bank Limited • ICICI Limited • Kotak Mahindra Bank Limited • State Bank of India • Union Bank of India • Utkarsh Micro Finance Bank ...

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The Indian pension industry is a complex and fragmented system. However, the current demographic structure makes it one of the most feasible markets for pension fund providers. The fertility rate in the country has decreased drastically from 2.50 in 2011 to 2.22 in 2018. Further, the country’s rich demographic dividend calls for a robust social security framework. The three most crucial elements of the industry are Employee Provident Fund (EPF), National Pension Scheme (NPS) and Public Provident Fund (PPF) catering to the needs of the different segments of population. The retirement fund corpus was worth ~INR 25,078 Bn in 2018 and is expected to reach INR 62,353 Bn by 2025, expanding at a compound annual growth rate of ~14.33 % during the 2020-2025 period. The Indian government is restructuring the current pension system by promoting pension coverage among informal sector workers. The collected retirement fund corpus is invested in long-term growth projects, which accelerates the pace of economic development of the country. The country’s pension industry is highly underpenetrated as ~88% of the population does not possess any social security scheme, which indicates that the market has huge growth potential. Market segment insights: The retirement fund corpus is inclusive of contributions from Employee Provident Fund and related plans, Life Insurance and Annuity schemes, Private Pension Fund, Public Provident Fund, and the National Pension Scheme. More than 40% of the current corpus is contributed by Employee Provident Fund, the most developed segment of retirement planning for the organized sector workforce. However, contributions from Life Insurance and Annuity plans are expected to grow significantly during the forecast period. With increasing financial inclusion, the market for Public Provident Fund and National Pension Scheme would expand exponentially, especially among those employed in the unorganized sector. Impact of COVID-19: The impact of the pandemic on the Indian pension fund market is likely to intensify in the long run. The government has redesigned the interest rate, which is expected to diminish private savings and pension fund assets. Further, several policy decisions to support pension fund subscribers during the crisis period are expected to add to the problem of accounting and returns for industry players. Companies covered: • HDFC Life Insurance Company Limited • Aviva Life Insurance Company India Limited • Aditya Birla Sun Life Pension Management Limited • HDFC Pension Management Company Limited • ICICI Prudential Pension Funds Management Company Limited • LIC Pension Fund Limited • Reliance Nippon Life Insurance Company Limited • SBI Pension Funds Private Limited • Tata AIA Life Insurance Company Limited • UTI Retirement Solutions Limited ...

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In India, gold is considered to be a sign of social status, financial security and cultural legacy. As of 2019, households in India assembled about 25,000 tons of gold, making the country the largest holder of the yellow metal in the world. Rural communities account for ~65% of the total gold demand in the country. Owing to the sentimental value that Indians associate with this indispensable item, people seldom sell it to meet financial emergencies. They prefer to pledge gold as collateral to secure short-term loans. Gold loans enjoy a relatively low interest rate that varies between 9.5% and 24%, and have a flexible tenure (ranging from a few days to 5 years). The gold loan market in India was valued at ~INR 2,921.42 Bn in 2019 and is expected to reach ~INR 6,275.40 Bn by 2025, expanding at a compound annual growth rate (CAGR) of ~12.75% during the 2020-2025 period. Segment insights: The Indian gold loan market is segmented into organized gold loan market, also known as formal gold loan market and unorganized gold loan market or the informal gold loan market. The organized gold loan segment includes public banks, private banks, small finance banks, co-operative banks, NBFCs and Nidhi companies. In contrast, the unorganized sector is dominated by money lenders and pawnbrokers. The unorganized segment accounts for more than 60% of the gold loan market in the country. Nevertheless, the organized sector is anticipated to expand exponentially during the forecast period. NBFCs constitute the largest share of the organized market. Customers residing in rural parts of the country are gradually switching to these NBFCs, owing to quick loan processing, systematic gold valuation, auctioning and safe-keeping. Banks also offer gold loans, but they primarily consider these as their priority sector lending (PSL) requirements. Further, small finance and Nidhi companies represent the co-operative segment in the Indian gold loan industry, and account for ~12.98% of the organized gold loan market. Private sector banks are gradually entering the Indian gold loan market with tech-driven offerings like online gold loan services. Impact of COVID-19: The Indian gold loan market has witnessed a positive impact on business during the nationwide lockdown due to the Coronavirus pandemic. Gold loan products have experienced rapid growth than other retail banking products during this period. Due to economic distress and job losses, gold is acting as an insurance policy, as well as a retirement plan across India. People are availing gold loans to fulfill their immediate fund requirements. Moreover, demand for gold loan is further expected to expand as risk profiles of borrowers have depreciated considerably and lenders are becoming risk-averse. Many NBFCs are facing liquidity crisis, which is deteriorating their liquidity capacity. Therefore, gold loans are becoming a fallback plan for borrowers who are denied loan through regular channels. Companies covered: • Axis Bank of India • Central Bank of India • Federal Bank Limited • HDFC Bank Limited • ICICI Limited • Kotak Mahindra Bank Limited • Manappuram Finance Limited • Muthoot Finance Limited • State Bank of India • Union Bank of India ...

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India is one of the fastest-growing fintech markets in the world. As of March 2020, India, alongside China, accounted for the highest fintech adoption rate (87%), out of all the emerging markets in the world. On the other hand, the global average adoption rate stood at 64%. With the burgeoning number of start-ups, the fintech industry in India is attracting increased investments. Initiatives undertaken by the government to drive digitization like demonetization, Jan Dhan Yojana, Aadhaar and Unified Payment Interface (UPI) have further contributed to the growth of the industry. Market insights: The fintech market in India was valued at ~INR 1,920.16 Bn in 2019 and is expected to reach ~INR 6,207.41 Bn by 2025, expanding at a compound annual growth rate (CAGR) of ~22.70% during the 2020-2025 period. Increased adoption of the internet and improved digital infrastructure are driving the fintech market in India. However, lack of consumers’ trust on digital modes of payment, and rising threat of cyber and data security are impeding market growth. Further, the industry is witnessing increased application of artificial intelligence (AI) and Big Data for enhancing personalized offerings. New business models like Neobanks are expected to revolutionize the Indian fintech market. Segment insights: Payments, lending, insurtech, wealthtech and banktech are the key operative segments within the fintech market. The payment segment comprises M-wallets, PPIs, merchant payments, PoS services, international remittance and trading in crypto currencies. The lending segment includes peer-to-peer lending, crowd funding, loans, online lenders, on-book lending by NBFCs and credit scoring platforms. Insurtech is a niche segment in the Indian fintech ecosystem consisting of insurance aggregators, IoT, wearable and kinematics. Wealthtech includes robo-advisors, discount brokers and online financial advisors. The principal function of the banktech segment is to utilize data points like financial transactions and spending patterns to create risk profiles of consumers. In 2018 and 2019, the payments segment received the highest amount of venture capital investments, followed by the lending and insurtech segments. Wealthtech and banktech are the emerging segments of the industry. Impact of COVID-19: As the discretionary spending in the industry has gone down considerably, the number of digital transactions has declined. This has severely hampered cash flow for leading businesses in the country. However, the industry witnessed a ~42% rise in the use of digital payment modes. But purchasing only essential products would not be enough to drive uptake of digital transaction in the Indian fintech ecosystem. Healthcare, bill payments, grocery and food are witnessing rapid digitization, while the entertainment, fashion, travel and tourism industries are at a standstill, thereby reducing transaction volumes in the country and severely affecting the Indian fintech industry. Competition analysis: The fintech market in India is highly competitive with incredible growth potential; however, stringent regulatory norms tend to act as significant entry barriers for new players entering the Indian fintech space. The country is growing into a hub for fintech start-ups, and global investors are actively investing in prospective Indian fintech start-ups. In terms of investment, PayTM, Cred, Acko, InCred Finance and BharatPe emerged as the top five fintech players in 2019. Companies covered: • ET Money • ezetap • Freecharge Payment Technologies Private Limited • One Mobikwik System Private Limited • Mswipe Technologies Private Limited • One97 Communications Limited • PhonePe Private Limited • Pine Labs Private Limited • PolicyBazar.com • PayU Payments Private Limited ...

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In India, mobile banking activities have surged over the years, with an increasing number of consumers adopting digital tools to monitor their finances. Mobile banking facilities are provided across the country by ~96,068 scheduled commercial banks (SCBs), through wireless application protocol (WAP), short message systems (SMS) and unstructured supplementary service data (USSD). In recent years, several government initiatives and the launch of payment systems like unified payment interface (UPI) and Bharat interface for money (BHIM) have resulted in increased use of mobile banking. In FY 2019, INR 29,584.07 Bn amount funds were transferred, using mobile banking, thus increasing at a compound annual growth rate (CAGR) of ~131.21% from INR 1,035.30 Bn in FY 2015. In FY 2019, SCBs recorded the highest growth in mobile banking transactions (~43.17%), based on value, between February 2019 and March 2019. Based on volume, SCBs recorded highest growth (~24.66%) between August 2018 and September 2018 in mobile banking. Major players currently operating in the Indian mobile banking market include Axis Bank Limited, HDFC Bank Limited, Kotak Mahindra Bank Limited and State Bank of India. Key growth drivers of the market • The demonetization of the 500 and 1000 currency notes in November 2016 was aimed at transforming India into a cashless economy. Through initiatives like Digital India, the government plans to empower the country technologically, by improving online infrastructure and internet connectivity. Services like banking and utility bill payments are being made accessible to Indians through online platforms, both in urban and rural areas. As a result, a large part of the Indian population now has turned to mobile banking for fund transfer. • With the introduction of mobile banking channels, customers can avail banking services any time of the day. The installation of a single app makes the various types of banking facilities easily accessible. The instant responses obtained from the mobile banking apps like emPower (Allahabad Bank), Axis Mobile (Axis Bank), Baroda mPassbook (Bank of Baroda), and BOI mobile (Bank of India), improve customers’ experiences. Owing to such benefits, customers’ preference has shifted in favour of mobile banking from branch-based banking. Key deterrents to the growth of the market As much as the increased adoption of wireless Internet and mobile data connection has driven mobile banking facilities, it has also led to a rise in fraudulent activities in both the public sector and private banks across the country. Since fund transfer has become easy through mobile banking platforms, the young generation nowadays use application-based mobile banking channels for making miscellaneous digital payments. In the process, chances of data breach and fraudulent activities are high due to successful interoperability. Increased cases of cybercrimes in India have developed fear among the existing, as well as the potential mobile banking app users to adopt digital transaction processes, thus impeding the growth of the mobile banking market in India. Companies covered • Allahabad Bank Limited • Axis Bank Limited • Bank of Baroda Limited • Bank of India Limited • Housing Development Finance Corporation (HDFC) Bank Limited • Industrial Credit and Investment Corporation of India (ICICI) Bank Limited • Industrial Development Bank of India (IDBI) Limited • Kotak Mahindra Bank Limited • Punjab National Bank Limited • State Bank of India Limited ...

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As online payment rose in popularity, paper-based clearing methods experienced a sharp blow within the overall retail payments sector (both in terms of value and volume) in FY 2019. The e-payment solutions market in India is expected to expand at a compound annual growth rate (CAGR) of ~21.74% during the FY 2020-FY 2024 period, from its FY 2019 value of INR 1,638.49 Tn to reach INR 4,323.63 Bn by FY 2024. Based on volume, the market would expand at a CAGR of ~60.65% during the same period (FY 2020-FY 2024). Bank cards (debit cards, credit cards), e-wallets and UPI are some of the common modes of online payment prevalent in the country. Development in fintech, e-commerce and digital banking is significantly driving the growth of e-payments in the country. Integration of payment services in popular non-banking mobile applications such as WhatsApp, Apple Pay, Amazon Pay and Ola Money, among others, is also fueling e-payments, especially among the millennial population in India. Major players currently operating in the Indian e-payment solutions market include scheduled commercial banks like Axis Bank Limited, HDFC Bank Limited, ICICI Bank Limited and State Bank of India. Apart from banks, e-payment solution providers like Infibeam Avenues Limited, Airtel Payments Bank Limited, Mswipe Technologies Private Limited, Google LLC, and PayPal Payments Private Limited, also operate in the market. Segment-wise market overview Out of the different types of e-payment solutions, real-time gross settlement (RTGS) held the largest market share, followed by retail electronic clearing and bank cards, during the FY 2017-FY 2019 period, based on value. However, based on volume, bank cards held the largest market share during the same period. The share of national electronic funds transfer (NEFT), based on value, declined from ~90.72% in 2017 to ~85.20% in 2019, while it went down from ~38.41% in 2017 to ~18.60% in 2019, based on volume. On the other hand, share based on value for immediate payment service (IMPS) shot up from ~3.11% in 2017 to ~5.94% in 2019, and from ~12% in 2017 to ~14.06% in 2019, based on volume. Based on value, the share of credit cards decreased from ~44.25% in 2017 to ~42.80% in 2019, while on the basis of volume, the share dropped to ~16.35% in 2019 from ~19.95% in 2017. In the case of debit cards, shares fell from ~44.45% in 2017 to ~42.10% in 2019, based on value, and from ~44.02% in 2017 to ~40.94% in 2019, based on volume. IMPS and UPI are mobile based e-payment methods, which makes transaction easy and hassle free for customers. On the other hand, in order to transfer fund through both NEFT and NACH (national automated clearing house), customers are required to visit their respective bank branches. Also, transaction through NEFT and NACH require manual intervention, which in turn limits the process within the working hours of the bank. Mobile-based e-payment solutions have gained widespread acceptance since they allow smooth transaction. The popularity of branch-based solutions like NEFT and NACH has sank, in recent years. Key growth driver of the market Of late, the e-commerce market in India has been experiencing rapid growth, owing to the participation of companies offering niche products, presence of a large Internet user base, launch of 4G and increase in the purchasing power of consumers. E-commerce giants like Amazon, Flipkart and Paytm Mall often provide cashback and discount offers for online transactions, which in turn attract young customers towards e-payment systems. Key deterrent to the growth of the market Despite multiple efforts of the government towards making the Digital India campaign successful, cash continues to be the most popular mode of transaction in the country. This is impeding the adoption of e-payment services across the country. Companies covered • Axis Bank Limited • HDFC Bank Limited • ICICI Bank Limited • Infibeam Avenues Limited • State Bank of India • Airtel Payments Bank Limited • Mswipe Technologies Private Limited • One97 Communications Limited • One MobiKwik Systems Private Limited • Google LLC • PayPal Payments Private Limited ...

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The wealth management market, an integral part of the financial services sector in India, was valued at INR 113.32 Tn in 2018 and is expected to reach INR 338.67 Tn by 2024, expanding at a compound annual growth rate (CAGR) of ~20.02% during the 2019-2024 period. For the past few years, India has been witnessing the emergence of family office offerings, along with estate planning services. Indians have gradually become tolerant of capital market investment instruments than traditional investment instrument of gold and real estate. The Indian millionaire club incorporated 7,300 people in mid-2018, driving up the total number of millionaires to 3,43,000 in 2018. Major players, who are currently operating in the Indian wealth management market include Alpha Capital, Bajaj Capital Limited, Edelweiss Asset Management Limited, Karvy Private Wealth and Sanctum Wealth Management Limited. Key growth drivers of the market • India is expected to be one of the powerful economies of the world in the next 10-15 years, owing to its strong bilateral ties. With the growth of the economy, income opportunities have increased, thereby giving rise to people’s disposable income. As a result, an attractive business environment has developed for wealth management firms. • With robust technological advancements in the field of financial services in the form of robo-advisors, artificial intelligence and the like, wealth management companies are now capable of providing highly personalized services that can fulfil the individual needs of investors. This in turn is giving rise to customer satisfaction and high investments in the field of financial services in India. Key deterrents to the growth of the market With increased usage of technology, risk of data breach and cyber fraud has increased. Between July 2018 and April 2019, data breaches cost Indian organizations INR 128 Mn. Such cases of high-profile financial scams, unethical practices by advisors with short-term objectives, and lack of effective investor protection regulations have contributed to insecurities among investors. This, in turn, is impeding the growth of wealth management companies across India. Companies covered • Alpha Capital • Anand Rathi Wealth Services Limited • Bajaj Capital Limited • Centrum Wealth Management Limited • Edelweiss Asset Management Limited • IIFL Wealth Management Limited • Karvy Private Wealth • Motilal Oswal Wealth Management Limited • Sanctum Wealth Management Limited • Waterfield Advisors Private Limited ...

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The retail banking sector, currently comprises a network of ~96,068 branches of public sector, private sector, foreign, regional, rural, and cooperative banks (urban and rural). During the FY 2014-FY 2019 period, deposit at SCBs expanded at a compound annual growth rate (CAGR) of ~10.39% to reach INR 1,30,430.12 Bn in FY 2019 from its FY 2014 value of INR 79,556.90 Bn. Various government initiatives like increasing the number of banks’ public service units in rural areas, the Pradhan Mantri Jan Dhan Yojana program, free credit and debit cards with low transaction limits and promotion of technology-based banking systems are driving the growth of the retail banking sector of India. Major players operating in the Indian retail banking industry include Yes Bank Limited, Axis Bank Limited, Bandhan Bank Limited, State Bank of India Limited and HDFC Bank Limited. Market segment insights As of FY 2018, in terms of deposit, public sector banks held the highest market share (~70.06%), followed by private sector banks. In FY 2018, SCBs opened around 1,594 new branches in tier I cities across India, which accounts for ~40.37% of the overall new branches opened during the year. During the same period, public sector banks had around 82,730 on-site ATMs and about 63,234 off-site ATMs across India. Among these, most public sector bank ATMs are in the semi-urban regions. Key growth drivers of the market In order to increase the penetration of services across India, SCBs have introduced facilities like opening a zero-balance savings account for the low-income population group in rural areas. Government-led, bank-based pension and insurance schemes like Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana and Atal Pension Yojana have also propelled the growth of the retail banking industry in India. Owing such customer-centric facilities, the penetration level of the banking sector in India had reached ~80% in FY 2018. The introduction of internet-based banking facilities has made transactions easier, thereby increasing the account-to-account transaction volume across the country. Key deterrents to the growth of the market Apart from banking, the popularity of internet-based banking has made it easy for hackers to engage in fraudulent activities. Crimes related to credit card fraud, spamming, spoofing, e-money laundering, ATM fraud, phishing, identity theft and credit through unauthorized cheque increased in India in FY 2019, as compared to that of FY 2018. This, in turn, has led to customers’ dissatisfaction and loss of trust towards web-based banking. Companies covered • Allahabad Bank Limited • Axis Bank Limited • Bandhan Bank Limited • Bank of Baroda Limited • HDFC Bank Limited • ICICI Bank Limited • Kotak Mahindra Bank Limited • RBL Bank Limited • State Bank of India Limited • Yes Bank Limited ...

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