A REPORT ON

BANKING AND NON-BANKING FINANCIAL COMPANIES

BY

AMAN BAGARIA 18BSP0109

AMAN BHATIA 18BSP0110

AMIT BEHERA 18BSP0121

ANMOL NAMDEO 18BSP

ANANAYA ROY 18BSP0131

ANKIT KUMAR 18BSP0149

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BANKING SECTOR
INTRODUCTION
As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised
and well-regulated. The financial and economic conditions in the country are far
superior to any other country in the world. Credit, market and liquidity risk studies
suggest that Indian banks are generally resilient and have withstood the global
downturn well.
Indian banking industry has recently witnessed the roll out of innovative banking
models like payments and small finance banks. RBI’s new measures may go a long
way in helping the restructuring of the domestic banking industry.
The digital payments system in India has evolved the most among 25 countries with
India’s Immediate Payment Service (IMPS) being the only system at level 5 in the
Faster Payments Innovation Index (FPII).

MARKET SIZE
The Indian banking system consists of 27 public sector banks, 21 private sector banks,
49 foreign banks, 56 regional rural banks, 1,562 urban cooperative banks and 94,384
rural cooperative banks, in addition to cooperative credit institutions (FY17 data). In
FY07-18, total lending increased at a CAGR of 10.94 per cent and total deposits
increased at a CAGR of 11.66 per cent. India’s retail credit market is the fourth largest
in the emerging countries. It increased to US$ 281 billion on December 2017 from US$
181 billion on December 2014

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INVESTMENTS/DEVELOPMENTS

Key investments and developments in India’s banking industry include:

• As of September 2018, the Government of India launched India Post Payments
Bank (IPPB) and has opened branches across 650 districts to achieve the objective
of financial inclusion.
• The total value of mergers and acquisition during 2017 in NBFC diversified financial
services and banking was US$ 2,564 billion, US$ 103 million and US$ 79 million
respectively
• The biggest merger deal of FY17 was in the microfinance segment of IndusInd
Bank Limited and Bharat Financial Inclusion Limited of US$ 2.4 billion
• In May 2018, total equity funding's of microfinance sector grew at the rate of 39.88
to Rs 96.31 billion (Rs 4.49 billion) in 2017-18 from Rs 68.85 billion (US$ 1.03
billion)

GOVERNMENT INITIATIVES
• As of September 2018, the Government of India has made the Pradhan Mantri Jan
Dhan Yojana (PMJDY) scheme an open ended scheme and has also added more
incentives.
• The Government of India is planning to inject Rs 42,000 crore (US$ 5.99 billion) in
the public sector banks by March 2019 and will infuse the next tranche of
recapitalisation by mid-December 2018.

ACHIEVEMENTS
Following are the achievements of the government in the year 2017-18:

• To improve infrastructure in villages, 204,000 Point of Sale (PoS) terminals have

been sanctioned from the Financial Inclusion Fund by National Bank for Agriculture
& Rural Development (NABARD).
• Between December 2016 and March 2017, a major drive was undertaken to boost
use of debit cards, resulting in an increase in the number of Point of Sale (PoS)
terminals by an additional 1.25 million by 2017 end from 1.52 million as on
November 30, 2016.
• The number of total bank accounts opened under Pradhan Mantri Jan Dhan Yojana
(PMJDY) reached 333.8 million as on November 28, 2018.

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FUTURE OUTLOOK

Enhanced spending on infrastructure, speedy implementation of projects and

continuation of reforms are expected to provide further impetus to growth. All these
factors suggest that India’s banking sector is also poised for robust growth as the
rapidly growing business would turn to banks for their credit needs.
Also, the advancements in technology have brought the mobile and internet banking
services to the fore. The banking sector is laying greater emphasis on providing
improved services to their clients and also upgrading their technology infrastructure,
in order to enhance the customer’s overall experience as well as give banks a
competitive edge.
India’s digital lending stood at US$ 75 billion in FY18 and is estimated to reach US$ 1
trillion by FY2023 driven by the five-fold increase in the digital disbursements.
Exchange Rate Used: INR 1 = US$ 0.0159 as on March 31, 2019

4
RESERVE BANK OF INDIA
The Reserve Bank of India (RBI) is
India's central bank, which controls the issue
and supply of the Indian rupee. RBI is the
regulator of entire Banking in India. RBI plays
an important part in the Development Strategy
of the Government of India.

RBI regulates commercial banks and non-

banking finance companies working in India. It
serves as the leader of the banking system and
the money market. It regulates money supply
and credit in the country. The RBI carries out
India's monetary policy and exercises
supervision and control over banks and non- Headquarters Mumbai, Maharashtra, India
banking finance companies in India. RBI was
set up in 1935 under the Reserve Bank of India Established 1 April 1935; 84 years ago
Act,1934.
Governor Shaktikanta Das

Central bank of India

Until the Monetary Policy Committee was
established in 2016, it also controlled monetary
policy in India.] It commenced its operations on Currency Indian rupee (₹)
1 April 1935 in accordance with the Reserve
Bank of India Act, 1934. The original share Reserves ₹2,837,400 crore (US$400 billion)
capital was divided into shares of 100 each fully
paid . Following India's independence on 15 Bank rate 5.40%
August 1947, the RBI was nationalised on 1
January 1949.
Interest 4.00% (market determined)

It is a member bank of the Asian Clearing Union. The general superintendence and
direction of the RBI is entrusted with the 21-member central board of directors:
the governor; four deputy governors; two finance ministry representatives (usually
the Economic Affairs Secretary and the Financial Services Secretary); ten
government-nominated directors to represent important elements of India's economy;
and four directors to represent local boards headquartered
at Mumbai, Kolkata, Chennai and the capital New Delhi. Each of these local boards
consists of five members who represent regional interests, the interests of co-
operative and indigenous banks.

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TOP 5 BANKS OF INDIA

1. HDFC Bank
Quick Info:
• Keyperson: Aditya Puri

• Established: 1994
• Head Branch: Mumbai
One of the most sought-after banks that the public usually looks upon to invest in one
of the best loan providers is the HDFC bank. It has been ranked India’s No.1 Bank in
Forbes’ world’s Best bank report. It is the number one ranked private bank in India that
not only provide withdraw facility and deposits but also helps the customers to avail
for FOREX services, loans, credit cards, insurance policies, and premium banking
features overall. College graduates in the banking sector that are very well capable of
handling big clients and corporate accounts usually look forward to getting a decently
paying job at HDFC. Many young employees understand the fact that HDFC is a
fastest growing banks in India HDFC Bank’s capitalization was Rs. 6,25,666.08 crores
as of April. 2019. Talking about its employee strength, that is about a total of 88,253.
HDFC has about has 4,963 branches and 13,160 ATMs across 2,727 cities in India.
Not only this, in terms of asset evaluation, this bank is also the largest private sector
lender in India.

2.ICICI Bank
Quick Info:
• Keyperson: Sandeep Bakhshi
• Established: 1994
• Head Branch: Mumbai
ICICI Bank has around 4867 branches and 14367 ATMs across India and is the
second in the list and has a presence in 17 countries including India. It has a
registered office in Vadodara (Gujarat) and headquarters in Mumbai (Maharashtra).
It has some of the most prominent subsidiaries in the United Kingdom and Canada
including branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka,
Qatar, Oman to list a few. ICICI Bank which is founded as the Industrial Credit and
Investment Corporation of India Bank also has representative offices in United Arab
Emirates, Bangladesh, Malaysia, and Indonesia. Other than providing normal
transactional services to consumers, it also provides services ranging from
withdrawals to loans, deposits, privilege banking, insurance policies, credit cards,
and other services to name a fewIt is an Indian financial service and multinational
banking company that has a market capitalization of Rs. 2,56,205.53 crore. Its
insurance policies that comprehensively include home insurance, car insurance,
motor insurance, and health insurance are great.

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3.Axis Bank
Quick Info:
• Keyperson: Amitabh Chaudhry
• Established: 1993
• Head Branch: Mumbai
Axis Bank that has a rich global presence with 12756 ATMs, 2959 branches and 9
international offices offers many of its key services that include corporate banking, and
credit cards alongside serving insurance policies and other mortgage schemes to its
customers. It has has a market capitalization of Rs. 1,97,360.89 crores. Been the 5th
largest bank and 4th largest private bank in India, Axis Bank has always made India
proud. It has around 4000 branches, 12,705 ATMs and 3,548 cash recyclers across
India. Giving its competitors a tough fight, it has an employee strength of more than
55,000. Alongside offering a comprehensive suite of financial products, Axis Bank has
30.81% of its market shares that are owned by promoters and promoter group while
the remaining 69.19% shares are owned by mutual funds, FIIs, banks, insurance
companies and other forms of individual investors. For the new joiners, Axis Bank runs
the Young Bankers Program which is useful for the young talent to eb a part of the
never-ending success of one of the top banks in India through a two-stage selection
process. This two-stage selection process is aimed at selecting candidates who are
most likely to succeed at various Branch banking roles that are a part of the services
that the employees can provide to the bank.

4.Kotak Mahindra Bank

Quick Info:
• Keyperson: Uday Kotak
• Established: 2003
• Head Branch: Mumbai
Kotak Mahindra Bank is the fourth largest bank and third largest private bank in India
that was issued a license in February 2003 by Reserve Bank of India after which it
was successfully able to carry on banking business. It has a rich network of 1,369
branches and 2,163 ATMs across India. One of the proud moments for Kotak
Mahindra Banks was for it to be ranked at 245th in Brand Finance Banking 500. Not
only this, it has a revenue of Rs. 21,176.09 crores (as of 2017) and 50,000 employees
across India. It offers a wide range of banking products and financial services for not
only the corporate customers but also retail customers through a variety of delivery
channels. Some of its specializations include subsidiaries in the areas of personal
finance, investment banking along with subsidiaries in general insurance, life
insurance, and wealth management. Among other services, it is known for been
providing services like NRI banking, wholesale banking, insurance policies, and
privileged banking. On the employee side, the bank is quite transparent so the focus
is on work always and they are known for their meritocratic culture.

7
5.IndusInd Bank
Quick Info:
• Keyperson: Romesh Sobti
• Established: 1994
• Head Branch: Mumbai
IndusInd Bank is a new kind of first ever new generation private bank in India. It is known to
be providing commercial, transactional and electronic banking products and services.
IndusInd Bank is confined and specializes in providing retail banking services and
continuously upgrades its support systems by introducing newer technologies. It has about
1,558 branches and 2453 ATMs across India. Apart from having its branches in Mumbai
(headquarter), New Delhi, and Chennai (Tamil Nadu), it also has representative branches
abroad are located in Abu Dhabi, Dubai, and London. It has a market capitalization of Rs.
1,07,064.08 crores as of April 2019 and is one of the biggest private sector banks. It offers
personal banking services such as insurance, cards, loans, deposits alongside providing
electronic banking services and products. When it comes to a number of bank branches,
Mumbai has the maximum number of bank branches followed by New Delhi and Chennai.
From among the various financial services, IndusInd Bank provides Corporate Banking &
Finance, Cash Management Services, Trade Service Utility, Depository Operations, and
Treasury Operations to name a few. For the young talent that wants to get onboard with
IndusInd Bank, there are various vacancies of Clerks PO’s Specialist officers

THE MERGER
Finance Minister Nirmala Sitharaman announced : 10 public sector banks to be
merged into four. Under the scheme of amalgamation, Indian Bank will be merged with
Allahabad Bank (anchor bank - Indian Bank); PNB, OBC and United Bank to be
merged (PNB will be the anchor bank); Union Bank of India, Andhra Bank and
Corporation Bank to be merged (anchor bank - Union Bank of India); and Canara Bank
and Syndicate Bank to be merged (anchor bank - Canara Bank).
In place of 27 public sector banks in 2017, now there will be 12 public sector banks
after the latest round of consolidation of PSU banks. The consolidation of public sector
banks will give them scale, the finance minister said.

8
The government also announced capital infusion totalling over ₹55,000 crore into
public sector banks: PNB ( ₹16,000 crore), Union Bank of India ( ₹11,700 crore), Bank
of Baroda ( ₹7000 crore), Indian Bank ( ₹2500 crore), Indian Overseas Bank ( ₹3800
crore), Central Bank ( ₹3300 crore), UCO Bank ( ₹2100 crore), United Bank ( ₹1,600
crore) and Punjab and Sind Bank ( ₹750 crore).

In 2018, the government had approved the merger of Vijaya Bank and Dena Bank with
Bank of Baroda (bob) that become effective from April 1, 2019. In 2017, the State Bank
of India absorbed five of its associates and the Bharatiya Mahila Bank.

Finance Minister Nirmala Sitharaman said:-

• We want banks with strong national presence and enhanced risk
appetite Indian Bank to be merged with Allahabad Bank (anchor bank -
Indian Bank)Consolidated Indian Bank and Allahabad Bank to be 7th
largest public sector bank with crs 8.08 lakh crore business ((anchor
bank - Indian Bank)
• PNB, OBC and United Bank to be merged (PNB will be the anchor
bank)Union Bank of India, Andhra Bank and Corporation Bank to be
merged (anchor bank - Union Bank of India)
• Consolidated Union Bank of India, Andhra Bank and Corporation Bank
to be 5th largest public sector banks with ₹14.6 lakh crore business
• Canara Bank and Syndicate Bank to be mergedConsolidated Canara
Bank and Syndicate Bank to be 4th largest public sector bank with ₹15.2
lakh crore business

No retrenchment has taken place post merger of Bank of Baroda, Dena Bank and
Vijaya Bank; staff has been redeployed and best practices in each bank have been
replicated in others. 8 PSU banks have so far launched repo rate-linked loans. Loan
tracking mechanism in PSU banks is being improved for the benefit of customers

For NBFCs, partial credit guarantee mechanism has already been implemented
Govt working on banking reforms ,Gross NPAs of PSU banks have come down,
Provision coverage ratio highest in 7 years, Best practices of each bank in
consolidation of Vijaya Bank, Bank of Borada and Dena Bank have been absorbed
Non-official directors to perform role analogous to independent directors

9
Public sector banks enabled to do succession planning
Bank boards given flexibility to fix sitting fee of independent directors
Bank of India, Central Bank of India will continue as public sector banks
"To make management accountable to board, board committee of nationalised banks
to appraise performance of general manager and above including managing director,"
Sitharaman said.

Post consolidation, boards will be given flexibility to introduce chief general manager
level as per business needs. They will also recruit chief risk officer at market-linked
compensation to attract best talent.

In 2018, post the merger, the SBI was in the process to rationalise its branch network
by relocating some of its branches to reach the maximum number of people. The SBI
believed that such a move would help it optimise its operations and also benefit
profitability. In 2018, Rating agency Fitch said the merger of the three banks could
bring about material operating efficiencies over a period of time by lowering the
combined operating costs, stronger risk management practices, etc. There are also
voices who said that because of this merger, Bank of Baroda, the best among the
three, would have to share a baggage on its shoulders.

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 The Advantages are:
• It reduces the cost of operation
• The merger helps in financial inclusion and broadening the geographical
reach of the banking operation
• NPA and risk management are benefited
• Merger leads to availability of a bigger scale of expertise and that helps in
minimising the scope of inefficiency which is more in small banks
• The disparity in wages for bank staff members will get reduced. Service
conditions get uniform
• Merger sees a bigger capital base and higher liquidity and that reduces
the government's burden of recapitalising the public sector banks time and
again
• Redundant posts and designations can be abolished which will lead to
financial savings

The Disadvantages of merger:

• Many banks have a regional audience to cater to and merger destroys the
idea of decentralisation.
• Larger banks might be more vulnerable to global economic crises while
the smaller ones can survive
• Merger sees the stronger banks coming under pressure because of the
weaker banks.
• Merger could only give a temporary relief but not real remedies to
problems like bad loans and bad governance in public sector banks
• Coping with staffers' disappointment could be another challenge for the
governing board of the new bank. This could lead to employment issues.

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THE SLOW DOWN
Credit growth at Indian banks has dropped to its lowest level in nearly two years, the
latest Reserve Bank of India (RBI) data shows, as slowing domestic consumption
weighs on demand.This adds to the challenges facing Narendra Modi as he begins
his second term as prime minister with India’s economy at its weakest levels in six
years.

“The slowdown in credit growth this time is a result of both reduced demand and
supply,” Madan Sabnavis, chief economist at CARE ratings, said.

Lending growth by banks had nearly halved to 8.8% at the end-September from the
start of the year.The RBI data includes all banks in India, which is dominated by state-
run lenders Bank of Baroda, Punjab National Bank and Union Bank of India as well as
private ones such as HDFC Bank and ICICI Bank.

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While retail lending has driven growth, banks are taking a more cautious approach on
some consumer loans.

“In certain retail loans we’re seeing customers delaying the payments by a few days
over the due date,” said the head of consumer banking segment of a private bank,
adding that this does not bode well when corporate lending has plunged.

A report last month by India Ratings predicts “further moderation” retail lending in 2020
“given the consumption slowdown across segments including housing and auto”

“Even the unsecured loans, which include credit cards, education loans and other
personal loans have seen a moderation in growth,” the report said.

India’s lending problems have been compounded by a drying up of liquidity in the

shadow banking sector last year after the collapse of infrastructure lending group
IL&FS.While some major non-banking financial companies (nbfcs) have been going
slow on lending, others stopped completely.However, banks have not used this
opportunity to win market share from nbfcs, which accounted for 30% of auto loans
and more than 40% of home loans until the end of last year.

The weak growth in lending comes at a time when banks have been cutting interest
rates and making it cheaper to borrow.So far in 2019, the RBI has reduced the repo
rate by 135 basis points. Even though banks have not matched this, the pace of cuts
has picked up in the last few months.

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A high credit-deposit ratio has been one of the key reasons why banks have struggled
to cut interest rates. But with credit growth falling faster than deposit growth, banks
may have a bit more room to transmit rate cuts.

A credit-deposit ratio above 75% indicates pressure on banks’ resources as they have
to set aside funds to maintain a cash reserve ratio of 4% and a statutory liquidity ratio
of 18.5%.

In an attempt to push banks to pass rate cuts on to their customers, the RBI has
required them to link all loans to an external benchmark such as the repo rate since
the start of this month. While this is expected to push rates down, economists are not
sure this will help spur credit demand.

Punjab National Bank Scam

The Punjab National Bank
Fraud Case relates to fraudulent
letter of undertaking
worth ₹11,356.84 crore (US$ 1.4
billion) issued by the Punjab
National Bank at its Brady House
branch in Fort, Mumbai; making
Punjab National Bank liable for
the amount.[1] The fraud was
allegedly organized by jeweller
and designer Nirav Modi. Nirav, his wife Ami Modi, brother Nishal Modi and
uncle Mehul Choksi, all partners of the firms, M/s Diamond R US, M/s Solar Exports
and M/s Stellar Diamonds; along with PNB officials and employees, and directors of

14
Nirav Modi and Mehul Choksi's firms have all been named in a chargesheet by
the CBI.[2] Nirav Modi and his family absconded in early 2018, days before the news
of the scam broke in India.
Nirav Modi is currently in the United Kingdom and is seeking political asylum in Britain
though the Indian government has officially asked for his
extradition.[3] The Enforcement Directorate has begun attaching assets of the accused
and is seeking to immediate confiscation under the Fugitive Economic Offenders
Ordinance.[4]
Modi is on the Interpol's wanted list for criminal conspiracy, criminal breach of trust,
cheating and dishonesty including delivery of property, corruption, money
laundering since February 2018.[5][6]
The bank initially said that two of its employees at the branch were involved in the
scam, as the bank's core banking system was bypassed when the corrupt employees
issued lous to overseas branches of other Indian banks, including Allahabad
Bank, Axis Bank, and Union Bank of India, using the international financial
communication system, SWIFT. The transactions were noticed by a new employee of
the bank. [7] The bank then complained to the CBI, who is currently investigating the
scam apart from ED and [[Reserve bank of I ndia]]. On a later date, CBI named key
officials Usha Ananthasubramanian, former CEO of PNB, executive directors KV
Brahmaji Rao and Sanjiv Sharan in a chargesheet holding them responsible for failure
to implement several circular and caution notices issued by the RBI regarding the
reconciliation of SWIFT messages and core banking systems.

YES BANK CRISIS

India’s central bank has unearthed more than $450 million in extra bad loans at Yes
Bank Ltd., the lender that is contending with a shadow-banking crisis and concerns
over soured debt and capital.

Gross non-performing assets assessed by the Reserve Bank of India were 32.77
billion rupees ($457 million) higher than Yes Bank had disclosed as of March 31, the
Mumbai-based lender said Tuesday. The bank has already classified 12.59 billion
rupees of the divergence as bad loans as on Sept. 30, it said.

An earlier dispute with the central bank over Yes Bank’s reporting of bad debts
culminated in co-founder Rana Kapoor’s departure as chief executive officer at the
start of this year. New CEO Ravneet Gill is trying to raise funds by December to revive
growth and reassure investors that the worst is over for the bank, which has tumbled
65% this year.Worst-Performing Bank Stock Is Now Seeing World’s Biggest Surge

Investors are likely to focus more on Yes Bank’s fund-raising plans than the latest
asset-quality divergence, according to Bloomberg Intelligence analyst Diksha Gera.
“Its impending capital raise continues to be the biggest catalyst for the bank’s outlook,”
she wrote.

15
Yes Bank said earlier this month that it has attracted $3 billion of proposals for a stake-
sale offer. A board meeting will be called by the end of November to finalize raising of
capital, the bank said Tuesday.

The RBI assessed that the bank’s non-performing assets stood at 111.6 billion rupees
as of March 31, more than the 78.8 billion rupees Yes Bank had disclosed for the year,
the lender reported.The central bank also found a divergence of 9.78 billion rupees in
provisions, the bank said. Yes Bank has made provisions of 3.46 billion rupees until
Sept. 30 and has to set aside a further 6.32 billion rupees for 2018-19, it said.Other
lenders including Bank of India have disclosed divergence in bad loans and provisions
recently.

PMC BANK SCAM

Punjab and Maharashtra Cooperative Bank (PMC Bank), which is now placed under
regulatory restrictions for under-reporting its bad loans, had reportedly granted a
personal loan of Rs 96.5 crore to debt-laden realty company Housing Development
and Infrastructure’s (HDIL) promoter Sarang Wadhawan, whose company had already
defaulted on a Rs 2,500-crore loan given by the lender.
Throwing all rules to the wind, PMC Bank had sanctioned the personal loan in August
and it was over and above the Rs 2,500-crore loan that HDIL had ceased repaying,
and which the cooperative bank failed to classify as bad loans. Alarmingly, PMC Bank
kept dealing with the beleaguered company even when it was facing insolvency
proceedings in the National Company Law Tribunal (NCLT).
Earlier, news reports mentioned that just one account — HDIL — was the single
reason for the PMC Bank’s woes, which was subsequently acknowledged by the
bank’s managing director, Joy Thomas. Wadhawan and HDIL took loans from PMC
Bank to clear Bank of India's (BoI's) dues, which had initiated bankruptcy proceedings
against the company for allegedly defaulting on loans of around Rs 520 crore.
BoI had approached the NCLT against HDIL last August but withdrew the pleas after
it reached a settlement with the embattled company to resolve the issue. The bank
submitted a fresh petition against HDIL in the tribunal after the company couldn’t meet
the August 2019 deadline to settle the account, a Mumbai-based publication said.
State-controlled BoI in August had said that it was dropping the bankruptcy
proceedings against HDIL for 14 days weeks after it got two pay orders worth Rs 96.5
crore from the company. The bank acknowledged receipt of two PMC Bank pay-orders
totalling Rs 96.50 crore.

16
NBFC SECTOR

INTRODUCTION
After witnessing healthy growth over the past few years, non-bank credit
growth slowed down in the second half of fiscal 2019 due to the tight
liquidity conditions that engulfed the sector. Consequently, Non Bank
Financial Companies (nbfcs) which were gaining market share from banks
across major asset classes in the past could not do so in fiscal 2019.

Going forward, nbfcs will need to recalibrate their strategies in order to

deal with the changing business dynamics. How would this impact the
credit growth of the sector? When is the liquidity situation going to
improve? Can nbfcs achieve pre-2018 growth in the medium term or will
the growth remain anaemic?

What are the key factors that will drive their growth? Will their earnings
growth trajectory be lower? What will be the capital that they will need over
the next 1-2 years? What will separate the winners from the losers?
Where are the opportunities for growth?

CRISIL Research's NBFC Report, 2019 delves deep into the fast-
changing industry landscape to come up with the answers. The report
contains CRISIL Research's perspective on growth prospects,
competitive scenario and the attractiveness of the 11 segments in which
nbfcs operate and also gives a perspective on the emerging fintech
market.
The country’s financial services sector consists of the capital markets,
insurance sector and non-banking financial companies (nbfcs). India’s
gross national savings (GDS) as a percentage of Gross Domestic Product
(GDP) stood at 30.50 per cent in 2019. The total amount of Initial Public
Offerings increased to Rs 84,357 crore (US$ 13,089 million) by the end of
FY18. IPO’s reached to Rs 13.55 crore (US$ 1.94 million) in FY19 (up to
Feb 2019). Ultra-High Net Worth Individual (UHNWI) increased to 2,697
in 2018 and the population of UHNWI has grew by 118 per cent from 2013
to 2018. The number of hnwis in India reached 2,30,400 by the end of
2017.
The asset management industry in India is among the fastest growing in
the world. In March 2019, corporate investors Assets Under Management
AUM stood at Rs 9,54,627.51 crore (US$ 136.59 billion), while hnwis and
retail investors reached Rs 7,51,666.95 crore (US$ 107.55 billion) and Rs
6,29,848.68 crore (US$ 90.12 billion), respectively. In the Asia-Pacific,
India is among the top five countries in terms of hnwis.

17
Bombay Stock Exchange (BSE) and National Stock Exchange of India
(NSE) attained permission from the Securities and Exchange Board of
India (SEBI), to launch commodity derivatives trading from October 1,
2018.
In FY19, equity mutual funds have registered a record net inflow of Rs
990.87 billion (US$ 14.18 billion). In September 2019, the Assets Under
Management (AUM) of the mutual fund industry stood at Rs 25.60 lakh
crore (US$ 366.35 billion).
Total equity funding's of microfinance sector grew at the rate of 39.88 to
Rs 9,631 crore (Rs 4.49 billion) in 2017-18 from Rs 6,885 crore (US$ 1.03
billion) in 2016-17. The public deposit of nbfcs increased from Rs
40,955.54 crore (US$ 5.86 billion) in FY09 to Rs 31,905 crore (US$ 4.95
billion) in FY18, registering a compound annual growth rate (CAGR) of
36.86 per cent.
In November 2018, Bombay Stock Exchange (BSE) has enabled offering
live status of applications filed by listed companies on its online portal and
introduced weekly futures and options contracts on Sensex 50 index from
October 26, 2018. The Government of India is planning to launch a global
exchange traded fund (ETF) in FY20 to raise long term investments from
overseas pension funds.
The Government of India has taken various steps to deepen the reforms
in the capital markets, including simplification of the Initial Public Offer
(IPO) process which allows qualified foreign investors (qfis) to access the
Indian bond markets. In FY19, Rs 14,674 crore (US$ 2.09 billion) has
been raised from Initial Public Offerings (ipos).
As per Union Budget 2019-20, 100 per cent foreign direct investment
(FDI) will be permitted for insurance intermediaries. The insurance sector
could be opened to 74 per cent FDI from 49 per cent.Government has
approved 100 per cent FDI for insurance intermediaries.

18
Top 30 NBFCs’ Ranking Based on Annual Turnover*

NBFCs List “Total Income (Rs mn)” Rank

Power Finance Corporation Limited 267377.40 1

Rural Electrification Corporation Limited 224403.10 2
Bajaj Finance Limited 133292.20 3
Shriram Transport Finance Company Limited 122768.30 4
Indian Railway Finance Corporation Limited 110202.32 5
Mahindra & Mahindra Financial Services Limited 72061.20 6
HDB Financial Services Limited 70619.90 7
Muthoot Finance Limited 62432.00 8

Cholamandalam Investment and Finance Company Limited 54257.60 9

L&T Finance Limited (erstwhile Family Credit Limited) 52460.00 10

Shriram City Union Finance Limited 51015.70 11

Tata Capital Financial Services Limited 45553.70 12
Aditya Birla Finance Limited 44800.00 13
India Infrastructure Finance Company Limited 38364.40 14
Capital First Limited 36282.50 15
Reliance Capital Limited 33150.00 16
Kotak Mahindra Prime Limited 31946.21 17
Manappuram Finance Limited 29498.59 18
IFCI Limited 27835.40 19
L&T Infrastructure Finance Company Limited 27344.15 20
Sundaram Finance Limited 26963.40 21
India Infoline Finance Limited 25051.90 22
Tata Motors Finance Limited 23934.64 23
IL&FS Financial Services Limited 22943.00 24
Magma Fincorp Limited 20371.10 25
Hinduja Leyland Finance Limited 19543.60 26

Indian Renewable Energy Development Agency Limited 17800.00 27

SREI Infrastructure Finance Limited 17736.20 28

Ujjivan Financial Services Limited 15820.00 29
Religare Finvest Limited 15726.75 30

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GOVERNMENT INTIATIVE
The Reserve Bank of India (RBI) announced two key measures to help stressed non-
banking financial companies (nbfcs) raise funds from banks.
First, the central bank increased the ceiling for a bank’s exposure to a single NBFC to
20% of its Tier I capital from 15% earlier. Second, it allowed bank lending to nbfcs
excluding microfinance institutions for on-lending to certain sectors to be classified as
priority sector loans.
“Under the revised guidelines on large exposure framework (LEF) that came into effect
from 1 April 2019, a bank’s exposure to a single NBFC is restricted to 15% of its Tier
I capital, while for entities in the other sectors, the exposure limit is 20% of Tier I capital
of the bank, which can be extended to 25% by banks’ boards under exceptional
circumstances," RBI said on Wednesday, adding it has been decided to raise a bank’s
exposure limit to a single NBFC to 20% of a bank’s Tier I capital.
RBI also said that to boost credit flow to certain priority sectors, bank lending to
registered nbfcs for on-lending to agriculture (investment credit) up to ₹10 lakh; micro
and small enterprises up to ₹20 lakh; and housing up to ₹20 lakh per borrower will be
classified as priority sector lending.
Detailed guidelines on these above steps will be issued by the end of the month, RBI
said.
The measures aim to address some of the pain points in the economy. Agriculture
makes up about 17% of the economy but is the largest employer and has been under
stress for some time, affecting livelihoods. Small businesses, on the other hand,
contribute significantly to the value addition in the manufacturing sector and contribute
to exports. Housing, a major job-creating industry, too has been under a prolonged
slump, leading to job losses.
The government has been trying to promote affordable housing in recent months to
stimulate this industry.
After increasing the tax break available to individuals buying affordable homes in the
Union budget, finance minister Nirmala Sitharaman last week announced National
Housing Bank’s (NHB) fresh liquidity window for housing finance companies. The
scheme called Liquidity Infusion Facility (lift) offered ₹10,000 crore for housing
financiers for lending to individuals for purchasing affordable homes.

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THANK YOU

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