Indian Financial Industry in 2022

The ongoing pandemic has prompted the banking and financial services industry to adapt across the board. Digital transformation ushered in the ultimate potential. Every Indian now possesses a smartphone and can use it to apply for a loan, complete e-KYC, open a bank account, and place orders for food, groceries, and other necessities.

Commercial banks, new-age fintech firms, non-banking financial businesses (NBFCs), co-operatives, pension funds, mutual funds, small and medium financial enterprises, and recently founded payment banks make up the Indian financial sector. These various financial services cater to a wide spectrum of customers according to their needs and accessibility. Individuals, governmental organisations, and private businesses can all be clients.

Here’s a peek at what the Indian financial industry will be like in 2022.

Commercial Banks

The banking sector in India controls the lion’s share of the Indian financial industry, accounting for more than 64 percent of the total assets held by the financial system.

In India, the banking sector has evolved from a physical to a digital paradigm. With creative technology solutions, it has effectively overcome the hurdles posed by India’s diverse population. Banks are producing long-lasting products and have transformed themselves from traditional money-transfer businesses.

Previously, under-represented rural groups were denied access to banking services. Banks are currently increasing their reach into the country’s rural core. In addition, the government of India’s efforts to assist SMEs and MSMEs in dealing with the pandemic issue have influenced banks to focus on previously underserved populations and regions.

Banks are busily re-evaluating their operations and strategies in reaction to the epidemic so that they can better reach out to clients. These actions are bridging the gap in regional banking between urban and rural locations across the country.

Fintech Startups

According to a survey published earlier this year, India’s fintech business is the world’s fastest expanding. According to a study performed by the Boston Consulting Group (BCG) and the Federation of Indian Chambers of Commerce and Business (FICCI), India’s fintech industry will be worth $150-160 billion by 2025. In fact, in the quarter ended June 2020, 33 fintech investment deals totalling $647.5 million were completed in India.

The most fascinating aspect of fintech is that it has thrived even though every other industry has been hit by financial difficulties. This was mostly due to limits imposed by Covid and the government on physical movement.

Pension Funds

The main goal of pension funds is to ensure that people save a percentage of their salary systematically so that they can have a steady income after they retire. National Pension Scheme, delayed annuity, immediate annuity, guaranteed period annuity, life annuity, and annuity certain are all examples of pension plans.

Pension plans enable customers to save for the future without exerting a great deal of work. They can also invest in safe government assets as well as non-government debt and stocks.

Mutual Funds and Other Smaller Financial Entities

According to a report by the Securities and Exchange Board of India (SEBI), the Indian mutual fund business is emerging as one of the fastest expanding and most competitive parts of the country’s current financial sector.

The mutual fund sector has undergone several changes and evolutions during the previous few decades. With the use of technology and platforms given by a variety of companies, people have been able to make smooth investing decisions quickly and effortlessly.

Cooperatives

The Indian cooperative credit system has the world’s largest network. Since the initial Cooperatives Society Act in 1904, the movement has grown to an estimated 230 million members across the country.

Cooperative societies provide critical strategic inputs and value to help the agricultural industry flourish. India has an agrarian economy, with agriculture providing a living for 72 percent of the country’s people who reside in rural areas.

Consumer cooperative societies are attempting to address consumer needs at low costs. Finally, marketing associations assist farmers in obtaining reasonable prices. Furthermore, these societies play an important function in supporting irrigation facilities, meeting electrical needs, and providing transportation mediums.

Final Thoughts

India is predicted to be the fourth largest private wealth market in the world by 2028, according to the India Brand Equity Foundation (IBEF). Furthermore, the Association of Mutual Funds in India (AMFI), the country’s largest financial services organisation, aims to triple the number of investor accounts by 2025, to 130 million.

The government also took initiatives and devised tactics to simplify payments, banking, insurance, and other financial services to meet the ever-increasing demands of the continually growing population. The industry has shown tenacity and adaptability, with very beneficial results.

In 2022, the Indian financial industry is predicted to grow fast, because financial innovation has taken centre stage, and customers have more choices to invest, save, and grow their wealth.