Due to supply and demand factors (new service providers entering current sectors, new financial solutions and products, etc.) as well as greater disposable incomes and tailored financial solutions, India’s broad and varied financial services sector is expanding quickly. There are numerous significant subsegments within the Indian financial services business. These range from tiny local businesses to major international corporations and include mutual funds, pension funds, insurance companies, stock brokers, wealth managers, financial advice firms, and commercial banks. A wide range of clients, including commercial companies, governmental agencies, and people, are served by the financial services.
Ten Different Financial Service Types:
1. Banking
The foundation of India’s financial services sector is the banking sector. There are several public (27), private (21), foreign (49), regional rural (56), and urban/rural cooperative (more than 95,000) banks in the nation. The following financial services are provided in this segment:
Personal Finances (debit/credit cards, savings accounts, bank accounts, etc.)
Business banking (merchant services, treasury services, business checking and savings accounts, etc.)
loans (working capital loans, home equity loans, vehicle loans, business loans, etc.)
The Reserve Bank of India (RBI), which oversees and maintains the segment’s capitalization, liquidity, and financial health, regulates the banking industry.
2. Professional Advisory
Professional financial advising service providers are widely available in India and offer a wide range of services to both individuals and corporations. These services include valuation, M&A advisory, investment due diligence, real estate consulting, risk consulting, and tax consultation. A variety of suppliers, from big international corporations to lone domestic consultants, make these services available.
3. Wealth Management
This segment’s financial services include managing and investing clients’ money across a range of financial instruments, such as debt, equity, mutual funds, insurance, derivatives, structured products, real estate, and commodities, according to their time horizons, risk tolerance, and financial objectives.
4. Mutual Funds
Professional investing services are provided by mutual fund service providers across funds that are mainly made up of debt and equity-linked assets. Generally speaking, mutual fund solutions have a smaller buy-in than debt and stock market goods. Since these products typically offer reduced risks, tax benefits, predictable returns, and diversification qualities, they are quite popular in India. Due to its popularity as a low-risk wealth multiplier, the mutual funds market has seen double-digit growth in assets under management over the past five years.
5. Insurance
This segment’s financial services offers are mostly divided into two categories:
(automotive, house, medical, fire, travel, etc.) general insurance
Life insurance, including pension plans, money-back, unit-linked, and term life policies
Insurance products give people and businesses protection from unanticipated events and mishaps. The type of the product, time horizons, customer risk assessment, premiums, and a number of other significant qualitative and quantitative factors all affect payouts for these products. Many insurance companies in India offer both life insurance (number 24) and general insurance (number 39). The Insurance Regulatory and Development Authority of India (IRDAI) oversees the insurance industry.
6. Stock Market
The stock market segment offers a range of equity-linked goods and investment solutions to customers of the National Stock Exchange and Bombay Stock Exchange in India. Customers’ returns are determined by capital appreciation, which is the increase in the equity solution’s value and dividends, as well as by the payments that businesses make to their investors.
7. Treasury/Debt Instruments
This category of services includes bond (debt) investments for both public and private entities. At the conclusion of the investment period, the investor will receive principal repayment and fixed payments (interest) from the bond issuer or borrower. This sector contains a variety of instrument types, including tax-free bonds, listed bonds, non-convertible debentures, capital-gain bonds, and GoI savings bonds.
8. Tax and Audit Consulting
A sizable portfolio of financial services in the tax and auditing industries is included in this category. Segmenting this service domain according to individual and commercial clients is possible. Among them are:
Individual taxation (ascertaining tax liability, submitting tax returns, receiving tax savings advice, etc.)
Tax – Business (calculating tax liability, structuring and analyzing transfer pricing, registering for GST, providing advice on tax compliance, etc.)
Service providers provide statutory audits, internal audits, service tax audits, tax audits, process/transaction audits, risk audits, stock audits, and other solutions in the auditing market. These services are necessary to reduce risk and guarantee the efficient operation of business organizations from both a qualitative and quantitative standpoint. You can study Indian taxation.
9. Capital Restructuring
The restructuring of capital structure (debt and equity) to increase profitability or address crises like bankruptcy, unstable markets, a lack of liquidity, or hostile takeovers is the main purpose of these services, which are mainly provided to companies. This section generally offers structured deals, capital raising, rapid M&A, and lender negotiations as financial solutions.
10. Portfolio Management
Portfolio managers in this area assess and optimize investments for customers across a wide range of assets (debt, stock, insurance, real estate, etc.), helping clients achieve their financial goals. These solutions are highly specialized and tailored. These services, which are primarily aimed at high-net-worth individuals, fall into two categories: non-discretionary (decisions made with client interaction) and discretionary (investment entirely at the discretion of fund management with no client intervention).
