Indian Financial Markets: Roadmap 2020; Opportunities and Challenges – Mapping the Way Forward

PwC and ASSOCHAM have launched a report titled “Indian Financial Markets: Roadmap 2020; Opportunities and Challenges – Mapping the Way Forward”. The report elucidates opportunities and challenges in the backdrop of developments in the Indian banking and the capital markets sectors and attempts to look at the way forward for the industry. 

Key findings of the report :

  • Emerging markets like India have exhibited a strong growth momentum, driven by a robust demand, consumption and savings rate.  A study by World Bank supports this by forecasting that the share of the five big emerging economies India, China, Indonesia, Brazil and Russia in 2020 will double to 16.1% from 7.8% in 1992.
  • Statistics indicate the low penetration levels in the banking industry: “Only 37% of bank branches of Scheduled Commercial Banks are present in rural areas, with only around 40% of the population holding a bank account. Moreover, out of the 600,000 habitations in the country, only about 30,000 have a commercial bank branch.”
  • PwC suggests support of technology, simple product offerings and regulating the self-help groups, as some of the steps to help increase the reach of banking services. 
  • Infrastructure financing has been featured in the report as a key pillar of growth, with the banking sector playing an increasing role in building the growth momentum
  • PwC lays emphasis on the role of the private sector towards funding infrastructure development, apart from strengthening the corporate bond market and increased participation from pension funds and insurance companies. 
  • Statistics from the Indian Capital Markets: With a population of more than a billion, a mere 1% of the population participates in capital markets, and of that only a fraction is active. 

In conclusion, a huge challenge for financial institutions today is functioning and retaining their efficiency in such uncertain times. Business models are undergoing a structural change to accommodate the changing regulations and foster growth. There needs to be a well-defined framework which will withstand disruptions and lead the financial markets towards growth and progression.