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Practice Area: Banking & Finance

Banking & Finance in India

INRA PriceWaterhouseCoopers report indicates that India could rise from today's relatively low levels to emerge as the third largest domestic banking market in the world by 2040 - and could ultimately grow faster than China.

State-owned financial institutions dominate the Indian banking industry and capital markets. The liberalization of banking and insurance over the past decade has led to a transformation, with private banks (including many foreign institutions) entering the state-dominated sector and taking an ever-rising share of business.

Bank performance has also been helped by rising consumer incomes, and this has led to a steady increase in lending levels. However, the global liquidity crisis is now affecting India and leading to sharp reductions in lending. India's relatively tight regulation of the country's banking sector, along with its focus on basic products and services, has afforded it a certain degree of protection.

India has more people living in poverty than any other country, and small-scale agriculture remains an important part of the economy. As a result, demand for sophisticated financial services products is not widespread. However, a rapid increase in demand for financial services products in recent years has reflected rising incomes and increasing urbanization of the population.

Trends: Prepaid Debit Cards & Mobile Banking

There has been a rising need in urban, youth and related upper middle class segments for prepaid debit cards. This is fueled by increased consumer retail spending. We have also seen much traction in Mobile Banking services as India embarks on increased rural penetration, as evidenced by the new Central Government Budget.

Source: The Economist, Media, PWC.