This detailed analysis provides insights into the increasing participation of individual investors, the expansion of mutual funds, the rapid development of the GIFT IFSC banking ecosystem, and trends in the insurance sector. These trends highlight the growing integration of Indian households into financial markets and the evolving landscape of financial services in India.
Banking Ecosystem in GIFT IFSC
The banking ecosystem in GIFT IFSC is evolving rapidly. By March 2024, the total asset size of IFSC Banking Units (IBUs) exceeded USD 60 billion, with cumulative transaction values surpassing USD 795 billion. There has been significant growth in Fund Management Entities (FMEs) and Alternative Investment Funds (AIFs) registered with the International Financial Services Centres Authority (IFSCA). The number of FMEs and funds rose from 39 and 33 in September 2022 to 114 and 120, respectively, by March 2024. This shift highlights GIFT IFSC's emergence as a preferred jurisdiction for global capital pooling by foreign and Indian fund managers.
Equity Cash Segment and Demat
Accounts
In FY24, individual investors
accounted for 35.9% of the equity cash segment turnover. The number of demat
accounts increased significantly, rising from 114.5 million in FY23 to 151.4
million in FY24. This growth reflects a rising interest in equity markets among
individual investors.
Growth in Investor Base and
Mutual Funds
The investor base registered at NSE nearly tripled from March 2020 to March 2024, reaching 92 million by the end of March 2024. This expansion indicates that about 20% of Indian households are now channeling their savings into financial markets. FY24 was a remarkable year for mutual funds (MFs), with assets under management (AuM) increasing by ₹14 lakh crore, a 35% year-on-year growth, bringing the total AuM to ₹53.4 lakh crore. This growth was driven by mark-to-market gains and the overall expansion of the industry. The total number of MF folios grew from 146 million at the end of FY23 to 178 million at the end of FY24.
Increased Retail
Participation
The number of unique tax IDs registered on the NSE surged from 27 million in FY19 to 92 million in FY24. This heightened retail participation has contributed to the stability of the Indian capital market. Net inflows were observed across most categories of MF schemes, except for income/debt-oriented schemes. Notably, inflows into growth/equity-oriented and hybrid schemes comprised over 90% of net MF inflows.
Systematic Investment Plans
(SIPs)
The mutual fund segment has around 84 million SIP accounts, through which investors regularly invest in schemes. Annual net SIP flows have doubled over the past three years, increasing from ₹0.96 lakh crore in FY21 to ₹2 lakh crore in FY24. SIPs now constitute approximately 35% of the AuM of equity-oriented MF schemes. This has led to an increase in MF ownership of Indian equities from 7.7% as of December 2021 to 9.2% as of December 2023.
Insurance Sector Trends
Overall insurance penetration in India slightly moderated to 4% in FY23 from 4.2% in FY22. Life insurance penetration declined from 3.2% in FY22 to 3% in FY23, while non-life insurance penetration remained flat at 1%. Insurance density increased from USD 91 in FY22 to USD 92 in FY23, with the life insurance segment rising from USD 69 to USD 70, and the non-life segment remaining stable.
Non-Life Insurance Premium
Growth
Non-life premium growth moderated from 9% in FY22 to an estimated 7.7% in FY23, lower than the historical average of 8% from 2012-2021. This stabilization follows the market's adjustment after the pandemic.
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