Highlights of the Financial Services sector in Q4 FY2024

Highlights of the Financial Services sector in Q4 FY2024

Delve into the trends / key highlights in the financial services sector for Jan'24 – Mar'24 across the following sub-verticals:  Banks and NBFCs Broking and Capital Markets Cards and Payments Insurance

Gross bank credit increased to ~INR 169T in Mar’24 as compared to ~INR 141T in Mar’23 at a y-o-y growth rate of ~20%, while deposits increased to ~INR 209T in Mar’24 as compared to ~INR 185T in Mar’23 at a y-o-y growth rate of ~13% Credit growth to the services sector accelerated to 23% in Mar’24 from 20% in Mar’23, primarily due to higher loans to aviation, commercial real estate, and tourism Y-o-Y growth in personal loans accelerated to 28% in Mar’24 as compared to 21% in Mar’23, primarily due to housing and education loans

Total active clients for all the stockbrokers of NSE increased to 41M in Mar’24 from 32.7M in Mar’23 with Groww serving 24% of the total clients followed by Zerodha (18%) and Angel One (15%) Net AUM for Mutual funds increased to INR 53T at the end of Mar’24 from INR 40T at the end of Mar’23; direct plans accounted for 45% of the AUM Number of trades increased to 648M (turnover ~INR 18.6T) in Mar’24 as compared to 377M (turnover ~INR 10.3T) in Mar’23 in the capital market; In the F&O segment, premium turnover increased to INR 46T in Mar’24 as compared to INR 36T in Mar’23

UPI transaction volumes saw an increase to 13.4B transactions (~INR 19.8T in value) in Mar’24 as compared to 8.7B in Mar’23 (~INR 14T in value) Debit card transaction volume (excluding cash withdrawal) decreased to 159M (~INR 0.45T value) in Mar’24 from 237M (~INR 0.53T value) in Mar’23. Credit card transaction volume (excluding cash withdrawal) increased to 344M (~INR 1.64T value) in Mar’24 as compared to 263M (~INR 1.7T value) in Mar’23.

Sale of life insurance policies increased 2% y-o-y to ~5.4M (with LIC having ~76% market share) in Mar’24; the policies covered ~28M lives under group scheme. For non-life insurance policies, gross underwritten premium increased 13% y-o-y to INR 290B in Mar’24 (against INR 257B in Mar’23)

SEBI issued a circular regarding framework for ‘Short Selling’ of securities, in which it permitted both institutional and retail investors to engage in short selling, except for "naked" short selling, which is not allowed. This circular does not impose any restrictions on short selling in the F&O segment. It prohibited institutional investors from day trading. It requires institutional investors to disclose their short selling intentions upfront, at the time of placing the order, whereas retail investors can make this disclosure by the end of the transaction day. Brokers are mandated to gather, organize, and upload data on short selling before the commencement of trading on the next trading day. SEBI issued a circular outlining the process for offering shares to employees through stock exchanges like BSE and NSE. Promoters of eligible companies are allowed to sell shares to their employees within two weeks of the offer for sale (OFS) transaction. SEBI has introduced amendments to the Real Estate Investment Trusts (REITs) regulations in 2024 which focus on enhancing transparency, eligibility criteria, and the overall regulatory framework for REITs, particularly for Small and Medium REITs (SM REITs). The amendments define REITs, introduce a dedicated chapter for SM REITs, outline registration processes, set eligibility criteria, and emphasize compliance. SEBI has taken measures to control the inflow of funds into small- and mid-cap mutual funds. Concerns have arisen due to the surge in investments in these funds, potentially impacting the financial system if investors suddenly withdraw their money. SEBI aims to address this by imposing additional risk disclosure requirements on small- and mid-cap funds. RBI has proposed stricter regulations for housing finance and NBFCs, suggesting an increase in liquid asset requirements. Deposit-taking housing finance companies (HFCs) will need to maintain 15% liquid assets against public deposits, up from the current 13%. RBI Monetary Policy Committee (MPC) has decided to maintain the repo rates at 6.5%. Governor Shaktikanta Das emphasized the need for gradual withdrawal of accommodation. The MPC projects a 7% real GDP growth for the fiscal year 2024-25, with risks evenly balanced.

Zomato and Stripe received final approval from RBI to operate as online payment aggregators Groww surpassed Zerodha in terms of active traders by acquiring one million new active traders in the December quarter. By the end of 2023, Groww had 7.6M active traders, surpassing Zerodha, which had approximately 6.7M traders. Google Pay India joined hands with NPCI for expansion of UPI across the globe Vivifi India Finance, a Fintech Non-Banking Financial Company (NBFC) based in Hyderabad, raised US$ 75M in a Series B funding round. BHIM, PhonePe, and Paytm have activated the cross-border linkage between India's UPI and Singapore's PayNow. Greaves Finance Ltd. And ElectricPe have collaborated to enhance the accessibility of electric vehicle (EV) ownership in India in the EV financing domain SoftBank has fully exited PB Fintech, parent company of Policybazaar. With this, SoftBank has made a total return of US$ 650M on its total investment in the company PB Fintech, the promoter of Policy Bazaar, has received board approval to establish a wholly-owned subsidiary named PB Pay Private Limited. This subsidiary will operate as a payment aggregator, facilitating both domestic and cross-border transactions, subject to Reserve Bank of India regulations. Power Finance Corporation received approval from RBI to set up a wholly owned finance company in the GIFT city in Gujarat MobiKwik Systems Ltd, a Gurugram based payment platform, has refiled its DRHP to raise INR 700 Cr for its IPO Jio Payments is entering the market with soundbox segment, a domain previously dominated by Paytm and PhonePe. The soundbox, which serves as both a payments device and an audio verification tool, has undergone rigorous pilot testing across Reliance Retail stores for 8-9 months. Cedar Capital and IBS Intelligence, has announced the first close of its INR 240 crore FinTech Venture Capital fund. The fund will invest in approximately 15 early-stage startups, with a primary focus on banking technology and business-to-business (B2B) fintech startups The Reserve Bank of India (RBI) has initiated special audits for IIFL Finance Ltd and JM Financial Products Ltd to further probe their regulatory breaches The Competition Commission of India (CCI) has granted approval for the merger of ‘Slice’ with the North East Small Finance Bank (NESFB)