The world of finance industry

12. The world of finance industry- The 10 Most Promising Finance Companies In India 2022

The finance industry is tough to evaluate. It is a group of various sectors like banking, non-banking financial institutes, insurance, wealth management and a few more on the list. The finance industry is considered a lifeline for every economy. Stable financial income and a balanced trade sheet showcase the strength of a country to survive in this modern world. 

Finance industry in India 

India’s finance industry has gained the crown of one of the top innovative industries. The government’s push for a digital economy and support from the public and corporates has displayed an upward trending graph. NPCI (National Payments Corporation of India) is one of the primary reasons for India’s rising dominance in the global finance industry.

The ongoing pandemic has forced all the banking and non-banking institutes to restructure their operations in order to keep them functional in any critical situation. Many banks operating in suburban and rural areas, previously had no plans to make their functions digital. However, even banks operating in big cities of India were not that ready for the situation. Sudden change in the functionality of an organisation has to go through a formal channel which is a time-consuming process.

It was an opportunity for many young entrepreneurs, as they had a small team and quick decision making power. Fintech Startups that were struggling to sustain in the competition had recorded a surge in their customer base and revenue. They have targeted the population that was not in the flow of the market. It was all possible due to the internet revolution in the country with 4G technology. Easy internet access from 2016 by Reliance Jio uplifted the remote areas that were always left behind from the mainstream. 

Structure of finance industry in India

The finance industry of India is mainly divided, into three parts: Banking sector, Non-Banking sector & Investment Banking. 

the world of finance industry

Banking sector

RBI (Reserve Bank of India) is the central bank and the monitoring authority for all the financial transactions being conducted in India. All the banks that operate in India have to get a license from RBI. Regarding the types of banks operating in India, they are: Public sector banks, Private sector banks, Foreign banks, Regional Rural Banks, Urban Cooperative banks, Rural Cooperative banks. 

The commercial public & private sector banks account for the highest share of the total assets held by the financial system. The traditional approach of the Indian people to keep money safe turned towards RD (Recurring Deposit) and FD (Fixed Deposit) for a long time. Now, banks have introduced more attractive services that have kept the public’s interest alive in banking companies. 

Non-Banking Companies 

NBFCs (Non-Banking Financial Companies) are the ones who are allowed to grant loans and credits to potential customers. They have to get a license from RBI to operate. Some examples of NBFCs are L&T finance, Bajaj Finance Ltd, Mahindra & Mahindra Finance, HDFC Home loan, LIC housing, etc. 

NBFCs play a vital role in nation-building as they have a wide network of connections and services. They have reached the unbanked remote areas, where the banking system takes time to get. They are crucial players in rural areas. 

The Insurance sector in India is dominated by LIC (Life Insurance Corporation). It has its presence across the country and has more than 2000 branches. The life insurance sector has been considered a tool of savings & investment that led to the rise. Other forms of insurance such as Vehicle, Travel, Property, and Medical are on the rise as well. The reason is financial literacy. 

Investment Banking 

This is the sector where India has recorded a sharp hike in a very short period. Investment banking is non-other than wealth management, or to make it easy, it is related to capital and money market, which is popularly known as the stock market. 

Investments in India by domestic investors, were at the lowest of the global investment. Preference to invest in the stock market began to rise when Fintech startups took charge to guide and provide knowledge to the general public. This caused the rise of the Indian stock market in just 3-4 years. 

It is a wide sector that could not be covered in one article. So stay tuned for the next update. Until then, you can read our other articles on finance and other domains.

– Parag Ahire

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