India’s Leading BFSI and FinTech Companies 2022

12 An Overview of the Indian BFSI Industry FY21 had been a difficult year for the Indian economy on account of the pandemic induced disruption in the economic activity. However, the economy gainedmomentum in FY22, largely due to the comparatively smaller and localised economic impact of the second wave of the pandemic, good progress on vaccination as well as coordinated and comprehensive policy response from the government and the Reserve Bank of India (RBI). With a gradual decline in new COVID-19 cases and withdrawal of containment measures, domestic consumers’ confidence bounced back. The pent-up demand coupled with strong growth in agricultural output stimulated domestic consumption demand, which was further reflected in the growth of industrial production and core sectors output. The Index of Industrial Production (IIP) and eight core indices rebounded and even went past their pre-pandemic level in November 2021. The rise in government capex on infrastructure and revival in residential real estate market also provided much required impetus to the domestic industrial activity. Besides, high frequency indicators like rail & freight activity, passenger traffic, power consumption, e-way bills and Goods and Services Tax (GST) collection are showing signs of revival. With recuperating economy, the real GDP is expected to grow by 8.9% in FY22 as per the advance estimates after contracting by 6.6% in FY21. Nonetheless, supply-chain related challenges continue to persist which have hindered supply of rawmaterial to industries. This coupled with surge in international oil and commodity prices and high logistics costs weighed on input prices. Wholesale Price Inflation (WPI) peaked at 14.9% y-o-y in November 2021. Higher input costs further translated in surging retail prices, with CPI inflation hovering over the RBI’s target level of 4% during April-January FY22. However, citing that the ongoing domestic recovery is still incomplete, the RBI maintained accommodative monetary policy stance in FY22. The resurgence in economic activities also providedmuch required impetus to the BFSI sector. Amongst BFSI segments, the Indian banking sector remained well capitalized during the year. Credit spiral also turned upwards in FY22 aided by broad based revival in loan demand. Although NBFCs witnessed significant challenges during the first wave of pandemic, they could weather the crisis with the help of various policy initiatives. FY21 and FY22 turned out to be exceptional years for Indian securities markets. The key feature of equity markets and mutual funds in FY22, has been increased participation of retail investors. Riding the bull run in the equity market, retail investors invested in equity-oriented mutual fund schemes. Profitability indicators in insurance sector also showed improvement in FY21. Banking Sector Banking has always remained the dominant segment of the Indian financial system. Over the years, the Indian banking system has progressed from being a financial intermediary to the facilitator of economic growth. Even amidst the turmoil induced by the COVID-19 pandemic, Indian banking sector has remained resilient. Current Scenario Indian banking sector has weathered the COVID-19 shock as reflected from improvement on parameters like profitability, capital adequacy ratio and non-performing assets (NPAs). Despite the pandemic, Gross Non-Performing Advances (GNPA) and Net Non-Performing Advances (NNPA) ratios of scheduled commercial banks have continued to decline since FY19. The improvement in asset quality of the banking system in FY22 can largely be attributed to the decline in delinquencies due to the government relief measures for various COVID-affected sectors. The moratorium and one-time restructuring BANKING Dun & Bradstreet