Indian Banking and Insurance Industry Overview

The drastic development taken place during the first 25 years since independence was Nationalization of many private banks. With this, the central government became major policy maker for these nationalized banks. With economic liberalization measures many private and foreign banking companies were allowed to operate in the country.

Scope of the Financial Sector

The financial sector in India has become stronger in terms of capital and the number of customers. It has become globally competitive and diverse aiming, at higher productivity and efficiency.

Exposure to worldwide competition and deregulation in Indian financial sector has led to the emergence of better quality products and services. Reforms have changed the face of Indian banking and finance.

Diversifying into investment banking, insurance, credit cards, depository services, mortgage financing, securitisation has increased revenues. As large number of players in various fields enter the market, competition would be intensified by mutual funds, Non Banking Finance Corporations (NBFCs), post offices, etc. from both domestic and foreign players. All this would lead to increased sophistication and technology in the sector. Corporate governance would come into the picture and other financial institutions would have to reach global standards. Also the limit for FDI in private banks is increased to 74% and the limit for FII is 49%. There are many challenges ahead for the banking sector such as technology, consumer satisfaction, corporate governance, risk management, etc. and they are redefining their priorities, which are now focused on cost reduction, product differentiation and customer centric services. Some of the major players in this sector are HDFC, ICICI, HSBC, State Bank of India, Punjab National Bank, Ing Vysya, ABN Amro Bank, Centurion Bank, City Bank, etc.

The insurance sector has opened up for private insurance companies with the enactment of IRDA Act, 1999. A large number of companies are competing under both life and general Insurance. The FDI cap/equity in this sector is 26% and the proposals have to be cleared by Insurance Regulatory and Development Authority (IRDA) established to protect the interest of holder of Insurance policy and act as a regulator and facilitator in the industry. Some of the major players in this sector are LIC, Max New York Life Insurance, Bajaj Allianz, ICICI Prudential, HDFC Standard Life, Metlife Insurance, Birla Sun Life Insurance, etc. Various types of policies and instruments are coming up in the market to attract more customers. Most of the population of India is not insured, hence there is a lot of scope in this sector and a number of companies are planning to enter the sector. Every futuristic individual would want himself to get insured.

Capital markets have a long history of over 100 years in India. Bombay Stock Exchange came into existence more than a hundred years ago to remove direct government control. Indian companies are now allowed to raise capital from abroad and Foreign Institutional Investors are allowed to enter the market due to an important policy initiative in 1993. The depository and share dematerialization has enhanced the performance of the capital market reducing processing time and increasing returns. The major players are India Bulls Securities, Kotak, and many more. Many new instruments have been introduced in the market such as index futures, index options, derivatives, including futures and options. Also commodities market is gaining pace. There is a huge potential available in the market and to realize it venture capitalists are coming up with lots of finance. To make use of the human capital, technical skills, cost competitive workforce, research and entrepreneurship VCFs and VCCs are ready to invest in potential projects.

For a stronger and resilient financial system, India needs to move beyond peripheral issues and act maturely by increasing profitability and efficiency, providing better solutions to the customers.

The banking sector has improved manifolds in terms of capital adequacy, asset classification, profitability, income recognition, provisioning, exposure limits, investment fluctuation reserve, risk management, etc.

Favorable economic climate and a variety of other factors such as demand for wide range of financial products from various sections of the society led to mutually beneficial growth to the banking sector and economic growth process. This was coincided by technology development in the banking operations. Today most of the Indian cities have networked banking facility as well as Internet banking facility. A customer is empowered to operate his account from any part of the country. UTI Bank, ICICI, HDFC Bank and Bank of Punjab are the main winners of the race.

Finance As a Career

Finance has immense opportunities to offer to potential candidates. Being a huge and diverse sector with opportunities in banking, insurance, capital market, venture capital, mutual funds, bonds, commodities markets, etc. To meet global standards and remain competitive recruitments in this sector are gaining pace in various fields such as Treasury Management, Credit, Risk Management, HRM and IT related services.

Commercial banks are catering to all the sections of the society, including small as well as large businesses. There are far more jobs in this sector than any other sector.

There is tremendous range of opportunities here with a wide variety of profiles and packages offered by this industry. Jobs in the financial services can be very interesting, giving opportunities to learn and interact with people from diverse cultures and backgrounds and build up a clientele.

The ever-expanding sector gives challenging and remunerative jobs, with incentives and benefits, according to the capabilities of the person concerned. If you are well prepared and passionate about it, then the sector can be highly rewarding for you in terms of a lucrative job. Promotion and growth depend on individual achievements and efforts.

There is a huge demand for insurance professionals in the industry as the population grows older. Jobs in this sector would be rewarding and would help people manage risk and protect themselves against catastrophic losses. Professionals have to persuade customers to take insurance as not only a tax savings tool but also as a safeguard for the future. Shady and fast talking salesmen are a thing of the past; highly reliable professionals are now preferred in the sector. There are various profiles offered by the insurance sector as underwriter, sales representative, actuary, asset manager, etc.

Capital Markets of any economy show the financial health of the country. In India capital markets are growing faster than ever before. Hence a lot of people with knowledge and professional acumen are required in the sector. Some of the regular vacancies are of stock analysts, investment analysts and equity analysts. An analyst has to study the companies’ financial reports, assess statistical information, estimate demand and supply factors and profitability projections, compare financial results, meet the management of the organizations, make surveys and, finally, reach a conclusion. Economic growth has paved the way for the participation of various organizations like mutual funds, investment consultancy, broker firms, insurance companies, merchant banks, pension funds and other financial institutions.