VISION 2020 IN BANKING AND FINANCE Presenters: Seemoli , Pardha , Anant & Preeti
Nov 17, 2014
VISION 2020 IN BANKING AND FINANCE Presenters:
Seemoli , Pardha , Anant & Preeti
Mergers & Acquisitions
• More BRIC nation companies will be on the acquiring side
• The highest volume of M&A transactions in 2020 will be seen in ‘Energy & Utilities’ sector
• Standardization of accounting policies worldwide facilitate M&A
• Indian banks may buy stakes in banks abroad
GlobalizationUpsurge of remote
banking
Adoption of global standards
Walk-in-loans & credit rating for each customer
Technology would be the key to
competitiveness
Financial Inclusion
• AADHAR will cover the entire population by 2020
• Urbanization & Predicted literacy rate close to 80%
• 600 million new customers' accounts
• Rural areas to be covered by ATMs
• More households investing in shares , debentures , mutual funds
Commodity Markets
2005-06 2006-07 2007-08 2008-09 2009-10 2010-110
20
40
60
80
100
120
Commodities Turnover
turnover Rs. Trillion
• FIs & banks will be permitted to invest in the
commodities markets.
• Bill to grant additional authority to the FMC has been
pending enactment for several years now – it will be
passed
• It is a Futures market , by 2020 options will be
introduced
• Commodities markets to overtake capital markets
FDIs & FIIs• FII inflows US$ 13 billion into Indian stocks till September 2012
• FDI inflow Rs. 734,240.48 Crores (162,305.99 US$ million)
• The Centre for Monitoring Indian Economy (CMIE) projects that FII inflows second half of FY13 at US$ 11.2 billion
• Major FIIs like JP Morgan, Morgan Stanley and Deutsche Bank are believed to drive the positive wave of foreign investments
PRIVATE EQUITY
Rs
Rs
Rs
Rs
Rs
Structure of Global GDP(in current US $ Trillion)2000 2011 2016 2020 2025
World GDP 32.2 68.7 90.5 110.5 140.5
Advanced Economies 25.7(79.7%)
44.4(64.6%)
53.3(58.9%)
61.1(55.3%)
71.7(51.1%)
Developing and Emerging 6.5(20.3%)
24.3(35.4%)
37.2(41.1%)
49.4(44.7%)
68.8(48.9%)
of which India 0.5(1.5%)
1.9(2.8%)
3.6(4.0%)
5.8(5.2%)
10.0(7.1%)
Industry 11th Plan(in %)
12th Plan(9.0%)(in %)
12th Plan(9.5%)(in %)
Agriculture, Forestry & Fishing
3.2 4.0 4.2
Construction 7.8 10.0 11.0
Financing, Insurance, Real Estate &Business services
10.7 10.0 10.5
Total GDP 8.2 9.0 9.5
Broad Macro-Economic Parameters - Previous Plan and Targets for Twelfth Plan•The labor force in India is expected to increase by 32 per cent over the next 20 years•The Interest rates may be decreased (to 8%) in order to encourage growth
11th Plan 12th Plan (Target 9.0%)
12th Plan (Target 9.5%)
1 Investment Rate 36.4 38.7 41.4
2 Fixed Investment 30.9 33.5 35.5
3 Savings Rate 34.0 36.2 38.9
4 Current Account Balance -2.4 -2.5 -2.5
5 WPI Inflation Rate 6.0 4.5-5.0 5.0-5.5
Regulatory Systems in the Indian Financial Market
• Maintain the current conservative system of regulation
• Indian banks should conservatively trade in derivative
market, not be influenced by US,UK banks
• Should resolve problems such as increasing population,
high unemployment rate
• Should not let the debt level rise as much as US, Europe
Microfinance
• Financial education
• Product range, informed by understanding client
needs
• Credit bureaus
• Client protection
• More loans available for rural india
Fiscal and Monetary policy
• FDI
• Investments
• Flexible Defence expenditure
• Short term loans
Financial Inclusion in the banking sector
The HR challenge : Re-skilling, attracting and retaining
Automation implicationsChallenges
Mortgages to cross Rs 40 trillion by 2020
The number of branches to grow 2X,ATMs 5X
Investment banking to grow ten fold.
Infrastructure financing : Rs 20 trillion on bank books
Wealth management : 10X growth
Opportunities
Banking Regulations
CAPITAL ACCOUNT 2020• Planning Commission envisages Foreign Direct
Investments (FDI) to contribute 35% (21% now) to
gross capital formation.
• FII inflows to get stronger in the second half of this
fiscal.
• Plan panel sets $100 billion target for pharma sector.
Cabinet approval of FDI cap hike to
49%
IRDA support:
Secure Rs 40,000 crore
Exit opportunity to promoters
India 2020:
Among top three life insurance
markets
Converge
Innovate
PenetrateInsurance in India in 2020
Insurance in India in 2020
Immediate employment potential: 10 million
30 percent mandatory procurement preferably from MSMEs
Infrastructure development: rural development
Technical expertise and better quality
F
ID
Retail
What it has in store for India?
Indian Pension market in
2020• Pension sector reforms (PFRDA Bill) : Favored by FICCI,
ASSOCHAM and CII.
• Easing rules for pension and insurance funds could help secure
$1 trillion in investment up to 2017.
• FDI could raise share of pension fund assets to GDP from the
current 5% to close to 17%, meeting capital needs.
Land Reforms and Land Acquisition And Rehabilitation Resettlements Bill
• Infrastructure development for GDP target of 5.5
trillion USD by 2020.: incentive to infrastructure
financing
• Bigger share of the rewards of urbanization and
industrialization to landowners.
• Balance between social and economic uses of land
References• Faster, Sustainable and More Inclusive Growth (Oct 11)• Report of the Committee on India Vision 2020 (2002)�• Report of The Committee on Angel Investment & Early�• Stage Venture Capital June 2012• http://www.dnb.co.in/India2020economyoutlook/
Macro_Economic_Outlook2020.asp• www.perjacobsson.org/external/np/seminars/eng/.../
fiscal/.../heller.pdf• www.business-standard.com/india/...regulationfinancial-
system/416450• www.articles.economictimes.indiatimes.com• www.mpra.ub.uni-muenchen.de/4438/1/
MPRA_paper_4438.pdf• http://socialenterprise.georgetown.edu/events-and-media/
2011-3/the-future-of-microfinance-opportunities-challenges-for-financial-inclusion
Thank you !