While the Indian growth story has been an integral part of any
assessment of global wealth for sometime, the sense is that 2009-10
could offer a real tipping point in terms of onshore wealth
management services. The list of recent entrants takes in all types
of wealth manager, from long-established players like Goldman Sachs
to burgeoning brands such as Barclays Wealth and domestic
brokerages such as Motila Oswal.
From a high-end perspective, it is important to note that India
has the second highest number of UHNWIs in Asia after Singapore -
over half the billionaires in Asia now come from India. Conversely
just 38 percent of the wealth market is owned by those considered
to be "high net worth" in the traditional sense. This makes the
targeting of differing wealth segments both desirable and
The Indian wealth market is delicately poised, and nowhere is
that more apparent than in the competition between domestic and
foreign players. The influx of foreign competitors has led to a
domestic fightback, as banks, brokerage houses and new entrants
develop their offerings.
This report looks at the huge potential for wealth management in
India as well as the issues, competition and regulations
involved in entering this market.
This report features exclusive proprietary data, including
interviews with senior industry players taken from Private
Banker International’s ‘Indian Wealth Roundtable’ to
present the most incisive view of one of the most lucrative wealth
markets in the world.
The potential of India as a wealth management
market is difficult to over-emphasise. The fundamentals are strong
by any metric.
As this report will show, this potential
exists not only in the untapped nature of the market, but also in
terms of: a relaxing of financial regulation and a quickly growing
mass affluent and HNW population in addition to the already
established ultra high net worth segment. Opportunity also lies in
providing services to the non-resident Indians (NRIs) who have
achieved success and generated wealth across the globe.
While the Indian growth story has been an
integral part of any assessment of global wealth for some time, the
sense is that 2009-10 could offer a real tipping point in terms of
onshore wealth management services. The list of recent entrants
takes in all types of wealth manager, from long-established players
like Goldman Sachs to burgeoning brands such as Barclays Wealth and
domestic brokerages such as Motila Oswal.
Segmenting this wealth remains a difficult
The extent of the growth within India has left
the country with a wildly divergent population in terms of income
and living standards.
From a high-end perspective, it is important
to note that India has the second highest number of UHNWIs in Asia
after Singapore - over half the billionaires in Asia now come from
India. Conversely just 38 percent of the wealth market is owned by
those considered to be “high net worth” in the traditional sense.
This makes the targeting of differing wealth segments both
desirable and practical.
These trends have also resulted in the most
fragmented wealth market in Asia. The rapid rate of growth seen in
the Indian wealth market in recent years has given rise to numerous
independent financial advisors and brokerage houses, though the
services offered by these segments are limited, and face stiff
competition from insurers and private banks themselves.
The high incidence of mass affluent
individuals in India has also led to a continued reduction in the
minimum liquid asset thresholds required to use wealth management
Reputation and Regulation
The long and varied history of foreign banking
presence in India means that there remains a degree of uncertainty
regarding the commitment and ultimate intentions of foreign
Despite the surge of wealth and influx of
private banking initiatives, the shadow of regulation still hangs
heavy over the Indian wealth management market.
Investment controls remain of secondary
importance when compared with private banks’ ability to establish a
presence in the region. Banking reform is expected to make this
process far simpler, diversifying the field still further and
mitigating the competitive advantage of the domestic banks which
are able to leverage their significant branch networks.
Obtaining a non bank financial corporation
(NBFC) licence is an increasingly common way for foreign banks to
enter India given the tight restrictions placed upon branch-based
expansion by overseas institutions. The RBI currently only allows
foreign banks to increase their cumulative network by between 18
and 20 branches per year. The figure is higher than the 12 India is
required to permit under the terms of its trade deals with the
World Trade Organisation but does not allow significant room for
Outlook, Competition and
The Indian wealth market is delicately poised,
and nowhere is that more apparent than in the competition between
domestic and foreign players. The influx of foreign competitors has
led to a domestic fightback, as banks, brokerage houses and new
entrants develop their offerings.
Of all the domestic competitors seeking to
target HNWIs in 2009-10, the most notable is perhaps Reliance
Money, which launched its wealth management programme in July 2008.
Backed by Indian billionaire businessman Anil Ambani, Reliance
announced it would be offering India’s first “cradle to grave”
wealth management service, utilising its network of over 10,000
outlets across 5,000 towns and cities in India to do so.
The group’s segmentation efforts will involve
a focus on both senior citizens and non-resident Indians.
With its extensive local network and
considerable knowledge of the local market, Reliance’s entrance
into the Indian wealth market poses a number of threats to even the
largest foreign banks. As the largest brokerage house in India, the
firm has a pre-existing base of investor to target, and the
potential for referrals from other Reliance businesses is
The aggressive nature of Reliance Money’s push
into the wealth management sector is evidenced by its AuM targets:
reportedly, the firm is looking to reach $11.3 billion in assets
under management by the end of 2009, just 18 months after it first
launched. But Reliance Money is not the only domestic institution
to have announced plans to diversify into wealth management.
A marketplace which already has firms of all
shapes and sizes jostling for position is likely to get more
crowded still for as long as this trend continues.
1. The Wealth
Market in India
c. Market Size and Forecast 2009 –
Key Market Issues
Wealth management products and services (sample products
Key competitive issues
Outlook and Opportunities
Outlook for the Indian wealth market
Opportunities for wealth management service providers
Opportunities for solution providers
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