For India’s financial sector, 2023 is panning out to be a watershed year with numerous industry giants seeking to increase exposure across private banking, investment banking and asset management.

At the start of 2023, few would be inclined to select India as one of 2023’s biggest stories and winners within Asia’s financial services industry. But nine months into the year, the world’s most populous country is firing on all cylinders. 

Strong wealth creation is luring private banks to ramp up coverage efforts. Economic momentum and stability are driving expectations of accelerated capital market activities. Investor optimism is fuelling the outlook for fund inflows.

Private Banking

According to a Knight Frank report, India is expected to experience strong wealth creation in the coming years, outpacing Asia and the rest of the world. By 2027, it will see a 108 percent increase in high net worth individuals (HNWI) to over 1.6 million and a 58 percent increase in ultra-HNWIs to around 19,000.

Numerous private banks are increasing focus on Indian coverage, not only for the offshore market but also the onshore market. Shifts in leadership structures also indicate increasing emphasis on the country. In a rare move, Barclays’ private banking arm even made Mumbai the base for its Asia business and regional head Nitin Singh, who started his new job earlier this month. 

Investment Banking

There is also optimism in the investment banking industry. At JPMorgan, global M&A head Anu Aiyengar estimated that $100-150 billion out of $2 trillion of funds available for investing are focused on Indian deals, according to a «Bloomberg» report, while India head of equity capital markets Abhinav Bharti recently forecasted $40 billion in future shares sales annually.

«Because of recent softness in Chinese economic data, a lot of these global [emerging market] fund managers are underweight on China and now where you go and deploy that extra capital, you must have a counter overweight as well. India is benefiting from that,» Bharti said.

Asset Management

And staying on JPMorgan, its inclusion of India in its emerging market bond index is also making headlines and sparking investor interest. Goldman Sachs is projecting $40 billion of bond inflows over the next 18 months. Passive and active flows are expected to account for $30 billion and $10 billion, respectively.

«The flows will be front-loaded, beginning immediately, as investors pre-position for inclusion next year. [S]everal EM-dedicated funds are already set up on India,» Goldman said in a note authored by analysts including Danny Suwanapruti.

Others have even opted to gain direct exposure domestically. BlackRock, for example, formed a 50-50 local joint venture in July with Jio Financial Services, which is part of the renowned Ambani family’s Reliance Group.

To The Moon?

India has been rapidly raising its global profile as of late, hosting a historic G20 meeting earlier this month and reportedly completing its first-ever successful moon landing in August via Chandrayaan-3 – the country’s lunar exploration mission (see image above). Any further success in other areas, such as the financial sector, will be another feather in the cap.

Every year, JPMorgan runs an investor summit in India and according to chairman and CEO Jamie Dimon, the event used to attract an audience that was around ten times smaller compared to today.

«Look at this conference. I remember eight years ago or nine years ago we started with 50 or 75 clients. Now it’s 700 investors around the world, 100 companies presenting,» Dimon said in a recent «CNBC» report. «I think the optimism of India is actually completely justified.»