The banking sector, Financial and Insurance Services (BFSI) of India has witnessed tremendous growth in the last two decades, according to a recent Motilal Oswal report.
The market capitalization of the sector has increased more than 50 times, jumping from ₹ 1.8 billion in 2005 to ₹ 91 billion in 2025. This represses a strong compound annual growth rate (CAGR) of around 22 percent. Although banks continue to be the backbone of the BFSI sector, their participation in total market capitalization has been reduced from 85 percent in 2005 to approximately 57 percent today. This change is mainly due to the increase of new players such as non -banking financial companies (NBFC) and Fintech companies.
These emerging segments have benefited from rapid technological advances and innovation, which have helped them obtain a significant presence in the market. The Fintech sector, which barely existed before 2015, now has a combined market capitalization or around ₹ 12 billion, including colleagues listed and not listed. This clearly shows how digital technologies and changing consumer preferences are shaping the future of the financial sector.
The report also highlighted the strong recovery in profits for the BFSI sector after the COVID-19 pandemic. The participation of the sector in the NIFTY-50 index profits increased to 33 percent in the fiscal year24, compared to 16 percent in the 2011 fiscal year. This growth has been supported by a better quality of assets, increased demand for loans and the lowest supply requirements. However, the sector has seen some actors material gains due to the reduction of net intermediate margins (NIMS) and Higer credit costs. The report added: “Despite the thesis challenges, banks with solid retail franchises and effective risk management strategies are well positioned for long -term stability.”
The financial strength of the sector has also improved. In the fiscal year24, the net assets of the banks reached ₹ 26 billion, while the NBFC had a net worth of ₹ 12.4 billion. This growth has further promoted investor confidence in the BFSI Indio sector, which continues with strong investment opportunities.
Posted on April 24, 2025