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Growth in BFSI sector

There has been a boom in India's financial services and insurance sectors. It has increased its market cap 50 times in the last two decades. According to a new research by Bajaj Finserv Asset Management Company, the market cap of this region is expected to increase from Rs 1.8 trillion in 2005 to Rs 91 trillion in 2025. Which is growing at a compound annual rate of 22%. The BFSI sector now accounts for 27% of India's GDP, up from just 6% two decades ago.

Over the last decade, bank credit grew at a CAGR of 10.7%, while deposits grew at 10.25%. The balance sheets of banks have strengthened rapidly. Gross NPA declined from 5.8% in FY22 to 2.2% in FY25 and credit cost declined from 1.3% to 0.4%. The study also notes that BFSI stocks have consistently outperformed the broader market. From the post-GFC bounce in 2009 to the post-Covid bounce in 2021, the Nifty Financial Services Index (NFS) has outperformed the Nifty 50 in every recovery cycle.

Right after the recovery from the Global Financial Crises in 2009, NFS rose 80% in just six months compared to Nifty 50's 64%. Similarly, after the election results in 2014, NFS gave 37% returns in six months, compared to 23% for Nifty 50. This strength was further highlighted by the post-Covid rebound in 2021, with NFS gaining 66% in a year compared to Nifty 50's 55%. Even at the market peak in 2024, NFS managed to outperform the broader market returns, rising 21% versus 19%, the research said.

getting boost here

The non-banking financial companies (NBFC) segment has grown as a major credit engine, growing its net worth at 15% CAGR and profit after tax at 31.7% CAGR over the last 20 years. NBFCs now account for 18% of total BFSI income, reflecting their growing importance in retail, MSME and rural lending. Asset quality has also improved significantly. Gross NPA declined from 4.5% in FY22 to 2.6% in FY25. The report said that NBFCs are playing an important role in increasing credit access, especially to underserved areas. The report said structural growth drivers such as digital lending, vehicle finance and co-lending partnerships will maintain momentum.