Over the last 20 years, India’s BFSI industry has grown more than 50 times, but banks’ market share has decreased as a result of NBFCs: Report

Over the last 20 years, India’s BFSI industry has grown more than 50 times, but banks’ market share has decreased as a result of NBFCs: Report Theindiaprint | 2025-04-24 12:27:11

India’s New Delhi According to a recent analysis by Motilal Oswal, the Banking, Financial Services, and Insurance (BFSI) industry in India has seen significant expansion over the previous 20 years.

From Rs 1.8 trillion in 2005 to Rs 91 trillion in 2025, the sector’s market capitalisation has grown by more than 50 times. At around 22%, this is a robust compound annual growth rate (CAGR).

Although banks remain the foundation of the BFSI industry, their proportion of the overall market capitalisation has decreased from 85% in 2005 to around 57% at now.

The emergence of new actors like fintech businesses and non-banking financial companies (NBFCs) is mostly to blame for this change.

According to the research, the market capitalisation of the Indian BFSI industry has increased by an astounding 50 times. Although banks continue to be the foundation of the BFSI industry, their market capitalisation has decreased from 85% in 2005 to around 57% now.

Rapid innovation and technical breakthroughs have benefitted these expanding markets, allowing them to establish a strong presence.

Before 2015, the fintech industry hardly existed. Today, its total market capitalisation, including both public and unregistered firms, exceeds Rs 12 trillion. This demonstrates unequivocally how the financial industry’s future is being shaped by digital technology and shifting customer tastes.

The BFSI sector’s robust profits recovery after the COVID-19 epidemic was also recognised in the study. In FY24, the sector’s profits share of the Nifty-50 index increased from 16 percent in FY10 to 33 percent. Better asset quality, more loan demand, and reduced provisioning needs have all contributed to this expansion.

Narrowing net interest margins (NIMs) and rising credit costs, however, have lately caused some profit slowdown in the industry.

According to the research, “Despite these challenges, banks with solid retail franchises and effective risk management strategies are well-positioned for long-term stability” .

Additionally, the sector’s financial stability has increased. NBFCs had a net value of Rs 12.4 trillion in FY24, compared to Rs 26 trillion for banks. Investor trust in the Indian BFSI industry, which still presents excellent investment prospects, has increased as a result of this expansion.