Hoping a bright future for the Indian financial services sector, Anil Dhirubhai Ambani Group (ADAG) Chairman Anil Ambani today said that "the headroom for (its) growth is virtually limitless."
"In financial services, as in many other sectors of the Indian economy, we have barely scratched the surface," Ambani told shareholders here at the annual general meeting (AGM) of Reliance Capital, a leading player in the Indian financial services space.
Comparing the mutual funds industry of the US with India, Ambani said that while 31 per cent of the US population invests in mutual funds, the figure for India is barely four per cent.
Of the nearly 400 million bank account holders (out of a population of 1-billion-plus), barely 45 million have mutual fund accounts and only 15 million hold demat accounts, he said.
On the insurance sector, in which the ADA Group has emerged as a leading player, Ambani said that India offered a large untapped market as nearly 80 per cent of the Indian population was without life, health and non-life insurance.
"While life insurance penetration is low at four per cent, non-life penetration is even lower at 0.6 per cent," he said.
According to Ambani, who spearheads businesses in highly-diversified spheres such as telecommunications, power, financial services, infrastructure, energy and media and entertainment, the Indian insurance market is expected to nearly double to Rs 4,90,000 crore ($100 billion) by 2012.
While at present up to 26 per cent foreign direct investment is allowed through the automatic route, the Government was expected to increase the FDI cap through the automatic route to 49 per cent in the next round of insurance sector reforms, Ambani said.
Giving details, the ADAG Chairman said that the per capita spend on life and non-life insurance is just about Rs 2,000 and Rs 300 respectively, as compared to a world average of over Rs 18,000 and Rs 13,000, respectively.
"Strong economic growth with an increase in affluence and rising risk awareness is currently driving rapid growth in the insurance sector in both life and non-life segments," he said.
Bullish on retail finance, Ambani said that the segment was expanding at an annual average of 18 per cent and is expected to become a Rs 3,67,500 crore business by 2010, up from Rs 1,35,240 crore in 2003-04.
"It is our commitment and belief that Reliance Capital will play an increasingly important role in driving the process of growth and transformation in India's financial markets, as the economy continues to expand and flourish," Ambani said.
