Birla SL has launched the new fund offer of Birla SL Banking & Financial Services Fund, an open ended scheme. The NFO opens for subscription on 25 Nov 2013 & closes on 9 Dec., 2013. No entry load will be applicable for the scheme.
About Sector
The financial sector consists of Banks, Non Banking Financial Services companies, Housing Finance Companies, Stock Broking Companies & Credit Rating Agencies etc.
The well developed sector yet under-penetrated financial sector is managed through a sound regulatory framework by the RBI, SEBI, and IRDA & PFRDA under the Ministry of Finance.
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Why Banking & Finance Sector?
High Growth Sector
The banking sector was witnessed study growth, with 19% increased in Bank Deposits, 23% increase in Credit in the last 8 years. Non Banking Finance Companies have also shown a strong 26% growth in their asset base in the same period.
Driven by Recent Reform Measures
|
Area of Reform |
Reform |
Potential Impact |
|
Banking & Financial Services |
Issue of Bank licenses by Jan 2014 | Financial inclusion & growth of an underpenetrated & underserved non-urban market. |
| Allow foreign banks to enter India & even take over domestic lenders. | The sector is expected to benefit from large global players’ transfer of technologies & best practices, & lead to healthy competition. | |
| NHB allowed risk weightage on loans > Rs 75 Lakh, to be reduced from 125% to 75% | This would free up capital requirements & allow HFCs to lend more. | |
| 49% FDI in Insurance (from current 26%) | Help boost investments in the sector & attract more serious global players. | |
| IRDA increased exposure limits to HFCs (for insurance co. investing in these) | This would allow insurers lend more to the sector, thereby providing access to valuable capital from the insurance sector to the HFCs. | |
| Infrastructure | Cabinet committee on Investment for Fast tracking infra projects. | Already cleared over 171 projects worth Rs. 1.5 Lakh Cr. in order to kick-start the investment cycle, which is the need of the hour |
| Fiscal Consolidation | Reduce deficit to 3% by FY 17, through expenditure cuts, hike in railway fare, Diesel price deregulation & PSU Disinvestment. | Improved economic growth which would directly impact the growth of the sector, & throw up multiple opportunities for companies engaged in Infra Finance, Mortgages, CV finance, etc. |
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