We all wish that we can make more from our investments and we constantly on a look out for opportunities that can help us do so. Guess what, Birla Sun Life Banking and Financial Services Fund could be your answer. Here is why:
- As on October 31, 2013, CNX Finance has given compounded returns of 17.3% as against 12.9% given by Nifty. This effectively means it has outperformed Nifty by 34% for the said period.
(Returns calculated since earliest available computation of CNX Finance, i.e. January 01, 2004, Data Source: NSE; Computation: Internal. Past performance is no indication of future performance).
- Mobile Banking and Technology based banking have helped reach out to a large set of people.
- Rural focus and the rising middle class society are expected to play an important role in the growth of the banking and financial services sector.
There are 4 key reasons why Banking as an industry has potential in India.
- Robust Demand
- We often see an increase in demand for banking and related services with an increase in working population and growing disposable incomes
- A report by National Council for Applied Economic Research's (NCAER) Centre for Macro Consumer Research indicates that by 2015-16, India will be a country of 53.3 million middle class households, translating into 267 million people.
NCAER defines Indian middle class as the one with income level between INR 3.4 lakh-17 lakh at 2009-10 level.
- The rising middle class usually implies higher purchasing power and also the ability take on extra debt to meet their aspiring lifestyle.
- Emergence of Rural India
- Rural banking is expected to witness growth in the future. Only 1 in 6 villages in India have access to banking services. This is a strong representation of the unbanked opportunity in rural India.
(RBI Vision Documents on Payment Systems for 2012 – 2015)
- It presents a significantly large opportunity that is still at a nascent stage of being tapped by the banking industry. Recent regulatory interventions have required banks to penetrate deeper in rural markets with ultra small branches in villages with populations as low as 2000.
(Source: KPMG 5th ICC Banking Summit Report 2013)
- Technology and low cost innovation from banks could play a key role in reaching out to the growing rural economy.
- Innovation in Services
- The fast growing Mobile & Internet banking services and extension of facilities at ATM stations are expected to play an important role in reaching out to a much larger set of people.
- The number of mobile banking transactions has increased to over 7.1 million in September 2013 from about 3.8 million in September 2012.
- Vast unbanked population highlights scope for innovation in delivery
- Strong Business Fundamentals
- Leading banks in India are known to have strong governance & management practices
- With a significant presence of foreign banks in India, large set of global learnings are being applied across the sector.
- Indian Banking ranks amongst the Top 10 countries in the world in providing a positive customer experience, with over 75% people having a positive experience.
(Source: World Retail Banking Report 2013 by Capgemini & Efma)
Banking seems promising. What about the Non Banking Financial Services Companies (NBFC)?
With the growing importance assigned to financial inclusion, NBFCs have come to be regarded as important financial intermediaries particularly for the small-scale and retail sectors.
NBFCs are a suitable alternative for banks for meeting various financial requirements of a business enterprise. They are agile and are able to offer quick and efficient services.
The Micro, Small & Medium Enterprise (MSME) sector is often in need of services and NBFCs are considered to have a suitable setup to reach out to them effectively.
The MSME sector is one of the key drivers of growth for the Indian economy. In 2009-10, there were around 29.8 million registered and unregistered enterprises and it is estimated that only 33-34% of these companies have access to banking or institutional financing channels. (MSME as classified by the banking definition of companies with a turnover in the range of Rs. 20 to 200 crores, Source: KPMG 5th ICC Banking Summit Report 2013)
Views expressed herein should not be construed as investment advice to any party and are not necessarily those of Birla Sun Life Asset Management Company Ltd.(BSLAMC) or any of their officers, employees, personnel, directors and BSLAMC and its officers, employees, personnel, directors do not accept responsibility for the editorial content.. Wherever possible, all the figures and data given are dated, and the same may or may not be relevant at a future date and have been compiled from sources, which BSLAMC believes to be reliable, but cannot guarantee its accuracy or completeness. Forward looking statements are subject to known and unknown risks and uncertainties which could material impact or differ the actual results or performance from those expressed or implied under those statements
Where else does this scheme invest?
Other than Banking & NBFCs, the scheme will endeavor to invest in promising companies within the financial services sector, such as Housing Finance, Insurance, Rating Agencies, Stock Broking etc.
The portfolio of the scheme is subject to changes within the provisions of the Scheme Information Document (SID) of the scheme. Please refer to the SID for asset allocation, investment strategy and scheme specific risk factors.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.