This CEO Upholds the Changing Face of the Indian Financial Market
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Financial space in India is coming of age and has evolved significantly over the last 30 years, especially since the economic reforms were unleashed. The share of state-owned banks has been declining, private-sector banks have grown on the back of technology and talent, and selected Non-bank financial institutions (NBFCs) have become larger than some of the banks. Recent market entrants like small finance banks, payment banks, micro-financiers and fin-techs too will start carving a niche by offering last-mile financial solutions.
The last quarter of 2018 has been straining for the NBFCs in terms of asset-liability mismatch, and as the MD & CEO of Envision Capital, Nilesh Shah sees, the challenge will continue to roll in the current year. “NBFCs will remain a high-watch area for 2019 as well. Further, it would be interesting to see if an asset quality review (AQR) process on the lines of banks is also initiated for NBFCs as well,” he says.
In a conversation with Entrepreneur India, Shah, who owns 26 years of experience in the finance sector, elaborates more about the ongoing and prospective financial aspects of the country for the current year.
India’s Investment Spectrum
Shah believes that investors will have to take a rational and balanced approach to asset allocation keeping in view one’s financial objectives. The country has the two most important ingredients required for a sound investment – long-term growth potential of the economy and a large pool of entrepreneurial talent. Investment in equities of established, emerging and may be early-stage companies is an excellent way to ride India’s investment prospects.
But what are the changes that have surfaced in the investment ecosystem? Shah says, “I think the seminal change is the change in investment thought process. It is no longer about investing in just age-old businesses run by established families. The relevance of the business to the new-age, ability to disrupt or the least likely to be disrupted and potential for scale are fetching a premium and attracting capital from investors.”
The Possible Financial Trends of 2019
As the year has started, a definite question comes up. So, what are the financial trends that are promising for the current year we stepped in? Financialization of savings will continue to be the mega trend of 2019 and beyond. “Savings by Indian households have traditionally been in physical assets like gold and real estate. This is changing and will continue to gather momentum in 2019 and sustain for the next several years and decades. Specifically for the year, there is room for headline interest rates to move lower on account of a wide gap between consumer inflation and repo rates. This I believe could be the big trend for 2019,” he elucidates.
Sectors to Relish Growth
Shah names a couple of sectors that are on the verge of the witnessing reasonable growth. He believes that healthcare, pharmaceuticals, textiles, chemicals and road construction are the pockets where the growth will be seen.
Will India Come under the Wheels of the US-China Trade War?It is unsure if the US-China trade dispute will end in mutual benefit or compromise, but the ongoing trade war has raised the brows of many, wondering if its ripple effect will touch any other country. Shah opines, “It is unlikely to impact India in any direct way”. Adding further, he says, “In fact, some of the industries in India could potentially benefit if the US looks at the alternative destination for outsourcing. However, further escalation of the trade war could impact sentiment and thereby trigger volatility in financial markets.”