The Indian BFSI sector has experienced a remarkable >50x surge in market capitalization over the past two decades, expanding to Rs 91 trillion in 2025 from Rs 1.8 trillion in 2005, reflecting a CAGR of ~22%. While banks remain the backbone, their share in the total BFSI sector market cap has declined to ~57% at present from 85% in 2005. This shift is largely due to the emergence of segments such as NBFCs and fintech firms, backed by technological shift and innovation.
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Motilal Oswal Report
In this report, we endeavor to present this eventful journey of the banking, financial services and insurance sector with a top-down view of how the sector has evolved over the decades.
We will also attempt to include engaging insights into trends in the BFSI sector market cap, the incremental contributions of new-age companies, deposit accounts per capita, a comparison of digital payments with select countries, the emergence of new business models, and the diminishing relevance of physical branches.
We believe that the next phase will witness hyper-personalized banking experiences, driven by AI and decentralized finance, alongside the growing adoption of Central Bank Digital Currencies.
Financial institutions must innovate and embrace technology to remain relevant as the pace of change accelerates and the industry continues to reinvent itself.
We remain selective in our BFSI stock picks: ICICI Bank, HDFC Bank, and SBI are our top large-cap picks. In mid-size banks, we prefer Federal Bank and AU Small Finance Bank. Shriram Finance, Home First, PNB Housing Finance, and L&T Finance are our preferred picks among NBFCs.
HDFC Life and ICICI Lombard are our favorites among insurance, whereas, among capital markets, we prefer HDFC AMC, Nuvama, CAMS, and Angel One.
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