India’s banking, financial services, and insurance (BFSI) sector has expanded 50 times in market capitalisation over the past two decades, reaching ₹91,00,000 crore (US$ 1 trillion) in 2025 from ₹1,80,000 crore (US$ 20.28 billion) in 2005, according to a study by Bajaj Finserv Asset Management Company (AMC).
The sector’s contribution to India’s Gross Domestic Product (GDP) has risen to 27%, up from 6% two decades ago, reflecting a compound annual growth rate (CAGR) of 22%, supported by strong credit expansion, healthier balance sheets, and increased financialization of savings.
Sector Composition and Performance
- Banks continue to dominate with a 57% share of BFSI market capitalisation, down from 85% in 2005, as NBFCs, fintechs, AMCs, and insurers gain traction.
- Gross NPAs declined from 5.8% in FY22 to 2.2% in FY25, while credit costs fell from 1.3% to 0.4%.
- The Nifty Financial Services Index has consistently outperformed the broader market during major recovery phases, including 2009, 2014, and 2021.
NBFCs, Insurance, and Mutual Funds
- NBFCs have expanded their net worth at a 15% CAGR and PAT at 31.7% CAGR, now contributing 18% to total BFSI earnings.
- Life insurance AUM reached ₹61,60,000 crore (US$ 693 billion), while mutual fund AUM stood at ₹75,00,000 crore (US$ 844 billion) as of March 2025, representing a 45-fold increase in 20 years.
Summary
India’s BFSI sector reached a market capitalisation of US$ 1 trillion in 2025, expanding 50 times in 20 years. The sector’s share in GDP rose to 27%, driven by strong credit growth, improved asset quality, and increased participation from NBFCs, insurers, and mutual funds.
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