By Kautilya Shastri
Private banking and wealth management might seem incongruous in a poor country such as India, where only 70,000 out of a population of more than 1 billion have financial assets in excess of $1 million. Yet many banks are rushing to capture what seems like a thin sliver of an already slim opportunity.
In fact, the market has been growing at an explosive rate in recent years. India’s booming economy has led to rising levels of income and wealth, especially in urban areas.
Traditionally, it was only the business class that could hope to accumulate the sort of wealth that private bankers are interested in managing. But this is changing rapidly. India’s technology companies have rewarded their employees with stock options that have soared in value. A bumper year in capital markets, investment banking and private equity means that bankers and traders could end the year with $1 million bonuses, the first time this has happened in India. Incomes in professions such as medicine and law are growing fast too.
“Two factors are driving the growth of private banking in India,” says C Jayaram, who heads the private banking business at Kotak Mahindra Bank.