S2 EP4: Banking on Growth: Unlocking the India Opportunity

[00:00:00] Welcome to Axis Moneynomics by Axis Mutual Fund

[00:00:09] Hey Vikash, I was reading this exciting news and I thought I should discuss it with you.

[00:00:14] Did you know India has been the fastest growing economy in the last 3 consecutive financial

[00:00:20] years and it doesn't seem like we are stopping anytime soon.

[00:00:24] According to you what has led to this growth and how can individuals liberate this opportunity.

[00:00:29] Let's talk more about it.

[00:00:39] Hello and welcome to yet another exciting episode of Axis Moneynomics.

[00:00:45] This is Hari from Axis Mutual Fund.

[00:00:48] Today we have with us Vikash Vadegar, head of passive funds and quants at Axis Mutual

[00:00:53] Fund to talk more on how India's growth story is unfolding and the key factors behind

[00:01:00] this growth.

[00:01:01] Hi Vikash, Welcome to Axis Moneynomics.

[00:01:04] Hey Hari, thanks for having me here.

[00:01:06] I am excited to talk to you.

[00:01:08] Vikash, in recent years we have seen that the Indian economy has made a huge mark on the

[00:01:14] world map.

[00:01:15] I want to understand what is driving this growth.

[00:01:17] India's economic expansion has been fueled by many sectors you know one of those like

[00:01:22] manufacturing, IT infrastructure and healthcare but one sector that stands out clearly is

[00:01:27] banking and finance services and today I want to highlight the importance of this

[00:01:32] sector in countries economic growth.

[00:01:35] Just as you wanted to discuss about it, Vikash, we would also want to know how significant is

[00:01:39] the role of this banking sector in supporting the Indian economy and its growth.

[00:01:43] The banking sector is a very important worry for success of any economy.

[00:01:48] In fact, it is the backbone of any economy especially country like India where it

[00:01:52] is one of the emerging economy.

[00:01:54] It also enables wealth creation with financial products like fixed deposits but it also

[00:01:59] gives access to capital expansion.

[00:02:02] It also supports small businesses by offering loans and very importantly this sector is one

[00:02:07] of the strongest risk management framework globally in India and also our banks are

[00:02:13] relatively very strong balance sheets.

[00:02:15] Plus, the unique case with us is the cutting-edge digital payment like UPI in fact you know

[00:02:20] that has made the life for consumers and businesses much smoother than earlier.

[00:02:25] Yes, Vikash, if there is one Indian innovation that has grabbed global headlines in the

[00:02:29] recent years, it is undoubtedly the UPI payment system and it seems Vikash that we are just

[00:02:35] getting started on the tech front.

[00:02:37] Yes, yes, Harith, this scope of disruption is huge.

[00:02:40] You know, we are just starting and there is something called India Stack, you know,

[00:02:44] our own digital infrastructure which aims to enable wider access to online financial

[00:02:49] services and transactions.

[00:02:51] Then you also have an account aggregator that helps gather all the financial information

[00:02:56] from different places like banks and investment accounts in one secure place.

[00:03:01] On top of that are groundbreaking UPI technology.

[00:03:04] This fintech revolution is helping traditional banks like to expand their services to underserved

[00:03:10] regions and segments like MSME.

[00:03:12] There is also a vibrant ecosystem, you know, which is lending startups, B2B fintechs

[00:03:18] and betex partnering with traditional banks.

[00:03:21] All of this sounds very exciting Vikas.

[00:03:24] But tell me what are the growth expectations for this sector?

[00:03:27] Well, Hari, the banking and financial service sector is expected to see growth which is driven

[00:03:32] by the increasing net interest margin and globally as compared to other countries it's much,

[00:03:38] much higher.

[00:03:39] Also, the decreasing bad loans, the higher credit uptake and the capital air DPSC ratio

[00:03:45] which is, you know, equal to global standards and growing digital infrastructure we can't

[00:03:49] forget.

[00:03:50] Hence, policy reforms, initiatives in digital banking are also helping this sector for growth.

[00:03:57] In fact you must have heard the UPR light which was recently launched to process, you

[00:04:01] know, the low-value transaction below 500 which makes, you know, offline payment hassle-free

[00:04:05] and quick.

[00:04:06] All this seems very good Vikas but tell me how does it sort of get connected to me

[00:04:11] as an investor?

[00:04:12] Yes, now you're talking like an investor Hari.

[00:04:15] I do if you've heard this the financial services sector has the highest weight in

[00:04:19] the broader market indices like Nifty 500 and Nifty 50, you know, which shows the importance

[00:04:24] of contribution of this sector in the broader market range as well as in economy.

[00:04:29] Financial services has an approximately 29% weight in Nifty 500 whereas more than 33%

[00:04:36] weight in Nifty 50 index.

[00:04:38] Sounds super exciting Vikas.

[00:04:41] You talked about how the banking sector landscape is spanning out in the country

[00:04:45] but tell me Vikas, what's the simplest way for an investor to participate in this growth

[00:04:50] story?

[00:04:51] Yeah that's the always question investors mind but let me tell you the practical and

[00:04:55] efficient way to invest is through bank index fund.

[00:04:58] You know like Nifty back index, there's an index which comprises of the most liquid

[00:05:03] and largest banks in India.

[00:05:05] It also gives access to a diversified portfolio combining both public as well as the private

[00:05:11] banks which provides exposure to top banks in India.

[00:05:16] Could you please explain this Vikas?

[00:05:18] Yeah index funds are very simple to understand.

[00:05:22] Index funds offers the convenience of investing in a particular index all the stocks in the

[00:05:27] same villages.

[00:05:28] You know it is one of the cost effective way to get a diversified portfolio and exposure

[00:05:33] to the leading banks through a single fund and it also minimizes your risk which is

[00:05:38] generally associated with individual stock investments.

[00:05:41] Thanks Vikas, I think you've given me a topic for one of my future episodes on index funds.

[00:05:47] Alright moving ahead Vikas, how have the bank indices performed compared to the other

[00:05:53] indices?

[00:05:54] Yes in fact the way bank index has played a role in the broader market it has also

[00:06:00] played a broader role in the investor portfolio.

[00:06:04] It is a long term wealth creator and historically it has outperformed benchmark indices

[00:06:08] like Nifty 50 and Nifty 100 as well.

[00:06:11] That's good to know and on this note we have some exciting news for our listeners.

[00:06:17] At AXS mutual fund we are coming up with a new fund offering that aims to capture the

[00:06:23] Indian banking sector opportunity.

[00:06:26] AXS Nifty Bank Index Fund is designed to track the performance of the Nifty Bank

[00:06:32] Index.

[00:06:33] This fund is suitable for long term investors seeking exposure to the Indian banking sector's

[00:06:40] growth potential through a passive investment strategy.

[00:06:44] To know more do visit AXS mutual funds website.

[00:06:49] Please note that the risk profile of this fund is very high however the scheme characteristics

[00:06:55] may vary post the NFO when actual investments are made.

[00:07:00] Thank you Vikash for shedding light on this promising investment path hope to have you

[00:07:05] back soon.

[00:07:07] Thank you Hari.

[00:07:09] And that's a wrap for today thank you for tuning in to make sure to follow AXS Money

[00:07:16] Nomics.

[00:07:17] Do share it with your friends and family I hope to see you on the next episode.

[00:07:22] Until next time this is your host Havi signing off.

[00:07:30] Mutual fund investments are subject to market risks.

[00:07:33] Read all scheme related documents carefully.