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Banking , Financial Service and Insurance Sector(BFSI)

  • The banking sector in India comprises nearly 90% of the total financial services sector of the country. The banking sector has continued to evolve post independence. The post independence era (1950-1990) has seen nationalization and consolidation followed by an era of banking sector reforms and partial liberalization (1990-2004) and then an era of increased liberalization and globalization (post 2004).

    The entire organized banking sector comprises of scheduled and non-scheduled banks.  The scheduled banks  are listed  under the RBI Act 1934. The  Scheduled Commercial Banks (SCB’s) account for a major portion of the business of the scheduled banks. There are around 100  SCB’s.

    Foreign banks are present in the country either through complete branch /subsidiary route  or through their representative offices. There are around more than 40 foreign banks in India  with more than 300 branches and there are around 46 foreign banks operating in India through representative  offices .

    Over the past couple of years, the Indian banking sector has displayed a high level of  resilience in the face of the high domestic inflation, rupee depreciation and fiscal uncertainty in the US and Europe. In order to stimulate the economy and support growth of the banking sector, the Reserve Bank of India (RBI) has adopted and continues to adopt several policy measures. No doubt a lot needs to be done in the banking space and the wider financial services space with in India and Globally to restore customer confidence which got tarnished with the commencement of global financial crisis.

    Asset quality, capital adequacy, financial inclusion and talent management are some of the key issues facing the Indian banking sector. We at Acquisory are fully geared up to serve BFSI sector with rage of service offerings as detailed out in the following section.

    BFSI Sector Offerings

    Loan Loss Provisioning and Impairment Levels
    We act as trusted advisor to financial institutions and companies on loan loss provisioning and impairment levels in accordance with applicable financial reporting framework- IGAAP, IFRS etc. We have experienced professionals with local and international experience to advise on loan loss modeling, monitoring and advise on key assumptions/estimates to arrive at specific and collective provisioning.

    Advisory support on Basel II/III implementation
    We understand your key concerns- accumulation of bad loans, high operating cost, reducing margins, liquidity concerns, core capital getting eroded year on year, we will work closely with you and advise you on capital & liquidity management, loan portfolio management, collateral management including collateral valuation, balance sheet expansion and cash flow management. We will provide you strategic advise on enhancing ROE and stronger capital ratios.

    Accounting Advisory Services
    We provide accounting advice to clients on complex accounting issues in accordance with applicable financial reporting framework.
    We provide accounting advisory services to banks/financial institutions to support launch of new business products and set up accounting framework to meet board and shareholders expectations.
    We also provide professional and experienced staff to support management in Accounting/finance function, HR function and Risk and compliance function.

    Risk Management Advisory
    We specialize in setting up of risk management framework including risk management policies, controls framework including risk management monitoring on behalf of board from time to time. Advisory support is also extended to banks/financial institutions on managing specific business risk such as operational risk, credit risk and market risk etc.

    Valuation Support
    We specialize in valuation of investments/securities including fair value, monitor and advise on fair value estimates, advice management on critical assumptions for fair valuation of investments/securities. 

    Review of Compliance function
    We undertake review of compliance with statutory requirements -RBI/SEBI/FEMA/Companies Act 2013. 
    We will assist you in your compliance with the latest amendment with regards to Companies Act 2013 covering Board structure composition and responsibility, Risks, controls and compliances, Related party transactions, Corporate social responsibility, Loans and Investments, Audit and auditor's enhanced responsibility and Secretarial compliances.

    Review of Accounting policies, procedures and financial statement disclosures
    At Acquisory, we undertake review of accounting policies and procedures to provide management comfort with internal and external compliance requirements. We provide advisory support on financial statement close process including enhanced disclosures to enhance transparency of financial statements and compliance with accounting framework.

    Review of Accounting framework/Transition to IFRS
    At Acquisory, we undertake review of accounting framework as applicable to clients- IGAAP, IFRS, US GAAP to ensure compliance with local and international regulatory requirements. We are geared up to help clients transition to IFRS, we provide IFRS trainings and technical support to clients to ensure compliance with globally accepted financial reporting framework.

    Regulatory Trainings
    We specialize in provision of regulatory training to financial institutions covering AML policies, Companies Act 2013 requirements including recent amendments, RBI prudential norms, SEBI guidelines etc from time to time. 

    Forensic Services
    We provide forensic services to you covering fraud investigation, setting up of anti-fraud control framework and controls. We also monitor and evaluate operating effectiveness of anti-fraud controls.

    Financial Due Diligence 
    Our experienced professionals offer a consistent deal process that help companies bid smarter, close faster and realise benefits sooner. Having advised on a number of deals in India, we have experience that can make a difference.

    Internal Audit
    We not only undertake internal audit engagement but act as your trusted adviser and consultant when it comes to re-defining internal audit role/function and scope in managing the business risk. This will result in audit efficiencies and cost savings.

    Governance Services
    We undertake hard look at board and audit committee composition, independence, and leadership in order to act as your trusted adviser with "fresh set of eyes" to bring in "required diversity" to your corporate governance.
    We assist management in understanding the strategic and transformational implications of emerging technologies and risk posed by emerging technologies.

    Audit & Attestation
    At Acquisory, we undertake audits, perform agreed upon procedures and reviews of historical financial information for Banks and other financial institutions such as NBFC. We cover branch audits as well. We also specialize in audits in accordance with special purpose framework, audit of accounts or items of a financial statement.

    Assurance services other than audits or reviews
    At Acquisory, we partner with you to examine "prospective financial information" or "compile financial information" to your requirement. We engage in assurance services and will provide you with assurance report on controls at a "Service Organization" for business processes outsourced to third parties/vendors.

    M&A Advisory
    At Acquisory, we partner with you to expedite the M&A process and to facilitate your deployment of capital and time in a focused, disciplined and efficient manner. 

    BFSI Sector Challenges/Opportunities

    Capital Adequacy
    One of the top issues/challenges faced by the Indian commercial banks as they continue to grow and to be compliant with Basel III challenges.

    Regulatory compliance
    The entire BFSI sector needs to gear up for evolving regulatory landscape. Banks must standardize regulatory reporting , need for accurate reporting with minimal human intervention. Banks need to have enhanced control environment to meet regulatory compliances. Further banks are required to comply with Basel III norms.

    NPA's and Accumulated losses
    With growing NPA's and accumulated losses from credit defaults, Banks/NBFC's need to revisit credit administration process including quality of decisions and undertake comprehensive financial due diligence.

    Leadership and the right talent
    Is extremely critical over the next 3 to 5 years as the banks would need to work towards growth agenda and ward off competition for talent from the new local and foreign banks.

    Operations of Foreign banks in India
    With RBI trying to bring in foreign banks at par with local banks, foreign banks will be keen to convert to WOS. When major banks will convert to WOS, they are likely to provide another level of competition to the domestic banks especially in the deposits space.

    Rising Middle Class and HNI's
    Will account for close to one third of the population in the next 20 years- need tailored products and services, banks need to tap this opportunity. HNI's have deeper pockets, banks need to focus on private wealth business segment to tap the opportunity. 

    Growth in Retail Credit
    From a demand side perspective, rising incomes, asset ownership aspirations and low perception of risk is fueling the rapid growth in demand for retail credit. Banks and NBFC's needs to step up to this significant opportunity by leveraging credit data from credit bureaus, perform speedier assessment of risk and rapid processing of credit.

    Focus on Micro and SME Sector
    All together MSME sector accounts for 45% of the India's industrial output and 40% of exports. The overall contribution of this segment to India's GDP is 11.5% a year and still the sector faces a chronic shortage of bank financing to aid its growth and improvement agenda. Only one third of MSME s have access to organized financing channels in India.

    Rural opportunity 
    The rural opportunity is large and growing. Rural India accounts for 70% of the total population . 37% or more of this population earns more than INR 1 Lac, clearly need to provide banking services to this segment needs careful marketing. Only 1 out of 6 villages in India have access to banking services. Clearly there is a need for branch expansion, infrastructure development, launch of simple products and innovative marketing approach.

    Licensing of new private banks
    Would certainly beef up competition and garnering fresh capital for financial inclusion would roll in a timely debate on the need for consolidation vis-à-vis numerical expansion in the industry.

    Banks to act as insurance brokers
    Is a welcome move for the industry, which will gradually forge out a financial supermarket for the customers.