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    This document summarizes the growth of financial services in India through Aditya Birla Financial Services Group. It discusses how India has high household savings but these savings have traditionally been invested in physical rather than financial assets. It then outlines the liberalization and growth of the life insurance, mutual funds, and asset management sectors in India. It discusses some of the joint ventures and business models of Birla Sun Life Insurance and Birla Sun Life Asset Management Company. It concludes by outlining some problems such as high staff turnover and decreasing ULIP sales, and recommends solutions such as providing non-monetary incentives to agents and distributors.

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    This document summarizes the growth of financial services in India through Aditya Birla Financial Services Group. It discusses how India has high household savings but these savings have traditionally been invested in physical rather than financial assets. It then outlines the liberalization and growth of the life insurance, mutual funds, and asset management sectors in India. It discusses some of the joint ventures and business models of Birla Sun Life Insurance and Birla Sun Life Asset Management Company. It concludes by outlining some problems such as high staff turnover and decreasing ULIP sales, and recommends solutions such as providing non-monetary incentives to agents and distributors.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    165 views9 pages

    Growing Financial Services in India

    Uploaded by

    ranjeetk_98
    This document summarizes the growth of financial services in India through Aditya Birla Financial Services Group. It discusses how India has high household savings but these savings have traditionally been invested in physical rather than financial assets. It then outlines the liberalization and growth of the life insurance, mutual funds, and asset management sectors in India. It discusses some of the joint ventures and business models of Birla Sun Life Insurance and Birla Sun Life Asset Management Company. It concludes by outlining some problems such as high staff turnover and decreasing ULIP sales, and recommends solutions such as providing non-monetary incentives to agents and distributors.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    Download as pptx, pdf, or txt
    of 9

    Growing Financial Services in India: Aditya Birla Financial Services Group

    ANUJ KUMAR SINGH ARCHANA B. NIKITA BHARADIA RUGVED RAJE SANCHI PADIA SUSHANT KOSHY

    Background
    India- Gross savings / GDP = 34%, higher than many developed economies >70% of savings- household savings

    Savings in physical assets such as real estate and gold as opposed to financial assets
    In the west, gold is the main currency Equity : lottery v/s tapping the underlying cash flows Fixed income exceptional performer as compared to equity, and hence grew more rapidly Bank deposits (safe) v/s money market and fixed income mutual funds (inflation and tax advantages)

    Life Insurance Sector


    Prior to 1999-Only public sector LIC Combination of life insurance and fixed income investments

    LIC sold products through 1.3 million individual agents, 65% of which were part time employees
    Implicit trust placed by people in LIC because of backing by government Liberalization initially led to increase in life insurance penetration (premiums underwritten to GDP) and density (premiums underwritten in per capita), but these have declined since 2010 India has lowest density amongst BRICS nations and highest penetration

    Mutual Funds
    Founded in 1963 with UTI Liberalised in 1987 and 1993

    2002, UTI was on the verge of collapse and was saved by the govt. Divided into stressed and healthy assets.
    In 2011, despite multiple schemes, Assets Under Mgmt. (AUM), mere 4.7% of GDP, opposed to world avg of 34%

    Birla Sun Life Insurance


    JV between ABG and sun life financial of Canada Unit Linked Insurance Plans (ULIPs)- life insurance policy + savings plan Portion of premium to life insurance and the remainder invested in equity according to customer choice Product distribution through 3 channels: Direct sales force, corporate agents (banks) and brokers who sold more than one insurance companys products Individual agents dominant distributor-64% of business premiums. Because of intangible nature of products, agents needed to cultivate trust and relationship Prior to 2010, commission for agents ranged between 20% and 65% for first year premiums and 5%-7.5% subsequently BSLI 2nd largest player in 2003 to 7th in 2007-due to competition from state owned LIC and aggressive private sector players. Pvt Sector players distributed through existing branch offices. Non-bank companies built a network of branch offices and agents from scratch

    Birla Sun Life Asset Management Company


    JV between ABG and sun life group of Canada One of Indias largest pvt asset managers in the late 1990s

    4 channels-banks, national broker, independent financial advisor and internet. Institutions sales by national distributors (51%) and banks (21%) retail sales by national broker (35%) bank (35%) and IFAs
    93% owned by retail investors

    Hit hard by 2001 dot com crash because technology weighted stocks and hence customers lost confidence
    Fixed income funds, owned by institutional investors, consistent strong performer

    Revamping processes
    Use common processes throughout the group outsourcing Improve efficiencies by making internal processes more efficient Have strong HR shared services to ensure scalability New processes introduced Standardization of Performance management systems Empowering managers to increase productivity and retention in teams Strengthening front line recruitment processes Strengthening leadership pipelines 3 leaders- profit and loss, functional and specialists Encouraged to rotate leaders across verticals Ensure that the leaders are continuously produced from the bottom ranks Continuous assessment through midmanagement to recognize prospective leaders Operation and risk practices standardized

    PROBLEMS
    80-100% staff turnover at branches and among agents
    Could not find any reasons for this explicitly mentioned in the case but evidently it is an issue. Solutions: Implementation of high achievers privileges on a larger scale, add perks such as education loans or insurance

    Decrease in sales of ULIPs


    Cause- Change n regulations reduced commission agents earnings Solutions: Provide non-monetary perks specifically for selling ULIPs.

    Regulations reducing profitability for distributors and tilting balance in favour of bank sponsored AMCs.
    Low penetration due to lack of wide network of branches

    THANK YOU!!

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