Against the backdrop of optimism – and hype – that surrounds India, this report examines the ground realities of operating in the retail financial services market in India. Clearly, India presents a huge pool of potential profit in retail financial services. It has a middle class population (defined as households with disposable incomes from INR200,000–1 million a year) , that is estimated to grow to 41% of the population or 583 million people by 2025. This segment is seeing its wealth grow dramatically and its current size is estimated at between 325 and 350 million people Gross national income per capita increased by 58% between 1995 and 2003 and the financial services and insurance sector nearly doubled their GDP growth rate in the three years from 2003 to 2006 from 5.58% to 11.18%.

However, realizing India’s great potential is not easy. From its slow and cautious banking regulator, to the fierce competition among its aggressive domestic banks, to its highly price-sensitive consumers, India presents a number of challenges. Finding success in this market requires a patient, long term commitment, deep pockets and a keen understanding of the local consumer base.