IndusInd Bank aims to grow its wealth management Assets under Management (AuM) from the current $10 billion to $30 billion over the next three years. With banks struggling to mobilise deposits, the growth in AuM for IndusInd Bank will be driven by mutual funds, alternative investment funds and portfolio management services and securities. The private lender is planning add nearly 100 relationship managers in three years to drive growth in its wealth management business.
“The share of deposits in AuM is around 64% currently. Deposit mobilisation has been a big challenge for the banking industry. Going forward, the share of mutual funds, alternative investment funds and portfolio management services will be higher,” Sameer Dewan, Head of Private Banking at IndusInd Bank told FE. “The share of mutual funds and other investment products will increase compared to liabilities,” he added.
However, despite the muted growth in deposits in the banking system, he is confident that the bank’s deposits will continue to grow faster than the industry growth. Deposits are growing slower than credit, posing a challenge for banks to mobilise low-cost deposits. Banks credit grew 17.3% to reach Rs 168.8 lakh crore for the fortnight ended June 28, 2024, while deposits increased 11.1% to Rs 212.9 lakh crore, as per the Reserve Bank of India data.
Last month, IndusInd Bank launched ‘Pioneer Private Program’, which is an exclusive program of bespoke financial solutions, tailored to the needs of High-Net-Worth Individuals. The bank will focus on Non Resident Indians (NRIs) to drive growth. IndusInd Bank has nearly 700 relationship managers to service wealthy clients.
“Non-residents are a high focus area for us. They provide sticky money with less withdrawals. This segment is attractive for everyone and every banking is running after them,” he added.
Out of the total Rs 12 lakh crore of NRI deposits, the share of IndusInd Bank is around Rs 50,000 crore.
With fast growth in income of HNIs, the competition is growing in wealth management sector. The country generated about $590 billion in new financial wealth in 2023, its largest increase in history, according to a recent report from the Boston Consulting Group.
Other banks have also entered into the fray to attract HNIs and NRIs. SBI’s former chairman Dinesh Khara, in the previous earnings call, had announced to deploy nearly 2,000 executive as relationship managers to attract wealthy clients. Private lenders such as ICICI Bank, Axis Bank and Kotak Mahindra Bank are already aggressive in the wealth management sector.