Aligned with India’s growth story: Why consider investing in Bajaj Finserv Banking and Financial Services Fund

Digitalisation has further expanded access. UPI transaction value has risen nearly five times, from Rs. 41 trillion in FY21 to Rs. 236 trillion in FY25, reflecting wider adoption of digital payments. Microfinance has also grown, with portfolios reaching Rs. 3.75 lakh crore and serving around 79 million borrowers as of March 2025.

India’s credit-to-deposit ratio stood at around 79% in May 2025, showing continued flow of funds into productive sectors of the economy.

Source: RBI, NPCI, CRIF, May 2025

Why consider investing in the Banking, Financial Services and Insurance sector

As of 2025, banks account for about 57% of the total market capitalisation of the Banking, Financial Services and Insurance segment, down from 85% in 2005*. This shift suggests diversification within the sector, driven by digital adoption, fintech innovation, and expanding retail participation. Over the past two decades, the market capitalisation of India’s financial services companies has increased from Rs. 1.8 trillion to Rs. 91 trillion, indicating the sector’s broadening scale.

Source: Bloomberg, NSE data, May 2025

Sector outlook

Market participants expect that any moderation in interest rates by the Reserve Bank of India in FY26 may influence borrowing trends and credit demand. Lower yields may also have implications for treasury operations of financial institutions.

Inside the Bajaj Finserv Banking and Financial Services Fund

The Bajaj Finserv Banking and Financial Services Fund invests across the sector’s value chain, from banks and NBFCs to insurers, asset management companies, and fintech platforms. Its investment process is guided by a T.R.E.N.D.S framework that focuses on long-term structural themes:

Technology
Digital payments continue to grow. Non-cash household transactions are projected to rise from 38% in FY23 to 62% in FY28. Digital lending is also expanding financial access, particularly in Tier-2 and smaller cities, which are expected to account for over 80% of the estimated USD 60 billion in digital disbursements by FY28. Source: NPCI, RBI, Industry estimates

Economic inclusion
The number of Jan Dhan accounts has grown nearly 18 times, from 33 million in FY14 to 540 million in FY24, with deposits totalling Rs. 2.3 trillion. These accounts have supported direct benefit transfers and transparency in financial transactions. Source: Ministry of Finance, Government of India

Demographic shift
India’s working-age population is projected to increase steadily over the next two decades. As 75% of households are expected to move into middle- and high-income segments by 2030, the demand for credit, insurance, and investment products may expand further. Source: Jefferies

Social and fintech innovation
Fintech platforms are improving credit access, particularly for borrowers with limited credit history. Their participation in personal and business loans, including among women entrepreneurs, reflects how digital solutions are expanding financial reach. Source: CRIF, RBI

Why invest in the Bajaj Finserv Banking and Financial Services Fund

• Structured around sectoral trends: Invests in 45–60 stocks* shortlisted from a universe of around 200 companies aligned with long-term structural trends.


• Diversified exposure: Allocates across banks, NBFCs, insurers, AMCs, and other financial participants.


• Aligned with key sector trends: Focuses on sectors such as digital finance, financial inclusion, and broader participation in insurance and investments.


• Valuation context: Sector valuations are currently below their 14-year averages, accompanied by improving asset quality and visibility in earnings performance.

*The portfolio count is indicative, and actual number will depend on market conditions at the time of making investment.

Investors may also consider participating in this sector through a Systematic Investment Plan (SIP), which enables disciplined, periodic investing and may help manage market volatility through rupee cost averaging.

Conclusion

The Bajaj Finserv Banking and Financial Services Fund provides exposure to companies operating across India’s evolving financial ecosystem. Investors may consider this scheme as part of a diversified portfolio, alongside other equity funds, depending on their financial goals and risk profile. It is advisable to consult with a financial advisor before making an investment decision.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.

Moneycontrol Journalists are not involved in creation of this article.