An elusive private equity opportunity

Private equity could play an important role in India's fast-growing financial services market, if only the government would allow it more room.
Microfinance organisations have attracted investor attention recently
Microfinance organisations have attracted investor attention recently

If the Indian economy grows at more than 8% a year during the next decade, the domestic financial services industry will have to grow three times faster. India has a healthy savings rate of 37%, but has to find ways to aggregate and channel the resulting pools of capital into those businesses that can use them most productively. The country's targeted investment rate of 40% also assumes substantial foreign investment inflows.

These challenges present a tremendous opportunity for those who invest in financial services, whether in banking and insurance, consumer and personal finance, asset-backed lending or microfinance. Private equity and venture capital investors are viewing investments in these companies as an attractive entry point into...

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