New Delhi, May 5 India’s banking, financial services and insurance (BFSI) sector remains largely stable despite global economic uncertainty, while segments such as hospitality, aviation and logistics are more directly impacted by external shocks, Deepak Parekh, former Chairman of HDFC Ltd (which merged into HDFC Bank Ltd), said on Tuesday.
On the sidelines of the 2nd Edition CII BFSI Summit 2026, Parekh told media there is no major cause of concern for the banking, financial services and insurance (BFSI) sector at present, though there may be a mild slowdown in new loan applications due to subdued market sentiment.
"Maybe there is a slowdown in business, and a little slowdown in new loan applications because the mood is not very strong. But I don't see any major impact on BFSI," he said.
He noted that sectors like crude oil, inflation-linked industries, airlines, hotels and logistics are more vulnerable to global uncertainty, with occupancy levels in hotels already seeing a decline due to reduced travel sentiment.
Asked about concerns around the high-profile exit in the largest private lender, Parekh said that he is not associated with HDFC Bank and is no longer on its board, and therefore cannot comment.
However, he highlighted that the Reserve Bank of India has already stated that the bank is strong, well-capitalised and faces no ethical issues.
On real estate, Parekh highlighted the growing importance of Real Estate Investment Trusts (REITs), saying India is moving towards a model where developers prefer to sell properties while large institutional investors and global players buy and bundle assets into REIT structures.
"This is a fairly new concept in India. Developers want to sell, users want to rent. REITs help bridge this gap. You get returns and capital appreciation, and they are becoming very popular," he said.
He also observed a structural shift in household savings, noting that systematic investment plans (SIPs) in mutual funds are increasingly attracting retail money, which in turn is reducing dependence on bank deposits.
"Deposits are growing slowly because people are putting money into SIPs. This has strengthened domestic savings and reduced dependence on foreign portfolio flows," he said, adding that domestic investors have helped offset foreign investor outflows in recent months.
Meanwhile, for the insurance industry, Parekh said life insurance should be viewed as a necessity rather than a tax-saving instrument, especially given economic uncertainty.
"It is a must for every family. If something happens to the breadwinner, insurance provides financial protection,” he said, calling for greater awareness and education to boost penetration.
In addition, on foreign investment and the financial sector, he said global players are expected to continue increasing investments in India, while domestic corporate groups are also expanding aggressively into financial services.
Addressing concerns around leadership changes and governance issues in banks, Parekh clarified that he is no longer associated with HDFC Bank and refrained from commenting on specific matters, citing Reserve Bank of India’s assurance that the institution remains strong and well-capitalised.
He said artificial intelligence (AI) and technology will play an increasing role in the BFSI sector’s next phase of growth, alongside rising foreign and domestic investment.
According to him, India’s financial system remains resilient, supported by strong domestic participation, even as global uncertainties create sectoral divergences in impact.
In June 2023, HDFC Bank announced the merger of HDFC Ltd into HDFC Bank.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor