Finance Sector: Comprehensive Industry Analysis (Q2 Fy26 Focus)

Summary: The Indian Finance sector, as evidenced by the Q2 FY26 performance and strategic outlook of key players, demonstrates robust growth, significant digital transformation, and a dynamic competitive landscape. Driven by India's resilient economic growth (projected 6.8% GDP for FY26), increasing financialization of savings, and expanding digital infrastructure, the sector is witnessing broad-based expansion across lending (NBFCs, housing finance, credit cards), insurance (life, general, broking, reinsurance), and asset management. Companies are aggressively leveraging AI/ML for underwriting, customer acquisition, and operational efficiency, while also diversifying their portfolios and geographical reach, particularly into Tier 2/3/4 cities and rural areas. Asset quality remains a key focus, with most players showing improving or stable GNPA/NNPA ratios, though some segments like unsecured retail and commercial vehicles faced temporary headwinds. Regulatory vigilance, ESG integration, and strategic partnerships (e.g., JioBlackRock, Allianz JVs) are shaping the future trajectory, promising sustained growth and innovation in the medium to long term.

A. Industry Overview & Market Landscape

The Indian Finance sector is a vast and rapidly evolving ecosystem, encompassing a diverse range of services including banking, non-banking financial companies (NBFCs), insurance, asset management, and payment services. The extracted data primarily focuses on NBFCs, insurance, and asset management, offering a granular view into these critical sub-segments.

1. Total Addressable Market Size and Growth Rates: While an aggregate "total addressable market size" for the entire finance sector isn't explicitly provided, the data points to significant scale and growth within its components:

• Lending (NBFCs & Housing Finance):

  • Bajaj Finance (BFL): AUM grew 24% YoY to INR 4,62,000 crores (Q2 FY26).
  • Bajaj Housing Finance (BHFL): AUM grew 24% YoY (Q2 FY26).
  • Jio Credit Limited (JCL): AUM grew 12x YoY to INR 14,712 crore (Q2 FY26), albeit from a low base for a new entrant.
  • Tata Capital Limited (TCL): Consolidated AUM reached INR 2.44 lakh crores (Q2 FY26), growing 2.7% QoQ. Excluding Motor Finance, AUM grew 22% YoY to INR 2.16 lakh crores. Tata Capital Housing Finance (TCHFL) AUM grew 30% YoY to INR 75,636 crores.
  • Indian Railway Finance Corporation (IRFC): AUM reached INR 4,61,973.43 Cr (H1 FY26), with new business agreements valued at >INR 45,000 crores in H1 FY26.
  • REC Limited: Loan Book grew 7% YoY to ₹5.82 lakh crore (H1 FY26).
  • L&T Finance (LTF): Retail Book crossed ₹1 lakh Cr milestone, reaching ₹1,04,607 Cr (18% YoY, 5% QoQ). Consolidated book size ₹1,07,096 Cr (15% YoY, 5% QoQ).
  • HDB Financial Services (HDBFS): Total Gross Loans ₹1,11,409 Cr (13.0% YoY, 1.9% QoQ). AUM (FY25) was ₹107,262 Cr, with a 3-year CAGR of 20.4%.
  • Mahindra & Mahindra Financial Services (MMFSL): AUM grew 13% (Q2 FY26).
  • Overall Lending Growth: The NBFC sector is experiencing robust double-digit growth, with several players reporting AUM growth in the 13-24% range YoY. Specialized infrastructure financiers like IRFC and REC are also expanding their loan books significantly, particularly with diversification strategies.

• Insurance:

  • Bajaj General Insurance (BAGIC): Gross Written Premium (GWP) grew 9% YoY to INR 6,413 crores (Q2 FY26). Excluding bulky tenders and 1/n impact, GWP grew 18% vs. industry growth of 13.4%, indicating strong underlying performance. AUM reached INR 35,000 crores.
  • Bajaj Life Insurance (BALIC): GWP grew 28% YoY (Q2 FY26). AUM reached INR 1,32,060 crores. Value of New Business (VNB) surged 50% YoY to INR 367 crores.
  • Jio Insurance Broking Limited (JIBL): Facilitated premiums of Rs. 347 Cr and issued 2.9 lakh policies (Q2 FY26), indicating a nascent but growing presence.
  • Overall Insurance Growth: Both life and general insurance segments are showing healthy GWP growth, with life insurance (BALIC) demonstrating particularly strong VNB and retail protection growth.

• Asset Management (Mutual Funds):

  • HDFC AMC: Closing AUM Rs. 8.7 trillion (Q2 FY26), +14% YoY, +2% QoQ. QAAUM Rs. 8.8 trillion, +16% YoY, +6% QoQ. Total AUM crossed Rs. 9 trillion mark since Q2 FY26. Industry QAAUM grew by 16.5% YoY and 6.9% QoQ in Q2 FY26 to INR 77.1 trillion.
  • Nippon Life India AMC (NAM India): QAAUM market share 8.51% (highest since June 2019). Total AUM not explicitly stated but implied by market share.
  • Bajaj Finserv AMC (BFAMC): AUM reached INR 28,815 crores (Sep 30, 2025), crossing INR 30,000 crores by concall date. AUM grew 77% YoY and 15% QoQ.
  • JioBlackRock AMC: AUM reached INR 15,980 crore (Sep 30, 2025) in <4 months, with 9 funds launched. Fle