Bajaj Finserv Banking and Financial Services Fund NFO: Invest for long term growth

The Bajaj Finserv AMC is launching the Bajaj Finserv Banking and Financial Services Fund NFO on 10^th November 2025. The NFO will close on 24^th November 2025.

The Banking and Financial services sector is the one of the main drivers of a nation's economy. India is projected to become the world's third-largest economy by 2030, with a GDP of $7.3 trillion (estimated) and the BFSI sector will be pivotal in the India growth story. The financial assets to GDP ratio of some of the major economies is 4 - 5X. If India is to become a $30 Trillion economy by 2047, then its financial assets should multiply 20X in the next two decades.

In this article we will review the fund in light of the growth and transformation of India's Banking and Financial Services (BFSI) sector, and its contribution to the growth of Indian economy.

Role of banking and financial services in powering Indian economy

The BFSI sector in India has experienced substantial growth, with a market cap increase of over 50 times in 20 years.

Source: Motilal Oswal, PIB, CareEdge

Banking and financial services sector in India: No more limited to banks

• Many investors associate financial services primarily with banks. Although banks are a very important part of financial services, the financial services sector is much broader than purely the banking sector. As of 2025, the share of banks in BFSI’s market cap have come down from 85% in 2005 to just 57% in 2025 (source: MOFSL, April 2025). This reflects the rising contribution of NBFCs, fintech, AMCs, and insurers as major value drivers in the sector. This transformation has been powered by digitization, fintech innovation, rising retail participation, and the growing demand for diverse financial services.


• Bank deposits and credit has been growing at 10 - 11%.
  
  

  

  Source: RBI



• NBFCs are emerging as key players in MSME lending, recording a PAT growth of 32% CAGR from FY 05 to FY 25. The fundamentals of NBFCs have improved with improvement in net interest margin and reduction in NPAs. Net worth of NBFCs has grown around 15% CAGR from FY 10 to FY 25.
  
  

  

  Source: MOFSL, RBI



• The insurance sector market cap has surged to Rs 10.6 trillion, aided by increased financialization of savings and rising retail participation. Assets under management of life insurance industry has grown around 10X from FY 07 to FY 24. Meanwhile, the general insurance industry grew around 10X in the last 18 years. India is projected to become the 6th largest insurance market in 2032, surpassing Italy, Canada, South Korea, and Germany (Source: IRDAI, MOFSL, Swiss Re Sigma World Insurance Report)


• Country wise, India has the 4th largest Capital Market by market capitalization after the US, China and Japan. India is above the global average in terms of market capitalization penetration, touching a 1.3x multiple, outperforming other emerging market equities due to its promising growth (Source: NSE Report on Indian Capital Markets)


• The Government has also taken several steps to reform and strengthen the banking sector. Initiatives such as the Pradhan Mantri Jan Dhan Yojana (PMJDY) aimed at providing financial inclusion to all Indians has brought nearly 57 crore Indians under the banking system.


• The Government has made a major thrust for digitization of payments as well through the Jan Dhan, Aadhaar and Mobile (JAM) trinity. UPI has revolutionized digital payments in India. Unified Payments Interface (UPI) recorded 19.6 billion transactions in the month of September 2025, valued at around Rs 25 lakh crores (Source: NPCI).

Long runway for growth

Significant growth in financial services sector is needed for India to catch up with the developed markets, in terms of the sector’s penetration.

Source: IRDAI, AMFI, World Bank Data as on CY 2024

Financial services has outperformed the broad market

The chart below shows the growth of Rs 10,000 investment in Nifty Financial Services TRI versus the broad market index Nifty 50 TRI over the last 10 years. You can see that the financial services index outperformed the broad market index.

Source: Nifty Indices, Period 31^st October 2015 to 31^st October 2025

Valuations are below 10-year average

Valuations are below 10-year average (see the charts below). This presents a favourable entry point to invest in the sector.

The Banking and Financial services sector is expected to benefit from the improving asset quality, earnings visibility and is positioned for long-term growth driven by demographic trends and technological advancements.

Source: Nifty Indices, Period 31^st October 2015 to 31^st October 2025

Investment strategy of the Bajaj Finserv Banking and Financial Services Fund

The Fund invests in Banking and Financial Services megatrends in India, thereby tapping into digital finance, financial inclusion, and sectoral growth, driven by UPI, digital lending, Jan Dhan, and rising traction across NBFCs, mutual funds, and insurance.

Portfolio Construction Process

Who should invest in Bajaj Finserv Banking and Financial Services Fund NFO?

• Investors who are looking for long-term capital appreciation through thematic investments.


• Investors who are aiming to capitalise on the growth potential within banking, financial services, and related sectors.


• Investors with an investment horizon of minimum 5 years.


• Investors who have a high risk appetite.

Investors should consult their financial advisors or mutual fund distributors, if Bajaj Finserv Banking and Financial Services Fund NFO will be suitable for your investment needs.