They are rolling out private banking and wealth management services to capitalise this untapped potential. Research reports show that out of 1.5 lakh people who possess assets in excess of $1 million each, 70,000 reside outside metros and rural areas.
This trend is largely attributed to absence of high levels of competition and the attitudinal patterns of people who are less savvy than their urban peers.
Sharad Sharma, head-private banking, BNP Paribas, said, "Banks prefer going to tier-II and tier-III towns for wealth management and private banking services as they find it easier to solicit these customers. Secondly, inhabitants of these towns think about larger time horizon and save wealth for specific periods such as a daughter's wedding or a son's education."
Most players in the private banking services are eyeing the northern belt of Punjab and Uttar Pradesh.
For instance Dawnay Day AV Financial Services Ltd, Indian arm of British financial services company Dawnay Day, plans to roll out wealth management services in the country.
"Under wealth management, we will be hiring approximately 75 relationship managers across the main metros and and states such as Punjab and Uttar Pradesh in north India," said Alok Vajpeyi, vice-chairman and managing director Dawnay Day AV Financial Services.
Bankers feel that there is a need to create and generate the market share in rural areas due to the huge potential of high networth individuals in these areas.
Also, on the radar are towns such as Noida, Gurgaon, Pune, southern districts such as Tirupur et al owing to the revolution in the IT domain, formation of SME clusters and the migration of retired populace in search of peace.
According to an IBM study, HNIs and mass affluent clients in the country have been growing as a result of economic boom and the rise in IT and IT enabled services industry.
This category includes professionals and entrepreneurs who have time-constraints and need a wealth manager to manage their wealth. In fact, most of these clients are wealth creators and are willing to take risk.
Speaking about the level of sophistication and demands of customers from these townships.
"Earlier, rural customers were just interested in financing their business activities. Today they demand full range of products and services to take care of their financial needs. They have started to look beyond the usual business activities to satisfy their personal wealth needs," said Harpreet Singh,head-branch banking and wealth management, Centutrion Bank of Punjab.
The wealth management industry has clocked an year-on-year growth of 99 per cent. However, this number is misleading as it is compared to a small base.
Bankers point out that India is a country of savers and not investors. Hence, the challenge for banks over the next five years is to educate the critical rural mass to invest rather than save.
As such, there is no uniform definition of the terms, private banking and wealth management, although the nature of services offered and the character of products laid out by different banks are on similar lines. Till now, most players tend to differentiate between these layers by the parameter of networth.
With the growing number of nouveau riche, banks are now formulating newer yardsticks in the form of levels of sophistication, behavioural patterns and risk appetites and accordingly, approach customers with specific products and services.
The BRIC (Brazil, Russia, India, China) report, an economic research paper by Goldman Sachs, forecasts that India will be the third largest economy in the world, after China and the US in the next thirty years.
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