Dhiraj Relli, Managing Director and CEO of HDFC Securities, believes India is poised to become a key contributor to global economic growth, estimating that the country will account for 20% of the world’s incremental GDP in the coming years.
This growth trajectory, according to Relli, positions India as a strategic focus for global investors. “India is a part of every boardroom’s strategy for growth,” Relli stated, emphasising the country’s favourable demographics and ecosystem, including advancements in technology, financial savings, and infrastructure investments.
Relli pointed out that India’s digitisation wave is transforming the economy, making financial services more accessible to the masses. “We are witnessing unparalleled digitisation. No one in the world has seen this kind of assimilation of technology, that too at a grassroot level,” he stated in an interview to CNBC-TV18. India’s financialisation of savings and increased participation by foreign portfolio investors further strengthen its position as an attractive destination for global investments.
Despite some recent hesitancy, foreign investors hold a significant stake in Indian equities, demonstrating sustained confidence in the country’s economic potential. Relli predicts that India will remain a darling for global investors for the next decade and beyond.
One of the most significant shifts Relli highlighted is the increasing risk appetite of Indian investors, especially among millennials, Gen Z, and even senior citizens. The experience of navigating various financial crises, including the 2008 financial crash and the COVID-19 pandemic, has helped shape a more resilient investor base. “The risk appetite has increased, and investors have learned to navigate volatility,” Relli observed.
Systematic Investment Plans (SIPs) have played a critical role in fostering long-term investment habits among Indians. With ₹20,000 crore being invested monthly via SIPs, Relli envisions this figure growing to Rs 1 lakh crore by 2030. Despite this growth, equity penetration in India remains low at around 7%, indicating a vast potential for future expansion. The rise of digital platforms and mobile technology has also made investing more accessible, with a growing number of investors confidently conducting transactions on mobile devices. This shift has been further bolstered by regulatory measures that have enhanced the security and trust in the capital markets.
Reflecting on HDFC Securities’ evolution over the past 24 years, Relli highlighted the transformative growth of India’s financial markets. Since the company’s inception in 2000, India’s GDP has grown eightfold, from $470 billion to nearly $3.9 trillion. The number of demat accounts has expanded exponentially, from just 20 lakh accounts in 2000 to over 16.2 crore accounts today. Similarly, the assets under management (AUM) of mutual funds have surged from ₹1 lakh crore to ₹65 lakh crore.
Relli attributed much of this growth to the adoption of technology, regulatory reforms, and the proactive role played by financial regulators such as SEBI, the Reserve Bank of India, and other institutions. “Regulators have played a critical role in ensuring that we have a very robust, secure, and scalable ecosystem,” Relli said.
Below are the excerpts of the interview.
Q: What a 24 year journey it has been for HDFC Securities. Dial back a little bit over those years, and tell me what have been perhaps some of the key highlights of that journey, keeping in mind, of course, also the evolution of the financial industries, the investment space. How has that journey been for HDFC Securities?
Relli: I think the markets have transformed miraculously in the last 25 odd years. I will give you some data points to substantiate my point. I think the GDP has grown 8x from $470 billion to almost $3.9 trillion. So 8x growth in last 25 years. If you look at the demat accounts, we used to have just about 20 lakh demat accounts in the year 2000 when we started HDFC Securities. Now, we have 16.2 crore demat accounts, which is 81x growth in the demat accounts.
Similarly, if you look at the mutual fund AUM, from ₹1 lakh crore to ₹65 lakh crore, 65x growth. All this has happened on the bedrock of significant evolution in the form of digitisation, adoption of technology, assimilation of technology at the bottom of the pyramid, and all participants in the markets.
I think the regulators have played a pivotal role here. They kept on evolving the whole financial ecosystem. All regulators, not just about the SEBI in capital markets, it’s Reserve Bank of India, PFRDA, or you look at IRDAI. I think regulators have played a critical role in ensuring that we have a very robust, secure, and scalable ecosystem.
In HDFC securities, we kind of disrupted in early 2000 by starting to open 3-in1 account. Earlier, it was more of a physical account, and most of the share were also held in the form of physical certificates and not in the demat certificates. Over the years, people started to dematerialise the same. And 3-in-1 account helped us to link the saving account, trading account, and the demat account, and gave them an environment and ecosystem that was secure for them to transact in the capital market.
What has changed in the last 25 years? I think now everything is happening digitally. We were opening an account with 40-odd signatures. It used to be a full booklet of account opening. From there to now, five to seven-minute journey to just sign up. I think this is remarkable. And it is also because of the Jandhan, Aadhaar, and mobility. So that has helped us to make India as a very large market. India was confined to only Maharashtra, Gujarat, and few large cities. But now India has become a very big market because we have seen the depth as well as the breadth increasing in the market ecosystem.
Q: Let me stay on that for a bit, especially your point about how this tech powered transformation has really changed everything and given that depth and scale, of course, allowing players like HDFC Securities to really scale up. Dig a little bit into how the company, how the firm has mirrored that digital growth.
Relli: We changed the whole construct of the transaction ecosystem in the capital markets with 3-in-1 account. Then we’ve seen that there is an evolution and people have started to adopt mobility more. More and more people started to use mobile for not just conversation, but also for the transaction purposes, particularly in the banking ecosystem.
So early 2008-2009, we launched our mobile application, which was a basic application, but again, it would help us to migrate customers who were looking forward to access capital markets through the direct technology. So that has helped us. Over the years, I think we have seen that the markets have been disrupted. I think I’ll give full credit to the many tech-led discount brokerage houses who have started operations in late 2020s and they basically disrupted the market on pricing as well as by introducing the state-of-art technology, which was scalable, user-friendly, and that’s where we had to respond and we then changed our mobile application, our web trading platforms. And very recently, last year, we launched HDFC Sky, which is our discount broking platform. So I would say that we have now evolved as more of a universal investment solution provider rather than pure play, broking entity.
Other than the technology, I think one area where we have de-risked ourselves is that we are not dependent only on broking revenue, we have evolved in the distribution of mutual funds, fixed assets and many other products like PMS, AIF, also providing advisory services to our customers and now with the discount broking and also with partnership with many fintechs, we were able to give solution on basket investing, even customers who were looking forward to participate in global asset classes, we could help them to do investment in the global investment products also, so this is how we have evolved in last 20-25 years.
Q: So what is your vision for India in terms of investment growth say for the next 10 years?
Relli: I think India will contribute 20% of the incremental GDP for the world in next decade or so, which means India will remain a darling for all investors, in fact every single board room across the world have been discussing India as an opportunity. And it is integral part of their strategy when they are looking forward for growth.
So we have demographics that are in favour of us. And I think also the whole ecosystem with the multiple decadal trends in India is also quite comfortable. We are witnessing unparalleled digitisation. No one in the world has seen this kind of assimilation of technology, that too at a grassroot level. We are seeing financialisation of savings. We are seeing disproportionately higher investment on infrastructure. We are seeing more and more foreign portfolio investors participating in the investments in India. Of late, they have been not actively participating. But just to give you some data point, currently also they own ₹87 lakh crore in Indian equities. And total market capitalisation for Nifty is about ₹460 lakh crore. So they still own sizable equity in India other than the promoters and domestic institutions. Domestic institutions, if you add mutual fund at ₹65 lakh crore and LIC another ₹35 lakh crore, so they’ll be at par with the domestic institution or little lower than that. So that way, I think this ecosystem is very, very conducive. And my take is that India will remain a darling for all the investors in next decade and more.
Q: Let’s talk about the Indian investor. How has the Indian investor changed? What are some of the fundamental shifts in their attitudes towards investing?
Relli: One big change, a dramatic change is increase in the risk appetite of the investors. I think particularly millennials, gen-z, and even now people who are senior citizens also, their risk appetite has changed. In last 25 years, they have seen the markets navigating many headwinds. We’ve seen the financial crisis in 2008 and 2009. We’ve seen mother of all crisis, COVID, and so much volatility. So my take is that risk appetite has increased. Also they’ve learned to navigate the volatility.
Volatility and timing in the markets are two bigger worries for most of the investors. And that’s where I think the SIPs have played a critical role in India. We are at about ₹20,000 crore per month SIP. I wrote an article about equitisation of savings, where if we compound at the current rate only, at 2030 we will be at ₹1 lakh crore per month SIP. So that’s the kind of participation we are seeing. And that too, as of now, we have only 7% odd penetration of equity as an asset class, so a long way to go to penetrate the same.
I think what has played a key role is adoption of mobility. I think the people were not comfortable earlier to do their transactions on mobile phones. They started to do few banking transactions, checking up their balances, and transferring funds from one account to another account, and also booking their fixed deposits, or so from 2010-2015. So the whole financial system was migrating transactions from physical brick and mortar ecosystem to a digital ecosystem. But I think particularly post-COVID, we have seen that they are getting more and more acquainted, comfortable with the whole ecosystem. And also, it has got to do with the SEBI’s intervention, whereby the intermediaries, like us as a brokerage house, HDFC Securities, have very limited access to the client’s demat accounts, and also their holdings and their balances. So that way the secured ecosystem, the confidence and trust on the whole capital market ecosystem, if I will buy, my shares will come next day in my demat account. If I sell, 100% my money will come next day in the morning in my account and now we are progressing to T+0 settlement, real-time settlements, so I think we are at a bright spot.
Watch accompanying video for entire conversation.