Keralas BFSI sector packs a national punch: KPMGCII report

KOCHI: Keralas financial sector has emerged as a powerhouse in Indias Banking, Financial Services and Insurance (BFSI) landscape commanding nearly 90% of the countrys organised gold loan market, holding over Rs 3 trillion in NRI deposits, and setting benchmarks in cooperative banking reforms, according to a new report by KPMG in India and the Confederation of Indian Industry (CII). Titled Improvisation Driving Performance How the Financial Services Sector in Kerala Has Grown to Pack a Punch and Influence the National Narrative, the report was released at the CII Kerala Banking & NBFC Summit 2025 held in Kochi on Friday. It positions Kerala as one of Indias most agile and innovative financial ecosystems, seamlessly blending traditional strengths with digital transformation. Keralas gold-loan-focused NBFCs several of them household names across India collectively hold loan books exceeding Rs 1.2 trillion and have sustained 1215% annual growth despite tighter regulations. Their success, the report notes, lies in marrying traditional underwriting practices with advanced analytics and multi-channel digital platforms, vastly improving rural credit access. In NRI banking, Keralas regional and private sector banks dominate, with deposits crossing Rs 3 trillion in early 2025 and growing at a steady 9.4% CAGR over five years. These institutions have not only built national leadership in remittance management but also created sophisticated, tech-driven service frameworks catering to the states vast global diaspora. The states cooperative banking sector, restructured in 2019 into a unified apex cooperative bank, serves over 1.5 crore customers on a single core banking platform. With more than 27% of its portfolio in MSME and agriculture lending, it has become a model for cooperative banking reform across India, delivering double-digit growth and driving financial inclusion deep into rural Kerala. Kerala stands out as a beacon of this new paradigm, where innovation meets purpose, said Vishnu Pillai, Financial Services Technology Leader and Office Managing Partner Kochi, KPMG in India. By blending traditional financial excellence with cutting-edge digital infrastructure and sustainable finance principles, Keralas BFSI ecosystem is not only powering state-level progress but also helping define Indias financial future. The report also highlights Keralas rapidly expanding fintech ecosystem, now valued at Rs 2,000 crore with over 200 startups and Rs 500 crore in funding since 2018, under the stewardship of the Kerala Startup Mission. Small Finance Banks and private sector institutions based in the state have expanded nationwide, leveraging customer-centric digital services and maintaining asset quality among the best in the industry. The states financial institutions are also embedding ESG principles into their operations, supporting green loans, climate-resilient agricultural finance, and women-led microcredit programmes like Kudumbashree. Describing Keralas BFSI sector as a strategic enabler of socio-economic development, the KPMGCII report says the states mix of innovation, inclusion, and resilience offers a blueprint for national replication. With Indias BFSI sector valued at 91 trillion in 2025, the report concludes that Keralas challenge now lies in building visibility, strengthening cybersecurity, and accelerating policy reforms to make finance available, sustainable, and frictionless for every citizen.