When Indian wealth manager Yatin Shah heard about the four brothers in Rajasthan who became multimillionaires after scoring a $600mn investment in their family-run exam coaching company, he chartered a plane from Mumbai to scout for business.

Shah, whose 360 One group manages about $47bn, may have built up his business in the commercial capital of Mumbai, home to hundreds of millionaires, but in recent months he has been looking outside of India’s biggest cities for clients.

He is not alone — wealth managers are targeting a new class of entrepreneurs making fortunes in everything from masala factories to hospitals as India’s economy grows. The IMF projects that gross domestic product will grow by 6.1 per cent this year after a robust bounce back from the pandemic.

India’s biggest conurbations, including around Mumbai, New Delhi and Hyderabad, have always been associated with banking scions and merchant dynasties, but more millionaires are emerging in so-called second- and third-tier cities considered less developed though still populous.

“We believe that money in the large cities is serviced well because there is more competition. If you’re in Mumbai, everybody seems to be chasing those clients,” said Anupam Guha, head of private wealth management at brokerage ICICI Securities. That presents an opportunity. “The tier-two, three cities is where we see competition being less,” he said.

Indian millionaires on the rise

Projected growth of number of people with net worth of more than $1mn between 2022 and 2027 (%)

Between 2020 and 2021, India’s millionaires club grew from 689,000 people to 796,000, according to Credit Suisse.

Guha estimates there are 17mn Indians with a net worth of $100,000 and above — potential clients sought after by private bankers.

“That is where I think a whole lot of wealth management players are wanting to play, which is really the new money in India that’s got generated in the last 15-20 years.”

The increasing wealth comes as Indian businesspeople have made their companies more formal, sometimes cashing in by selling out to private equity firms or taking them public. Meanwhile, the stock market has been on a tear. Indian equities have gained handsomely in the past few years, also boosting wealth. The Nifty 50 index, which tracks India’s biggest listed companies, has gained almost 10 per cent since this time last year.

The chance for wealth managers to score new clients in India’s further-flung cities is also because multigenerational family-business owners are shifting from physical to financial assets, said Atul Singh, LGT Wealth India’s chief executive. “They don’t have money suddenly, [rather] they were all investing in real estate and gold in the past [and are] now beginning to invest heavily in financial products and markets as well.”

Mumbai, India’s banking centre and home of Bollywood, still boasts the greatest portion of India’s super-rich, according to the 2022 Hurun India Rich List. But the Hurun ranking shows smaller cities are also spawning their own millionaire’s rows: Agra, better known for the Taj Mahal than its business scene, now hosts six of India’s richest people; Rajkot, the fourth-largest city in the western state of Gujarat, has seven.

The cities home to India’s newest billionaires

To keep up, wealth managers are branching out. 360 One currently has 17 offices across India and plans to expand to 30. LGT Wealth, the private bank and asset management company owned by the Liechtenstein royal family, has 14 offices across India, including the southern cities of Coimbatore, a textiles hub, and Salem, which sits on top of prized mineral reserves.

Payal, an LGT Wealth relationship manager in Chandigarh, a Le Corbusier-planned city of just over 1mn people in agricultural Punjab, has seen the changes first hand. “Earlier [Chandigarh] was called the city of retired where people would love to play golf,” she said. “But that’s not happening any more, people are putting in a lot of effort” into business.

Previously her clients typically had Rs1bn-Rs2bn ($12mn-$24mn) of net worth, she said, “now you can see a lot of clients with a net worth . . . that is more than Rs10bn-Rs15bn in these cities”.

While Payal has worked in private banking in Chandigarh for decades, she is aware other wealth professionals are branching out. “We do face competition now because every top wealth firm wants to come to these cities and represent themselves,” she said.

But it is not always easy to get new business. Shah declined to comment on whether his chartered flight to Kota was successful.

In smaller cities, “you need a reference”, he said. “New clients would not give you money on Zoom, you have to be there in that city . . . we engage five to 15 times before you actually convert a client.”

India became the world’s most populous country this year, with more than 1.4bn people, but wealth is starkly concentrated. Most “Indians are located in the bottom half of the global distribution”, noted Credit Suisse’s annual wealth report. Yet “high wealth inequality and a huge population means that significant numbers of Indian citizens also occupy the top wealth echelons”.