India's millionaires club is expanding as the economy explodes, offering a tantalising opportunity to wealth management institutions seeking to help these newly minted tycoons invest their money.

But wealth managers seeking to profit from India's new crop of millionaires, who have made their fortunes in software, telecommunications, oil refining and property, must first win over suspicious clients who are notoriously coy about their wealth and have fixed ideas about their investment portfolios.

'The first question you hear is: 'Who told you I have money?',' said Sonu Bhasin, head of Axis Bank's wealth management arm, whose team of 75 relies on referrals for clients.

'Being a private banking client is not seen as a status symbol to flaunt. They don't want to talk about it with friends and they want absolute discretion from us,' she said.

Economic growth which has averaged 8.6 percent for four years and a record-setting stock market have boosted the number of Indians with more than $1 million to invest by nearly 21 per cent in 2006 to 100,015, the Merrill Lynch/Capgemini World Wealth report showed.

But even that is a gross underestimate, bankers say.

'There's probably that many millionaires in south Mumbai alone,' Shailendra Bhandari, managing director, Centurion Bank of Punjab, said tongue-in-cheek, referring to the financial hub's well-heeled district.

Global banks, including Merrill Lynch, Citigroup, UBS, Standard Chartered, BNP Paribas, HSBC, Morgan Stanley and Societe Generale have been expanding their wealth management services in India.
Local banks including ICICI Bank, who have focused on credit cards and home loans, are also jumping in, lured by the more lucrative fee-based incomes in managing wealth.

The banks are encountering younger, more sophisticated clients with a higher risk appetite than their western peers, but who may be slow to warm up to professional wealth advisers.

'Many of them have a fixed notion of what their portfolios should look like,' said Bhasin at Axis, which has tied up with Banque Privee Edmond de Rothschild Europe to also service overseas Indians holding about $1 trillion of investable assets.

'It takes a while to convince them we are on the same side of the table, that they need not take on so much risk,' she said.

The newly wealthy are open to more risk and seek options such as hedge funds, private equity and real estate.

'The level of sophistication continues to rise, as does the level of money being made by younger entrepreneurs,' said Peter Hu, head of investor solutions, Barclays Capital, Asia ex-Japan.

'Generally speaking, risk appetite is higher, since much of the wealth in places like India and China has been created by the current generation, and they tend to make their own decisions and are open to less traditional products,' he said from Singapore.

Wealthy Indian investors, who in the past bought gold, are also signing up for wine-tasting sessions hosted by private banks, and checking out contemporary art and swish yachts.

'More investors are keen to put at least some part of their assets in art, and are looking to their banks to help them do that,' said Dinesh Vazirani, director of Saffronart, which sells art and offers advice on investing in it.

'We are also seeing a younger profile of investors, 25-40 years, that is keen on art as an asset,' he said.

Creating a database of high net worth individuals (HNI) and designing products can be a huge challenge in India, where only about 30 million of the billion-plus population pay taxes, and are coy about revealing income and wealth details.

'Many of our clients are entrepreneurs who hold cash as their largest asset class, and about 70 per cent of HNIs keep less than half their assets with private banks,' said Shiv Khazanchi, head of Standard Chartered's private banking unit in India.