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Financial assets are increasingly gaining favour among Indian households, with savings routed through the securities market rising to ₹ 6.91 lakh crore in 2024-25 from ₹ 3.58 lakh crore in the preceding fiscal, according to a research paper authored by Sebi officials.
The paper said the revised estimate is significantly higher than the ₹ 5.43 lakh crore that would have been recorded under the earlier methodology for FY25.
As a result, India’s gross savings-to-GDP ratio for 2024-25 increased by 47 basis points to 34.94% compared to 34.47% under the previous methodology.
The paper, authored by Prabhas Kumar Rath, Shyni Sunil and Kalyani H, said household savings channelled through the securities market form a crucial component of financial savings and are emerging as an attractive alternative to traditional assets, such as gold and real estate.
While physical assets like gold and real estate have conventionally been preferred, financial assets are gaining popularity due to their potential for higher returns and liquidity, the authors said in the research paper uploaded on Sebi’s website on Wednesday.
They added that government initiatives, such as tax incentives on investments, financial inclusion programmes and digital banking, have also encouraged Indian households to shift towards financial assets.
Sebi clarified that the findings and views expressed in the paper are those of the authors and do not necessarily reflect the regulator’s official position.
The study examines the macroeconomic impact of a methodological shift in the computation of household savings through the Indian securities market undertaken by Sebi in consultation with the Reserve Bank of India (RBI) and the Ministry of Statistics and Programme Implementation (MoSPI).
The revised methodology has been incorporated into the national accounts series based on the new 2022-23 base year.
Earlier, the RBI and MoSPI relied largely on estimates to compute household savings through the securities market. Under the old framework, 35% of public and rights issues in equities, 40% of public issues of corporate debt, and actual investments in mutual funds were treated as household savings.
However, this approach excluded investments in preferential allotments, private placements of debt, secondary market transactions, and new-age instruments, such as REITs, InvITs and Alternative Investment Funds (AIFs).
The new methodology uses actual granular data from depositories, stock exchanges and the Association of Mutual Funds in India (AMFI) to capture household investments across a broader range of instruments and market segments.
It also includes Non-Profit Institutions Serving Households (NPISHs), such as trusts, societies and charitable organisations, in addition to individual investo₹.
According to the research paper, household savings through the securities market rose from ₹ 2.60 lakh crore in 2022-23 to ₹ 3.58 lakh crore in 2023-24 and further to ₹ 6.91 lakh crore in 2024-25.
Primary market investments accounted for ₹ 6.32 lakh crore in 2024-25, led by mutual funds at ₹ 5.13 lakh crore and equity issuances at ₹ 95,139 crore.
Secondary market investments contributed ₹ 59,452 crore during the year, supported by net investments in debt securities, exchange-traded funds, REITs and InvITs.
The paper noted that household savings through the securities market amounted to 2.17% of GDP in 2024-25 compared to 1.71% under the earlier methodology.
Similarly, the household savings-to-GDP ratio improved to 21.7% from 21.23%, while net household financial savings rose to 7.10% of GDP from 6.63%.
Jimeet Modi, founder and CEO of SAMCO Group, said the most notable takeaway was that households were net selle₹ of direct equity worth ₹ 54,786 crore in FY25, following net sales of ₹ 69,329 crore in the previous year, even as they made record investments in mutual funds.
”This is not a retreat. This is maturation,” he said, adding that retail investo₹ are increasingly booking gains in direct equities while allocating fresh savings to professionally managed vehicles.
Modi said mutual funds have become the primary channel for household financial savings, with nearly four-fifths of the ₹ 6.91 lakh crore invested in securities markets in FY25 flowing through mutual funds.
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The paper further estimated that the total stock of household assets held in Indian securities markets — including equities, mutual funds, debt securities, REITs, InvITs and AIFs — stood at ₹ 141.34 lakh crore at the end of 2024-25.
Of this, equity holdings accounted for ₹ 88.92 lakh crore, mutual fund investments for ₹ 44.39 lakh crore and AIF investments for ₹ 1.55 lakh crore.
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