Indian Households Shift Rapidly Toward Financial Assets
Indian households invested a record ₹6.91 lakh crore into securities markets during FY25, highlighting a major shift in the country’s savings behaviour as investors increasingly move away from traditional assets such as gold and real estate.
According to a new research paper authored by officials from Securities and Exchange Board of India (Sebi), household investments routed through the securities market nearly doubled from ₹3.58 lakh crore in FY24 and ₹2.60 lakh crore in FY23.
The report highlights the accelerating financialisation of household savings in India as retail investors increasingly prefer mutual funds, equities and other market-linked investment products over physical assets.
The paper was authored by Sebi officials Prabhas Kumar Rath, Shyni Sunil and Kalyani H.
Mutual Funds Become India’s Preferred Investment Route
The biggest contributor to the surge in household market participation was mutual funds.
According to the report, mutual fund investments accounted for ₹5.13 lakh crore out of the ₹6.32 lakh crore invested through primary markets during FY25.
This means nearly four-fifths of all household investments in securities markets were routed through professionally managed mutual fund products.
Industry experts believe this reflects growing maturity among Indian retail investors, who are increasingly shifting towards systematic investment plans (SIPs), diversified portfolios and professionally managed financial products instead of direct stock speculation.
Jimeet Modi described the trend as a sign of market evolution rather than speculative excess.
Interestingly, despite rising market participation, households remained net sellers of direct equities worth ₹54,786 crore during FY25 after selling ₹69,329 crore worth of equities in FY24.
The data suggests investors are increasingly booking profits in direct stocks while redirecting fresh savings into mutual funds and long-term investment vehicles.
Gold And Real Estate Lose Dominance
Historically, Indian households have relied heavily on physical assets such as gold and real estate for wealth preservation and long-term savings.
However, the latest Sebi paper suggests that financial assets are rapidly emerging as an attractive alternative due to stronger return potential, better liquidity and easier market access.
The report highlighted that government initiatives such as tax incentives, digital banking expansion and financial inclusion programmes have played a major role in accelerating this transition.
Digital investing platforms, low-cost online brokerages and widespread smartphone adoption have also made investing more accessible to retail participants across smaller cities and towns.
The study noted growing investments across equities, ETFs, REITs, InvITs and alternative investment products.
India’s Savings-To-GDP Ratio Improves
The revised methodology used in the study also resulted in higher estimates for India’s overall savings levels.
According to the report, India’s gross savings-to-GDP ratio for FY25 improved to 34.94% compared to 34.47% under the earlier framework.
Similarly, household savings routed through securities markets rose to 2.17% of GDP compared to 1.71% earlier.
Net household financial savings also improved to 7.10% of GDP from 6.63%.
Sebi Revises Savings Calculation Framework
One major reason behind the sharp rise in estimates was a methodology overhaul jointly undertaken by Sebi, the Reserve Bank of India and the Ministry of Statistics and Programme Implementation.
The earlier framework relied largely on indirect estimates and excluded several important asset categories.
The updated approach now includes granular data from depositories, stock exchanges and Association of Mutual Funds in India (AMFI).
The revised framework additionally includes secondary market investments, REITs, InvITs, alternative investment funds and private debt placements.
India Emerging As A Financial Assets Economy
The paper estimated that total household assets invested in Indian securities markets stood at ₹141.34 lakh crore by the end of FY25.
Equity holdings accounted for ₹88.92 lakh crore, while mutual fund investments stood at ₹44.39 lakh crore.
Analysts believe the data reflects a structural transformation in India’s savings culture, where mutual funds and market-linked investments are increasingly replacing physical assets as the preferred avenue for long-term wealth creation.
The trend is also expected to deepen further as financial literacy, digital investing adoption and retail market participation continue rising across India.https://chatgpt.com/backend-api/sentinel/frame.html?sv=20260423af3c
