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A recent report by the State Bank of India (SBI) reveals that while the share of mutual funds and insurance in financial savings have been going up over the last 3 years, the share of bank deposits is declining since FY 2021 till (FY 2023).
The share of bank deposits in financial savings has decreased from 47.6% in March FY 2021 to 45.2% in March FY 2023.
On the other hand, mutual funds have gained ground. Its share in the financial savings has increased from 7.6% in FY 2021 to 8.4% in FY 2023. The report said, “The increasing share of mutual funds in financial savings make them the most preferred instrument for financialization of savings.”
Life insurance funds have also maintained relative stability with the share of 21% in financial savings over the last three years.
Other investment avenues, including NBFC, PPF, PF & small savings, have also seen growth, with their share increasing from 12.6% to 13.7% over the last three years.
Let’s look at the table below to understand this better:
|
Category of Investment |
FYMAR-2021 (%) |
FYMAR-2022 (%) |
FYMAR-2023 (%) |
|
Bank Deposits |
47.6 |
45.9 |
45.2 |
|
Life Insurance Funds |
20.8 |
21.1 |
21.5 |
|
Currency |
11.4 |
11.3 |
11.1 |
|
Mutual Funds |
7.6 |
8.5 |
8.4 |
|
Others (NBFC, PPF, PF & small savings) |
12.6 |
13.2 |
13.7 |
- India’s financial inclusion improved significantly and now more than 80% of adults in India have a formal financial account, compared to 50% in 2011, which is improving the financialization of savings rate of Indian households
- India savings rate is at 30.2%, which is higher than the global average of 28.2%
- However, there is significant shift towards physical assets. In FY 2023, the share of household savings in physical assets grew to 71.5%
- Women participation in individual investor registrations has shown a gradual increase since FY22
