India's Household Wealth Shifts from Deposits to Alternatives

India's Household Savings Shift from Bank Deposits to Market-Linked Investments

Key Figures:

• $19.3 trillion: Current value of India's household financial assets
• Rs 150 lakh crore: Value of household bank deposits
• Rs 240 lakh crore: Current value of bank deposits, up 2.6 times from the past decade
• Rs 80 lakh crore: Current value of mutual fund investments, up 7X in the last few years
• Rs 11 lakh crore: Current value of portfolio management services (PMS) market, up nearly seven-fold
• Rs 12 lakh crore: Current value of alternative investment funds (AIF) market, up about twelve-fold

India's household savings are increasingly shifting from traditional bank deposits to market-linked investments, according to IDFC FIRST Bank Managing Director and CEO V. Vaidyanathan.

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The country's financial asset base has expanded rapidly in recent years as investors diversify beyond bank deposits. India's household financial assets currently stand at $19.3 trillion, reflecting the growth of financialisation in the country.

Despite the rise of investment products, bank deposits still account for a large share of household savings, with Rs 150 lakh crore currently held in household bank deposits. However, this figure has grown significantly over the past decade, up 2.6 times to Rs 240 lakh crore today.

Market-linked investment products, such as mutual funds, have also expanded rapidly. Total mutual fund investments have grown 7X in the last few years, reaching Rs 80 lakh crore. Other investment segments, including portfolio management services (PMS) and alternative investment funds (AIF), have also seen significant growth, with the PMS market growing nearly seven-fold to Rs 11 lakh crore and the AIF market expanding about twelve-fold to Rs 12 lakh crore.

The growth of intergenerational wealth transfers is also driving households to explore investment products, with investors often beginning with traditional savings products before moving towards investment options over time. Financial institutions are responding to this shift by expanding wealth management services to a wider base of customers.

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