Revised Methodology Shows Surge in Household Savings Via Securities Markets

India’s household savings patterns have undergone a significant reassessment following a revised methodology developed by SEBI in consultation with the RBI and MoSPI. The updated approach provides a more comprehensive view of how households invest through securities markets.

It indicates a sharp increase in financial savings routed through formal investment channels. The findings highlight evolving investor preferences and improved data capture across asset classes.

Sharp Rise in Household Financial Savings

Household savings through securities markets rose to ₹6.91 lakh crore in FY2024-25, compared to ₹3.58 lakh crore in FY2023-24 and ₹2.59 lakh crore in FY2022-23. This sharp increase reflects both improved measurement techniques and a genuine rise in financial participation.

The data indicates accelerated adoption of investment products linked to capital markets. The upward trend suggests stronger household engagement with formal financial systems over recent years.

Shift From Direct Equity to Mutual Funds

A notable trend emerging from the data is the shift away from direct equity investments towards mutual funds. Households were net sellers of direct equities worth ₹54,786 crore in FY25, following net sales of ₹69,329 crore in FY24.

At the same time, mutual funds saw record inflows, becoming the primary channel for securities-based savings. This shift indicates a growing preference for professionally managed investment vehicles over individual stock selection.

Mutual Funds Drive Investment Growth

Mutual funds accounted for a significant portion of total household investments in securities markets. Primary mutual fund inflows rose from ₹1.66 lakh crore in FY2022-23 to ₹5.13 lakh crore in FY2024-25.

This increase highlights the rising popularity of systematic investment approaches among retail investors. The trend reflects greater reliance on diversified portfolios and long-term investment strategies within households.

Expanded Framework and Data Coverage

The revised methodology incorporates granular data and expands coverage to include multiple investment avenues previously excluded. These include secondary market investments, REITs, InvITs, Alternative Investment Funds, private debt placements, and NPISHs.

Earlier estimates relied on assumptions such as attributing fixed portions of equity and debt issuances to households. The updated framework provides a more accurate and comprehensive picture of financial savings behaviour.

Impact On Savings-To-GDP Ratio

The revised approach has also led to a measurable change in macroeconomic indicators. The Gross Savings-to-GDP ratio for FY2024-25 increased by 47 basis points to 34.94%, compared to 34.47% under the previous methodology.

This adjustment reflects the inclusion of previously unaccounted financial flows. The change highlights the importance of improved data systems in understanding economic trends.

Read More: SEBI Proposes Payroll-Linked Mutual Fund SIPs and Unit Donations.

Conclusion

The revised methodology has significantly altered the understanding of India’s household savings landscape. It highlights a clear shift towards financial assets, particularly mutual funds, over traditional and direct investment avenues.

The expanded data coverage provides deeper insight into investor behaviour and market participation. Overall, the findings reflect growing maturity and formalisation in India’s savings and investment ecosystem.

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