Indian household savings shift to financial assets as securities market flows rise, Sebi paper says

Indian households increased savings through the securities market in 2024-25, a research paper by Sebi officials reported. The paper put the figure at Rs 6.91 lakh crore, up from Rs 3.58 lakh crore in 2023-24. It added that the revised estimate was higher than Rs 5.43 lakh crore under the old method.

Representative image

The revised numbers also lifted key ratios in national accounts for 2024-25. India’s gross savings-to-GDP ratio rose by 47 basis points to 34.94 per cent. Under the previous method, the ratio stood at 34.47 per cent. The paper said the shift reflected wider capture of household market activity.

Sebi securities market savings method change

The study reviewed a change in how household savings through the Indian securities market were calculated. Sebi made the shift after consultation with the Reserve Bank of India RBI and the Ministry of Statistics and Programme Implementation MoSPI. The revised approach was added to the national accounts series based on the new 2022-23 base year.

Earlier, RBI and MoSPI depended mainly on estimates for these savings. The old framework treated 35 per cent of public and rights equity issues as household savings. It also counted 40 per cent of public corporate debt issues. Actual mutual fund investments were included, but several other routes were left out.

The earlier framework did not count preferential allotments, private debt placements, or secondary market transactions. It also missed newer instruments, including REITs, InvITs and Alternative Investment Funds AIFs. The paper said these gaps reduced the measured scale of household participation in securities markets.

The updated method used granular data from depositories, stock exchanges and the Association of Mutual Funds in India AMFI. It captured household investments across more instruments and market segments. The approach also included Non-Profit Institutions Serving Households NPISHs. These included trusts, societies and charitable organisations, alongside individuals.

Sebi securities market savings rise and GDP ratios

The paper said securities market savings rose from Rs 2.60 lakh crore in 2022-23 to Rs 3.58 lakh crore in 2023-24. It then increased to Rs 6.91 lakh crore in 2024-25. The authors said financial assets were drawing interest versus gold and real estate. They linked this to returns, liquidity, and policy support.

Primary market flows formed most of the 2024-25 total, at Rs 6.32 lakh crore. Mutual funds made up Rs 5.13 lakh crore of that amount. Equity issuances contributed Rs 95,139 crore. The paper’s figures showed households directed more fresh savings to listed products and managed funds.

Secondary market investments added Rs 59,452 crore in 2024-25, the paper stated. The flow was supported by net investments in debt securities, exchange-traded funds, REITs and InvITs. The study used this split to show where savings moved. It also showed how market activity extended beyond IPOs.

According to the paper, securities market savings equalled 2.17 per cent of GDP in 2024-25. Under the previous method, it would have been 1.71 per cent. The household savings-to-GDP ratio rose to 21.7 per cent from 21.23 per cent. Net household financial savings increased to 7.10 per cent from 6.63 per cent.

Sebi securities market savings and household investing shift

Jimeet Modi, founder and CEO of SAMCO Group, focused on direct equity flows in the numbers. Modi said households were net sellers of direct equity worth Rs 54,786 crore in FY25. That followed net sales of Rs 69,329 crore in the previous year. This happened alongside record mutual fund investments, Modi said.

"This is not a retreat. This is maturation,\" Modi said. Modi added that retail investors were booking gains in direct equities. Modi also said new savings were moving to professionally managed products. Modi said mutual funds were the main route, with nearly four-fifths of Rs 6.91 lakh crore flowing through them.

The paper estimated the stock of household assets held in Indian securities markets at Rs 141.34 lakh crore by end-2024-25. It covered equities, mutual funds, debt securities, REITs, InvITs and AIFs. Equity holdings were Rs 88.92 lakh crore, while mutual fund investments were Rs 44.39 lakh crore. AIF investments stood at Rs 1.55 lakh crore.

Sebi said the paper reflected the authors’ views and not the regulator’s official stance. The authors were Prabhas Kumar Rath, Shyni Sunil and Kalyani H. The study linked rising market-linked savings to government measures. It cited tax incentives, financial inclusion programmes and digital banking as supporting the shift.

With inputs from PTI