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Personal Finance News

More money in PPF and mutual funds: How household savings shifted from bank deposits in 3 years

Upstox
By Upstox News Desk

3 min read | Updated on March 05, 2025, 13:11 IST

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SUMMARY

In India, households’ savings in physical assets and financial assets stood at 71.5% and 28.5%, respectively as of March 2023. As for the trend in constituents of financial savings in India, bank deposits and currency have seen a decline, while the share of other investment products such as life insurance funds, mutual funds, PPF have seen an increase over the same period.

PPF news

The share of PPF and pension funds in the net financial savings of households in India increased in 3 years. | Image source: Shutterstock

The share of public provident fund, pension funds, life insurance funds and mutual funds in the net savings of Indian households increased while the share of bank deposits and cash declined between 2021 and 2023, according to a recent report by AMFI and Crisil.

"In India, households’ savings in physical assets and financial assets stood at 71.5% and 28.5%, respectively as of March 2023. As for the trend in constituents of financial savings in India, bank deposits and currency have seen a decline, while the share of other investment products such as life insurance funds, mutual funds, PPF have seen an increase over the same period," the report said.
PPF and pension funds: The share of PPF and pension funds in the net financial savings of households in India increased from 5.8% in 2021 to 6.2% in 2022 and 6.66% in 2023. Whereas, the share of other small savings increased from 6% in 2021 to 6.2% in 2022 and 6.4% in 2023.
Mutual funds: The share of mutual funds in the net financial savings of households in India increased from 7.6% in 2021 to 8.5% in 2022. However, it dropped to 8.4% in 2023.
Bank and non-bank deposits: The share of bank and non-bank deposits in the net financial savings of households in India decreased from 48.5% in 2021 to 46.7% in 2022 and 46% in 2023.
Currency: The share of currency or cash in the net financial savings of households in India decreased from 11.4% in 2021 to 11.3% in 2022 and 11.1% in 2023.
Life insurance funds: The share of life insurance funds in the net financial savings of households in India increased from 20.8% in 2021 to 21.1% in 2022 and 21.5% in 2023.
amfi-crisil-data.webp

Mutual Fund AUM beats FDs

There was also a significant growth in mutual fund AUM in five years between March 2019 and March 2024.

As per the report, the growth in mutual fund AUM surpassed bank deposits in this duration, indicating a shift from low return fixed deposits to high return mutual funds.

"Indian mutual funds’ AUM grew to ₹53.40 lakh crore as of March 2024 from ₹23.80 lakh crore as of March 2019, clocking a CAGR of 17.5% during the period whereas bank deposits grew to ₹212.53 lakh crore as of March 2024 from ₹126.39 lakh crore as of March 2019, logging a CAGR of 11.0%. This reflects a shift in investor preferences as low interest rates on fixed deposits have pushed investors towards potentially higher return options such as mutual funds," it said.

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Upstox News Desk is a team of journalists who passionately cover stock markets, economy, commodities, latest business trends, and personal finance.

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