SIPs Aren’t Draining Bank Deposits — India’s Households Are Diversifying, Not Deserting Savings

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• Indian households are diversifying portfolios, not abandoning bank deposits.
• Equity and mutual fund share in savings rose from 2% in FY12 to 15.2% in FY25.
• Unique equity investors grew from 3.1 crore in FY20 to over 11 crore by FY25.

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As the debate intensifies over whether soaring systematic investment plan (SIP) flows are weakening bank deposit growth, the Economic Survey sets the record straight: Indian households are diversifying their financial portfolios rather than shifting savings wholesale away from traditional instruments.

Over the past decade, household financial behavior has undergone a structural transition, marked by rising exposure to market-linked products, particularly equities. The Survey notes that this shift reflects both greater access to capital markets and evolving risk preferences, rather than a simple substitution away from deposits.

Data show that the share of equity and mutual funds in annual household financial savings rose sharply from about 2 per cent in FY12 to over 15.2 per cent in FY25. During the same period, deposit allocations declined from more than 58 per cent to around 35 per cent, after hitting a low of 31.9 per cent in FY22. However, policymakers interpret this trend as portfolio rebalancing rather than erosion of the banking system’s savings base.

The rise of disciplined long-term investing has been a defining feature of this transition. Average monthly SIP contributions have increased nearly seven-fold, from under ₹4,000 crore in FY17 to over ₹28,000 crore in FY26 (April–November). This steady flow across market cycles has supported household participation while smoothing volatility in equity investments.

From a stock perspective, household balance sheets also reflect this structural change. According to RBI data cited in the Survey, the share of equity and investment funds in total household financial assets rose from 15.7 per cent in March 2019 to 23 per cent by March 2025. Individual investors’ ownership of equities climbed from roughly 11 per cent in FY14 to nearly 19 per cent by September 2025, with total household equity holdings expanding more than tenfold to about Rs84 lakh crore.

Importantly, the Survey highlights that direct equity ownership has risen gradually, while indirect participation — through mutual funds, pension products and insurance-linked investments — has grown at a much faster pace. This indicates a broadening of access rather than speculative concentration.

The post-pandemic period marked a turning point. The number of unique equity investors surged from around 3.1 crore in FY20 to over 11 crore by FY25. Although net additions have moderated recently, domestic inflows have remained resilient and have outpaced foreign portfolio investments over the past five years.

This growing domestic participation has strengthened market stability by reducing reliance on volatile external capital. At the same time, the Survey emphasises that households are not abandoning deposits altogether, but are building more diversified portfolios that combine safety, liquidity and long-term wealth creation.