Jimeet Modi, Founder & CEO at Samco Group
When a close friend recently asked me, “Should I keep money in my savings account or start a SIP?” I smiled. It felt like a deceptively simple question, but in reality, it reflects a tectonic shift happening in Indian finance. For decades, banks were the unquestioned custodians of our savings. Every rupee earned, every surplus tucked away, found its first home in a fixed deposit or a savings account. The banker’s pen, not the broker’s pitch, was the instrument of trust. Today, that dominance is being challenged by a new force: mutual funds (MFs). And it is not a minor skirmish. It is a full-blown battle for the very future of Indian household savings.
Let’s look at the numbers. India’s mutual fund industry has crossed Rs 75 lakh crore in assets under management (AUM). The Systematic Investment Plan (SIP) inflows are not just steady; they are breaking records every single month. Contrast this with banks, where fixed deposits (FDs) and savings accounts are increasingly struggling to attract fresh money. The number of AMCs has swelled from 41 in 2019 to 50 today, each one a soldier in this new financial army, a telling sign of where both investors and entrepreneurs see the opportunity.
In fact, we recently saw a large private bank attempt to raise the minimum average balance for savings accounts, only to roll it back after backlash. The message from customers was loud and clear: don’t take us for granted. Nobody wants to park their hard-earned money in channels that offer 3–4% returns when alternatives promise compounding at far superior rates.
US Bank Deposits vs Mutual Fund AUM (FY 2019–2025)
If you think this is only an Indian story, think again. The US offers us a preview of what may come. In April 2019, US mutual funds managed assets worth $16,700 billion, already more than the $12,700 billion parked with banks. By April 2025, mutual funds AUM is at $21,200 billion, still ahead of bank deposits at $18,000 billion. The writing is on the wall: when investors are empowered with choices, they migrate to efficiency.
India’s numbers tell the same story, only a few years behind. In 2019, bank deposits were over Rs 126 lakh crore compared to just Rs 24 lakh crore of AUM in mutual funds, which was 19% of bank deposits. By 2025, mutual funds’ AUM has surged to over Rs 75 lakh crore, now nearly 32% of total deposits of Rs 234 lakh crore. The gap is closing, swiftly.
India Bank Deposits vs Mutual Fund AUM (FY 2019–2025)
The banks, of course, will not vanish overnight. But make no mistake: they are standing at the wrong end of the stick. Banking, by design, is slow to innovate. Regulatory constraints, legacy systems, and the culture of caution shackle their ability to reinvent. Meanwhile, mutual funds thrive on agility. With digital platforms, transparent pricing, and compounding returns, they are seizing the imagination of the young and the trust of the old.
This shift has ripple effects far beyond investors. It will create an ecosystem of winners — asset management companies (AMCs), mutual fund distributors (MFD), tech partners, RTAs, and advisors — all riding the growth wave of financialization. We are witnessing not just a reallocation of savings, but a reallocation of power within the financial system itself.
I have lived through multiple bull and bear cycles over decades, and rarely have I seen a transformation of this magnitude. This is not a passing trend. It is a structural shift in the DNA of Indian savings.
The takeaway is simple yet profound. For banks, the path ahead is uncertain. For mutual funds, it is crystal clear. Systematic investment plans are no longer just a side option; they are becoming the default. The question to be asked is not whether FDs will lose ground, but how long the FDs will remain relevant.
The story of Indian finance is being rewritten before our eyes. And it ends with a truth every investor should remember: Funds are eating FDs — and this time, the meal is permanent.
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