India's household financial wealth through securities markets has been significantly underestimated for years, with the Securities and Exchange Board of India (Sebi) revealing that household assets in securities markets stood at ₹141.34 lakh crore by FY25. The study, authored by Dr Prabhas Rath, Shyni Sunil and Kalyani H from Sebi's Department of Economic Policy and Analysis (DEPA), found that household savings via capital markets touched ₹6.91 lakh crore in FY25 under a revised data-driven methodology, nearly ₹1.5 lakh crore higher than estimates generated through the older framework. The research paper notes that the rate of gross savings to GDP increased to 34.94 per cent for FY25, which would have been 34.47 per cent if the old methodology for computing securities market investments had continued.
Under the revised methodology, the household savings-to-GDP ratio for FY25 is 21.7 per cent compared to 21.23 per cent under the previous methodology. Similarly, net household financial savings improved to 7.10 per cent of GDP, up from the former estimate of 6.63 per cent. The study found that equities accounted for the largest component at ₹89 lakh crore, while mutual fund holdings stood at ₹44.4 lakh crore of the total household assets in securities markets. According to the paper, household savings routed through the securities market stood at ₹6.9 trillion in FY25, compared with ₹5.42 trillion under the earlier methodology. The inclusion of new instruments and segments has provided comprehensive coverage and better captures the shift in household savings from traditional physical assets towards financial instruments.
The new framework addresses a significant gap in previous calculations by including assets under custody held by individuals across equities, debt, real estate investment trusts (Reits), infrastructure investment trusts (InvITs), and alternative investment funds (AIFs). As reported by Sebi, while the Reserve Bank of India (RBI) provides data on the stock of household financial assets in addition to household savings, the current coverage was limited to mutual funds' assets under management belonging to individual investors. The revised methodology incorporates granular data, incorporating the secondary market in various segments, new-age assets such as Reits, InvITs, AIFs, and non-profit institutions serving households in the investor category. For years, household participation in securities markets was estimated using simplified assumptions, such as attributing 35 percent of public equity issuances and 40 percent of public corporate bond issuances to households. But the revised framework now uses actual transaction data from depositories, stock exchanges and mutual fund registrars.
The revised methodology reveals interesting patterns in household investment behavior, with households being net sellers of direct equity to the tune of ₹54,786 crore in FY25 — and ₹69,329 crore the year before — even as they were record buyers of mutual funds. Despite huge equity market participation since COVID, net household investments in the secondary equity market remained negative at ₹27,684 crore in FY23, ₹69,329 crore in FY24 and ₹54,786 crore in FY25. This indicates that households were actively booking profits or reallocating capital even as participation surged. At the same time, investments into mutual funds and debt products rose sharply, with primary market mutual fund inflows jumping from ₹1.66 lakh crore in FY23 to nearly ₹5.13 lakh crore in FY25. According to Jimeet Modi, founder and chief executive officer of Samco Group, this represents not a retreat but maturation, as the Indian retail investor is booking gains on direct stockholdings and outsourcing fresh allocation to professional vehicles.
