The Securities and Exchange Board of India (SEBI) has proposed significant reforms to mutual fund payment norms, allowing salary deductions by employers for employee investments and commission payouts to distributors in the form of mutual fund units. As reported by The Hindu BusinessLine, the regulator announced these changes on Wednesday, responding to industry requests for relaxation in genuine cases. The proposed framework would enable payroll investments through listed and EPFO-registered companies and permit asset management companies (AMCs) to pay trail commissions to empanelled mutual fund distributors in the form of mutual fund units. SEBI has sought public comments on these proposals until June 10, 2026.
Indian households demonstrated unprecedented commitment to financial market investments in FY25, pumping a record ₹6.91 lakh crore into securities markets according to the latest Sebi research paper. As reported by Business Standard, this represents a sharp jump from ₹3.58 lakh crore in FY24 and ₹2.60 lakh crore in FY23, highlighting the accelerating financialisation of Indian household savings. The paper, authored by Dr Prabhas Kumar Rath, Shyni Sunil and Kalyani H, revealed that household savings through securities markets rose to 2.17% of GDP in FY25, up from 1.71% under the earlier methodology. The revised approach now captures a broader set of investments including secondary market participation, REITs, InvITs and private placements, offering a more realistic picture of household participation in capital markets.
Mutual funds emerged as the primary driver of household investment growth, accounting for ₹5.13 lakh crore out of the total ₹6.32 lakh crore invested through primary markets in FY25. According to the Sebi analysis, this means nearly four-fifths of household market investments were routed through mutual funds, reinforcing how professionally managed investment products are becoming the preferred route for retail participation. The domestic households placed their trust in mutual funds, which emerged as the biggest driver of inflows, with investments through MF schemes in the primary market jumping to ₹5.13 lakh crore in FY25 from ₹2.85 lakh crore in FY24 and ₹1.66 lakh crore in FY23. Secondary market mutual fund flows, including ETFs, also rose sharply to ₹30,885 crore in FY25 compared with ₹9,783 crore in the previous year.
Indian households demonstrated a significant structural shift in FY25, pulling ₹54,786 crore from secondary equities according to the Securities and Exchange Board of India (Sebi). As reported by Business Standard, this withdrawal likely reflects investors booking profits amid valuation concerns and heightened volatility. However, the exit from secondary markets was offset by strong primary market participation, with household flows into equities through IPOs, FPOs, rights issues and preferential allotments rising to ₹95,139 crore in FY25 in FY25 - more than double the ₹46,879 crore recorded in FY24. The data suggests investors are increasingly booking gains in direct equities while redirecting fresh savings into SIPs, diversified mutual funds, and professionally managed portfolios.
The growing appetite for mutual funds was reflected in the stock of household assets, with household mutual fund holdings climbing to ₹44.39 lakh crore at the end of FY25 from ₹36.28 lakh crore a year earlier and ₹24.45 lakh crore in FY23. According to the Sebi data, household equity assets increased to ₹88.92 lakh crore in FY25 from ₹84.07 lakh crore in FY24 and ₹53.67 lakh crore in FY23, despite the secondary market exit. The revised methodology increased the household savings through securities markets-to-GDP ratio to 2.17% in FY25 compared with 1.71% under the earlier approach. The total household assets invested in Indian securities markets stood at ₹141.34 lakh crore by the end of FY25, with equity holdings accounting for ₹88.92 lakh crore, mutual fund investments at ₹44.39 lakh crore, and AIF investments at ₹1.55 lakh crore. The new SEBI proposals would strengthen this framework by enabling social investing through Zero Coupon Zero Principal instruments and providing robust KYC checks, clear mandates, and compliance with PMLA norms.
The Sebi article emphasized that the household savings channeled through the securities market is a crucial component of the financial savings. As reported by Business Standard, the data on household savings reported by RBI relied partly on estimations, while data on mutual fund investments were sourced from Sebi. The analysis noted that 35% of the equity via public and rights issuances and 40% of the public issuances of corporate debt were considered for equity and debt respectively. The household shares in equity, debt and mutual funds were used by MoSPI in the computation of Gross Savings in the economy, indicating the material underreporting of household financial market participation in earlier methodologies. The revised methodology now uses actual granular data from depositories, stock exchanges, and the Association of Mutual Funds in India (AMFI) to calculate household participation more accurately, including trusts, charitable organisations, and societies under the category of Non-Profit Institutions Serving Households (NPISHs).
