Growing participation in mutual funds and equities signals a gradual shift in how households are allocating their financial savings.
Indian households are increasingly directing their savings towards market-linked financial products, with mutual funds and equities gaining a larger share of household financial assets. The trend reflects a gradual change from traditional savings avenues towards capital markets, according to observations cited by Bajaj Mutual Fund.
Mutual fund assets have expanded significantly in recent years, narrowing the gap with traditional bank deposits. According to data highlighted in the report, mutual funds and equities together accounted for around 15 per cent of household financial savings in FY25.
More on mutual funds gaining ground against bank deposits.
Mutual fund assets had also risen to about 31 per cent of bank deposits in 2025. The comparison indicates how quickly managed investment products have grown as Indian savers have become more comfortable with market-linked instruments.
The shift is particularly notable because bank deposits have historically been one of the most widely used avenues for household savings in India. While deposits continue to represent a substantial portion of household financial wealth, the growing allocation towards mutual funds suggests that investors are increasingly looking beyond conventional savings products.
SIPs support retail participation.
Systematic Investment Plans (SIPs) have played an important role in bringing individual investors into mutual funds. Rather than making large one-time investments, SIPs allow investors to contribute smaller amounts at regular intervals. This approach has helped mutual funds attract a broader investor base and encouraged longer-term participation in the equity markets. Recent industry data also indicates continued strength in SIP contributions despite periods of stock market volatility.
The expansion of mutual fund folios further points to growing retail participation. By June 2026, India’s mutual fund industry had more than 61 million unique investors, while total folios were considerably higher, reflecting investors holding multiple schemes. Digital investment platforms, easier account-opening procedures, and greater financial awareness have lowered some of the barriers that previously kept households away from capital markets. Investors in smaller cities and towns are also becoming an increasingly important part of the mutual fund ecosystem.
However, the transition doesn’t mean traditional savings products are disappearing. Bank deposits continue to play a central role in household finances, particularly for investors seeking liquidity and relatively predictable returns.
The rising presence of mutual funds and equities in household portfolios points to a broader change in India’s financial landscape. Mutual fund assets under management have grown substantially over the long term, while retail participation has expanded through SIPs and direct investment channels.
