Indian households have traditionally relied heavily on physical assets and bank deposits as the cornerstone of their financial planning. However, a noticeable shift is underway—households are increasingly channeling their savings into mutual funds, insurance products, and pension schemes, seeking returns higher than those offered by banks.
Net household financial savings in India rose from 7.7 per cent of gross domestic product (GDP) in 2019-20 to 11.7 per cent in 2020-21, largely because of precautionary and forced savings during the pandemic, but moderated thereafter to a multi-decade low of 5.3 per cent in 2022-23.
A recent study in this regard by economists at the Reserve Bank of India (RBI), which examined household portfolios, indicated how household behaviour was changing. While bank deposits, including fixed deposits and post-office savings, are still the most preferred savings instrument among households, market-linked ones are gaining traction.
This story is from the January 06, 2025 edition of Business Standard.
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This story is from the January 06, 2025 edition of Business Standard.
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