India’s financialisation shift deepens as more physical assets convert to financial assets

New Delhi, Aug 24 (SocialNews.XYZ) A structural shift toward financialisaton remained intact in fiscal 2026, as individual bank deposits and market‑linked assets showed strong growth, a report said on Monday.

The report from JM Financial services said individual bank deposits grew 9.7 per cent year‑on‑year to Rs 134.8 trillion, well ahead of resident individual bank accounts' 1.8 per cent growth to 2.6 billion.

Indian households have historically favoured savings in the form of physical assets but there has been a steady rise in the share of savings in financial assets from 39.5 per cent in FY05 to 44.7 per cent in FY24, the report noted.

"The shift has been slow, but we see a larger shift post FY20–21, indicating a behavioural shift in preferences of households during the pandemic," the report said.

Retail equity participation continued to expand, although growth in resident individual demat accounts moderated to 17.6 per cent YoY versus 26.7 per cent YoY in FY25.

The mutual fund folios grew 16.8 per cent to 274 million, the report added.

The route through which households access equities is also evolving as MF shareholding in the Indian equity market increased to 11.3 per cent in FY26 from 10.2 per cent in FY25 while public shareholding declined to 9.4 per cent from 9.9 per cent.

Despite this progress, the report noted that penetration remains low, with demat accounts at 13.1 per cent of India's population versus 28.3 per cent in China and 30.2 per cent in Japan, leaving significant headroom for further equity-market participation.

India’s mutual fund AUM-to-GDP stood at 19.6 per cent versus 28.7 per cent in China, 43 per cent in Japan, 54.3 per cent in the UK, and 76.8 per cent in the US.

India’s average deposit per bank account rose to Rs 51,494, up 7.7 per cent YoY, the report said.

“The divergence between account and deposit growth indicates that financialisation is increasingly being reflected in larger balances within existing accounts,” the firm said, adding that women continue to lead this deepening, with women's accounts/deposits growing faster than men.

Discretionary PMS AUM rose to Rs 35.1 trillion in FY26 from Rs 31.8 trillion in FY25, implying a 10 per cent YoY increase and a 15.2 per cent CAGR over FY19–26. The number of investors in FY26 grew 8.8 per cent YoY, while the average ticket size rose to Rs 168.8 million.

—IANS

aar/pk

Source: IANS