Households wield enormous clout with financial assets amounting to ₹221 lakh crore

The Indian households have considerable fire-power as far as their savings go. Financial assets of Indian households accounted for 93.4 per cent of GDP in March 2022, at ₹221 lakh crore. While the assets had crossed 100 per cent of GDP in the first year of the pandemic in FY21, it has declined slightly since then, according to RBI’s latest monthly bulletin. 

With so much wealth at their disposal, it’s no wonder that banks and other institutions are vying for a piece of the pie. Financial assets comprise currency, bank deposits, debt securities, mutual funds, insurance, pension funds and small savings. 

These assets have also grown at a robust pace of 28.7 per cent between March 2020 and March 2022. On the other hand, total liability of households has grown at a slightly slower pace of 19.7 per cent. With Indian households being more conservative in taking on too much debt, total liabilities accounted for just 35.3 per cent of GDP in March 2022, amounting to Rs 83.6 lakh crore. 

Financial liabilities are primarily held in the form of loans and borrowings from banks, non-banking financial companies (NBFCs) and housing finance companies (HFCs). 

Bank deposits, most preferred

Bank deposits have the highest share with more than half of the total household assets in bank deposits. Next comes Life Insurance, at 24 per cent, followed by currency at 13 per cent and Mutual funds at 10 per cent. 

Although mutual funds have the smallest share among financial assets held by Indian households, they have witnessed the highest growth. From ₹11.9 lakh crore in March 2020 to ₹21.5 lakh crore in March 2022, mutual fund assets have grown about 80 per cent. The next highest growth was witnessed in life insurance. From ₹38.8 lakh crore to ₹52.8 lakh crore in the same period. Currency and bank deposits have also shown growth of 29.2 per cent and 19.3 per cent respectively in the same period. 

Breakdown of liabilities 

The banking sector, which includes commercial banks and co-operative banks, has a 80 per cent share of housholds’liabilities, while the remaining 20 per cent share belongs to other financial institutions such as non-banking financial companies and housing financial companies. 

The houshold borrowings from the banking sector and other financial institutions have grown since March 2020 to 20.7 per cent and 16.1 per cent respectively.

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