The financialisation of household savings — or the move away from the traditional preference for physical assets and fixed deposits in banks towards investment in financial assets — is accelerating in India.

Riding on the tailwinds of the past five fiscals, the managed funds industry in the country will likely grow assets under management (AUM) to the tune of ~₹315 lakh crore by fiscal 2027, an analysis by Crisil MI&A Research indicates. As of last fiscal, it managed ₹135 lakh crore.

Ashish Vora, President and Head, Crisil Market Intelligence & Analytics said, “As of the last fiscal, AUM of the managed funds industry amounted to 57 per cent of India’s gross domestic product (GDP). In the next five years, we see this proportion rising to 74 per cent as financialisation increases. Much has happened in the investment landscape over the past five fiscals, yet the industry has barely scratched the surface given the potential in different categories and compared with how such assets have grown in the developed countries.”

Jiju Vidyadharan, Senior Director, CRISIL Market Intelligence & Analytics, said the pace of technology and intermediation remains crucial in driving product penetration.

“Development of a distributor segment through sufficient incentivisation to expand their network will be key to increasing both penetration and financial awareness in the hinterland. Independently, the industry needs to boost understanding of its products, moving from awareness to education. Also, having directionally similar taxation and regulation would send out a more coherent message, helping investors take better-informed decisions based on their risk-return profiles rather than spend time grappling with various complexities,” Vidyadharan said.

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