Indian Households Shift Savings from Banks to Markets Post-COVID

Indian households are increasingly redirecting their savings from conventional bank deposits towards market-linked investment instruments, according to a recent ASSOCHAM Global Research report. This shift, observed in the period following the COVID-19 pandemic, signals a notable evolution in financial habits across the nation.

The report, titled ‘Pattern of Savings Deposits with Scheduled Commercial Banks in India’, highlights a deceleration in the growth rate of bank savings deposits. This trend is driven by a growing preference for investments like equities and mutual funds over traditional banking avenues.

Evolving Investment Patterns

Between the fiscal years 2020-21 and 2024-25, the average annual increase in savings deposits registered 8.6%. This marks a significant decrease from the 14.8% growth rate recorded in the preceding five-year period, from 2015-16 to 2019-20.

Over the past 15 years, the total savings deposit base has seen a cumulative increase of nearly 374%. This substantial long-term growth indicates underlying strength despite the recent moderation in annual growth rates.

Resilience Amidst Change

Despite the observed moderation, the ASSOCHAM report underscores the enduring robustness of India’s overall savings deposit system. This resilience is supported by several key factors that continue to bolster the financial landscape.

Key drivers include ongoing financial inclusion initiatives, which have broadened access to formal banking services. Enhanced accessibility to banking infrastructure also plays a crucial role in maintaining deposit levels.

Furthermore, the widespread adoption of digital banking platforms across India contributes significantly to the sustained growth of the savings deposit system. These combined factors position India’s financial sector for continued expansion and adaptation.