According to a report by Franklin Templeton India Mutual Fund titled Financialisation of Savings in India – From Safety to Scale, managed investments grew at a compound annual growth rate (CAGR) of about 17.5% between March 2020 and March 2025. Bank deposits, in comparison, grew at around 11.7% during the same period.
As a result, the gap between the two categories narrowed from nearly ₹32 lakh crore to about ₹7 lakh crore, the report said.
The trend points to a gradual change in how Indian households allocate their financial savings, with market-linked products gaining a larger share alongside traditional savings instruments.
Mutual fund assets have risen sharply
The growth is also visible in the mutual fund industry. Mutual fund assets under management (AUM) increased from ₹35.32 lakh crore in July 2021 to ₹85.76 lakh crore in July 2026, representing a CAGR of around 19%, according to the Franklin Templeton report.
The fund house attributed the increase to higher retail participation, growing systematic investment plan (SIP) adoption and a shift among younger investors towards market-linked savings.
Despite the rapid increase, India remains less exposed to mutual funds and equities than mature markets. The report estimates that these assets account for around 15-20% of Indian households’ investable assets, compared with roughly 50-60% in markets such as the US and Canada.
This suggests that while financialisation has accelerated, a significant portion of household wealth remains outside market-linked financial products.
Why the shift is happening
The report points to a combination of rising incomes, greater formalisation of the economy and wider access to digital financial infrastructure as key drivers of the change.
Digital platforms have also reduced some of the barriers traditionally associated with investing. Aadhaar-enabled e-KYC, UPI, Account Aggregator and other digital infrastructure have made it possible to open and service financial accounts without relying as heavily on physical branches and paperwork.
The report said this has helped extend formal financial services beyond major urban centres.
The increasing use of mobile investing platforms has also changed how retail investors access markets. According to the report, digital platforms now account for a large share of direct equity participation, particularly among younger investors.
A larger shift in household savings
The broader change extends beyond mutual funds. Franklin Templeton said India’s financialisation is part of a wider movement in which households gradually shift from informal and physical assets towards formal, institutional and market-linked financial products as incomes increase.
India’s demographic profile could further support this transition. About 65% of the country’s population is below 35 years of age, while the median age is around 28, the report noted.
The report also cited industry expectations that gross financial savings could more than triple over the next decade as investment flows increase and digital infrastructure continues to lower entry barriers.
For households, however, the shift towards market-linked products also means greater exposure to market volatility compared with traditional deposit-based savings. The pace at which financialisation progresses is therefore likely to depend not only on access, but also on financial awareness, risk appetite and the ability of investors to remain invested through market cycles.
Franklin Templeton said the transition could deepen domestic capital pools and increase the participation of households in formal financial markets. But with mutual funds and equities still accounting for a relatively small share of household investable assets, India’s shift towards market-linked savings remains a work in progress.
