India is witnessing a significant shift in household savings behavior, with mutual fund assets under management (AUM) surging to nearly a third of total bank deposits, according to veteran banker Uday Kotak. In a recent post on social media platform X (formerly Twitter), Kotak highlighted that mutual fund AUM, largely driven by equity investments, climbed to 31% of bank deposits as of May 2025, up sharply from just 13% in FY15.
Kotak described this as a structural change in financial intermediation, noting that it helps grow domestic risk capital and fosters an equity culture in India. He cautioned, however, against “excessive exuberance” amid this rising investor enthusiasm. “India’s saver turns investor. Post-Covid, mutual fund AUM share, mainly equity, has doubled to 31% of bank deposits. It grows domestic risk capital and creates an equity culture. But let’s be alert about excessive exuberance,” Kotak wrote.
The rise in mutual fund investments accelerated particularly after the Covid-19 pandemic. The AUM-to-deposit ratio rose from 21% in FY21 to 26% in FY24, reaching 31% by May 2025, signaling growing investor participation in capital markets. This growth is supported by greater digital access, awareness initiatives, and increasing appetite for equity exposure.
Mutual funds, especially systematic investment plans (SIPs), have been key in channeling long-term household savings into the markets. Industry experts believe this trend could reduce India’s dependence on foreign capital, enhancing domestic financial resilience.
According to the latest data from the Association of Mutual Funds in India (AMFI), monthly SIP inflows hit a record ₹26,688 crore in May 2025, though net equity inflows fell 22% month-on-month to ₹19,013 crore from ₹24,269 crore in April. The number of SIP accounts contributing also rose to 8.56 crore in May from 8.38 crore the previous month. Total SIP AUM increased to ₹14.61 lakh crore in May from ₹13.90 lakh crore in April.
This ongoing momentum highlights a growing equity culture among Indian investors, transforming traditional savers into active market participants.
