Retail participation in financial markets likely to deepen as household savings shift towards market-linked assets: SEBI
New Delhi, August 9
Retail participation in India's financial markets is likely to deepen further as rising financial literacy, digital access and regulatory reforms continue to shift household savings towards market-linked instruments, according to the Securities and Exchange Board of India's Annual Report 2025-26.
The regulator's latest data points to continued expansion in mutual funds, SIPs and other professionally managed investment products, while stronger investor-protection measures are expected to support broader participation.
India's financial landscape is undergoing a structural transformation, with investors increasingly favouring financial assets over traditional instruments, the report said.
Mutual funds remain central to this transition, supported by digital onboarding and growing accessibility of systematic investment plans (SIPs). SEBI said the mutual fund industry's total assets under management more than doubled over the past five years, rising from Rs 31.43 lakh crore in March 2021 to Rs 73.7 lakh crore by March 2026.
The number of unique mutual fund investors rose 13.2 per cent year-on-year to 6.1 crore in 2025-26. Importantly, the expansion is increasingly broad-based, with Tier III cities accounting for 55 per cent of the investor base, indicating deeper penetration beyond major urban centres. SIPs also strengthened their role as a vehicle for disciplined, long-term investing, with gross inflows rising 20.8 per cent during the year.
SIP accounts increased to 1,045 lakh in 2025-26 from 1,005 lakh a year earlier, while assets accumulated through SIPs rose to Rs 15.1 lakh crore from Rs 13.35 lakh crore. Gross SIP inflows climbed to Rs 3.5 lakh crore, while net inflows increased to Rs 1.97 lakh crore.
The broader mutual fund industry also recorded strong growth, with AUM rising 12.2 per cent to Rs 73.7 lakh crore. Equity-oriented schemes attracted net inflows of Rs 3.5 lakh crore, while passive investment continued to gain traction. Net inflows into passive schemes rose to Rs 2.1 lakh crore from Rs 1.4 lakh crore in 2024-25.
At the same time, SEBI is tightening safeguards as participation expands. Stress tests showed that large small-cap schemes could require substantially longer periods to liquidate portfolios under high redemption pressure, highlighting liquidity and concentration risks.
Going ahead, the combination of digital access, rising investor awareness and regulatory simplification could support sustained growth in financial-market participation. SEBI's revised mutual fund regulations are aimed at improving clarity while retaining and strengthening investor-protection, transparency and governance standards.
— ANI
Reader Comments
The growth from Rs 31 lakh crore to Rs 73.7 lakh crore in just 5 years is remarkable. As someone working in fintech, I can see the revolution happening on the ground. The combination of UPI, DigiLocker and easy KYC has literally democratised investing. But I hope SEBI's stress test findings on small-cap funds serve as a wake-up call for investors chasing quick returns.
Finally, Indian households are moving beyond the traditional FD and gold obsession! My parents were always sceptical about markets, but after seeing my SIP returns over the years, they've now started their own monthly investments. Financial literacy is truly the key - and the fact that even small-town investors are joining is fantastic. 🙌
While this growth is impressive, I hope SEBI is equally focused on investor education. The 6.1 crore unique investors is a big number, but we need to ensure people understand market risks too. The stress test on small-cap funds is concerning - many retail investors don't realise that liquidity can dry up in falling markets. Let's celebrate growth but also demand better risk disclosure.
The passive investing trend catching on in India is exciting - net inflows into passive schemes nearly doubled! It shows the market is maturing. As a long-term investor, I appreciate how SEBI is balancing growth with regulation. More Indians owning financial assets is great for the country's economic future.
Being from a Tier-III city myself, I'm proud to see 55% of investors are from places like mine! The SIP culture has genuinely caught on, and it's heartening to see people from
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