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Key Points

More Indians are shifting savings into equities, doubling their share since FY20. Public sector banks are regaining credit market share after years of decline. The MSME sector is emerging as a key driver of credit growth. Private credit deals are expanding, reflecting growing demand for tailored financing solutions.

Key Points: SBI Reports Rising Equity Investments in Indian Household Savings

  • Household equity investments doubled to 5.1% of savings since FY20
  • PSBs credit share rebounds to 52.3% after 14-year decline
  • MSME sector drives credit growth with 17.8% YoY rise
  • Private credit deals hit Rs 774B in FY24 via AIFs & NCDs
2 min read

More Indians now invest in equities as financialization of household savings rises: SBI

SBI Research reveals Indian household savings in equities doubled to 5.1% since FY20, signaling a shift in financialization trends.

"The X factor in credit growth is credit to MSME sector, rising by 17.8% (year-on-year) – Dr. Soumya Kanti Ghosh, SBI"

New Delhi, June 30

The financialization of household savings in India has gained significant momentum as equities as percentage of household savings in the country has increased from 2.5 per cent in FY20 to 5.1 per cent in FY24, an SBI Research report said on Monday.

The Indian credit market is witnessing some structural shifts with headline bank credit growth. Thus, arithmetic average possibly hiding more things than it reveals, the report mentioned.

In future, sources of credit origination through bank deposits (primarily household savings in bank deposits) needs to be keenly watched, it added.

According to the report, public sector Banks/PSBs show stable growth of 12.2 per cent in FY25 compared to FY24 growth of 13.6 per cent.

However, the share in incremental credit of PSBs has increased to 56.9 per cent in FY25 from 20 per cent in FY18.

“The government’s 4R’s strategy of recognition, resolution, recapitalisation and reforms have reaped rich dividends. The asset quality in the banking system is now at a record low of 2.6 per cent in H1 FY25 from 11.5 per cent in FY18,” the report explained.

Now, PSBs share in outstanding credit has improved to 52.3 per cent in outstanding credit in FY25, after 14-years of decline to 51.8 per cent in FY24 from 75.1 per cent in FY10.

The sectoral credit growth indicates credit growth to various sectors of the economy has softened driven by a moderation in growth of credit to services sector and agriculture and allied activities.

Personal loans share in incremental credit growth has declined in FY25 to 37 per cent from 43 per cent in FY24, while industry share has increased to 17 per cent in FY25 from 11 per cent in FY24.

“The X factor in credit growth is credit to MSME sector, rising by 17.8 per cent (year-on-year),” said Dr Soumya Kanti Ghosh, Group Chief Economic Advisor, State Bank of India.

“Interestingly, the MSMEs depend greatly on large corporates through backward integration (and at times, forward integration) and hence, the MSMEs activity level could be a gauge of corporate activities (with all channels of financing options (banks/non-banks) embedded holistically),” he noted.

Moreover, private credit deals totalled Rs 774 billion in FY24, growing 7 per cent over CY23, satiating the growing needs of varied strata of India Inc. through tailored financing solutions primarily via Alternative Investment Funds (AIFs) while issuances of NCDs remains in practice.

- IANS

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Reader Comments

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Priya S
While the numbers look positive, I'm concerned about small investors who might jump into stocks without proper knowledge. The market can be volatile. My uncle lost money in penny stocks last year. More regulation needed for investor protection!
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Arjun K
MSME growth at 17.8% is the real story here! Small businesses are the backbone of our economy. As a small manufacturer, I can confirm that bank loans have become easier to get compared to 5 years ago. Make in India is working 👍
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Sarah B
Interesting to see personal loans share decreasing. Maybe people are becoming more financially responsible? Though I wonder if this is because of RBI's recent strict rules on unsecured lending. Either way, good for long-term stability.
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Vikram M
PSBs improving their share after 14 years is remarkable. But private banks still offer better digital services. SBI needs to upgrade its app - it crashes too often! Good performance numbers though 👏
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Kavya N
As a homemaker, I'm happy to see more investment options for women. Started learning about stocks through YouTube channels. But wish banks would conduct more workshops in regional languages for people like my mother-in-law.

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