India is witnessing a notable shift in how households allocate their savings, with a significant rise in investments in equities, according to a recent report by SBI Research. Equity investments as a share of household savings have doubled from 2.5% in FY20 to 5.1% in FY24, signaling deeper financialization in the Indian economy.
The report also highlighted structural changes in the Indian credit market, noting that traditional averages may not fully reflect the evolving trends. With bank credit growth undergoing transformation, close attention to household savings in bank deposits is crucial, as they remain a major source of credit origination.
Public sector banks (PSBs) have shown stable credit growth of 12.2% in FY25, slightly below the 13.6% growth recorded in FY24. Yet, their contribution to incremental credit has surged&mdash;from 20% in FY18 to 56.9% in FY25&mdash;highlighting their growing role in the financial system.
This shift is attributed to the government's 4R strategy&mdash;recognition, resolution, recapitalisation, and reforms&mdash;which has significantly improved asset quality. Non-performing assets in the banking system have dropped to a historic low of 2.6% in the first half of FY25, down from 11.5% in FY18.
As a result, the share of PSBs in outstanding credit has rebounded to 52.3% in FY25, reversing a 14-year decline that saw it fall to 51.8% in FY24 from 75.1% in FY10.
Sector-wise, overall credit growth has slowed, particularly in services and agriculture. However, industry credit saw a boost, with its share rising to 17% in FY25 from 11% in FY24. Meanwhile, personal loans now account for 37% of incremental credit, down from 43% in the previous fiscal year.
A standout area has been credit to the MSME sector, which grew by 17.8% year-on-year. According to Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor at SBI, MSME activity is closely linked to large corporates through backward and forward integration, making it a key indicator of broader corporate health.
Additionally, private credit deals in FY24 reached ₹774 billion, marking a 7% increase over the previous year. These transactions are increasingly being routed through Alternative Investment Funds (AIFs), offering customized financial solutions to various segments of Indian industry. Meanwhile, Non-Convertible Debentures (NCDs) continue to play a role in the corporate funding landscape. [Except for the headline, this article has not been edited by the Benefit News editorial team and is published directly from the IANS news feed]

Equity Investments in India Double in 4 Years

Household savings shift toward equities as SBI flags rising financialization and credit reforms

Equity Investments in India Double in 4 Years: SBI

Household savings shift toward equities as SBI flags rising financialization and credit reforms

June 30, 2025 | 16:14 IST