A recent analysis of Reserve Bank of India (RBI) data uncovers a significant trend: Indian households have been accumulating financial debt at a considerably faster pace than they’ve been building financial assets since the pre-pandemic fiscal year of 2019-20.
Between 2019 and 2025, the annual increase in household financial assets saw a 48% rise. However, over the same period, annual liabilities surged by a striking 102%. When measured against India’s Gross Domestic Product (GDP), the growth in financial assets remains below pre-pandemic levels, while household liabilities have proportionally increased.
This data also points to a notable change in Indian saving habits, with mutual funds emerging as an increasingly favored investment choice for families.
According to the latest RBI figures, Indian households increased their financial assets by ₹24.1 lakh crore in 2019-20, a figure that climbed to ₹35.6 lakh crore by 2024-25, representing a 48% growth.
Conversely, financial liabilities incurred by households jumped to ₹15.7 lakh crore in 2024-25, a staggering 102% increase from the ₹7.5 lakh crore recorded in 2019-20.
Economic Footprint: Assets vs. Liabilities in GDP
In 2019-20, the annual financial assets accumulated by Indian households represented 12% of the nation’s GDP. This proportion saw a slight decline to 10.8% by 2024-25, a level that has remained relatively consistent throughout the post-pandemic era.
Meanwhile, household financial liabilities, which accounted for 3.9% of GDP in 2019, rose to 4.7% by 2024-25. Although this figure peaked at 6.2% in 2023-24 post-pandemic, it has shown a slight improvement, trending downwards in the most recent year.
The RBI data further highlights an evolution in how Indian households manage their savings and investments. While traditional bank deposits continue to be the primary choice for savings, mutual funds have experienced a rapid surge in popularity in recent years.
In 2019-20, commercial bank deposits constituted 32% of the total financial assets added by households, marginally increasing to 33.3% by 2024-25. In monetary terms, household deposits rose by 54%, from ₹7.7 lakh crore in 2019-20 to ₹11.8 lakh crore in 2024-25.
The Ascent of Mutual Funds
Mutual fund investments, however, witnessed a dramatic increase, with their share in total household financial assets growing from a mere 2.6% in 2019-20 to a significant 13.1% by 2024-25.
Strikingly, new investments in mutual funds skyrocketed by 655%, soaring from ₹61,686 crore in 2019-20 to an impressive ₹4.7 lakh crore in 2024-25.
This surge in mutual fund investments for new asset creation appears to have impacted traditional currency holdings, as the share of currency in household financial assets decreased from 11.7% to 5.9% between 2019-20 and 2024-25.
Meanwhile, other popular saving and investment avenues, including life insurance funds, provident and pension funds, equities, and small savings schemes, maintained largely stable shares during the 2019-20 to 2024-25 period.