Net inflows into life insurance funds and small savings increased by 15 per cent and 7.5 per cent, respectively.
Household investments in mutual funds (MFs) reached a record Rs 1.8 trillion during financial year 2023 (FY23), largely driven by strong inflows through systematic investment plans (SIPs).
However, their share in the total household savings declined slightly to 6.1 per cent from 6.2 per cent in FY22, according to data from the Reserve Bank of India (RBI). In FY21, this figure had been a mere 1.3 per cent.
Despite the growing popularity of MFs, direct equity investments lost traction due to increased market volatility. Net direct purchases in the equity market dropped to Rs 23,000 crore in FY23, down from Rs 48,600 crore in the previous financial year.
Data from the Securities and Exchange Board of India (Sebi) indicates that most household funds were channelled into equity schemes.
MFs invested a net of Rs 1.73 trillion in the equity market in FY23, accounting for 97 per cent of net household flows into MFs.
Aside from direct equity, household investments rose across various instruments. Bank deposits, which suffered in FY22 due to low interest rates, experienced a 32 per cent year-on-year growth in FY23, reaching Rs 10.3 trillion.
Net inflows into life insurance funds and small savings increased by 15 per cent and 7.5 per cent, respectively.