The penchant among Indians towards real assets—gold and real estate—is fast losing favour with a significant rise in financial assets held by people, according to the recently released data by the Reserve Bank of India. The data indicates that the percentage of bank deposits in overall savings made by the household sector in financial assets declined from 54 per cent to 41 per cent between financial years 2013-14 and 2015-16. In the 2015-16 period, investments in financial assets—bank deposits, non-banking deposits, life insurance funds, provident and pension funds, currency, shares and debentures—in the economy grew by Rs 14.89 lakh crore.
The shift towards financial assets augurs well for savers and investors as more money into financial instruments only means a higher number of beneficiaries of economic growth. The declining interest rates in savings instruments, reduction in guaranteed returns in small savings instruments, rising inflation, and poor performance of real estate and gold has made scores of people see virtue in putting their money into financial instruments. Take for instance the estimated 75 lakh new investors into mutual funds by way of SIPs, taking the SIP folios to one crore in August this year.