Uday Kotak combines cheer with caution as ‘Indian saver turns investor’

Veteran banker Uday Kotak has flagged growing investor exuberance as Indian households move from saving to investing. In a recent post on X (formerly Twitter), Kotak observed, “India’s saver turns investor.”

He highlighted that post-COVID, mutual fund AUM share—“mainly equity”—has doubled to “31% of bank deposits.”

Calling it a “structural change in financial intermediation,” Kotak said the shift is expanding “domestic risk capital” and helping to “create an equity culture.”

However, he added a note of caution: “Let’s be alert about excessive exuberance.”

India’s saver turns investor. Post Covid, mutual fund AUM share, mainly equity,has doubled to 31% of bank deposits. Reflects structural change in financial intermediation. It grows domestic risk capital and creates an equity culture. But let’s be alert about excessive exuberance. pic.twitter.com/KajiUX4f5B

— Uday Kotak (@udaykotak) June 20, 2025

In his post, Kotak cited data from a Franklin Templeton report, along with Reserve Bank of India (RBI) and Association of Mutual Funds in India (AMFI), to highlight the trend.

Mutual fund asset under management (AUM) as a proportion of bank deposits stood at 13% in FY15, remained steady through FY16, and rose gradually to 16% in FY17. The pace picked up from FY21, when the share jumped to 21%, followed by 26% in FY24 and 29% in FY25.

As of May 2025, mutual fund assets account for 31% of total bank deposits.

The trend signals a major rebalancing in Indian household portfolios, with more Indians shifting toward market-based financial instruments. Analysts attribute the change to greater awareness, digital access, and relatively higher equity returns.

However, broader data suggests India still has a long way to go. According to the UBS Global Wealth Report 2025, only 20% of gross household wealth in India is held in financial assets, with the bulk concentrated in physical assets like real estate and gold.

In contrast, countries such as Sweden and Israel have over 80% of household wealth in financial assets, and even Brazil and South Africa exceed 60%.

UBS also notes that India ranks among the bottom six countries globally in terms of median income growth over the past five years, and eighth in inequality among 56 nations in 2024. The report stresses that countries with greater financial asset participation witnessed faster wealth creation, particularly during market rallies.