Indian households are now investing much more in mutual funds than before. According to an RBI report, the share of mutual funds in people’s total financial savings has risen from 0.9% in 2011-12 to 6% in 2022-23.
The money managed by mutual funds, known as Assets Under Management (AUM), has also grown fast—at a rate of 17.1% per year. This growth has made mutual funds an important stabilising force in the stock market, helping to balance out volatility when foreign investors pull money out.
For decades, Indian families preferred safe investments like fixed deposits and gold. But things are changing. Rising incomes, better financial awareness, and easier access through digital technology have made equity mutual funds a popular choice for investors.
The RBI report, Equity Mutual Funds: Transforming India’s Savings Landscape, says that mutual funds are now one of the preferred ways for households to invest in stock markets.
Their role as shareholders has also grown sharply. Mutual funds’ ownership in companies listed on the NSE increased from 3.7% in 2010 to 10.4% by March 2025.
The report highlights three main reasons behind the rise in mutual fund investments:
- More Financial Inclusion – Growth in demat accounts means more people are directly participating in markets.
- Low Fixed Deposit Rates – When banks offer low interest on FDs, savers look for higher returns in mutual funds.
- Business Confidence – If people believe the economy will grow, they are more likely to invest in equity funds.
The RBI also stressed the need for better investor education and protection to ensure new investors remain confident and continue to trust mutual funds.
