With a growing preference for safer, more liquid assets, Indian households are increasing their holdings in bank deposits and cash, while direct equity flows turn negative, signalling a shift in long-term financial strategies amid geopolitical uncertainty.
Indian households are increasingly choosing safer, more liquid places to keep their money, with bank deposits and cash absorbing a larger share of savings even as direct equity investing has turned negative. A businessline analysis of Reserve Bank of India monthly bulletin data shows bank deposits rose to ₹15.3 lakh crore in FY26, up 22 per cent from a year earlier, while currency holdings nearly doubled to ₹4.15 lakh crore. Over the same period, direct equity flows swung from an inflow of ₹40,353 crore in FY25 to an outflow of ₹79,890 crore in the year to March 2026.
The shift does not necessarily amount to a lasting change in behaviour, according to Vikram Chhabra, senior economist at 360 ONE Asset. He told businessline that deposits and cash may be acting as a temporary parking place for money rather than a permanent break with risk assets. Ramkumar Subramanian, partner at Grant Thornton Bharat, said geopolitical uncertainty, including the conflict in West Asia, has unsettled investors and made returns on equities feel less certain.
Seen over a longer period, however, the composition of household financial savings does appear to be changing. Businessline’s analysis shows the share of bank deposits in household financial asset flows has risen to 36.6 per cent in FY26 from 32.2 per cent four years earlier. By contrast, life insurance has lost ground, with its share falling to 13.4 per cent from 18.8 per cent over the same span, while flows declined 10.9 per cent to ₹5.62 lakh crore in FY26.
Subramanian linked the weaker showing in life insurance to subdued returns and falling interest rates, arguing that such products still need active selling by insurers. In a related view, the Economic Survey for 2025-26 said bank deposits’ share in household financial savings has fallen sharply over the longer term, from 58 per cent in FY12 to 35 per cent in FY25, while mutual funds and equities together have risen from 1.8 per cent to 15.2 per cent. The survey also pointed to the rapid expansion of systematic investment plans, whose average monthly flows have risen sharply since FY17.
Mutual funds have remained resilient even as direct equity flows weakened. Businessline reported that mutual fund inflows rose marginally to ₹5.47 lakh crore in FY26, while their share of household financial asset flows more than doubled to 13.1 per cent over four years. Chhabra said that reflects the steady build-up of SIP investing, with contributions climbing to ₹3.5 lakh crore in FY26 from ₹2.9 lakh crore a year earlier. Provident and pension funds also remained important, accounting for 20.7 per cent of household financial asset flows in FY26, a sign that long-term savings continue to anchor household portfolios even as short-term preferences move around.
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