Despite rising financial literacy and market growth, less than 1 in 10 households in India directly invest in securities like stocks and mutual funds.
Mumbai : October 3, 2025
In a striking revelation, a new SEBI survey has found that only 9.5% of Indian households currently invest in securities markets. Despite increasing awareness of financial products and growing economic opportunities, the vast majority of households remain outside the formal investment ecosystem.
The survey highlights that even though 63% of Indian households know about financial products such as stocks, mutual funds, bonds, and REITs, actual penetration is still alarmingly low. This underscores the gap between financial literacy and financial participation in India’s rapidly expanding economy.
Key Findings of the SEBI Survey
The comprehensive study covered 40,000 households across 400 cities and 1,000 villages, making it one of the most detailed financial behavior surveys in recent times. The findings were revealing:
- 9.5% of households invest in securities markets.
- 63% of households are aware of at least one financial product.
- Mutual funds have the highest penetration at 6.7%, compared to stocks at 5.3%.
- Delhi households showed the highest participation at nearly 21%, followed by Maharashtra at 17%.
- States like Uttarakhand reported the lowest penetration, with just 4.5% of households invested.
- Products like F&O (Futures & Options), REITs, InvITs, and corporate bonds had penetration of less than 1%.
The survey also highlighted behavioral patterns: nearly 80% of households hold their capital in savings accounts or gold, rather than channeling it into securities markets.
Regional Disparities in Investment
The data reflects stark regional disparities in market participation. While metropolitan states such as Delhi and Maharashtra lead in adoption, several states in north and northeast India lag significantly behind.
This uneven penetration highlights the need for financial inclusion strategies tailored to regional realities. Access to investment platforms, digital tools, and awareness campaigns must be expanded beyond metro cities to ensure broader participation.
Why Are Indian Households Not Investing?
Despite India’s robust stock market performance, households remain cautious. Several factors explain the low penetration:
- Risk Aversion: Indian households traditionally prefer safe assets like gold, real estate, and fixed deposits over equities.
- Low Financial Literacy: Although awareness is growing, understanding of how markets function remains limited.
- Trust Deficit: Concerns over scams, volatility, and lack of guidance deter retail investors.
- Liquidity Preferences: Families prefer cash or savings accounts for quick access, avoiding long-term commitments.
- Cultural Preferences: Investment in land, property, and gold is still considered more reliable and prestigious in many communities.
This cautious behavior highlights the challenge regulators face in channeling household savings into productive financial markets.
Mutual Funds Lead Market Penetration
Among all products, mutual funds have shown the strongest growth, with 6.7% penetration nationwide. The success of campaigns like “Mutual Funds Sahi Hai” has played a key role in making systematic investment plans (SIPs) popular, particularly among young professionals.
However, despite their relative success, mutual funds are still adopted by less than one in ten households, showing the untapped potential of the sector.
Stocks, Bonds, and New-Age Products
While stocks remain a cornerstone of securities markets, only 5.3% of households invest directly in equities. In comparison, advanced instruments like derivatives (F&O), corporate bonds, REITs, and InvITs remain niche, with penetration below 1%.
Experts believe that greater adoption of digital investment platforms, robo-advisory services, and fintech innovations could make these products more accessible to middle-class households.
The Role of SEBI and Financial Inclusion
The Securities and Exchange Board of India (SEBI) has been working on expanding retail participation through reforms, awareness drives, and simplification of investment products.
Key initiatives include:
- Introduction of investor education programs across schools and colleges.
- Expansion of digital KYC and e-signature services to make onboarding easier.
- Regulation of investment advisors to build trust in financial planning.
- Focus on regional campaigns to spread awareness in rural and semi-urban areas.
SEBI has emphasized that increasing retail participation is critical for India’s financial stability and long-term economic growth.
Generational Shifts in Investment Behavior
The survey also revealed generational differences:
- Gen-Z and Millennials are more likely to invest in equities, mutual funds, and SIPs.
- Older generations prefer traditional assets like gold, savings accounts, and fixed deposits.
Nearly 79% of Gen-Z households surveyed expressed interest in investing in equities, signaling that the future may see a major shift in household investment behavior if trust and accessibility are strengthened.
Opportunities for Modern Banking and Fintech
The findings also present a clear opportunity for modern banking in India and fintech players. Digital-first platforms, mobile apps, and low-cost trading systems can help bring millions of households into the investment fold.
Startups focusing on fractional investing, SIPs, and automated advisory are well positioned to close the gap between awareness and participation.
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