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The SBI report underscored the evolution of savings with over 80% of adults now using formal financial accounts, compared to just 50% in 2011.
80% of adults use formal financial accounts.
India has long maintained a culture of savings, a tradition that continues to thrive even in the face of modern financial shifts. According to a recent report by the State Bank of India (SBI), the country’s savings rate stands at 30.2%, surpassing the global average of 28.2%. This positions India as the fourth-largest saver globally, trailing only China (46.6%), Indonesia (38.1%), and Russia (31.7%).
The SBI report, which is part of its Ecowrap series, underscored the evolution of saving habits in the country which witnessed a remarkable shift towards financial inclusion, with over 80% of adults now using formal financial accounts, compared to just 50% in 2011. This trend highlights the growing accessibility of financial services and the increased participation of the population in the formal economy.
While traditional savings methods, such as bank deposits and cash holdings, still play a role in the financial landscape, newer investment vehicles have gained significant traction. The preference for instruments like mutual funds and equities is on the rise, with Systematic Investment Plan (SIP) registrations seeing a fourfold increase since FY 2018, reaching a total of 4.8 crore SIP accounts.
Moreover, investments in stocks and debentures have also surged, reflecting a broader shift in saving strategies. Ten years ago, the contribution of shares and debentures to the GDP was a mere 0.2%, but by FY 2024, this figure rose to 1%.
Additionally, the report revealed that net financial savings – representing the portion of domestic savings invested in financial assets – has seen a steady increase. From 36% of total savings in FY 2014, this share grew to 52% by FY 2021, though it experienced a slight dip in FY 2022 and FY 2023.
SBI’s analysis also highlighted a potential correlation between market capitalisation and economic growth. The report suggested that a 1% rise in market cap could contribute to a 0.6% increase in GDP growth. Over the past decade, the amount raised by companies through the capital markets has surged dramatically. In FY 2014, firms raised Rs 12,068 crore, a figure that ballooned to Rs 1.21 lakh crore by October 2024.
