Financialisation of savings is on the rise in India, and the assets under management (AUM) will increase to about three-fourths of GDP in the next five years, reported PTI, citing a Crisil report.
According to the report, the AUM of the managed funds will rise to ₹315 lakh crore in FY27 from ₹135 lakh crore in FY22.
The report added that policymakers for long have been wanting a growth in the financialisation of savings — diverting savings away from physical assets like gold and real estate to mutual funds, equities, exchange-traded funds, etc.
As per the report, financialisation of savings over the last few years can be attributed to buoyant debt and equity markets on the back of excessive liquidity. It warned that a prolonged disruption in the financial markets or liquidity conditions can have an impact on investor experience.
"Much has happened in the investment landscape over the past five fiscals, yet the industry has barely scratched the surface given the potential in different categories and compared with how such assets have grown in the developed countries," Ashish Vora, the head of Crisil market intelligence and analytics, was quoted as saying.
Meanwhile, the domestic mutual fund industry's assets under management (AUM) surpassed ₹40 lakh crore for the first time in November.
In November, the net inflow of funds into equity mutual funds fell by 75 percent month-over-month (MoM), to ₹2,258 crore, compared to an inflow of ₹9,390 crore in October.
While the inflows via systematic investment plans (SIPs) were at an all-time high of ₹13,307 crore in November.