India financialisation 2026: Deposits hit ₹134.8 trillion, MF folios cross 274 mn
Synopsis
Indian households are quietly but decisively moving away from gold and real estate. JM Financial's FY26 data shows deposits at ₹134.8 trillion, MF folios at 274 million, and PMS AUM at ₹35.1 trillion — yet demat penetration at 13.1% of the population remains less than half of China's. The gap is the opportunity.
Key Takeaways
Individual bank deposits grew 9.7% YoY to ₹134.8 trillion in FY26 , per JM Financial Services .
Mutual fund folios rose 16.8% to 274 million ; MF shareholding in Indian equities reached 11.3% , up from 10.2% in FY25.
Demat account penetration stands at 13.1% of India's population, versus 28.3% in China and 30.2% in Japan.
India's MF AUM-to-GDP ratio is 19.6% , compared to 76.8% in the US and 54.3% in the UK.
Discretionary PMS AUM grew to ₹35.1 trillion in FY26, with a 15.2% CAGR over FY19–26.
Women's bank accounts and deposits grew faster than men's, indicating more inclusive financial deepening.
India's structural shift from physical to financial assets deepened further in fiscal year 2026, with individual bank deposits surging 9.7 per cent year-on-year to ₹134.8 trillion and mutual fund folios crossing 274 million, according to a report by JM Financial Services released on Monday, 24 August 2025. The data signals a sustained behavioural change in how Indian households allocate savings — a trend that accelerated sharply after the pandemic.
Bank Deposits and Account Growth
Individual bank deposits grew at nearly five times the pace of account additions: while deposits rose 9.7 per cent YoY, resident individual bank accounts expanded just 1.8 per cent to 2.6 billion. The average deposit per bank account climbed to ₹51,494, up 7.7 per cent YoY.
According to JM Financial, 'The divergence between account and deposit growth indicates that financialisation is increasingly being reflected in larger balances within existing accounts.' Notably, women's accounts and deposits grew faster than men's, suggesting that financial deepening is also becoming more inclusive.
Equity and Mutual Fund Participation
Retail equity participation continued to expand, though growth in resident individual demat accounts moderated to 17.6 per cent YoY in FY26, down from 26.7 per cent YoY in FY25. Mutual fund folios grew 16.8 per cent to reach 274 million.
The route through which households access equities is also evolving. Mutual fund shareholding in the Indian equity market rose to 11.3 per cent in FY26, up from 10.2 per cent in FY25, while public direct shareholding declined to 9.4 per cent from 9.9 per cent — reflecting a broader shift toward intermediated, professionally managed equity exposure.
Where India Stands Globally
Despite the progress, penetration remains comparatively low. Demat accounts cover just 13.1 per cent of India's population, against 28.3 per cent in China and 30.2 per cent in Japan. India's mutual fund AUM-to-GDP ratio stood at 19.6 per cent, well below 28.7 per cent in China, 43 per cent in Japan, 54.3 per cent in the UK, and 76.8 per cent in the US — pointing to significant headroom for further market participation.
PMS Segment Sees Steady Expansion
Discretionary Portfolio Management Services (PMS) AUM rose to ₹35.1 trillion in FY26 from ₹31.8 trillion in FY25, a 10 per cent YoY increase and a 15.2 per cent CAGR over FY19–26. The number of PMS investors grew 8.8 per cent YoY, while the average ticket size climbed to ₹168.8 million.
The Long Arc of the Shift
Indian households have historically favoured physical assets — gold, real estate, and land. The share of savings held in financial assets has risen from 39.5 per cent in FY05 to 44.7 per cent in FY24. The JM Financial report notes that 'the shift has been slow, but we see a larger shift post FY20–21, indicating a behavioural shift in preferences of households during the pandemic.'
With demat penetration, MF folios, and deposit balances all trending upward, the financialisation trajectory appears durable — though the gap with peer economies suggests the transformation is still in its early innings.
Point of View
But the pace is deceptive. A rise from 39.5% to 44.7% financial asset share over nearly two decades is incremental, not transformational — and the pandemic-era acceleration may owe as much to restricted physical-asset access as to genuine preference change. More telling is the deposit-account divergence: balances are fattening in existing accounts rather than new savers entering the system, which raises questions about breadth versus depth. At 13.1% demat penetration against China's 28.3%, India's equity culture remains an urban, upper-income story. Until the next 300 million savers are brought into formal financial markets, the headline numbers will keep flattering a structural shift that is, in reality, still quite shallow.
NationPress
24 Aug 2026
Frequently Asked Questions
What does India's financialisation shift in FY26 mean?
It means Indian households are increasingly holding savings in financial instruments — bank deposits, mutual funds, and equities — rather than physical assets like gold or real estate. According to JM Financial, the share of savings in financial assets rose from 39.5% in FY05 to 44.7% in FY24, with the pace picking up after FY20–21.
How much did individual bank deposits grow in FY26?
Individual bank deposits grew 9.7% year-on-year to ₹134.8 trillion in FY26, according to the JM Financial Services report. The average deposit per bank account rose to ₹51,494, up 7.7% YoY, reflecting larger balances in existing accounts rather than a surge in new account openings.
How does India's mutual fund and demat penetration compare globally?
India's demat account penetration stands at 13.1% of the population, compared to 28.3% in China and 30.2% in Japan. India's MF AUM-to-GDP ratio is 19.6%, well below the US (76.8%), UK (54.3%), Japan (43%), and China (28.7%), indicating significant room for growth.
What happened to retail equity participation in FY26?
Retail equity participation continued to expand, but growth in resident individual demat accounts moderated to 17.6% YoY in FY26, down from 26.7% YoY in FY25. Mutual fund folios grew 16.8% to 274 million, and MF shareholding in Indian equities rose to 11.3% from 10.2% in FY25.
What is the size of India's discretionary PMS market in FY26?
Discretionary PMS AUM reached ₹35.1 trillion in FY26, up from ₹31.8 trillion in FY25 — a 10% YoY increase and a 15.2% CAGR over FY19–26. The number of PMS investors grew 8.8% YoY, with the average ticket size rising to ₹168.8 million.
