Capital markets: SEBI cites FY25 household savings shift

What SEBI said at the investor conference

Capital markets are increasingly becoming a core avenue for household savings and wealth creation in India, SEBI Chairperson Tuhin Kanta Pandey said on Monday while addressing the ICICI Securities India Investor Conference 2026. The remarks add to a growing set of official signals that India’s equity and fund markets are becoming a mainstream household destination, rather than a niche alternative to bank deposits and physical assets.

Pandey said household financial savings as a share of GDP increased to 21.7% in FY25 from around 20% in FY23, supported by broader participation across financial instruments. He also said households are allocating a rising share of savings towards market-linked investment avenues, reflecting deeper financialisation.

A structural shift in how households invest

The SEBI chief framed the change as part of a wider transition in household balance sheets, with more savings moving away from physical assets such as real estate and gold towards financial assets such as equity, debt and other market-linked products, either directly or via mutual funds. In SEBI’s messaging, the capital market is no longer just reflecting India’s growth cycle, but enabling it by connecting household savings with enterprises, attracting global capital and turning economic momentum into investable opportunities.

Separate SEBI-authored research referenced in the shared material quantified the shift through the securities market. It said household savings flowing through the securities market rose to ₹6.91 trillion in FY25, compared with ₹3.58 trillion in FY24 and ₹2.59 trillion in FY23. The same research indicated that mutual funds have become the dominant conduit for these flows.

Mutual funds and SIPs as the main channel

The research cited in the material said that of the ₹6.91 trillion households put into securities markets in FY25, roughly four-fifths flowed through mutual funds. It also stated that primary mutual fund flows tripled from ₹1.66 trillion in FY23 to ₹5.13 trillion in FY25. The discussion positioned systematic investing as a key behavioural change, with SIPs described as a default mechanism for long-term household allocation.

The Economic Survey 2025-26 data included in the material also pointed to rising SIP contributions, with average monthly SIP flows increasing seven times from under ₹0.04 trillion in FY17 to over ₹0.28 trillion in FY26 (April-November). Together, these figures indicate that a larger portion of incremental household savings is being routed through pooled, market-linked products rather than direct stock picking.

Retail participation expands beyond large cities

Participation growth was also described through account and investor counts. As per the material, 235 lakh demat accounts were added till December 2025, taking the total beyond 21.6 crore accounts. The mutual fund industry had 5.9 crore unique investors as of December 2025.

The same set of figures highlighted a widening geographic footprint. Of the 5.9 crore unique mutual fund investors, 3.5 crore investors (as of November 2025) were from non-tier-I and tier-II cities, as per the Economic Survey 2025-26. This suggests market-linked savings are spreading beyond major urban centres, which has implications for disclosure standards, distribution practices, and grievance redress systems.

Market scale: market capitalisation and AUM growth

Pandey also pointed to the scale-up of India’s securities ecosystem over the past decade. India’s market capitalisation increased nearly fivefold from ₹95 trillion in FY16 to about ₹463 trillion by April 2026, according to the details provided. Mutual fund assets under management were also cited as rising from ₹12 trillion in FY16 to nearly ₹81 trillion.

Alongside equities and mutual funds, the SEBI chief highlighted that capital markets complement traditional financing avenues such as banks, government support and internal accruals, and provide a wider set of instruments including equity, debt, REITs, InvITs and municipal bonds.

SEBI’s next phase: review of key market rules

In Mumbai, Pandey said SEBI is moving into the next phase of reforms, signalling a comprehensive review of key market regulations covering stockbrokers, listing norms, portfolio management services (PMS), research analysts and other market intermediaries. He underlined the regulator’s approach of balancing investor protection with ease of doing business and market development.

In another set of remarks included in the material, Pandey said regulation must evolve from supervising institutions to supervising systems and technology. He flagged the need to address concentration and interconnectedness risks, strengthen data governance and consent architecture, and manage the boundary between regulated finance and unregulated digital spaces.

New policy ideas and investor protection measures

The material referenced a SEBI consultation paper published last week that proposes allowing employers to deduct money from salaries every month into mutual fund schemes chosen by employees. Separately, it cited an investor-protection initiative: SEBI has mandated a new UPI address structure for all SEBI-registered intermediaries that collect funds from investors, effective 1 October 2025.

A SEBI working paper also revised upwards the estimate of household contribution towards financial assets to ₹6.91 trillion for FY25, compared with an earlier estimate of ₹5.43 trillion. The same working paper said household wealth in the securities markets stood at ₹141 trillion as of March 2025, with equity holdings close to ₹90 trillion.

REITs and InvITs: linking savings to infrastructure

Pandey also highlighted the role of REITs and InvITs as a bridge between infrastructure and capital markets, positioning them as instruments that can convert household savings into long-term national assets. He said India’s transport, energy, telecom, aviation and urban infrastructure will require over ₹700 trillion over the next two decades.

As per the details provided, India had 5 listed REITs and 24 listed InvITs across roads, renewables, transmission, telecom, warehousing and commercial real estate. As of October 2025, the combined AUM of REITs, InvITs and SM REITs stood at ₹9.25 trillion.

Key numbers at a glance

Analysis: why the shift matters for regulation and market quality

The data points shared across SEBI remarks, research papers and the Economic Survey collectively indicate two linked changes. First, household participation is broadening via mutual funds and SIP-style investing, reducing the dominance of physical assets in incremental savings. Second, the market’s scale and investor mix are changing faster than before, with rising participation beyond large metros and a much larger pool of first-time investors.

That combination raises the stakes for market design, intermediary conduct and technology controls. Pandey’s emphasis on supervising systems and technology, and on managing boundary issues with unregulated digital spaces, aligns with the operational realities of a market where onboarding, transactions and advice increasingly occur digitally.

Market impact: what investors should watch

The immediate market impact in the material is framed less as a short-term price story and more as a flow and resilience story. Rising household allocations through mutual funds, expanding demat account penetration, and a larger securities-market wealth base can support market depth, while also increasing the need for tighter guardrails around disclosures, product suitability and execution.

For investors, the practical developments to track from the disclosures include SEBI’s planned review of broker and listing regulations, the consultation proposal on payroll-based mutual fund contributions, and operational changes such as the UPI address structure for registered intermediaries starting 1 October 2025.

Conclusion

Pandey’s remarks place household financialisation and capital-market growth at the centre of India’s savings narrative, backed by FY25 figures on savings intensity, securities-market flows and mutual fund dominance. SEBI’s next phase of reforms, including reviews spanning intermediaries and market rules, is positioned as the regulatory response to a market that is larger, more digital and more retail-driven. The next set of specifics is expected to emerge through SEBI’s consultation process and follow-up regulatory updates on the areas under review.