Click to play videoMumbai: Indian investors who are known to prefer safe and secure investments are developing risk appetite.
Indian households are fast changing the way they invest. While rising interest rates have meant a higher inflow into bank deposits last year, mutual funds are fast scoring over traditional government sponsored investment schemes.
According to the latest reserve bank of India’s annual report, the share of mutual funds in household savings has shot up to close to 4 per cent from less than 0.5 per cent a year ago.
Bank deposits also continue to rise on the back of rising interest rates to now command a share of 46 per cent as against 36 per cent the previous year.
Share of insurance too has come down from over 15 per cent to a little over 13 per cent now.
In sharp contrast, the share of small saving schemes of the government has fallen to 12 per cent as against 20 per cent the previous year.
Contribution to pension and provident funds too is going down, from 13 to 10 per cent.
"Even in real terms there is an increase in market shares. And lots of these are acquired last year mainly due to equity market boom," says Certified Financial Planner Gaurav Mashruwala.
According to the RBI Annual Report, net household savings in Mutual Funds have jumped by 1263.8 per cent, from Rs 1,550 crore in 2004-05 to Rs 21,139 crore in 2005-06.
Bank deposits meanwhile increased to Rs 2,74,704 crore, up 72 per cent from the previous year’s figure of Rs 1,58,393 crore.
But investments in small saving instruments have decreased to Rs 72,364 crore, down 14.97 per cent from the previous year’s figure of Rs 85,106 crore.
Last year has seen huge inflows into mutual funds and expert says Indians are fast realising a bit of risk may not be such a bad idea after all.
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