New Delhi: Reserve Bank of India (RBI) data show Indian households have been accumulating financial liabilities far faster than financial assets since 2019-20. Between 2019 and 2025, fresh financial assets added annually rose by 48%, while new household liabilities surged by 102% a divergence that carries implications for savings behaviour, financial stability and household resilience.
Assets vs Liabilities The Numbers
Households added ₹24.1 lakh crore to financial assets in 2019–20. By 2024–25, that figure rose to ₹35.6 lakh crore — an increase of 48% in absolute terms. During the same period, financial liabilities added by households increased from ₹7.5 lakh crore to ₹15.7 lakh crore, marking a 102% jump.
Measured as a share of GDP, annual fresh asset creation fell slightly from 12% in 2019–20 to 10.8% in 2024–25. Meanwhile, household liabilities rose from 3.9% of GDP in 2019 to 4.7% in 2024–25, after peaking at 6.2% in 2023–24.
What Is Driving the Liability Surge?
Several factors underlie the rise in household liabilities. Higher consumer credit, easier access to personal loans and buy-now-pay-later products, and an uptick in housing and vehicle loans have all contributed. Rising incomes and increased formal credit penetration have enabled more families to borrow but that also raises questions about debt servicing capacity if macro conditions turn.
Shift in Savings: Mutual Funds on the Rise
The composition of newly created household financial assets has shifted noticeably. Bank deposits remain the largest destination, but mutual funds have shown explosive growth. Deposits accounted for 32% of fresh assets in 2019–20 and edged up to 33.3% by 2024–25; deposit flows rose from ₹7.7 lakh crore to ₹11.8 lakh crore (a 54% increase).
Mutual funds jumped from 2.6% of new assets in 2019–20 to 13.1% in 2024–25. Net new investments into mutual funds leapt by 655% to roughly ₹4.7 lakh crore in 2024–25 from ₹61,686 crore in 2019–20. This reflects growing investor comfort with market-linked instruments and the success of SIPs and retail distribution.
Where Savings Shrunk
Currency holdings and cash-based instruments lost share. The share of currency in fresh assets fell from 11.7% to 5.9% between 2019–20 and 2024–25, indicating a continued move away from cash and toward formal financial channels.
Other instruments life insurance funds, provident and pension funds, small savings and direct equity largely held steady in share, even as absolute flows changed with macro conditions.
Policy and Practical Implications
A faster rise in liabilities than assets can amplify vulnerability for households if interest rates climb or incomes falter. Policymakers and regulators may need to monitor consumer credit growth, encourage financial literacy, and promote prudent borrowing. At the same time, rising mutual fund flows point to deeper capital markets and better retail access to investment products.
For readers wanting to consult primary sources, the RBI publishes household sector statistics and flow tables on its website and periodic reports that contextualise these trends. See RBI publications for data details and methodology.
What savers should consider
Households should balance saving and borrowing: maintain emergency funds, prioritise high-interest liabilities, and diversify assets across deposits, market instruments and retirement products. Financial advisers stress building a buffer to weather rate hikes or income shocks while using market investments for long-term wealth creation.
