RBI’s statistical data on Indian Household Savings & Investments (2019-20) | How & Where do we invest?

The Reserve Bank of India (RBI) has released the latest volume of its annual statistical publication, ‘Handbook of Statistics on the Indian Economy – 2019-20′ on 18th Sep, 2020.  Through this publication, the Reserve Bank has been providing time series data on various Economic and Financial indicators for the Indian economy.

You can find lot of useful data related to;

• Macro Economic indicators
• Money & Banking
• Financial Markets
• Public Finances
• Trade & Balance of payments
• Socio & Economic indicators and so on..

Based on this statistical data, I have been collating and publishing (since 2014) some important / interesting points and trends related to Personal Finances like – Financial Saving habits of Households, total investments in bank deposits, investments in shares & mutual funds, information on total bank loans, performance of Share markets, Inflation data, NRI deposits, Deposit & Lending interest rates pattern etc.,

Before discussing the facts & figures, let us understand – what are household savings, Financial Assets and Physical Assets?

Households’ Savings correspond to the total income saved by households during a certain period of time. Savings and investments in banks, stock markets, Post office schemes, company deposits etc., are considered as Financial Assets / Financial Savings. Investments in properties (real estate), gold, silver etc., are Physical Savings / Physical Assets.

Indian Household Savings, Investments & Liabilities Pattern 2020

Financial Assets Vs Physical Assets : Which are our preferred Assets?

• From 1990 to 2000, Indian households preferred to invest in Financial assets to Physical assets.
• From 2000 to 2007, more savings were routed to Physical assets.
• Interestingly in 2007/08, more investments were made in Financial assets. This shows that retails/small investors participated in stock markets when their valuations were at peak. The markets eventually crashed in 2008.
• From 2008 to till 2015, we preferred physical savings to financial savings.
• The Domestic Savings of household sector have seen a considerable increase from Rs 2474913 crore in 2015-16 to Rs 3446760 crore in 2018-19.
• The Gross Financial Savings during 2015-16, 2016-17, 2017-18 & 2018-19 were Rs 1496232 crore, Rs 1614677 crore, Rs 2061033 crore & Rs 1995706 crore.
  • We can notice that the gross financial savings decreased slightly when we compare the data of 2018-19 Vs 2017-18.
• The savings in Physical Assets were around Rs 1317599 crore, Rs 1594573 crore, Rs 1912803 crore & Rs 2180798 crore during 2015-16, 2016-17, 2017-18 & 2018-19 respectively.
  • The savings in Physical assets have seen a steep increase in 2017-18.
  • We can notice that the savings in physical assets steadily increasing from 2015 to 2019.
• The above recent years data indicates that there has been an uptick of savings in Physical Assets and Financial Assets in 2017-18 when compared to the figures of 2016-17. However, physical assets outscored savings in Financial securities in 2018-19.
• Saving in the form of gold and silver ornaments decreased from Rs 41489 crore (2017-18) to Rs 35778 crore (2018-19).

Financial Assets (Savings) of the Households (2012-2019)

• The Savings in non-banking deposits (like company fixed deposits) have more than doubled in 2018-19. The low interest rate scenario is making the retail investors to look for non-banking deposits which generally offer slightly higher rates.
• The investments in Shares and Debentures have decreased drastically in 2018-19.

Financial Liabilities of Indian Households (2019)

• The total Financial liabilities (loans & advances) of the Indian household sector were around Rs 765522 crore in 2018-1.9
• This figure was around Rs 738067 crore for the FY 2017-18. So, the financial liabilities of Indian households have increased by almost 37%.
• Loans taken from Banks during 2015-16, 2016-17, 2017-18 & 2018-19 were Rs 269417 cr, Rs 345811 cr, Rs 486666 and Rs 587606 respectively.
• The loans taken from other financial institutions (non-banking) have decreased considerably from Rs 251182 cr in 2017-18 to Rs 177949 cr in 2018-19.
• The total Home loans outstanding with HDFC are around Rs 444938 cr till 2019-20.

Savings in Bank Fixed Deposits

The below table gives you an idea about the total outstanding amount saved in Bank Term Deposits based and the tenure of the deposits. Term deposits with up to 90 days duration and 1 to 3 year tenure have seen an increase when compared to 2018-19 data.

Deposits by NRIs

Below are the outstanding NRI Bank Deposits from 2015 to 2020

There has been a steady increase of outstanding deposits by NRIs in NRE & NRO accounts since 2015 to 2020.

Interest Rates pattern of Bank Deposits (2012 to 2020)

Below table gives us an idea about the deposit rates and lending rates pattern in India over the last 9 years.

You can notice that deposit rates and lending rates have been decreasing in current FY 2020-21 as well.

Deposits in Post office Small Savings Schemes (SSS)

• Indian households’ savings in Post office time deposits and PPF have been increasing steadily since 2011.
• During 2012-16 there has been a decline in investments in NSCs, KVP certificates and other popular schemes like Senior Citizen Savings Schemes or Monthly Income Scheme (MIS), however this trend has been reversed during 2016-18. 

Mutual Fund Schemes : Assets Under Management till 2020

There has been around 7% decline in AUM of Mutual Funds in India during 2019-20.

Other important observations

• Inflation : The CPI (consumer Price Index), which is popularly known as INFLATION has gradually decreased from 10% in 2012-13 to 4.8 in 2019-20.
• Below Poverty Line : Around 22% of the population in India still lives below poverty line. This figure was around 30% as per last year’s Statistical data by RBI.
• Investments by LIC : LIC has invested around Rs 2936030 cr in Stock-exchange securities during 2019-2020 (an increase of around 11%). During 2018-19, LIC had invested around Rs 2661564 cr.
• NBFC Deposits : The total outstanding public deposits with NBFCs were around Rs 40058 cr and Rs 49697 cr for 2018-19 and 2019-20 respectively. (Related article : ‘How to check if a Company can collect Deposits from the Public? – Company FD Schemes‘)
  • An interesting observation is – the number of reporting NBFCs have further declined from 81 to 69 during 2019-20.
• Income Tax Revenue Collection : The Central Govt had collected Personal income tax to the tune of Rs 413716 cr during 2020, up from Rs 358048 cr in 2019.
• Share Market Indices: The annual average of share price index of BSE Sensex was 36242 and Nifty was 10923 for FY 2018-19. The annual average of share price index of BSE Sensex was 38757 and Nifty was 11487 for FY 2019-20.
• CRR & Repo Rates : The RBI has been cutting the key policy rates. The latest rates as of 22-may-2020 are – CRR @ 3%, SLR @ 18%, Repo rate @ 4% and Reverse-repo rate @ 3.35%. (Read : ‘What is CRR/SLR/Repo rate?‘)
• Insured Bank Deposits : The total amount of Insured Deposits under DICGC are around Rs 3696100 cr. (Read : What happens to your FDs, deposits if bank fails?)
• Electronic Payment System : The FY 2019-20 saw a decline in total digital payments (value) from Rs 163852286 cr (2018-19) to Rs 162305934 cr (2019-20)

My Opinion:

We (Indians) maintain a reasonably very high net savings rate (the national saving rate is about 19.68 per cent of GDP). However, the gross savings rate and net savings rate in 2019 declined by around 7% and 12%.

Also, the net savings rate growth as a % of GDP has been steadily declining since 2011-12. Moreover, a considerable percentage of income is still in the form of cash/currency, invested in low-yielding bank deposits and/or unproductive assets like Gold. This has to change.

The Physical assets outscored the savings in Financial securities in 2019. There is a huge scope for channeling households savings into the financial markets, which is imperative. But, with real-estate construction activity at a standstill, there’s a possibility of a shift by households from physical to financial assets in this Financial Year.

Let’s see next year how the on-going Covid-19 pandemic impacts the household savings, investments & liabilities pattern in India.

I hope you find this post informative and useful. Where do you save and invest? Which are your preferred investment avenues? Kindly share your views and comments!

Continue reading:

1. Indian Household Savings Pattern 2022-23 | RBI’s latest Statistical data
2. List of all Popular Investment Options in India – Features & Snapshot
3. Lump sum Investment options for Retirees/Senior Citizens | Where to invest your Retiral benefits to get Regular Income?
4. What is an Uncorrelated Investment Portfolio? | Importance of Non-correlated Assets in Portfolio Diversification
5. Top 15 Best Mutual Funds 2021 & beyond | Top Performing Equity Funds

(Reference : RBI’s Handbook of Statistics on the Indian Economy 2019-20. Some data is based on the preliminary estimates) (Post first published on : 25-Sep-2020)