RBI’s data on Financial Savings of the Households

Recently the RBI (Reserve Bank of India)released ‘Handbook of Statistics on the Indian Economy-2014.’ This handbook is available to the public and is updated every year.

Based on this handbook, I have tried to collate some important / interesting points related to Personal Finances. Like – Financial Savings of Households, total investments in bank deposits, investments in shares & mutual funds, information on total bank loans etc.,

Financial Savings of Households

 Financial Savings Vs Physical Savings

• Savings and investments in banks, stock markets, Post office schemes, company deposits etc., are considered as financial savings. Investments in properties, gold, silver etc., are physical savings.
• From 1990 to 2000, Indian households preferred to invest in Financial assets when compared 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 are at peak. The markets eventually crashed in 2008.
• From 2008 to till date, we prefer physical savings to financial savings.
• The total domestic financial savings as on March 2013 are at Rs 7,171 billion. The total Physical savings are at Rs 14,953 billion.

 Financial Assets of the households ( As on March 2014)

• The total currency (in cash) held by the households was at Rs 1,018 billion
• The total investments made in bank deposits were Rs 6,722 billion. Previous year (2012/13) it was around Rs 5,749 billion. That is almost 17% increase.
• The total non-banking deposits made in 2013-14 were Rs 185 billion
• The investments in Life insurance funds were Rs 1,996 billion. Previous year is was around Rs 1,803 billion
• The investments in Provident and Pension funds were around Rs 1,020 billion
• Investments in Shares and Debentures were around Rs 274 billion
• The total Financial assets in 2013-14 were Rs 11,740 billion. This is an increase of around 12.5% when compared to previous years’ data.As per the above data, it is very clear that many household savings are routed to bank deposits. Investments in shares,mutual funds and debentures were abysmally low.

Average Interest rates on Bank deposits

Total Assets Under Management of Mutual Funds

• The total AUM of MFs in 2012-13 were Rs 7,014 Billion
• The total AUM of MFs in 2013-14 were Rs 8,252 Billion

Small Savings Schemes 

 NRI Deposits

• The total outstanding NRI Deposits in 2012-13 were Rs 3,852 billion (under various accounts like NRO, NRE, FCNR etec.,)
• The total outstanding NRI Deposits in 2013-14 were Rs 6,241 billion

Financial Liabilities of the households ( As on March 2014)

• The total Loans and Advances taken from the banks were Rs 3,425 billion. Almost 11% increase from previous year.
• The total Loans and Advances taken from the non-banking institutions were Rs 125 billion
• The total Financial liabilities held by the household sector was Rs 3,555 Billion. This is an increase of around 10.6% when compared to previous years’ data.

Cheque Clearances

• The total no of cheques cleared in 2013-14 are 1,257 Million.
• The total amount cleared through cheques was Rs 93,438 Billion

The Financial Savings rate as a percentage of GDP (Gross Domestic Product) was 7.2%. A marginal increase from 7.1% of 2013. These figures released by the RBI indicates that the prospects of a pickup in financial savings of household to the double digit levels attained in the 2002-03 to 2010-11 period are still a far way away. In fact at its peak level the financial savings of household had gone up to 12.14% of the GDP in 2009-10.

More households have to be brought into the  Financial system. We should have a healthy mix of financial savings and physical savings. More investments have to be made in mutual funds/shares. Let us hope the financial inclusion programmes planned by the current central government lead to these changes.

Continue reading :

• RBI’s latest data on Savings & Liabilities of Indian Households (2016-17) | How & Where do we save & invest?
• List of Best Investment Options in India