RBI’s statistical data on Indian Households Savings & Investments (2017-18) | How & Where do we save & invest?

RBI Statistical Data Analysis

The Reserve Bank of India (RBI) has released the latest volume of its annual statistical publication, ‘Handbook of Statistics on the Indian Economy – 2018 on 15th Sep, 2018.  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 Savings 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 etc.,

Before discussing the facts & figures, let us understand – what are households 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 Households Savings, Investments & Liabilities Pattern 2018

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 Gross Financial Savings during 2014-15, 2015-16 &  2016-17  were Rs 12,572 billion, Rs 15,207 billion and Rs 14,048 billion. As per the data for 2017-18, around Rs 18,800 billion were invested in Financial assets.
  • The savings in Physical Assets were around Rs 14,164 billion, Rs 15,000 & 12,700 billion during 2013-14, 2014-15 and 2015-16 respectively. The data for 2016-17 was around Rs 13,900 billion were invested in physical assets.
  • The above recent years data clearly indicates that there has been a slight uptick of savings in Physical Assets and steep increase of savings in Financial Assets (2017 Vs 2018).

Financial Assets (Savings) of the Households (2012-2018)

latest Savings and investment patters in India 2018 indian households savings in financial assets Bank deposits Life insurance Shares Stocks Mutual Funds Liabilities pic

Based on the above data, we can observe that there has been a steep decrease of savings in Bank deposits and a steep increase of investments in Shares during 2017-18.

We can also infer that Pension and Provident Funds have been receiving steady in-flows.

Financial Liabilities of Indian Households (2018) :

  • Around Rs 6,739 billion were taken as Loans and advances from the Banks & Financial institutions during 2017-18. This figure was around Rs 3,700 for the FY 2016-17. So, the financial liabilities of Indian households have almost doubled.
  • Loans taken from Banks during 2015-16, 2016-17  & 2017-18 were Rs 2,747 billion, Rs 2,509 and Rs 4,300 billion respectively.

Bank Fixed Deposits Data : The below table gives you an idea about the total outstanding amount (as on Mar 2018) saved in Bank Term Deposits based and the tenure of the deposits. Term deposits with 1 to 2 year duration were the most preferred ones, followed by the Five year term deposits (these can be tax saving FDs). (Read : ‘Avoid making long-term investments in FDs / RDs / Traditional life insurance plans.)

Bank Fixed deposits term deposits total outstanding amounts savings 2017-2018

NRI deposits :

  • 2015-16 Data : The total outstanding NRI deposits were Rs 8,419 billion, out of which NRE deposits, FCNR and NRO deposits were around Rs 4,740 billion, Rs 3,005 billion & Rs 672 billion respectively. (NRE – Non-resident (external) Rupee accounts, FCNR – Foreign currency non-resident & NRO – Non-Resident Ordinary Rupee Accounts)
  • 2016-17 Figures : The total outstanding NRI deposits were Rs 7,577 billion, out of which NRE deposits, FCNR and NRO deposits were around Rs 5,395 billion, Rs 1,361 billion & Rs 820 billion respectively.
  • 2017-18 Figures :  The total outstanding NRI deposits were Rs 8,207 billion, out of which NRE deposits, FCNR and NRO deposits were around Rs 5,856 billion, Rs 1,432 billion & Rs 918 billion respectively.

Interest Rates pattern of Bank Deposits (2012 to 2018)

Bank Interest rates trend chart list scenario in India 2012 to 2018-19 Prime lendig rates Latest MCLR rates 2018-19

You can notice that deposit rates and lending rates have been in downward trend since 2014-15 till 2017-18. In the current FY 2018-19, we are witnessing an uptick in deposit and MCLR (lending) rates. (Related Article : ‘What is MLCR?‘)

Deposits in Post office Small Savings Schemes (SSS)

Investments in Post office small saving schemes during 2011 till 2017 latest interest rates NSC KVP Sukanya Samriddhi MIS SrCSS PPF

  • Indian households’ savings in Post office time deposits and recurring deposits have increased slightly in 2017 as well.
  • Since 2011-15 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 2015-17. (Read: ‘Latest Interest rates on Post office Small Savings Schemes 2017-2018‘)
  • There has been a steady increase in long-term savings in Public Provident Fund scheme (PPF). 

Imports of Gold & Silver

  • Gold & silver to the tune of Rs 2,106 billion and Rs 276 billion were imported during FY 2014-15, Rs 2,074 billion and Rs 244 billion were imported during FY 2015-16, around Rs 1,843 billion & Rs 123 billion were imported during FY 2016-17.
  • The figures for 2017-18 were, Rs 2,170 billion worth of Gold and Rs Rs 207 billion of Silver had been imported. Thus, we can see a trend reversal of imports of Gold & Silver in India during the last fiscal year.
  • The average annual price of Gold (10 gms) in 2016-17 was Rs 29,655 and silver (1 kg) was Rs 42,748.
  • The average annual price of Gold (10 gms) in 2017-8 was Rs 29,300 and silver (1 kg) was Rs 39,072.

Mutual Fund Schemes : Assets Under Management till 2018

Growth of Assets Under Management of Mutual Funds in India 2009 to 2018

There has been around 22% increase in AUM of Mutual Funds in India during 2017-18. (Read : ‘How to select right & best Mutual Fund Schemes?‘)

Other important observations

  • Share Market Indices: The annual average of share price index of BSE Sensex was 27,338 and Nifty was 8,638 for FY 2016-17. The annual average of share price index of BSE Sensex was 32,396 and Nifty was 10,424 for FY 2017-18.
  • Inflation : The CPI (consumer Price Index), which is popularly known as INFLATION has gradually decreased from 10 in 2012-13 to 3.6 in 2017-18.
  • CRR & Repo Rates : In the last few quarters of 2018, the RBI has increased key policy rates like Repo Rate & Reverse Repo rate. It has kept the Cash Reserve Ratio unchanged. The latest rates as of 1st August, 2018 are – CRR @ 4%, SLR @ 19.50%, Repo rate @ 6.50% and Reverse-repo rate @ 6.25%. (Read : ‘What is CRR/SLR/Repo rate?‘)
  • Investments by LIC : LIC has invested around Rs 21,525 billion in Stock-exchange securities during 2016-17 (an increase of around 14%). During 2017-18, LIC had invested around Rs 24,154 billion.
  • Home loans : HDFC has disbursed home loans to the tune of Rs 1,712 billion in FY 2016-17. The total home loans outstanding amount with HDFC is around Rs 3,594 billion.
  • Electronic Payment System : The FY 2016-17 saw an uptick in the amount of money cleared through ‘Pre-paid instruments & retail electronic clearing systems’.Popular payment modes in India valuewise 2017 2018 UPI mwallet IMPS NEFT RTGS Cards ATMs
  • NBFC Deposits : The total outstanding public deposits with NBFCs are around Rs 306 billion and Rs 319 billion for 2016-17 and 2017-18 respectively. (Related article : ‘How to check if a Company can collect Deposits from the Public? – Company FD Schemes‘)
  • Taxes : The central govt has collected direct taxes of around Rs 6,245 billion during 2017-18. Out of which, the personal income tax amount was Rs 2,670 billion and corporate tax amount was Rs 3,574 billion. Indirect taxes to the tune of Rs 6,448 billion has been collected.

My Opinion

We (Indians) maintain a reasonably very high net savings rate (the national saving rate is about 20 per cent of GDP).  However, the net savings rate as a % of GDP has been steadily declining since 2011-12.

Also, a major portion of these savings gets invested in unproductive assets like Gold or low-yielding bank fixed deposits or traditional life insurance policies.

More households have to be brought into the  Financial system. We should aim for a healthy mix of financial assets and physical assets. Channeling households savings into the financial markets is imperative.

I hope you find this post informative. Kindly share your views and comments. Cheers!

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(Reference : RBI’s Handbook of Statistics on the Indian Economy. 2017-18 data is based on preliminary estimates) (Post first published on : 19-Sep-2018)

About The Author

  • thomas says:

    hi srikanth

    whats your opinion on index funds where there is passive monitoring only by fund managers ..can the rate of managing the fund can help investor in long term compared to active managed mfs ? what are the pros and cons ?

    thanks
    thomas

  • akkiaasaan says:

    Indeed! One of the best way to save money. Nice article!

  • HS says:

    Hi,
    Maybe its just me, But it seems the cycle is repeating itself.
    Investments in financial products was highest in 2007 which exploded in 2008.
    The same seems to be happening in 2018. Are we heading for another collapse.
    Regards,
    H

  • B VENUGOPAL says:

    Informative. Investors should keep asset allocation in mind and know when and where to invest. Good collection and analysis of data.

  • Amit says:

    Sir
    Nice to see you again after a long diration
    Sir my question is which are the best funds for investment in 2018

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