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Financialization of Indian Households: Trends in Savings and Borrowing

Author

Listed:
  • Vidhya Soundararajan

    (Centre for Advanced Financial Research and Learning (CAFRAL))

  • Aishwarya Bhamidipati

    (Centre for Advanced Financial Research and Learning (CAFRAL))

  • Twincle Halder

    (Centre for Advanced Financial Research and Learning (CAFRAL))

  • Vijayshree Jayaraman

    (Centre for Advanced Financial Research and Learning (CAFRAL))

Abstract

This article examines how Indian household balance sheets have changed over the past three decades. Near-universal bank account ownership, digital payments, and wider credit access have deepened household participation in the financial system. This financialization has coincided with important shifts in both savings and borrowing. On the asset side, deposits have declined as a share of household financial savings, while market-linked instruments such as mutual funds, shares, insurance, and pension products have gained prominence. On the liability side, household borrowing has expanded rapidly, with private banks, NBFCs, and FinTech lenders playing a growing role. Although credit growth has supported consumption, housing, and entrepreneurship, it has also increased exposure to unsecured lending and repayment stress among riskier borrowers. The article concludes by highlighting the macroeconomic risks associated with rising household debt and discussing their policy implications.

Suggested Citation

  • Vidhya Soundararajan & Aishwarya Bhamidipati & Twincle Halder & Vijayshree Jayaraman, 2026. "Financialization of Indian Households: Trends in Savings and Borrowing," Working Papers 023049, Centre for Advanced Financial Research and Learning (CAFRAL).
    • Handle: RePEc:ris:cafral:023049
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    File URL: https://www.cafral.org.in/sfControl/content/Speech/528202653449PMHouseholdFinance.pdf
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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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