Even after a decade of booming stock markets and record mutual fund inflows, India’s securities market remains a narrow space for households. A recent investor survey by the Securities and Exchange Board of India reveals a stark reality: barely one in ten Indian households participates in market-linked financial products. This gap highlights a deeper challenge for financial inclusion and long-term capital formation in the economy.
The Participation Gap in Numbers
Out of India’s 33.72 crore households, only 3.21 crore — or 9.5 per cent — invest in securities such as equities, mutual funds, or corporate bonds. This leaves over 30 crore households entirely outside the formal securities market.
This low penetration persists despite an extraordinary expansion of financial markets over the last decade. Equity market capitalisation on the Bombay Stock Exchange has risen from about ₹101 lakh crore in FY2015 to nearly ₹4,701 lakh crore by October 2025. Over the same period, mutual fund assets under management surged from roughly ₹12 lakh crore to ₹79 lakh crore.
In other words, markets have grown rapidly — but household participation has not kept pace.
Awareness Concentrated in a Few Products
The survey shows that awareness of securities market products is heavily skewed towards a limited set of instruments. Mutual funds and exchange-traded funds are recognised by about 53 per cent of households, while listed equities are known to 49 per cent.
Actual ownership, however, is far lower. Only around 6.7 per cent of households hold mutual funds or ETFs, and about 5.3 per cent invest directly in equities. Awareness and participation drop sharply for more complex products such as corporate bonds, futures and options, REITs, InvITs, and alternative investment funds. While futures and options are recognised by 13 per cent of households, less than 1 per cent actually participate in them.
Urban–Rural and Regional Divides
Geography plays a decisive role in shaping participation. About 74 per cent of urban households report awareness of at least one securities product, compared to 56 per cent in rural areas. Market participation is highest in large metros, where nearly a quarter of households invest, and steadily declines in smaller towns.
State-level differences are even more striking. Delhi tops the list with around 21 per cent participation, followed by Maharashtra, Goa and Gujarat. At the other end, states such as Nagaland, Uttarakhand and Meghalaya record participation below 5 per cent, pointing to persistent information and access gaps in smaller and less urbanised regions.
The Generational Tilt Towards Markets
Younger Indians display significantly higher awareness of financial products. About two-thirds of Gen Z households and over 60 per cent of millennials report familiarity with securities market instruments, compared to roughly 56 per cent among Gen X and older cohorts.
This generational shift suggests that participation may rise gradually over time, but only if awareness translates into trust and actual investing behaviour.
Why Most Households Still Don’t Invest
For households that remain outside the securities market, three barriers dominate.
The first is complexity and lack of accessible information. Nearly three-fourths of non-investors say they do not understand how financial products work, particularly equities. The second is fear of risk. Volatility and the possibility of losing money are the most cited deterrents, especially for stock market investments. The third barrier is trust. Over half of non-investors express concerns about transparency and confidence in financial institutions and products.
Together, these factors create a perception that market-linked instruments are risky, opaque and unsuitable for household savings.
Why This Matters for the Economy
Low household participation in financial markets has broader macroeconomic implications. It limits the pool of domestic risk capital, increases reliance on foreign flows, and constrains the ability of households to build long-term wealth that can outpace inflation.
The survey’s central message is that the “untapped majority” represents a significant opportunity. Expanding participation would not only deepen financial inclusion but also strengthen India’s growth story by channelling household savings into productive investments.
What to Note for Prelims
- Only 9.5% of Indian households invest in securities markets
- Mutual funds and equities have highest awareness among products
- Urban and metro participation far exceeds rural areas
- Younger cohorts show higher awareness than older generations
What to Note for Mains
- Structural reasons behind low household participation in capital markets
- Role of financial literacy, trust and risk perception
- Link between household savings, capital markets and economic growth
- Policy measures needed to deepen financial inclusion beyond banking
