According to a survey released by the Securities and Exchange Board of India (SEBI) on Tuesday, only 9.5 percent of Indian households are invested in securities market products, despite 63 percent indicating awareness of at least one such product. The study highlights a significant disparity between awareness and actual participation in the market, attributing the gap to complexities, informational deficiencies, trust issues, and concerns over risk and returns.
The survey, conducted nationwide after a decade and involving over 91,000 households across urban and rural India, revealed that although approximately 213 million households are familiar with products like mutual funds, exchange-traded funds (ETFs), and stocks, only about 32 million households actively invest in them. Participation rates are heavily concentrated in urban areas, where 15 percent of households are engaged in investments, compared to just 6 percent in rural regions. In metropolitan areas, nearly one in four households reported investment, whereas states like Bihar and Nagaland saw penetration below 8 percent.
Risk aversion emerged as a principal barrier to engagement, with four out of five households prioritizing capital preservation over potential returns. Key reasons for avoidance included fear of losses, uncertainty regarding performance, and a lack of trust in financial institutions. Among younger generations, specifically Gen-Z, a staggering 79 percent exhibited risk-averse behaviors.
Mutual funds and ETFs recorded the highest household penetration at 6.7 percent, followed by stocks at 5.3 percent. However, more advanced products such as derivatives, real estate investment trusts (REITs), corporate bonds, and alternative investment funds (AIFs) had penetration levels below 1 percent. Even for existing investors, overall knowledge of securities markets remains limited, with only 36 percent demonstrating a moderate to high level of understanding.
The survey conducted by research firm Kantar also identified a considerable number of potential investors. Approximately 22 percent of non-investors who were aware of securities products expressed interest in investing within the next year, indicating significant potential for growth in the investor base should existing barriers be addressed.
Despite a high demand for accessible education, fewer than 1 percent of households have participated in investor awareness programs. Preferred methods of learning included social media, mobile applications, and digital advertisements, with a particular interest in topics such as fraud prevention, risk management, and investor rights.
Additionally, awareness of SEBI’s grievance redressal system is notably low, with only 6 percent of respondents knowing about its helplines and the SCORES platform. Nonetheless, satisfaction levels among users of these services approached 90 percent.
The findings from this survey are expected to inform policies aimed at enhancing retail participation, especially in smaller towns and rural areas, while also reinforcing investor protection and educational initiatives.
