Indians may have saved more in FY24. Is the rise sustainable?

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₹15.57 trillion. The chart below shows retail credit growth (in year-on-year terms, for banks only) growing at over 30% as of December last year. Throughout most of the last decade, corporate borrowing was sluggish at best, with banks souring on lending to the sector in the aftermath of the 2008 financial crisis.

Loans to households began to take the place of corporate lending as a major growth area for banks. The introduction of credit bureaus made it easier for banks to assess the creditworthiness of borrowers. As Crisil points out, even as home loans still account for the bulk of retail lending, their share in overall retail loans has declined by about 6 percentage points since 2017.

At the same time, the share of credit cards, vehicle loans and other personal loans has increased. In other words, households are increasingly taking on debt not to buy houses, but for more short-term needs and for assets that depreciate over time. The second big shift was towards holding financial savings in different types of assets.

Ten years ago, close to 70% of household financial savings were held as cash or invested in deposits with banks or finance companies. That share has now fallen to well below half. Investments in provident and pension funds and ‘small savings’ account for a bulk of the shift.

Investment in shares or mutual funds as a proportion of financial savings, too, has grown, though it remains within single digits as a share of the total household savings pie. The third big shift has been an increase in so-called ‘physical’ savings, such as investments in real estate. While this has always been an important component of household saving, it declined from a high of 67% of total household savings (in net terms) at the