India's investing awakening: SIPs, Gen Z and the ₹300-lakh-crore MF dream

From FDs to funds: India's investing culture hits a generational turning point

India’s retail investing landscape is heading into a decade of unprecedented expansion, with mutual fund assets projected to cross ₹300 lakh crore and direct equity holdings expected to touch ₹250 lakh crore by 2035, according to the How India Invests 2025 report released by Bain & Company in partnership with Groww.

 

 According to the report, mutual fund penetration across Indian households is expected to double from 10% to 20% over the next decade. The next phase of industry growth will come primarily from mass and mass-affluent households beyond the top 30 cities. 

 

Increased adoption among affluent investors across the next 70 cities will further accelerate this expansion, added the report.

 

 The share of long-term holdings is also rising; over-five-year holdings in industry AUM have doubled from 7% to 16%, and over-five-year SIP holdings have increased from 12% to 21%, reflecting growing investor trust and confidence.

 

  “Indian households are steadily shifting from a traditional savings mindset to a more investment-oriented approach, with mutual funds and direct equities emerging as the fastest-growing asset classes in recent years. As more households, especially young and first-time investors and those beyond the top 30 cities embrace market-linked products and longer holding periods, we’re seeing the emergence of a deeper and more resilient domestic investor base. With SIP inflows and long-term holdings rising sharply, this evolution will be central to how India finances its growth in the years ahead," said Saurabh Trehan, Partner & Head of Bain & Company’s Financial Services practice in India.

 

The expected growth in equity participation, on the other hand, can be attributed to the shift from speculative trading to long-term investing, in addition to continued digitally driven penetration and strong market performance. 

 

Approximately 9 crore incremental retail investors are expected from Gen Z and millennials, led by higher digital adoption and growing financial literacy.

 

Smaller Cities and First-Time Investors Are Shaping the Next Phase of Growth

 

The report highlights a broad-based democratisation of investing in India, with rising participation from younger investors, women, and households beyond the major metros.

 

A wave of new investors from B30 and B110 cities is reshaping India’s wealth landscape:

 

• 55–60% of new SIPs now originate from B30 cities
• Cities outside the top 110 now contribute 19% of MF AUM, up from 10% in FY19
• Women’s participation has risen to 25% of investors, compared with 20% five years ago

 

Meanwhile, mutual fund folios have grown 2.5 times in five years, but individual flow growth remains modest—evidence that many new entrants are beginning their wealth journey with smaller, consistent SIPs.

 

“The investment ecosystem is no longer metro-centric,” the report notes. “A younger, more diverse investor base is strengthening markets from within.”

 

 "Average monthly SIP inflows have risen at an estimated 25% CAGR over the last decade, driven largely by 18 to 34-year-olds, a demographic which is increasingly shaping the direction of domestic capital markets. Younger investors under 30 now represent 40% of NSE-registered investors, compared with 23% in FY19," noted the report.

 

Another key trend highlighted in the report is rising participation from smaller urban centers Today, 55%-60% of new SIP registrations originate from B30 cities, demonstrating that India’s investment ecosystem is broadening beyond major metros.   

 

Cities beyond the top 110 contributed 19% of mutual fund AUM in FY25, up from 10% in FY19. Women’s participation is also rising steadily with salience of women investors rising to 25% in FY24 vs 20% in FY19.

 

Digital platforms are rewriting investing behaviour

 

The digital transformation is now at the heart of retail investing:

 

80% of equity investors have been onboarded digitally

 

35% of mutual fund investors join via digital platforms

 

Nearly half of all digital users are from Tier-2+ cities

 

Gen Z now forms 45% of the investing base—a profound shift that has made finance more accessible, transparent, and habit-driven.

 

 "We are witnessing a definitive structural shift in Indians—moving from a savings-first to an investing-first mindset. The government’s push on digital infrastructure, combined with progressive regulatory measures, has democratized access and fostered deep trust in the ecosystem. A diverse, resilient investor base is emerging from Tier 2+ cities and younger demographics, who are strengthening India’s capital markets from within.”, said Harsh Jain, co-founder and COO, Groww.

 

Retail Investing as a Key Enabler of India’s Journey to a $10+ Trillion Economy

 

 The report outlines several ways growing retail participation will support India’s long-term economic ambitions:

 

1. Deeper capital access for companies

 

Retail participation enhances liquidity and boosts primary issuance across market segments.

 

SME IPO proceeds have risen from ₹1,800 crore (FY19) to nearly ₹6,000 crore (FY24).

 

2. Broader, more democratic wealth creation

 

Households are increasingly shifting from traditional deposits to market-linked products, improving long-term wealth outcomes.

 

3. New job creation

 

Retail investing may create 7 lakh+ jobs across financial services, distribution, and market-linked businesses.

 

4. Market resilience

 

Steady domestic inflows act as a counterbalance to FPI volatility—a factor increasingly visible during global sell-offs.

 

“India is entering a new era of retail investing—more inclusive, more resilient, and central to market stability,” said Rakesh Pozhath, Partner at Bain India.