 "How India saves: Mutual funds pip FDs, 58% prepared for retirement")
In 2024, mutual funds and SIPs emerged as the leading investment choice among Indians, according to a recent report. Meanwhile, gold regained its appeal, experiencing a notable resurgence, while interest in cryptocurrencies plummeted significantly.
BankBazaar’s MoneyMood Retail Credit Trends Report for 2024, released recently, sheds light on key developments in borrowing, saving, and investing among working professionals in India aged 22 to 45 years. The survey covered 1,529 respondents across six metros and 18 Tier-2 cities.
Take a look at the key findings of the survey:
Mutual funds trump fixed deposits
When it comes to investments, mutual funds and SIPs remained the top choice, with 62% of respondents choosing them over other options. Fixed deposits followed at 57%, but the gap between the two widened to a record 5%.
Gold also saw a resurgence, with 30% of respondents investing in the metal, compared to 27% last year. Meanwhile, interest in cryptocurrencies dropped sharply to just 12%, reflecting concerns over regulation and security.
Insurance coverage shows mixed results
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Insurance coverage showed a worrying trend. While more Indians reported having health insurance, life insurance saw a decline. The percentage of people with both health and life insurance stayed at 38%, but those without any coverage nearly doubled.
Insurance coverage trends:
Both life and health insurance: 38% of respondents, up from 37% in 2023.
Only health insurance: 19%, up from 16%.
Only life insurance: 38%, down from 41%.
No insurance: 5%, slightly better than 6% last year.
Although health coverage improved, life insurance uptake declined. Worryingly, the proportion of respondents without any coverage almost doubled.
Retirement planning improves
More Indians are planning for their retirement, with 58% saying they have a corpus, up from 56% last year. The majority aim to retire between 51 and 60 years, and about 12% have set aside over Rs 2 crore for their retirement.
Distribution of retirement corpus sizes:
Less than Rs 25 lakh: 6%
Rs 25-50 lakh: 19%
Rs 50-75 lakh: 17%
Rs 75 lakh-1 crore: 14%
Rs 1-1.5 crore: 12%
Rs 1.5-2 crore: 11%
Rs 2-5 crore: 10%
Over Rs 5 crore: 11%
Retirement goals:
Desired retirement age:
By 40 years: 7%
Between 41-50 years: 21%
Between 51-60 years: 54%
Between 61-65 years: 12%
Over 65 years: 6%
Adjustments to retirement plans:
12% increased investments to retire earlier
43% stayed on track with their original plans
18% slowed investments and postponed retirement
Retail lending growth slows, but secured loans dominate
Retail lending grew by 16% in 2024, reaching Rs 5.28 trillion, slightly slower than the 18% growth recorded in 2023. Secured loans led this growth:
Home loans grew by 18% year-on-year, up from 14% in 2023, totalling Rs 2.52 trillion.
Gold loans surged by 56%, reaching Rs 154,282 crore, marking the fastest growth across all categories.
Together, home loans and gold loans accounted for a significant share of total retail credit.
In contrast, personal loans and vehicle loans slowed down, each growing by 11%. Smaller personal loans, particularly those under Rs 50,000, took a hit due to stricter lending norms.
Personal loans grew by 11% to Rs 1.41 trillion, compared to 23% growth in 2023.
Vehicle loans also grew by 11%, reaching Rs 616,405 crore, down from 20% growth in 2023.
Credit card dues increased by 17%, totalling Rs 281,392 crore.
Breakdown of contributions to retail credit in 2024:
Home loans: 47.84%
Personal loans: 26.73%
Vehicle loans: 11.68%
Gold loans: 2.92%
Credit card dues: 5.33%
Credit cards break records
Indians spent big with their credit cards in 2024. The number of outstanding cards hit 106.8 million, almost double what it was in 2019. Monthly card spending touched Rs 2 trillion, fuelled by cashback offers, no-cost EMIs, and festive shopping.
Interestingly, only about 6% of Indians currently own a credit card, leaving a lot of room for growth. Despite concerns over rising delinquencies, credit card usage continues to grow, especially in smaller cities.
Outstanding credit cards: 106.8 million, showing a 13% year-on-year increase and nearly doubling since 2019.
Monthly spends on credit cards: Rs 2 trillion, driven by no-cost EMIs, cashback offers, and festive spending.
Historical credit card growth:
2017: 33.8 million
2018: 42.6 million
2019: 53.3 million
2020: 59.4 million
2021: 66.3 million
2022: 79.3 million
2023: 94.7 million
2024: 106.8 million
Despite regulatory tightening and rising delinquencies, credit card penetration remains low, with less than 6% of Indians owning a card.
Personal and auto loans slow down
The pace of unsecured credit growth has moderated:
Small-ticket loans under Rs 50,000, especially for sub-prime borrowers, saw slower demand due to stricter RBI norms and inflationary pressures.
Larger loans to prime and super-prime borrowers continued to grow, ensuring overall personal loans still grew by 11% year-on-year.
Vehicle loans also saw a similar slowdown, growing 11% to Rs 616,405 crore.
2025 outlook
Looking ahead, home loans and gold loans are expected to keep driving lending growth. Credit card adoption will likely expand into Tier-3 cities, while mutual funds and gold remain top investment choices. However, policy tightening and inflation may slow unsecured loan growth, but AI-driven lending could offer customised solutions, BankBazaar report suggests.