India is quietly undergoing one of the most important economic transitions of its modern history: the financialisation of household savings. For decades, Indian families preferred physical assets such as gold, land and real estate as their primary store of wealth. Financial products were seen as complex, risky or optional. That mindset is now decisively changing.
Rising incomes, formalisation of the economy, digital infrastructure and policy-led financial inclusion are reshaping how Indians save, borrow and invest. The shift is structural, not cyclical. And at the centre of this transformation sit banks, NBFCs and asset management companies (AMCs) institutions that are increasingly becoming the default gateway for household and corporate capital.
This transition explains why financial stocks continue to outperform across market cycles, corrections and valuation debates. While narratives change, the direction of money flow does not.
SIP Growth: The Backbone of Financialisation
Nothing captures India’s financialisation story better than the rise of Systematic Investment Plans (SIPs). Monthly SIP inflows, once measured in hundreds of crores, are now running into tens of thousands of crores every month, creating a predictable and recurring equity demand engine.
This is not opportunistic capital. It is sticky, behaviourally anchored money driven by salaried households, first-time investors and long-term savers. SIP flows are no longer market dependent; they have become habit-based savings mechanisms similar to insurance premiums or provident fund contributions.
For AMCs, this shift changes everything. Revenue visibility improves. AUM volatility reduces. Distribution becomes scalable. Even during market corrections, SIP stoppage rates remain far lower than lump sum redemptions, cushioning downside risk.
This structural inflow explains why asset managers are now valued not just on market returns, but on flow consistency, client longevity and operating leverage. As long as SIP penetration deepens, AMCs enjoy a long runway of compounding earnings.
Credit Penetration: India Is Still Under-Borrowed
India’s credit story is still in its early chapters. Despite being the world’s fastest-growing major economy, credit-to-GDP remains significantly lower than global averages. This gap represents opportunity, not weakness.
As consumption formalises and income visibility improves, households are increasingly comfortable using structured credit for housing, vehicles, education, healthcare and discretionary spending. At the same time, MSMEs and small businesses long starved of institutional capital are entering the formal lending ecosystem through GST data, digital trails and fintech partnerships.
This is where NBFCs and banks play complementary roles. Banks dominate low-cost balance sheet lending and corporate credit, while NBFCs specialise in niche segments such as microfinance, affordable housing, vehicle finance, consumer durables and MSME loans. Technology and data have allowed NBFCs to underwrite risks that banks once avoided.
Crucially, asset quality has improved dramatically across the system. Balance sheets are cleaner. Capital adequacy is strong. Credit costs are normalised. This allows lenders to grow without sacrificing profitability. The result is a multi-year compounding cycle where credit growth feeds earnings growth, reinforcing valuations rather than inflating them.
Wealth Management: India’s Silent Goldmine
Perhaps the most underappreciated leg of financialisation is the wealth management boom.
Conclusion
In the long run, markets reward businesses that control flows, not stories. Financials do exactly that, which is why they will keep winning.
Disclaimer: The article is for informational purposes only and not investment advice.
The Financialisation of India: Why Banks, NBFCs and AMCs Will Keep Winning