Investments

Indian watchdog sees shift from physical to financial savings

Some of the recent policy reforms in India are expected to lead to more financial savings rather than physical savings.

This is according to a research paper published by the Reserve Bank of India (RBI).

Demonetisation and the introduction of Goods & Service Tax (GST) are two key drivers for this likely trend.

They are further supported by weaker real estate activity and more moderate housing prices.

“During demonetisation and the subsequent period, there has been a distinct increase in saving flows into equity/debt-oriented mutual funds and life insurance policies,” said the RBI paper on ‘Financialisation of savings into non-banking Financial Intermediaries’, according to local media.