MF AUM Hits 31% of Deposits Structural Change Alert

India’s financial world is seeing a big shake-up. People are pouring money into mutual funds, especially stocks, which now make up 31% of bank deposits in 2025, double what it was before COVID.

Uday Kotak, the big boss of Kotak Mahindra Bank, calls this a “game-changer” for how money moves in India, showing folks are getting comfy with investing in the stock market.

“India’s saver is now an investor. After COVID, mutual fund money, mostly in stocks, has doubled to 31% of bank deposits. This is a big shift in how money works. It builds homegrown cash for risky bets and creates a stock-loving culture. But watch out for getting too excited,” Kotak Mutual Fund posted on X on June 20, 2025, with a chart showing the jump from 13% in 2015 to 31% in May 2025.

This boom is mostly because people are loving equity mutual funds, which are tied to the stock market. Numbers from the Reserve Bank of India and the mutual fund group AMFI show mutual fund money hit Rs.72.20 trillion by May 2025, six times more than Rs.12.04 trillion in 2015. Regular investments through SIPs (like setting aside cash every month) are a big reason, with Rs.26,688 crore flowing in during May 2025. It’s like Indians are getting smarter about building wealth bit by bit.

Kotak says this trend is great because it means India is relying less on foreign cash and growing its own money for investments. But he warns people not to go overboard, especially since some stocks, like smaller companies, are priced super high right now. It is like he’s saying, “Enjoy the ride but do not lose your head.”

The numbers tell the story: back in 2015, Mutual Funds were just 13% of bank deposits. That climbed to 20% in 2019, dropped to 16% in 2020 when COVID hit, and then shot up to 29% in 2025, hitting 31% by May. More people are jumping in, thanks to apps, ads about investing, and moving away from old-school bank fixed deposits to stock-based funds.

Why Structural Change in Financial Intermediation Matters for You?

 This change means Indians are getting serious about growing their money through stocks, and mutual funds are a big part of that. Over 10 crore SIP accounts were active by November 2024, and monthly SIP cash jumped 48% to Rs.25,320 crore. That’s a lot of people betting on the market.

However, Kotak’s warning is a heads-up: Stick to the basics and don’t get carried away by hype.

If you are thinking about mutual funds, this shows it is a good time to start, but you’ve got to match your investments to how much risk you can handle and what you want long-term. Stock-based funds can help you cash in on India’s growth, but they can be a rollercoaster, so stay sharp.