Transition from a nation of savers to investors marks a paradigm shift: PFRDA Chairperson at CII Finance 3.0 summit

New Delhi [India], September 3 : Deepak Mohanty, Chairperson, Pension Fund Regulatory and Development Authority (PFRDA) on Tuesday said that the transition under way from a nation of savers to investors marks a paradigm shift in our economic and financial landscape.

"It reflects our growing confidence in the financial system and its regulatory underpinnings, improving financial literacy levels, and broader investment opportunities", stated Deepak Mohanty, Chairperson, Pension Fund Regulatory and Development Authority (PFRDA), during the session on 'From a nation of savers to a nation of investors - The transition' at the Financing Summit 3.0 of the Confederation of Indian Industry (CII) in Mumbai today.

In his keynote address, Mohanty highlighted that the share of cash and bank deposits in household financial assets is declining, while investments in bonds and equities are rising in the recent years, alongside a steady increase in financial savings for social security, such as insurance, pension, and small savings.

"As we aspire to be a high-income country over the next 25 years, we need to grow at an average rate of around 8.0 percent per annum. This will require commensurate levels of investment," said Shri Mohanty. He stressed the importance of efficient conversion of savings to capital formation to meet these growth targets, underlining that "to achieve an annual GDP growth rate of 8 per cent, we need an investment rate of around 36 per cent of GDP per annum."
Mohanty also highlighted the role of technological advancements and financial inclusion in driving this transition. The increased number of Jan Dhan bank accounts, rise in smartphone usage, and proliferation of fintech have expanded access to financial markets, making investment opportunities more accessible to a broader population.
He noted that India's financial behavior is shifting from risk aversion to risk-taking, as evidenced by the rising number of Demat and MF SIP accounts, increased retail investor participation, and growing interest in innovative investment instruments like digital gold, REITs, Green Bonds, Exchange Traded Funds, Cryptocurrency, etc.
Looking ahead, Mohanty underscored the need for greater depth in the financial sector, innovative financing mechanisms to bridge financing gaps, addressing data privacy and cybersecurity concerns, enhancing financial literacy, and establishing a robust consumer protection mechanism to sustain this transition.
Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company, emphasized the need to transform India's savers into informed investors. He pointed out that many households still believe in keeping money at home rather than in banks, and are driven by greed, highlighting the need for financial literacy.
Arun Muralidhar, Adjunct Faculty, Georgetown University and Chairman and Founder, Mcube Investment Technologies LLC, highlighted challenges in pension management, especially in India where a large portion of the population lacks access to financial instruments and basic financial literacy. Muralidhar stressed that securing a retirement should focus on maintaining pre-retirement lifestyles into retirement and proposed development of "InDIAs" bonds (Inflation-Linked Deferred Income Annuity-like securities) to create secure pensions for India's vast population.
Neelkanth Mishra, Chief Economist, Axis Bank, emphasized that with rising per capita GDP, India will transform from a nation of passive savers to investors. He noted that increasing prosperity will boost financial savings for a larger segment of the population, creating more investment opportunities.
Vishal Kampani, Non-Executive Vice Chairman, JM Financial, emphasized that the transition from a nation of savers to investors should lead to wealth creation that benefits a broader segment of the population rather than a select few. The session was moderated by Dr V Anantha Nageswaran, Chief Economic Advisor to the Government of India.