Sat Mar 15 17:58:21 UTC 2025: ## Mutual Funds Outpace Bank Deposits Amidst Market Volatility

**CHENNAI, March 16, 2025** – Despite recent equity market fluctuations, mutual fund investments have significantly outperformed bank deposits in the past 11 months, according to new data. The Association of Mutual Funds in India (AMFI) reports a 90% surge in mutual fund inflows, reaching ₹9.79 lakh crore (compared to ₹5.14 lakh crore in the same period last year). This contrasts with a slowdown in bank fixed deposit growth to 9.2% (₹17.29 lakh crore), down from 11.2% (₹18.69 lakh crore) in the previous year, based on Reserve Bank of India (RBI) data.

Overall bank deposit growth also lagged behind mutual funds, increasing by 8% year-on-year to ₹231 lakh crore. The mutual fund industry saw a 24% rise in assets under management (AUM), reaching ₹68 lakh crore.

Experts attribute this shift to several factors. Sunil Subramaniam, CEO of Sense and Simplicity, a think tank, highlights the willingness of younger investors to embrace risk for long-term wealth creation. Positive three-year equity returns and the use of Systematic Investment Plans (SIPs) have boosted confidence. Furthermore, the new tax regime, while removing some tax benefits, has reduced investor concerns and encouraged larger investments in mutual funds. The new regime’s impact on ELSS schemes has shifted investor focus away from tax savings alone.

Subramaniam also points to the advantages of debt mutual funds over fixed deposits, emphasizing that tax is only payable on redemption, unlike the annual taxation of FD accrued income. The emergence of low-risk equity products like arbitrage funds has also contributed to the shift.

Ankit Shah, an independent financial advisor, notes the MF industry’s ability to cater to diverse risk appetites, unlike the one-size-fits-all approach of bank FDs. Technological advancements have also broadened access to mutual funds, even in smaller towns. The role of distributors in educating investors about market risks has also been crucial, Shah added.

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