Mutual Funds vs Bank Deposits – Where Do We Stand?

One of the most common questions I come across from investors is whether to keep money in bank deposits or move it towards mutual funds. Both have their role, but the way people in different countries allocate their money tells us an interesting story.

Let us look at the US first.

US Bank Deposits vs Mutual Fund AUM (FY 2019–2025)

Year	Bank Deposits (USD Billion)	Mutual Fund AUM (USD Billion)	MF AUM as % of Bank Deposits
Apr-19	12,700	16,700	131%
Apr-20	14,800	16,800	114%
Apr-21	17,000	21,500	126%
Apr-22	18,200	17,800	98%
Apr-23	17,300	18,900	109%
Apr-24	17,600	21,000	119%
Apr-25	18,000	21,200	118%

(Source: tradingeconomics.com)

In the US, mutual funds are not just popular but have actually surpassed bank deposits in size. Even when deposits increased, the allocation towards mutual funds grew significantly. For instance, in April 2019, mutual fund AUM was already 131 percent of total bank deposits. This shows a very strong culture of investing rather than just saving.

Now let us see the situation in India.

India Bank Deposits vs Mutual Fund AUM (FY 2019–2025)

Year	Bank Deposits (₹ Crore)	Mutual Fund AUM (₹ Crore)	MF AUM as % of Bank Deposits
Mar-19	12,639,000	2,379,600	19%
Mar-20	13,748,600	2,226,000	16%
Mar-21	15,443,500	3,124,800	20%
Mar-22	17,008,800	3,756,700	22%
Mar-23	18,742,300	4,930,200	26%
Mar-24	21,253,300	5,324,800	25%
Mar-25	23,451,800	6,574,300	28%

(Source: RBI & AMFI Website)

In India, the story is completely different. Bank deposits are still the first choice for the majority of people. As of March 2025, mutual fund AUM is only 28 percent of total bank deposits. Compare this with the US, where mutual funds are bigger than deposits, and you can see how far we still have to go.

From my experience of working with hundreds of investors, I notice that most Indian families are comfortable keeping large sums in savings accounts or fixed deposits. The primary reason is safety and habit. But what many miss is the long-term compounding power of mutual funds. Even a simple SIP, started early, can build wealth far beyond what a fixed deposit can ever provide.

The data clearly shows that as a country we are gradually moving towards investments, but the gap is still huge. Imagine what will happen when Indian households start allocating even 50 percent of their bank deposits into mutual funds. The growth of the Indian capital market will be extraordinary.

I believe this transition will happen. Slowly but surely, awareness is spreading. Investors are realizing that while bank deposits provide safety, they do not create real wealth. Mutual funds, when chosen wisely and held with patience, can completely change a family’s financial future.