The number of unique mutual fund investors rose 13.2 per cent year-on-year to 6.1 crore in 2025-26. Importantly, the expansion is increasingly broad-based, with Tier III cities accounting for 55 per cent of the investor base, indicating deeper penetration beyond major urban centres. SIPs also strengthened their role as a vehicle for disciplined, long-term investing, with gross inflows rising 20.8 per cent during the year.
New Delhi: Retail participation in India’s financial markets is likely to deepen further as rising financial literacy, digital access and regulatory reforms continue to shift household savings towards market-linked instruments, according to the Securities and Exchange Board of India’s (SEBI) Annual Report 2025-26.
Also, domestic institutional investors increased their share in Indian equities to an all-time high of 17 per cent by the end of March 2026, while the share held by foreign portfolio investors fell to a 15-year low of 15.8 per cent, according Report. .
The regulator’s latest data points to continued expansion in mutual funds, SIPs and other professionally managed investment products, while stronger investor-protection measures are expected to support broader participation.
India’s financial landscape is undergoing a structural transformation, with investors increasingly favouring financial assets over traditional instruments, the report said.
Mutual funds remain central to this transition, supported by digital onboarding and growing accessibility of systematic investment plans (SIPs). SEBI said the mutual fund industry’s total assets under management more than doubled over the past five years, rising from Rs 31.43 lakh crore in March 2021 to Rs 73.7 lakh crore by March 2026.
The number of unique mutual fund investors rose 13.2 per cent year-on-year to 6.1 crore in 2025-26. Importantly, the expansion is increasingly broad-based, with Tier III cities accounting for 55 per cent of the investor base, indicating deeper penetration beyond major urban centres. SIPs also strengthened their role as a vehicle for disciplined, long-term investing, with gross inflows rising 20.8 per cent during the year.
SIP accounts increased to 1,045 lakh in 2025-26 from 1,005 lakh a year earlier, while assets accumulated through SIPs rose to Rs 15.1 lakh crore from Rs 13.35 lakh crore. Gross SIP inflows climbed to Rs 3.5 lakh crore, while net inflows increased to Rs 1.97 lakh crore.
According to the report, the number of SIP accounts increased 3.9 per cent to 10.45 crore in 2025-26 from 10.05 crore in the previous financial year. Average net monthly SIP investments increased 25.8 per cent to Rs 16,413 crore from Rs 13,052 crore.
The broader mutual fund industry also recorded strong growth, with AUM rising 12.2 per cent to Rs 73.7 lakh crore. Equity-oriented schemes attracted net inflows of Rs 3.5 lakh crore, while passive investment continued to gain traction. Net inflows into passive schemes rose to Rs 2.1 lakh crore from Rs 1.4 lakh crore in 2024-25.
Domestic institutional investors increased their share in Indian equities to an all-time high of 17 per cent by the end of March 2026, while the share held by foreign portfolio investors fell to a 15-year low of 15.8 per cent, according to the Securities and Exchange Board of India’s (SEBI) Annual Report 2025-26.
“Despite this volatility, Domestic Institutional Investors (DIIs), comprising Banks, DFIs, insurance, mutual funds and NPS, acted as a critical countervailing force, absorbing foreign divestments with a record cumulative net inflow of Rs 8.5 lakh crore, heavily supported by consistent mutual fund SIPs during 2025-26.,” SEBI said in the report.
This pushed the share of domestic institutional investors in Indian equities to a record level even as foreign investor ownership declined.
The shift came during a year when foreign investors pulled money out of the Indian market amid heightened global uncertainty, while domestic institutions continued to invest.
SEBI said domestic institutional investors (DIIs), including banks, development financial institutions, insurance companies, mutual funds and the National Pension System (NPS), recorded a cumulative net investment of Rs 8.5 lakh crore
The shift also reflects the growing role of domestic savings in India’s capital markets. Mutual fund investments through systematic investment plans (SIPs) remained a major source of domestic money during the year.
The shift came during a year when foreign investors pulled money out of the Indian market amid heightened global uncertainty, while domestic institutions continued to invest.
At the same time, SEBI is tightening safeguards as participation expands. Stress tests showed that large small-cap schemes could require substantially longer periods to liquidate portfolios under high redemption pressure, highlighting liquidity and concentration risks.
Going ahead, the combination of digital access, rising investor awareness and regulatory simplification could support sustained growth in financial-market participation. SEBI’s revised mutual fund regulations are aimed at improving clarity while retaining and strengthening investor-protection, transparency and governance standards.
Leave a comment