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Urban India plays safe with financial products

The survey reveals that risk free and guaranteed returns drive financial asset ownership

Here is the last instalment of the Indian Financial Scape survey, conducted by Delhi-based economics research firm Indicus Analytics, which tracks patterns of financial asset ownership of urban India. The survey reveals that risk free and guaranteed returns drive financial asset ownership in urban India as the average overall pan-India ownership of savings bank account topped at 89.02% followed by bank fixed deposit at around 50%. Chit funds, a financial instrument formed through informal savings groups, fall short of the popular notion that it is the favourite savings instrument in the south. In fact, the western region, with an average ownership of 4.64%, is ahead of the rest of the country in chit fund ownership. The survey shows that on an average only 2.95% of urban households own chit funds. The data is split across income groups and regional variations. At least 35,000 households were surveyed across urban India over April-June 2012.

In the lowest income categories up to 5 lakh, the average chit fund ownership is just above 2% and in the annual income categories between 5 lakh and 50 lakh the average ownership is 3.52%. Surprisingly, in the highest income categories of above 1 crore only the western region owned chit funds, pushing the average ownership to 4.48%.

Key takeaways:

1. The western region is ahead of rest of the country in chit fund ownership.

2. The overall pan-India ownership of chit funds stands at a mere 2.95%

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