Banks boost equity investments by 49% in FY25 amid retail FOMO

Synopsis

Indian banks significantly increased their equity investments in FY25, driven by strategic treasury diversification. An analysis of 16 major banks revealed a 49% surge, reaching ₹49,572 crore, with SBI's investments tripling. This rise coincided with growing retail participation in the market and the implementation of new accounting norms.

Mumbai: Retail investors may have entered the equity market driven by the fear of missing out, or FOMO, but for banks, the move was more strategic. Their treasury operations saw an opportunity to diversify, leading to a sharp rise in equity investments in FY25.

An analysis by ET covering 16 banks - together accounting for 90% of the lending market - showed that their investments in stocks rose 49% to ₹49,572 crore.

Investments by State bank of India (SBI) tripled to ₹22,000 crore over the previous year, while equity commitments by Bank of Baroda, Canara Bank and UCO Bank more than doubled.

Retail participation in the markets also grew in the same period, as investor accounts on NSDL surged to 39.5 million (35.8 million in the previous year). Retail presence on CDSL grew to 153 million (115.6 million the year ago).

Agencies

Investments in equities by banks are part of their treasury operations that include both fresh and existing commitments in their subsidiaries and affiliates. Equity investments also rose as banks implemented fair value treatment accounting norms, which came into effect from April 1, 2024.

In FY25, the BSE Sensex touched an all-time high of 85,978 points on September 27, 2024. However, through FY25, it climbed just 5.1%, opening at 73,968.6 points on April 1, 2024, and closing at 77,414.9 points on March 28, 2025 - the last trading day of the previous fiscal year.

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