I’m just thinking out loud here.

With traditional finance slowing, inflation wreaking havoc, and individuals still financially illiterate (relatively) — there seems to be a need for alternative financial instruments that offer higher returns than banks are currently providing (the best savings interest rates right now are 6% p.a. at IDFC bank on a regular savings account), and without too many people assuming too much risk.

While relative to our global counterparts, India is still better off (interest rates aren’t dipping down below 0%), the common man still has close to no financial exposure, and his only source of wealth generation (or growth) is a savings account offering rates of interest lower than inflation. Inflation in India over the FY 20–21 was 5.52% (as of March ‘21).

The problem is clear, INR 100 a year ago is worth INR 95 today after inflation. Savings rates don’t hedge this loss in value, with rates less than that of inflation. Assuming a 5% savings rate (good luck finding this), that INR 100 is now worth INR 99.48 (after inflation) — so technically the banks are failing us.

There is always the argument of growing wealth through various investment vehicles — mutual funds, bonds, equity etc. — but the problem here is that the financially unexposed have :

a) No Idea how, why or where to invest their money;

b) To end up paying high broker fees for someone to manage their money or invest it; and

c) To assume risk that they cannot, and more importantly, would not have assumed with regular savings accounts.

(There are merely 684 million savings bank accounts in the country with a population of 1.2 billion)

The problem is clear, and far more complicated than a few extra points on your savings. I may have stumbled across De-Fi in search of possible solutions, and I would like to use this as a “medium” of self learning, progress logging, and hopefully, some helpful financial insight. Stay tuned.