Dr. Nidhi Upendra Argade, Journal of Management Research and Analysis (JMRA) Available online at http://jmraonline.com ISSN: 2394-2770, Impact Factor: 4.878, Volume 05 Issue 02, June 2018, Pages: 33-37 Homepage: http://jmraonline.com, Email: jmraeditor@gmail.com Page 33 THE COMPOSITION OF HOUSEHOLD ASSET HOLDINGS IN INDIAN HOUSEHOLDS 1 Dr. Nidhi Upendra Argade 1 (Deptt of Accounting & Financial Management, Faculty of Commerce, The Maharaja Sayajirao University of Baroda) Abstract: Household Finance examines various financial instruments used by households in their portfolio in order to achieve financial stability. This study is very important in the developing countries like India, where the population is very high and number of financial institution to cater this population is comparatively low as in these countries, high level of unsecured debt from non-institutional sources like moneylenders is observed which leads to high financial cost to the households. The household finance will help to find out the loopholes in household finance behavior and will suggest the ways to rectify them. During past decade, the Indian household finance patterns have been going through major structural changes. The Indian household wealth is dominated by presence of physical asset like real estate in the personal Balance sheet with relatively high share of gold. It is observed that Indian households do not invest much in financial assets and retirement instruments. The present research article attempts to highlight the Indian household finance pattern and also describes the effect of various demographic factors like age, education, family composition, rural urban divide on household finance. Keywords: Household Finance, Wealth, Physical Asset, Financial Asset INTRODUCTION Household Finance is defined as financial decisions made by households which includes decisions related to acquisition of assets, borrowing and repayment of short term and long term liabilities, savings and investment in various instruments to create balanced portfolios, risk management and advisory services. To facilitate the transactions necessary to achieve the goals of individuals and families i.e. household, the financial system should provide various instruments such as deposits, bonds, equities, mortgage and other secured and unsecured debt instruments. The studies related to household finance is significant in the developing countries like India, where the population is very high and number of financial institution to cater this population is comparatively low as in these countries, high level of unsecured debt from non-institutional sources like moneylenders is observed which leads to high financial cost to the households. In India, the National Housing Bank (NHB) regulates Housing Finance Companies (HFCs). It is a wholly owned subsidiary of the RBI, and propagates norms that apply to all registered housing finance companies. The various attributes of Indian households are very different from international scenario. Like, high portion of asset of household is invested in physical assets, mainly real estate. High level of unsecured debt is noted in India and it is mainly through non-institutional sources such as moneylenders which generates high cost to households. Recently, Indian household savings patterns have been witnessing some massive structural shifts. Households in India have historically been risk-averse and were not willing to invest their savings into risky financial assets. This has always driven India towards making investments in unproductive assets like gold. The awareness and preference for insurance products are also very low. The population is not aware about it and those who are aware cannot afford the same. The heterogeneity is observed across Indian states in the allocation of assets and liabilities in the personal balance sheet. It was also observed that the households simply keep shifting their funds between real estate and gold, which will not contribute in their wealth generation. REVIEW LITERATURE In the year 2006, John Campbell coined the name „household finance‟ in his presidential address to the American Financial Association. This is the field of Financial Economics that studies, how households use financial instruments and markets to achieve their objectives. The research in the area of household finance has gained momentum these days for many reasons. Like households are directly involved in their financial decisions because of liberalisation of debt markets, financial innovation in the area of investment etc. The other reason for the same could be data related to household statistic are easily available these days. This section of paper presents review of literature related to household. Campbell (2006) studied household participation in asset allocation, how they diversify their holding in risky assets and choice of mortgage which is one of the most important financial decisions. He concluded that many household make serious investment mistakes. He also observed that poorer and less educated households are more likely to make mistakes than wealthier and better educated households.