Why Kashmir Records Low Participation in Financial Markets
Data show how banks, policy constraints and household risk preferences shaped a property-led wealth model in the region.
Srinagar- On a cold morning in Srinagar’s Natipora neighbourhood, 52-year-old Ghulam Nabi Wani pulls up the shutter of a two-storey building he bought more than 20 years ago.
A pharmacy opens on the ground floor. Upstairs, students file into a private coaching center.
Wani does not call himself an investor. When he bought the plot in the late 1990s, he was running a small timber business and paid less than ₹6 lakh for land that many locals thought was too far from the city to matter.
Today, real estate brokers estimate the property’s value at more than ₹3 crore.
“I didn’t buy it to make money,” Wani said. “I bought it because I didn’t know where else to put my savings.”
That decision, shaped more by constraint than strategy, reflects how wealth has been built across much of Kashmir.
For decades, land, not stocks or mutual funds, became the region’s primary investment vehicle.
Formal investment options in Kashmir were long limited, equity participation was thin, and financial advisory services were scarce. Banks, many say, preferred loans backed by collateral, and land was often the only asset households could reliably pledge.
“Property became both savings and security,” said Dr. Ashraf Bhat, an economics professor in Srinagar. “It was something people could see, control and borrow against.”
Reserve Bank of India data show that Jammu and Kashmir has consistently recorded one of the highest proportions of bank lending secured against immovable property among Indian states. At the same time, participation in equities and mutual funds remains far below the national average.
According to data from the Association of Mutual Funds in India, the region accounts for well under 1 percent of the country’s total assets under management, despite having a population comparable to several mid-sized states.
“People here didn’t distrust money,” said a senior banker in Srinagar. “They distrusted systems that felt distant or unpredictable.”
Decades of discord reinforced a preference for tangible assets. Land could be used, rented, inherited or mortgaged. Stocks could not.
“Families here think in generations,” said Shabir Lone, a financial adviser who has worked in Srinagar for more than a decade. “The first question I hear is never about returns. It’s always: Can I physically control this asset?”
Land also fits inheritance norms, where wealth is expected to be passed down rather than liquidated. A building could support parents, children and grandchildren. A demat account felt abstract.
That instinct helped fuel a steady real estate boom across parts of Srinagar, Budgam and north Kashmir from the early 2000s onward.
Government circle-rate data show land values in many urban pockets rising through the 2000s and early 2010s, even as transaction volumes rose and fell. Buyers included traders, government employees and salaried households shifting savings away from idle cash or gold.
For Shazia Hameed, a schoolteacher in Baramulla, property investment grew out of routine saving rather than ambition.
In 2007, her family bought a small residential plot using provident fund withdrawals and a modest bank loan. Today, rental income supplements her pension planning.
“I have never bought a stock,” she said. “With land, I know what I’m getting every month.”
The math is simple: steady rent from an asset that has roughly tripled in assessed value over 15 years.
But this concentration has also created vulnerabilities.
Economists warn that household wealth in Kashmir is heavily exposed to local property cycles. Limited diversification means that shocks to construction, regulation or demand hit families directly.
After 2019, tighter compliance norms and a slowdown in new housing approvals reduced liquidity. Some households found it harder to sell property quickly to fund education, healthcare or migration.
Banks feel the strain too. Public sector lenders report high collateral coverage but slower growth in unsecured credit, such as personal loans and consumer finance.
“Capital is safe, but it’s not very productive,” added Dr. Bhat. “Money is parked in buildings instead of circulating through businesses.”
From a systemic perspective, this has limited entrepreneurship and slowed the growth of small enterprises that rely on flexible credit.
Change is coming, though slowly.
Digital brokerage platforms report a rise in new account openings from Kashmir since 2020, driven largely by younger earners in technology, education and services. Most begin with small monthly investment plans rather than direct stock trading.
The amounts are modest, often below national averages, but the trend is new.
Government-backed credit schemes for self-employment and small businesses have also widened access to formal finance, though uptake varies widely by district.
Still, analysts say trust matters as much as products.
“Without confidence in rules, taxation and exit options, people fall back on what feels defensible,” said Lone, the financial adviser. “Kashmir’s real estate story is not proof that property always outperforms financial markets. It is evidence that investment behaviour follows institutional depth.”
When markets are thin, information uneven and enforcement uncertain, analysts say, people choose assets that match lived experience, even if returns are lower and risks concentrated.
Early buyers benefited from timing. Those who followed later often entered with thinner margins and fewer options.
But as the region integrates more fully into national financial systems, the challenge, many say, will be balance.
“Land will remain central,” Dr. Bhat asserted. “But long-term wealth depends on widening paths for savings into businesses, markets and instruments that spread risk.”
In Natipora, once dismissed as too far from the city, Wani’s building now sits at the center of a thriving neighbourhood. Its rise mirrors Kashmir’s investment story.
When financial markets felt distant and uncertain, people put their faith in land they could see and hold.
“I didn’t know where else to put my savings,” Wani concluded.
That instinct shaped decades of wealth in the valley, turning property into shelter for trust.
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Kashmir