New Delhi, Feb. 11 -- India's personal finance markets have come a long way. Hundreds of millions of bank accounts have been opened, digital payments are world-class, and a growing middle class is increasingly engaging with formal financial markets.

Yet this progress masks two deep and related failures: a poorly functioning home loan market and a fragile retirement savings system.

A glance at household balance sheets reveals the cracks. Wealth, especially among richer households, is excessively concentrated in real estate. Reliance on unsecured debt is high. Retirement savings are minimal, reflecting continued dependence on family support in old age.

Fixing these issues is of first-order importance for household welfare, with powerful ...