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The recent spate of initial public offerings has pushed up the number of demat accounts to 6.25 crore, from 4 crore at the end of FY20. This is expected to more than double with 10 crore new accounts likely to be added in less than two years, with impending big-ticket IPOs of Life Insurance Corporation (LIC) and Paytm and the launch of spot gold trading platforms by NSE, BSE and MCX, experts say.
New investors
Demat account provider CDSL has 4 crore clients and NSDL 2.25 crore. It took CDSL five years to go from 1 crore active demat accounts in Sept 2015 to 2.5 crore in August 31, 2020. It has added nearly 1.5 crore accounts in just the last 10 months. The rise in tech platforms like Zerodha and Paytm have also helped bring in new categories of investors to sign up for demat accounts.
“There is an impending boom in demat accounts. The ground is nearly ready with many large IPOs and the spot bullion exchange set to unveil. A huge base of untapped investors, who buy bullion through retail stores, can move to an exchange platform. Then, there are crores of LIC policyholders who would buy shares for the first time in the IPO. Together, it will bring at least 10 crore new demat accounts, conservatively,” said Kishor Ostwal, MD, CNI Global Research.
Another impetus will be the spot bullion exchange where market regulator SEBI and the government have planned to put all of India’s gold consumption on the exchange platform.
Each year, India imports nearly 1,000 tonnes of bullion metal, which is then sold in the over-the-counter market. Large portion of this trade moving onto the exchange platform will bring that many new demat accounts, brokers say.
Digitisation of assets
“Growth in demat accounts and retail investor base will be exponential in the next 2-5 years. It will be driven by digitisation of assets like bullion, real estate, debt and IPOs like LIC, which will bring many new investors to the exchange platform. As we move towards the $5-trillion economy, growth of exchange business and demat accounts could surprise many. Digitisation of assets will create a pan India presence for the securities market,” said Deven Choksey, MD, KR Choksey Investment Managers.
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