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India surpasses 100 million demat accounts for the first time

According to the Securities and Exchange Board of India (SEBI) guidelines, a demat account is necessary to invest or trade in the stock markets. With several stockbrokers allowing online opening of demat accounts, the number of account holders in India has increased rapidly since the Covid-induced lockdown in 2020.

The data released by the two depository firms—the National Security Depository Limited (NSDL) and the Central Depository Limited (CDL)—has shown that the total number of demat accounts crossed 100 million for the first time in India in August 2022. It’s the first instance in the history of India that such a milestone has been achieved.

Before the first Covid-19 lockdown, i.e., March 2020, India’s demat account tally stood only at 40.9 million or nearly 4.1 crores. However, factors like a sharp surge in the market, work-from-home investment opportunities, increased penetration of internet services, and the desire for a secondary source of income led to the rapid rise in the number of demat account holders in the country.

As per the NSDL and CDL data, 2.2 million new demat accounts have been opened in the past four months. As the number of demat accounts surpassed the 100 million figure, CDL has to operate around 71.6 million accounts, whereas NSDL operates around 28.9 million accounts. The total Assets Under Custody (AUC) for these two depository bodies are Rs 38.5 trillion and Rs 320 trillion.

This growth in the investor base for the stock markets can mainly be attributed to reduced brokerage charges by new discount stockbrokers and positive projections of market growth in the near future. What’s more encouraging is the fact that most of the new demat account holders in the past two years come from Tier II and Tier III cities.

If the estimations are to be believed, this is just the beginning. Slowly but gradually, investing will become a part of everyone’s life in India. Hence, the brokerage industry foresees a bright future.

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