10 crore new demat accounts to be added in next two years: Experts

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The initial public offerings (IPOs) by Zomato and many others in the recent past have propelled the investment in the share market by common people who are not into daily trading. The number of demat accounts have increased to 6.25 crore from 4 crore in FY20.

With the much-talked-about IPOs of Life Insurance Corporation of India (LIC) and Paytm among others in the pipeline, over 10 crore new accounts are likely to be added in the next two years. The launch of spot gold trading platforms by National Stock Exchange, BSE and MCX will also add to the growth in the number of demat accounts, experts predict.

Demat account providers Central Depository Services Ltd (CDSL) and National Securities Depository Ltd (NSDL) have seen significant growth in new demat accounts in recent months. But of the total 6.25 crore existing demat accounts CDSL has 4 crore accounts and NSDL operates 2.25 crore.

CDSL got around 1.5 crore new demat accounts only in the last 10 months while it had reached 2.5 crore from 1 crore between September 2015 and August 2020.

The tech platforms like Zerodha and Paytm, which have made investment in the share market easier for common people, fuelled this growth bringing new investors to open demat accounts.

As per a Hindu Business Line report, Kishor Ostwal, MD, CNI Global Research said, “There is a boom in the demat accounts due to the incoming large IPOs and spot bullion exchanges. Retail investors who have traditionally bought bullion through retail stores will move to this platform. Add the crores of LIC policyholders who can buy and sell LIC shares for the first time, and this can add 10 crore new demat accounts conservatively.”

The Indian government and market regulator SEBI have planned to launch the spot bullion exchange and place all of India’s gold consumption on the exchange platform. With India importing nearly 10,000 tonnes of bullion metal and a large portion of the purchases being made over the counter, the opening of the new bullion exchange will result in thousands of new demat accounts. It will also eliminate the need for buying physical gold.