According to Sebi data on total investor accounts with 45 fund houses, the number of folios fell to around 4.04 crore at the end of November 2013 from 4.28 crore in the last fiscal (2012-13) - indicating a decline of 24.23 lakh.
Folios are numbers designated to individual investor accounts, although one investor can have multiple folios.
Market participants attributed the sharp fall in the number of folios to profit-booking and various merger schemes in the mutual fund industry, among other reasons.
The mutual fund industry has been facing consistent equity folio closures for the past few months despite the efforts of the industry to educate investors about staying invested for the long term.
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Last year, Sebi Chairman U K Sinha had also raised concerns over the continuous decline in folios.
The decline in equity folios during the first eight months of the current fiscal is coincided with BSE's barometer index Sensex surging 1,956 points or 10.4 per cent during the period.
Balanced schemes, which invest in equity and debt category, gained 79,662 folios to 27 lakh.
As on November 30, 2013, the sector offered 1,359 schemes to investors, of which 351 were equity schemes and 916 were debt-linked schemes.
The mutual fund industry lost more than 36 lakh investor accounts in 2012-13. The last financial year also marked the fourth consecutive year of loss of folios by mutual funds.