With a push from commodity traders, the number of demat accounts in the country crossed the 20-million mark in May. The majority of the nearly 300,000 demat accounts opened so far this year has been by those buying gold, silver, copper and platinum, among other metals, in electronic form, according to depository officials.
Even as the equity market is in doldrums, depositories are expecting the number of demat accounts to increase by another 50 per cent this year, as insurance policies would soon be allowed to be held in electronic form.
However, depository participants say insurance demats would be held in a separate entity, as both insurance and equity regulators are different and there is a history of disagreement between the two.
For now, the National Securities Depository Ltd (NSDL) holds over 10.21 million demat accounts. It alone handles $1.22 trillion worth of assets in these accounts. The Central Depository Services Ltd (CDSL) has nearly eight million accounts and handles over $174 billion worth of assets.
The number of demat accounts is considered the benchmark to gauge the extent of financial inclusion in the country.
Of the total number of demat accounts, five to eight per cent belong purely to commodity traders without any equity exposure, say depository officials. A major push for demat accounts was last seen in 2010 during the initial public offering of Coal India, the country’s largest equity public issue.
According to the Mumbai-based official of a leading depository, the alarming fact is that 30-35 per cent of these accounts are zero-balance, with no transactions taking place.
“Banks have recently started encouraging their savings account customers to open online trading and demat accounts. The clients usually agree as they are not charged for the first one-two years. However, no business is being generated from most such accounts, as these are not being operated due to the poor market scenario,” said the official.
