India demat accounts cross 108 million in December

Nothing captures the India equity cult growth as well as the growth in demat accounts. The growth has been especially sharp in the aftermath of the COVID pandemic. As of December 2022 total demat accounts touched 10.80 crore; a full 34% higher on a yoy basis, compared to December 2021. However, as much as the numbers look enticing and gratifying, the pace of accretion in demat accounts has been gradually reducing. For December the number of fresh demat accounts opened was just about 21 lakh accounts. This is certainly more than November 2022 figure of 18 lakh demat accounts. 

Where this number falters is when you compare with the FY22 average. In FY22 the average run-rate on a monthly basis was accretion of just about 29 lakh demat accounts. This can be largely assigned to the IPO market facing headwinds after a slew of IPOs listed at a discount. For instance, in calendar year 2021, IPOs had collected more than Rs1.20 trillion. However, in year 2022 the IPO collections were just about Rs59,400 crore. That was the main reason for the sharp fall in demat accounts.

CDSL retained overall market share at 72%, but this is only in terms of number of accounts and not in terms of AUC or assets under custody. NSDL still dominates in terms of assets under custody and it accounts for about 83% of the assets under custody overall with only 17% of the AUC with CDSL. This is more due to the large number of institutional demat accounts with NSDL as compared to CDSL. NSDL was the pioneer of demat in India in 1997 and was followed by CDSL in 1999.