Maharashtra, Gujarat and UP lead the race in new demat accounts

Advertisement
Maharashtra, Gujarat and UP lead the race in new demat accounts
Canva
  • The number of demat accounts jumped to 11.45 crore, recording a growth of 43% in the last one year, according to the BSE registered investors data.
  • Analysts say most of the traction came through mutual funds, which has shown consistent inflows in monthly SIP contribution.
  • SIP inflows hit a record high of ₹12,693 crore in August 2022.
Advertisement
The number of demat account holders in India has grown rapidly in the last couple of years, on the back of greater financial literacy and growing awareness about investments and markets.

One hard lesson the pandemic has taught the world is the importance of savings and investments, which is now being reflected in the growth in demat accounts.

Overall the number of demat account holders has increased to 11.45 crore, recording a growth of 43% in the last one year, according to BSE’s registered investors data. It is important to note that in a country with about 140 crore citizens only about 8% of people invest in financial instruments, displaying low penetration.

Most investors are from Maharashtra and Gujarat
The highest number of investors in the market (2.31 crore) are from Maharashtra, mainly because of Mumbai, the financial capital of the state. The next in line is Gujarat, the state with enthusiastic investors who have contributed to 1.18 crore demat accounts.

Despite being the most populous state in the country, Uttar Pradesh ranks third. However, these are the only states with over a crore demat accounts.

Advertisement

Next come the states of Rajasthan, Karnataka, West Bengal, Tamil Nadu, Madhya Pradesh and Andhra Pradesh — which have anywhere between 50 lakh to 66 lakh demat accounts each. Bihar, Haryana, Telangana, Kerala, Punjab, Odisha and Assam are the states with over 20 lakh accounts each.

The Himalayan region of Ladakh has the least number of demat account holders at 242
Demat accounts in India
Maharashtra2.31 crore
Gujarat1.18 crore
Uttar Pradesh1.04 crore
Rajasthan65.58 lakh
Karnataka65.05 lakh
West Bengal61.02 lakh
Tamil Nadu59.39 lakh
Madhya Pradesh55.65 lakh
Delhi54.54 lakh
Andhra Pradesh50.59 lakh
Bihar37.67 lakh
Haryana37.22 lakh
Telangana35.98 lakh
Kerala27.41 lakh
Punjab26.14 lakh
Odisha25.14 lakh
Assam23.77 lakh
Jharkhand17.96 lakh
Chhattisgarh11.06 lakh
Uttarakhand9.86 lakh
Himachal Pradesh5.68 lakh
Jammu & Kashmir4.60 lakh
Chandigarh2.97 lakh
Goa2.47 lakh
Tripura1.25 lakh
Manipur1.08 lakh
Pondicherry1.04 lakh
Meghalaya51,616
Dadra and Nagar Haveli37,409
Nagaland35,076
Arunachal Pradesh30,776
Sikkim29,305
Daman and Diu25,861
Andaman & Nicobar19,318
Mizoram11,909
Lakshadweep1,191
Ladakh242
Total11.45 crore

Analysts say demat accounts may continue to grow rapidly
The growth in demat accounts picked up after the pandemic since markets witnessed high activity. Smaller towns are showing interest in opening demat accounts, analysts said. Most of the traction came through mutual funds, which has shown consistent inflows in monthly SIP contribution. SIP inflows hit a record high of ₹12,693 crore in August 2022.

“It is very evident with the maximum number of SIP participation coming from smaller cities that demat accounts will grow manifold, as mutual funds reach out through banks and intermediaries (financial advisors). I think the undertone in tier II and tier III is even more sharper than in the metro cities,” Sanjiv Bhasin, director at IIFL Securities, told Business Insider India

In fact, the number of retail folios in the mutual fund industry stood at an all-time high of 10.89 crore as of August 31, 2022.

Advertisement
The assets under management of the mutual fund industry has grown more than five times in the last 10 years from ₹7.53 trillion in 2012 to ₹39 trillion right now.

The Indian mutual fund industry has grown multifold since it launched the ‘Mutual Funds Sahi Hai’ campaign in 2017, which did wonders for the industry. Moreover, making the know your customer (KYC) norms in mutual funds more convenient and paperless has helped immensely as well.

“KYC has become easier and while traveling in smaller cities, I have seen that there is a huge amount of demand for SIPs and an urge to know how to invest in equities. These are small- ticket-size investors and hence investing through mutual funds seems more attractive to them,” said Bhasin.

N S Venkatesh, the CEO of Association of Mutual Funds in India, believes that a lot more needs to be done to spread the word across the country especially in tier II and tier III cities to encourage investments. Despite the rise in demat accounts, the percentage of the total population investing in financial instruments is still a paltry 8%. A lot needs to be done to ensure more people can reap the benefits of India’s growth story.


SEE ALSO: Rupee likely to touch 82 against the greenback
Advertisement
Home loans growing at a faster rate in Tier 3 and 4 districts, thanks to WFH: SBI report
{{}}