Nearly 77% of India’s demat accounts were reported as inactive or dormant based on transaction activity, highlighting an important gap between the number of accounts opened and the number of investors actively participating in the securities market. A June 2026 report citing December 2025 data said India had 21.6 crore demat accounts, but only around 5 crore had witnessed activity during the preceding year. The figure needs context, however, because one individual can hold multiple demat accounts and “dormant” does not necessarily mean the investor has permanently left the market.
Introduction
India’s demat account base has expanded rapidly over the past few years, supported by digital onboarding, discount brokers, rising financial awareness and increased retail participation in equities and IPOs.
But the 77% dormant demat accounts figure raises a different question: how much of this account growth represents sustained investing activity?
The answer is more nuanced than the headline suggests. Dormant accounts can belong to IPO applicants, investors maintaining multiple broker accounts, people who have paused investing, or individuals who simply hold securities without frequent transactions.
Context and Background
The growth in demat accounts has been substantial. SEBI research has also highlighted the difference between the number of accounts and the number of unique investors. Its research found that individual demat holders, after PAN based de duplication, were significantly fewer than the total number of individual demat accounts.
This distinction is important because 21 crore demat accounts do not represent 21 crore separate investors.
SEBI’s Investor Survey 2025 provides another useful perspective. It found that 8.5% of Indian households reported having a demat account. Among these demat account holding households, 62% invested in stocks and shares, while 38% were classified as dormant demat account holders because they either invested in other securities market products or were not currently investing in securities market products.
Therefore, the 77% figure should not be interpreted as 77% of Indians abandoning the stock market.
What Does a Dormant Demat Account Mean?
A dormant demat account generally refers to an account where there has been no relevant securities transaction for a specified period.
SEBI’s March 2024 framework defines an inactive or dormant demat account as one where no transaction has taken place continuously for 12 months. The framework also provides safeguards for such accounts to reduce the risk of unauthorised transfers.
Importantly, dormancy is different from closing an account.
An investor may stop trading for several months while continuing to hold shares. Another investor may maintain an account purely for occasional IPO applications. Someone with multiple brokerage accounts may actively use one while leaving the others unused.
Why Are So Many Demat Accounts Inactive?
1. Multiple accounts
Opening a demat account has become easier with digital KYC and app based onboarding. Investors may therefore maintain accounts with several brokers but regularly transact through only one.
This means account level data can overstate the number of active individuals participating in the market.
2. IPO driven account openings
The IPO boom encouraged many first time investors to open demat accounts. Some investors may have applied for an IPO but not continued investing after the listing.
Such accounts can subsequently become inactive without indicating that the person has completely lost interest in financial markets.
3. Investors taking a break
Market volatility can influence participation. Investors may reduce trading after experiencing losses, changing financial priorities or deciding to wait before making additional investments.
This is particularly relevant for short term traders, whose participation can change quickly with market conditions.
4. Long term investors behave differently
A dormant account does not necessarily mean an investor is financially inactive.
Someone holding shares for several years may make very few transactions. Their account could appear inactive under a transaction based definition even though they continue to own investments.
Impact on Indian Investors
The large inactive account pool provides an important reminder for investors: having a demat account is only the starting point of market participation.
Investors should periodically check their account status, holdings, registered mobile number, email address, KYC details and nominee information. They should also review whether multiple accounts are necessary and understand the charges associated with maintaining them.
SEBI has also introduced measures aimed at improving the security of inactive accounts.
For brokers and market infrastructure institutions, the challenge is different. They need to maintain secure systems and accurate investor records while ensuring that dormant accounts cannot become an easy target for unauthorised activity.
Opportunities and Risks
The large inactive demat account base represents both a challenge and a potential area for deeper financial participation.
Better investor education could help people understand products, risks and long term investing principles. Improved digital communication can also make it easier for investors to update KYC information and manage their accounts.
At the same time, inactive accounts create security concerns. SEBI’s framework specifically includes additional safeguards around transactions involving dormant accounts because inactivity can increase the need for verification.
Another risk is misreading headline account numbers. Demat accounts, unique investors and active investors are different measures and should not be treated as interchangeable.
Conclusion
The case of 77% dormant demat accounts highlights an important change in the way India’s retail investment story should be measured. The country has added millions of demat accounts, but account growth alone does not reveal how many unique individuals are actively investing.
The more useful indicators are active investors, unique PAN based investors, investment behaviour and the value of securities actually held.
For investors, the practical takeaway is simple: periodically review your demat accounts, keep KYC and nominee details updated, understand account charges and avoid maintaining unnecessary accounts. For the broader market, the next phase of growth will depend not just on opening more accounts, but on building sustained, informed and secure participation.
Frequently Asked Questions
1. What does a dormant demat account mean?
A dormant demat account generally refers to an account with no relevant securities transaction for a continuous period. Under SEBI’s March 2024 framework, an inactive or dormant demat account is one where no transaction has taken place for 12 months.
2. Are 77% of Indian investors inactive?
No. The 77% figure refers to demat accounts, not necessarily unique individuals. One person can maintain multiple demat accounts, and some investors may simply use one account while leaving others inactive. Therefore, the figure should not be interpreted as 77% of Indian investors leaving the market.
3. How many demat accounts are there in India?
A June 2026 report citing December 2025 data said India had approximately 21.6 crore demat accounts. However, the number of unique investors is lower because individuals can have multiple demat accounts.
4. Why do investors open multiple demat accounts?
Investors may open multiple accounts to access different brokerage platforms, investment products, pricing structures or features. Some may also open an account for a specific IPO or investment purpose and subsequently stop using it.
5. Does a dormant demat account mean it has no shares?
No. An account can be inactive from a transaction perspective while still holding securities. Dormancy should therefore not automatically be interpreted as a zero balance or empty demat account.
6. Can a dormant demat account be reactivated?
The process depends on the depository participant and the reason for inactivity. Investors may need to complete required verification or update account information before transactions can resume. They should contact their broker or DP for the applicable procedure.
7. What did SEBI’s Investor Survey 2025 say about dormant investors?
SEBI’s Investor Survey 2025 classified 40% of investor households as dormant investors because they had not made fresh investments during the previous year. It also found that 38% of demat account holding households were dormant demat account holders under its survey classification.
8. Is it necessary to close an unused demat account?
Not necessarily. Investors should first check applicable annual maintenance charges, holdings and account requirements. If an account is genuinely unnecessary, they can consider closing it through the relevant depository participant after completing the required process.
9. Are dormant demat accounts a security concern?
They can require additional safeguards because prolonged inactivity may increase the risk of unauthorised transactions going unnoticed. SEBI has prescribed specific safeguards for inactive and dormant accounts, including additional controls around certain account related requests.
10. What should investors check if they have an old demat account?
Investors should verify their holdings, KYC details, registered mobile number and email address, nominee information, account charges and transaction history. They should also check whether they have other unused demat accounts and keep only those that serve a genuine purpose.
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Jaspreet Singh Arora is the Chief Investment Officer at Equentis, where he heads a seasoned team of equity analysts and turns two decades of market experience into portfolios that consistently beat the benchmark. A go-to voice on cement, building-materials, real-estate, and construction stocks, Jaspreet previously ran research desks at leading brokerages, honing an eye for the metrics that truly move share prices. His plain-spoken analysis helps investors cut through noise and act with conviction. When he’s not deep-diving into earnings calls, you’ll find him unwinding over sports, weekend cricket or a good history podcast.
