March 5: It has been found that 32 percent of the Demat accounts opened for share transactions are inactive. According to CDS and Clearing Limited (CDSC), more than 1,763,000 of the total 5,577,000 Demat accounts opened so far are inactive. CDSC spokesperson Suresh Neupane said that there are no shares of any company in those accounts and such accounts have not been renewed for a long time. According to him, one person can open up to two Demat accounts.

According to Neupane, if any investor has opened two Demat accounts, both accounts should be in operation. Neupane informed that 32 percent of Demat accounts which are currently inactive have not been in operation since 2073 BS.

Neupane says that according to the provision of renewal by paying Rs 100 per year, the renewal cost for the re-activation of the accounts that are currently inactive will be quite high. He suggests that only closing those accounts will be cost-effective. According to him, investors are not interested in the operation of those accounts which have not been renewed for a long time even though there is a system that renewal can be done from home.  He stated, “There is no point in increasing the number of inactive accounts just to maintain the numbers.”

As per the regulatory body, Securities Board of Nepal (SEBON), CDSC may close inactive Demat accounts as deemed necessary.

Muktinath Shrestha, the spokesperson of the board, speculated that 32 percent of the Demat accounts mandated for securities transactions may have been opened in the name of several members of the same family. Shrestha speculates that even though the accounts were opened in the of name of several members of the same family, only some members may have participated in the transaction. He said that keeping the inactive account without closing it will not have much effect.

Demat account was made mandatory when applying for the purchase of securities of public shares within the valley from July 16, 2016 and from January 14, 2017 throughout the country. The number of Demat accounts started to increase as it became mandatory. According to CDSC, only 100,000 Demat accounts were opened till January 15, 2017. More than 5,400,000 such accounts have been added in the last six years. CDSC informed that the Demat account was opened for the first time in Nepal on July 16, 2012.