Everything You Need to Know about Demat Account 

Last Updated on April 14, 2025 – by Lubhanshi Lamba

A Demat Account is a digital repository to hold security in electronic form. It is like a bank account that holds your share certificates in electronic format. It makes the complicated process of holding bonds, government securities, insurance and ETFs easy. You don’t need to deal with the tension of physical handling and maintenance of related documents. 

A Demat account ensures seamless transactions in the stock market. Demat account gives investors a chance to make a strong portfolio of bonds, mutual funds, and other financial assets. This paperless way of managing funds is becoming popular among this generation’s investors. 

Features of Demat Account 

• Access in Ease: As an investor, you can manage your financial assets through net banking without any hassle. 
• Effortless Dematerialisation: A depository participant is there to help you convert your physical financial assets into an electronic form or vice versa. 
• Automated Receipts: Investors’s dividends, interest payments, and refunds are credited into their accounts via an Electronic Clearing Device (ECS).
• Share Transfer: Investors can transfer their shares quickly and more efficiently with a Demat account. 
• Loan against securities: As an Investor, you can obtain a loan by putting your securities as collateral. 

How to Open a Demat Account in India

Online 

You can easily open a new Demat account. Just follow these steps to start your paperfree finance journey. 

1. Choose a Depository Participant (DP): Assessing the services, reputation, and charges of DPs as per your preference. 
2. Fill in basic details: Visit the broker’s site and fill out the online application form with details like name, phone number, email, and PAN card information. 
3. Link bank account: you need to link your bank account and enter important details like account number. IFSC code, account holder name, and more. This will ensure smoother transactions of interest payments, dividends received, or refunds.
4.  Upload documents: You need to verify account details by uploading your photograph, ID proof, and address proof. 
5.  E-sign the form: Most DPs provide the E-signing option using your Aadhar-linked number. By signing the form, your paperless process is complete.
6.  Submit & get your account details: After the completion of all necessary steps, you will receive your Demat account number and login details to kickstart your digital finance journey.

Offline

To open a Demat account offline, you can follow the following steps to get free from paperwork.

1. Choose a Depository Participant (DP): you need to choose a DP to form a Demat account. It can be a bank, financial institution, or brokerage firm. They are registered with  National Securities Depository Limited (NSDL) or the Central Depository Services Limited (CDSL).
2. DP’s Office Visit: You will have to make an appointment and visit the nearby branch physically. You can collect the Demat account application form. 
3. Filling out the form: You need to enter all the necessary details in the form like personal information, bank account details, and your Income Tax details (if required).
4. Document Submission: You must submit your KYC documents that include proof of identity, address proof, and bank account proof to open a Demat account. 
5. Agreement sign: Your DP will give you a client agreement that outlines the terms and conditions of the Demat account. Thoroughly read the document and sign it. 
6. Verify Details: Some DPs may conduct an in-person verification or may request you to visit their office to verify your identity.
7. Demat Account Details: After your application and documents are processed, you will receive your Demat account details. It will come with a client ID to manage your account. 

How Does a Demat Account Work?

1. First, you need to log into your Demat and Trading account which is linked to your bank account.
2. You can buy or sell your shares from the Trading account and your Dp can make the request to stock exchange on an immediate basis. 
3. If you want to buy the shares, the stock exchange searches for a seller who wants to sell shares. And if the price matches, it is sent to the clearance house and the respective no. of shares are debited from seller’s Demat account and credited into your. It is vice versa. 
4. It’s important to consider that your and seller’s Demat accounts can be linked to different Depository Participants. 

Trading Account Vs Demat Account 

Benefits of a Demat Account

There are numerous benefits of opening a Demat Account. Check them out:

1. Paperless interaction: Earlier, shares used to exist as physical paper certificates. However, after the introduction of the Demat account, all the securities were converted into electronic format. Demat account saved us from the hassle of handling documents. 
2. Storage Ease: Electronic format allows you to store numerous shares at a time and trade in volumes. You can easily keep track of no. of shares in your account. Additionally, you can rely on your Demat account to execute fast share transfers. 
3. Financial instruments hole: You can use your Demat account to hold many assets at a time like mutual funds, shares, Exchange Traded Funds (ETFs), government securities, etc. This way, you can comprehensively approach your investment plans. You can even build a diverse portfolio. 
4. Access: You can easily access your Demat account by smartphone or laptop. It allows you to manage your investments from anywhere at any time. It makes investing safe and financially secure with easy accessibility. 
5. Nomination: A Demat account comes with the nomination feature. If the account holder passes away, the appointed nominee receives the shareholding in the account. It is best to make plans for future mishappenings and avoid legal disputes. 

Demat Account Details & Credentials

You need to get the following demat account details from your DP after a successful opening of the Demat Account:

1. Demat Account Number: This is a combination of 16 characters with letters and numbers. It is also known as beneficiary ID’ if under CDSL. 
2. POA Number: A part of the Power of Attorney Agreement. The POA number is assigned when an investor permits its stockbroker to operate his/her account as per the instructions. 
3. DP ID: It is given to your DP and becomes a part of your Demat Account Number. 
4. A unique login ID and password for the Demat and Trading Account is assigned for online access. 

Demat Account Charges 

1. Demat Account Opening Charges: You need to appoint a Depository Participant (DP) when opening a Demat account online. A DP is a broker firm that holds your securities and protects them. You will need to pay nominal opening charges to open a Demat Account online. However, some DPs don’t ask for extra charges to open a Demat Account with them. You can even have the option to choose a Demat Account that best suits your financial needs. 
2. Annual Maintenance Charges: After opening the account, you might have to pay the maintenance fee on an annual basis. These charges can range from Rs. 300 to Rs. 800. The amount can vary on DP and your annual transactions. But, some institutions don’t ask for these nominal charges. It usually depends on the brokerage firm you choose. For instance Zerodha
   

Types of Demat Account 

There are mainly 2 types of Demat accounts for Indian residents  as follows:

1. Regular Demat Account: It is offered by NDSL and CDSL by default. These accounts are used by investors to hold shares and securities in electronic format. You can easily trade on the stock exchange and is ideal for you as a resident of India. A regular Demat Account allows you to hold an unlimited number or value of securities. You need to pay AMC to hold a Demat account for a long period. 
2. Basic Service Demat Account: It is a basic version of a regular Demat account which is meant for Indian residents. It is designed to encourage small investors in stock market participation at a low cost. BSDA offers zero annual maintenance charges if the value of securities is up to Rs. 5,00,000. It is an ideal choice for people who trade occasionally or invest small amounts. 

Top Brokers Providing Demat Account 

1. Angel One

It is India’s one of the best Demat Account brokers because of its low cost and user-friendly services. It offers Rs 0 brokerage up to Rs. 500 for the first 30 days. Then, flat Rs. 20 or 0.1%per trade across segments. It has 0 AMC for the first year and Rs. 240 thereafter. It is a cost-effective choice for investors and provides many services including equity, F&O, commodities, mutual funds and advanced trading platforms. It is an ideal choice for beginners and experienced traders with ease of use, educational resources, and a reliable interface. 

Features:

• Free demat account opening with zero AMC for the first year.
• User-friendly trading platforms with research and market insights.
• Dedicated customer support and relationship managers.

2. Zerodha

Zerodha is India’s leading broking service provider for its low-cost offerings. It offers free equity delivery trading and flat ₹ 20 or 0.03% (whichever is lower) per executed order on intraday trades. It can be done across equity, currency, and commodity trades. It provides free Demad Account opening for Indian residents and Rs. 100 for annual maintenance charges. It is used by around 7.5 million active users because of features like transparency, ease of use, and efficiency.

Features:

• Free demat account opening for Indian residents.
• Annual maintenance charge of ₹100 for demat accounts.
• No hidden charges or commissions. 

3. Groww

This Indian financial service company and online brokerage platform is deal for all kinds of investors. It has a user-friendly platform for investing in stocks, mutual funds, digital gold, US stocks, and fixed deposits. It holds a 23% market share and provides zero-commission mutual fund investments. Groww offers a flat ₹20 or 0.1%, whichever is lower brokerage per trade for equity and derivatives. It is famous among investors because of its simplicity, transparency, and investor-friendly features.

Features:

• Invest in 5,000+ direct mutual funds with no commission.
• Real-time market data with advanced charting tools.
• Trade Futures & Options with risk management features.

4. 5 Paisa 

This Indian discount broker offers affordable online investment services. It provides trading in equities, commodities, currencies, mutual funds, and IPOs. 5 Paisa offers flat Rs. 20 brokerage per trade and free Demat account opening for investor’s convenience. It is available on the web and in movies with features like real-time data, advanced charts, and Robo Advisory tools. The online platform supports direct mutual fund investments at zero commission. You can access additional services like margin funding, pledging, and derivatives strategies. 5 Paisa is indeed a cost-effective choice for investors who are looking for a digital trading experience.

Features:

• Flat ₹20 brokerage per trade across all segments.
• Free demat account opening with digital KYC.
• Invest in stocks, mutual funds, and IPOs on one platform.

5. Sharekhan

This is a prominent Indian full-package brokerage firm. It offers many financial services like equity and derivatives trading, mutual funds, IPOs, and portfolio management. Sharekhan has a free Demat account opening with Rs. 400 as annual maintenance charges. AMC is waived off for the first trading year and brokerage fees include 0.30% for equity delivery, 0.02% for intraday and futures, and ₹20 per lot for options. Currency option charges are Rs. 5 per slot and additional fees include Rs. 16 DP changes transactions and ₹50 for call & trade services.

Features:

• Free account opening with ₹400 AMC from the second year. 
• 0.30% brokerage on equity delivery and ₹20 per lot for options.
• User-friendly mobile and web trading platforms.

Importance of Demat Account 

Here are some key points that highlight the importance of Demat accounts and why you should open one

1. Quick access: A Demat account is a convenient way to access all the investments and statements through net baking. You can easily track your investments and manage them without hassle. 
2. Easy Dematerialization: A Depository Participant can help you convert your physical share certificates into electronic form or vice versa. It makes the dematerialization process seamless and easy. 
3. Share transfer: Demant account offers easy transfer of shares. This task has become time-saving with the help of a Demat account and eliminates the need of physical paperwork or delay. 
4. Liquidity: It has a simple and quick process of selling shares online faster. You can conveniently convert your shares into cash and improve liquidity. 

Conclusion:

A Demat account is a necessity for modern-day investors. It allows them a safe, paperless, and efficient way of trading. Beginners and experienced traders can have a Demat account to simplify their financial journey. They can enjoy the benefits of reduced risk and easy transactions with various types like Regular, BSDA, and more. Understand its benefits, charges, and functionality to make an informed decision.