What is a Demat account and how can you open one?

What is a Demat Account?

I got an email last week from someone asking about opening a demat account, and in the SBI and IDFC thread you might have noticed that there are several people who don’t have demat accounts, but will have to open one soon because nowadays you need one even to invest in these bond issues.

Let’s start with what a Demat account is, and then we can move on to the several options currently available in India.

My grandpa used to have a black briefcase where he stored all his physical share certificates.

Eventually he dematerialized all his shares and moved them to an electronic briefcase, which is how he described his Demat account, and I think this is quite apt to understand the concept.

A Demat account is like a brief case where you store your shares and bonds electronically.

In India there are two Depositories – NSDL and CSDL – and you can think of these depositories as banks that hold your shares and bonds in electronic form.

A regular investor can’t deal with a depository directly, and you have to deal with their agents which are called Depository Participants (DPs).

Demat Account in India
Demat Account in India

There are hundreds of DPs in India, and you can open a demat account with one that suits you in terms of price and convenience. Normally, people open a Demat and a trading account with the same institution as it makes transactions cheaper, and is more convenient to get started as well.

So you could have a trading account and a DP account with SBI or ICICI Direct. It is in fact better to have trading and DP account with the same organization because in those cases you are waived off the DP transaction fees.

Effectively, you are using an agent in the form of a depository participant to avail the services of a depository which are storing your shares and bonds electronically.

There are hundreds of DPs in India, and NSDL provides a very comprehensive list of DPs along with their fees here and here (this data might not be up to date though).

Partial List of Depository Participants in India

If you clicked through the above links to the entire list of DPs then you’ll notice that there are a large number of DPs in India, so for this post I’m trying to create a list which has got some of the better known DP names with only their annual maintenance charges covered.

There are several other charges, but including all of them here will make comparison difficult. I have included a link to the source in this table so you can go check the details there. Since these prices are relatively low – you should think about convenience also, and see if your bank offers demat services, and if you can open one there.

Name Annual Maintenance Charge Detailed Charges
SBI Rs. 400

Rs. 350 for customers receiving statements by e-mail

Link
ICICI Bank Rs. 500

Rs. 450 for customers receiving statements by e-mail

Link
HDFC Bank Rs. 750 for less than 10 transactions

Rs. 500 for 11 – 25 transactions

Rs. 300 for greater than 25 transactions

Link
Citibank Rs. 250 Link
HSBC Rs. 750 Link
Sharekhan Rs. 75 per quarter (300 annually)

Deposit of Rs. 500

Link
Axis Bank Rs. 500 p.a. for customers authorizing Bank to debit DP charges from bank account maintained with Axis Bank, and 2,500 for others. Link
Karur Vysya Bank Rs. 250 per annum Link
Sharekhan Rs. 300 under two plans, and Rs. 500 under another Link
Bank of Baroda Rs. 350 per annum Link

How to open a Demat account?

Once you decide where you want to open your Demat account – contact their representatives, and they will get you started.

You will need the following documentation in order to open a Demat account, so keep this handy while contacting the DP.

Proof of Identity: This includes PAN card, driver’s license, passport, voter card etc.

Proof of Address: This includes the above documents and bank passbooks, identity cards issued by Centre or State governments etc.

Passport size photo

Pan card copy

You will need the following details while opening the demat account:

  • Name of account holder
  • Mailing address
  • Bank account details
  • Guardian details for minors
  • Nomination declarations
  • Standing instructions

When you contact the DP – their agent will let you know if they need any specific documentation, or if you need answers to any other specific questions.

It used to be that only equity investors cared about having a demat account, but with a lot of bond issues coming out in only demat form – I think more and more investors will need to open a demat account, and if you don’t already have one, then do think about spending this four or five hundred bucks per year to take advantage of electronic stock and bond holding.

This post should get you started on what a Demat account is, how and where you can open one, as well as the documents required to open it. Please leave a comment if you have any questions or other feedback.

140 thoughts on “What is a Demat account and how can you open one?”

  1. Mr. Manshu,
    i have savings account in sbi & Federal banks india , n im currently in Kuwait…pls tell me if i can open dmat acct in sbi by simply mailin the NRI division there?& how many days it will take? which is better option sbi or federal based on charges n services.
    Mr. Manshu, pls can u advise me if i dont ve share certificate for SBI mutual fund scheme but i ve the details like policy no: etc how do i proceed to make it electronic shares without certifcate.
    awaiting ur kind reply
    Regards SONA

    1. Hi Sona,

      Yes, you can contact either of these banks and get your account opened. I think they will ask you to open a NRO account first and then open a Demat account for you that’s linked to the NRO account. This is a lengthy process. I’d say it will take a month to open the NRO account, and I’m not sure if the Demat is parallel or you will have to wait. They need you to send documents to the home branch, so the mailing process takes a lot of time. I have recommendations between the two, please choose the one that’s more convenient to you.

  2. Sir,I m 19 years old..I have a sbi account..Can i eligible for open demat and trading a/c?

  3. Dear Sir/Madam,
    The information was very useful.Thank you very much.I shall check with the FEDERAL BANK LTD for the Demat a/c and Trading a/c.

  4. hi,

    I have a query regarding taxfree infra bonds. Which between the two currenly available bonds L& T and REC will be better in physical formPlease Reply? Also can I change the address afterwardsin the bonds if I change the address in the KYC , as I have already made my KYC in my temporary address and I wanna change it soon with my parmanent address.
    Please Reply.

    1. There is not much difference between the two infra bonds. You can go to that particular comment thread and read the discussion there, as this question has been asked a few times earlier.

      As for address in bonds, it’s highly unlikely that it changes on its own. You will have to write a letter or something to get it done.

  5. I noticed that all the information written in this column is worth to read. I am an NRI working in Abu Dhabi and would like to buy some shares, as I am new in this field, I wants to know more about.
    Can I open trade account and Demat account with ICICI bank in UAE and buy shares from them. What are the benefits opening both account through Geogit (bargeel). Pls. reply.

    1. Mubashir – I don’t know if they have a facility in your town to open one, but you can call their toll free number if there is one and check with them. If you open both accounts with the same organisation it will be cheaper, though you must compare rates of Geojit with others to see what kind of deal you’re getting.

      Since I am not affiliated with any of these organizations I don’t have an idea on their availability in specific countries etc.

    2. Hi Mubashir,

      It months later but hopefully you’ll get this.
      I too am in Abu Dhabi and want to start trading. What do you suggest as the best place and way to go about opening a demat / trading account for NRI’s?

      Thanks.

  6. We have a corpus of Rs 7 lakh which we want to invest in metal etf’s like Gold, Silver and Copper.
    Kindly guide us in the same.

    1. Suchitra,

      Right now there are only gold ETFs in the country, so you can only buy gold in the form of ETFs.
      There are silver ETF alternatives and I have written about them here:
      http://www.onemint.com/2010/11/16/silver-etf-alternatives-in-india/

      Copper and Silver can also be bought from NSEL and I have written about them here. Please ensure that you read the last part about unanswered questions about NSEL as that’s important.
      http://www.onemint.com/2011/01/13/e-gold-and-e-silver-from-nsel/

  7. hi,
    thanks for your information. I wanna open demat with axis but here i knew about the cost being higher than other dps . What can i do ?

    1. Try an option that’s convenient to you – keep in mind that having the trading and demat account with the same company will be cost effective and convenient in the long run.

    2. Hello everyone. Im a 15 year old boy from Delhi. I was studying in ARMY PUBLIC SCHOOL, DHAULA KUAN. My life was going pretty fine until last year when I was treated with BLOOD CANCER. Im not 100% fine yet, my treatment is still going on in ARMY HOSPITAL Research and Referal. Durinng my chemotherepy I got this idea of share market, I started investing right after coming from hospital. I had huge losses but I knew one day ill succeed. Looking at my health my parents were never happy with this idea of mine. But I made myself very clear that ill have to succeed in this market. Now I get some profit everyday and I have become a sub broker now. I really want maximum people to join my company as I really want to help the children who are suffering from BLOOD CANCER. Please try to understannd im doing it for a good cause.. as it is you people give brokrage somewhere and if you will join me some part of your money will go in a very good cause. My contact number is 9876074698. Please contact me and please try to join my company. Im just 15 and doing this, so please join me. email me at chanakyaatul007@gmail.com.We also provide free calls if you join our company.

  8. Its quite interesting to interact with the persons on the subjects i like & i
    would happy to receive e-mails to pass on my knowledge and also to gain more knowledge from others.
    Thanks

    1. Hello everyone. Im a 15 year old boy from Delhi. I was studying in ARMY PUBLIC SCHOOL, DHAULA KUAN. My life was going pretty fine until last year when I was treated with BLOOD CANCER. Im not 100% fine yet, my treatment is still going on in ARMY HOSPITAL Research and Referal. Durinng my chemotherepy I got this idea of share market, I started investing right after coming from hospital. I had huge losses but I knew one day ill succeed. Looking at my health my parents were never happy with this idea of mine. But I made myself very clear that ill have to succeed in this market. Now I get some profit everyday and I have become a sub broker now. I really want maximum people to join my company as I really want to help the children who are suffering from BLOOD CANCER. Please try to understannd im doing it for a good cause.. as it is you people give brokrage somewhere and if you will join me some part of your money will go in a very good cause. My contact number is 9876074698. Please contact me and please try to join my company. Im just 15 and doing this, so please join me. email me at chanakyaatul007@gmail.com.We also provide free calls if you join our company.

  9. Dear Madam,
    I m happy to know that young generation like you and more particularly ladies are
    interested in stock market.
    Prior to starting of on-line trading in shares, share trading was done in physical form
    and to complete one transaction, it used to take minimum 6 months to one year.
    Now, the trading is done instantly and it takes maximum 3 days to get the shares transferred in ones name.
    In India, there are 2 Depositories viz NSDL & CDSL. and there are Depository Participants of both NSDL & CDSL. You can open Demat A/c withe either NSDL or
    CDSL Dep Participant.
    Demat A/c is the account where the shares/mutual funds are held in electronic form
    And Trading A/c is the account where money transaction takes place.
    If you open the Demat A/c with the Bank, then you will have to do the transactions on your own. However, if you open the account with the Broker, you have both the
    facilities viz trading on your own and placing orders throuhg Call N Trade facility.
    The following Charges are charged;-
    1. Annual maintenance Charges.
    2 Charges to Demat Shares.
    3. Charges to Re-mat Shares
    4. Charges to Pledge Shares.
    Besides there are Brokerage rates.

    The Charges differ from Broker to Broker and Depository Participant.

    You may check for the same with 2 – 3 Brokers/DPs.
    You may also visit our site viz:www.PLIndia.com
    For any further clarifications, you may e-mail at: nvkmail@Gmail.com
    or call Mob. 9860765955

    Best of Luck,

    N. Karmali,
    Shree Investments, GOA
    Progress Partner
    Prabhudas Lilladher Pvt. Ltd.

  10. Hi,

    I read the article on Demat, it a very good piece of information for beginners in trading.
    I have Salary account with AXIS, I’m planning to open Demat account. When i approached AXIS, they mentioned that Demat account can be opened with AXIS and trading account with Geojit. Since they have some tie up. I also got the information that AXIS will very soon introduce trading account(may be within next quarter). After which Geojit trading accounts will be automatically transferred to “AXIS Direct”.
    Now, i’m being a new to trading and Demat operation, please advise me if it wise to go to AXIS in this situation. Or can i go with other DP’s like SBI or ICICI (having both Demat and Trading account) in same institution.

    Regards
    Priya

    1. Hi Priya – In this situation I would go for a SBI combination which is reputed, and is slightly cheaper than ICICI Direct. I don’t see much merit in waiting for Axis, so that’s what I would do.

    2. Hello everyone. Im a 15 year old boy from Delhi. I was studying in ARMY PUBLIC SCHOOL, DHAULA KUAN. My life was going pretty fine until last year when I was treated with BLOOD CANCER. Im not 100% fine yet, my treatment is still going on in ARMY HOSPITAL Research and Referal. Durinng my chemotherepy I got this idea of share market, I started investing right after coming from hospital. I had huge losses but I knew one day ill succeed. Looking at my health my parents were never happy with this idea of mine. But I made myself very clear that ill have to succeed in this market. Now I get some profit everyday and I have become a sub broker now. I really want maximum people to join my company as I really want to help the children who are suffering from BLOOD CANCER. Please try to understannd im doing it for a good cause.. as it is you people give brokrage somewhere and if you will join me some part of your money will go in a very good cause. My contact number is 9876074698. Please contact me and please try to join my company. Im just 15 and doing this, so please join me. email me at chanakyaatul007@gmail.com.We also provide free calls if you join our company.

  11. Hi
    I am also one of the participants in the workshop in dubai and though I do have a demat account with Geojit, I am a bit confused if i need to continue investing through them, because the charges are higher than what others offer. Appreciate if you could advise me ( going through the offers from India infoline and kotak Mahindra too) because in the long run we would be paying a lot to the brokers if we plan to invest every month.

    1. If I were in your position, I would choose the same broker and Demat account based on their price and convenience. I think you have already identified the cheaper option.

      If you have the demat and trading account with the same company that will work out to be cheaper for you. So if you open one with Kotak or India Infoline or wherever then you can use just that one and get rid of anything else that you have.

  12. Dear Manshu,

    It is a very useful article for beginers.
    Also, can you tell us what will happen to a dmat a/c
    opened abroad by a NRI after coming back to India.

    regards,
    pramesh

    1. As far as I know Pramesh you don’t need to make any changes to your Demat account once you return, and you can continue using the same one. I’m not sure about this though, so you might want to check this with the bank when you open the account.

  13. Hi Manshu,

    Nice article on Demat Account. Very nicely presented.
    Now I got the concept of Demat Account.
    One request, could you please explain, suppose, if I open a Demat Account with DP, how a Transaction take place and how do I make transactions?
    Please reply..

    Thanks again.

    Best Regards,
    Sandip

    1. Thanks Sandip. If you want to buy stocks then you will have to open a trading account also, so say you open a Demat account with SBI, and trading account with SBI Caps, and then want to buy 10 shares of Reliance.

      You will place your order through your trading account, who will send it to the exchange, and they will execute your order, and after that your Demat account will be credited with the 10 shares. Your bank account will be debited before that.

      If you buy things like the Infra bonds that were recently out in that case instead of placing an online order you will fill up the form, and mention your account number in the form, where the bonds will be credited. In order to sell them you will have to wait for the lock in period, and after that you can send a notification to the issuer to buy them back.

  14. Hi Manshu,

    This info is really helpful not only to new investors but also existing investors. Rajesh, even i’m curious to know if the initiative was taken by you and hoping that it gives you more than the desired result. I’m also, looking to conduct a small conferenece in Mumbai soon as we offer solutions to most of the financial needs of all including NRI’s. Shall keep you guys posted.

    Cheers!!

    Imran (iikazi81@gmail.com)

  15. Dear Manshu,

    Thanks for this info. Recently we had a 4 days workshop conducted by Dr. Bharath Chandra on how to invest wisely. More than 110 people participated and we formed a little group here in Dubai. We now have almost 55 active new investors who are keen to learn how to invest smartly. Several people who attended this seminar did not have a demat account and this blog from you should help them to open one which I will be forwarding tonight.

    Thank you & wish you all the best from Dubai.

    Warm regards,

    Rajesh

    1. Wow that’s awesome! thanks a lot!

      So, how did the conference go? What themes did you guys touch upon, and I’m curious to know if this is your initiative?

    2. Hi Rajesh,

      It’s a year later but hopefully you’ll get this.
      I too am in UAE and want to start trading. What do you suggest as the best place and way to go about opening a demat / trading account for NRI’s?

      Thanks.

      1. Please contact me for Demat/Trading Ac requirement , Can arrange in UAE,SAUDI ARABIA,QATAR ETC.
        India Infoline has about 4000 business locations in about 900 cities. Apart from India we are present in 8 other countries – Singapore, Dubai, USA, UK, Switzerland, Hong Kong, Mauritius and Sri Lanka.

        Regards ,Jatin
        +91-9268372023
        +91-9999948173(Whatsapp)

    3. Dear Rajeshji,

      Hi, i am rishi from mumbai, firstly wud like to kno if u r frm dubai or india. also if you are individual investor or what?? if ok with u i can offer you a business proposal. interested??? call on 8554858189.

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