" Invest the smart way. "

Demat and Trading Accounts

What is a demat account?

The shares that you buy and sell on a stock exchange (BSE or NSE), are stored in a demat account. The shares that are stored in your demat account are dematerialized (stored in the electronic format) and not as physical shares.

When you buy shares, your broker credits your demat account with shares. These shares are reflected in your statement of holdings (You can see details of the shares you have bought in your account).

When you sell the shares in your demat account your account is debited (Shares are debited/move out of your demat account) and money is paid to you for the shares you sell).

You need to submit a DIS (Delivery Instruction Slip), to your broker, where you fill in the details of the shares you sell. There are 2 depositories in India. They are the National Securities Depositories Limited (NSDL) and the Central Depositories Services Limited.(CDSL).

Why invest in Demat and Trading Accounts


Physical share certificates can be lost, forged, stolen or destroyed in a fire. Dematerialized shares face no such problems.

No Paperwork

No Paperwork

Shares are stored in an electronic format. There is no paperwork needed. This saves on cost and increases the speed of transactions.

Ease of Transaction

Ease of Transaction

Shares arising from splits and mergers, are easily credited to your demat account. Dividends credited to bank account.

Buy and Sell Fast

Buy and Sell Fast

This is an electronic account. You can access and operate your account anywhere. You can buy and sell shares at great speed.

How can you open a demat account in India?

A demat account can be opened with a depository participant, which may be a bank or a stock broker who has a license to do so. You must have a PAN card to open a demat account as it is very important for your KYC (Know Your Client), norms.

You also require an identity proof (Voters card or your PAN card itself) and an address proof (Passport or a Drivers license).You have to sign across the copies of the passport and the PAN card and submit them to your depository participant, as part of your know your client (KYC) norms.

Charges in a demat account

Demat account opening fees: This covers the cost of the agreement with the depository participant.

Annual maintenance fees: These fees are charged in advance mainly for the maintenance of the account and the services rendered

Custodian fees: This is mainly charged for the safe keeping of shares in the demat account and is charged based on the number of shares held in the account.

Brokerage fees: Whenever a share is bought or sold, certain transaction or brokerage fees are charged.

Dematerialization fees: In order to convert physical shares to the dematerialized form, certain nominal amounts are charged.

What is a trading account?

You can only store shares in a demat account. In order to buy and sell shares you require a trading account.
You can also opt for the 3-in-1 account which is:
Your bank account + Demat account + Trading accountSimple:
You buy shares through your trading account
Money is debited from your savings bank account and shares are automatically credited to your demat account.
You sell shares through your trading account
Money is credited to your savings bank account and shares are automatically debited from your demat account.

What is a basic services demat account?

You can open a basic services demat account if you are a first time investor in the stock market. You can also open a basic services demat account, if you already have a demat account and you are the sole (only), holder of this account.

You can have only a single basic services demat account.

Why you need a basic services demat account?

If you are a small investor in the stock markets with holdings less than INR 50,000 then it would be wise to opt for a basic services demat account also called a no-frills demat account. There are no annual maintenance charges (Maintenance charges are nil), if the holdings in your demat account are less than INR 50,000.

If the value of the shares in your demat account (value of your holdings) are between INR 50,000 - INR 2,00,000, then you will have to pay an annual maintenance fee of INR 100. If the value of the shares in your account exceeds INR 2 Lakhs, then you will have to pay an annual maintenance fee, which is the same as that of any normal demat account. You have the option to convert your demat account to a basic services demat account, if the value of your shares (holdings) slips below INR 2 Lakhs.

Related Articles

14 January 2016, Thursday

How To Dematerialize Physical Shares?

When buying shares, ask yourself, would you buy the whole company?                                       &nb...

28 January 2014, Thursday

How Can an NRI Invest in Shares in India?

Stock markets in India are booming. There seems to be no limit to which they can rise .Everyday a new high is reached. One has been waiting on the sidelines all this while and jumping on the stock market bandwagon is all one cares. India is no longer a part of the fragile five. It is a strong econ...

04 January 2014, Thursday

Is Opening a basic Services Demat Account a Good idea -Demat Accounts in India?

Most of the retail investors in India blindly jump into the stock markets without weighing the pros and cons of doing so. While investing in the stock markets is per se not bad blindly buying and selling of stocks without proper research or a sound understanding of them or the markets is akin to g...

Most Read Articles

20 January 2008, Thursday

Milestones of the sensex

The BSE Sensex or Bombay Stock Exchange Sensitive Index is a value-weighted index composed of 30 stocks with the base value of 100 started on April 1979. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies ...

07 January 2014, Thursday

Why is it very Essential to have Defensive Stocks in ones Portfolio?

There is a famous saying “Better be safe than sorry”. One cannot make too many mistakes and live to tell the tale when he is investing in the stock market. Building a safety net under one’s portfolio is very essential and its true value is realized only in a recession. Fortunately...

18 January 2012, Thursday

How to Make Claim on a Health Insurance Policy

Formalities for a health insurance claim You can make a claim under a Health insurance policy in two ways : On a Cashless basis and A Reimbursement Claim On a Cashless basis : For a claim on cashless basis, your treatment must be only at a network hospital of the Third Party Admini...

In The Media