All You Need To Know About a Demat Account

When I thought of investing in the stock market, the first question was, do I need a separate account other than my bank account? After researching, I came across the term “Demat Account”. A demat account is a digital wallet used to securely hold financial securities like shares, bonds, mutual funds, etc.

In India, a demat account is mandatory to invest in the stock market. But wait, a demat account works as a wallet to store securities, how am I able to buy or sell those securities from the stock exchange? To buy/sell securities, you need a trading account.

Both a trading account and a demat account are mandatory to invest in the stock market.

Types of Demat Account

Demat account can be classified into 4 main types. Investors can opt to open a demat account in any of the following types:

1. Basic Services Demat Account (BSDA): This is a low-cost demat account meant for small investors whose investment value of holding does not exceed ₹2 lakh. The BSDA demat holders will not be charged annual maintenance charges (AMC) for a holding value up to ₹50,000.

For holding value between ₹50,000 to ₹2,00,000, ₹100 will be charged as AMC. For a holding value above ₹2,00,000, the AMC charges will be the same as a regular demat account.

2. Regular Demat Account: This is a normal demat account available for every Indian resident. The AMC charges are higher compared to a BSDA account, but they offer additional services.

3. Repatriable Demat Account: This demat account can be opened by Non-Resident Indians (NRIs). Investors can transfer investment profits from India to a foreign country. It is linked to a Non-Resident External (NRE) bank account.

4. Non- Repatriable Demat Account: It is also a type of demat account which is opened by Non-Resident Indians (NRIs). But in this account, profits earned through investment cannot be freely transferred to a foreign country. The money must stay in India and should only be used for expenses or investment within India.

Benefits of a Demat Account

Investors looking to open a demat account can enjoy several benefits. Here are the most common benefits:

1. Digital Record of Securities: All financial securities are stored electronically in a digital format, making it easy to access from anywhere.

2. Automatic Updates of Corporate Actions: Corporate actions such as dividends, bonus shares, rights issues, etc., are all automatically updated.

3. Easy Transfer Process: Shares can be easily transferred to a nominee in case of any unfortunate event.

How To Open A Demat Account Online?

To open a demat account online with Upstox, you need to visit the website or download the mobile app and complete the KYC process. Below is the step-by-step guide:

1. Visit Upstox Online:

• Visit the Upstox official website or,
• Download the Upstox App from Google Play or App Store.

2. Start the Sign Up Process

• Enter your mobile number
• Verify the number with an OTP

3. Set Your Login Pin and Email

• Set a 6-digit login pin for a secure login.
• Enter your email and verify with OTP

4. Personal Details

• Full Name
• Date of Birth
• Occupation
• Annual Income

5. Enter PAN and Aadhar Number

• Enter PAN number
• Enter your Aadhaar number and verify it with the OTP sent to your Aadhaar-registered mobile number.

6. Complete the E-KYC process

• Link your Digilocker to fetch identity proof and address details.

7. Live Photo/IPV (In-person verification)

• Allow the camera access of your device and click a live photo to verify identity.

8. Link Your Bank Account

• Add your bank account
• Enter the account number and IFSC code

9. Select Segment

• Equity
• Future and Options (requires income proof)
• Commodity
• Currency

10. Draw or Upload Signature

• Draw your signature inside the app or upload the image of your signature (on white paper).

11. Add Nominee Details

• Add a nominee to your demat account. (You can add a nominee after opening your account as well)

12. E-sign and Submit

• E-sign the account opening form with Aadhaar-based OTP and click on submit.

• Once the account opening form is submitted, the Upstox team will review it and verify the details. If all details are correct, your account will be activated, and a User ID along with a password will be sent via email/SMS.

Conclusion

A demat account is essential and mandatory for investors looking to invest in the stock market. It keeps the record of securities and stores them in a digital format, making it safe from the risk of forgery or theft. Opening a demat account is a quick and easy process that can be done online in just a few minutes.