What Is a Demat Account?

Let us answer the obvious question: What is a Demat account? We will give you a quick history lesson to answer this. A few years ago, share certificates were issued in physical form. With digitisation and improved transparency, those certificates were dematerialised and digitally stored in an online account called the Demat account. So, every time you buy a share, bond or mutual fund, it is stored in your Demat account, eliminating the need for physical certificates.

However, the Demat account meaning has evolved and symbolises the shift from paper-based trading to a secure and transparent system of investment. A Demat account makes your transactions faster, safer and hassle-free, by storing your investments digitally with trusted depositories like NSDL and CDSL.

How Does a Demat Account Work?

A Demat account stores company shares and investments electronically with a central depository like NSDL or CDSL. It is a digital locker for your stock market-related investments.

Here is how it works:

• You place an order via a trading platform (such as Upstox).
• The exchange clears the transaction.
• The shares are credited in your Demat account in T+2 (2 trading days).

In India, you cannot buy or sell securities without a Demat account.

Types of Demat Account

Here are the types of Demat accounts in India:

Types of Demat Accounts

Only a few years ago, opening a Demat account was a lengthy process, including numerous paperwork and requiring days, if not weeks, to complete client onboarding. During the entire process, there was little to no interaction between the client and the brokerage house. With the new age brokerage houses like Upstox, the process has not only become quicker, but with a dedicated customer support team, the entire process has become more reliable than ever.

Who Needs a Demat Account?

Here is a list of persons requiring a Demat account:

• Investors exploring the share market through investments in stocks, mutual funds, or ETFs (Exchange Traded Funds)

• Traders looking to trade in stocks actively

• Anyone looking to invest through IPOs (Initial Public Offerings)

In short, anyone looking to invest in shares or stock market-based investments for a short or long-term period must have a Demat account.

Charges Associated with Demat Account

Let us take a look at different types of charges you will need to pay while opening and maintaining a Demat account, compared to what Upstox offers you:

Demat Account Charges at Upstox

FAQs

What are the charges of a Demat account?

Demat accounts may have account opening fees, annual maintenance charges (AMC), transaction charges, and commissions, though platforms like Upstox offer zero account opening charges and no AMC for the first year.

Can I have multiple Demat accounts?

Yes, you can open multiple Demat accounts with different brokers using the same PAN, but each must be maintained separately.

Is a Demat required for IPOs?

Yes, you need a Demat account to apply for IPOs, as shares are allotted in electronic form only.

Can I transfer shares between different accounts?

Yes, shares can be transferred between Demat accounts using a Delivery Instruction Slip (DIS) or online if both accounts support it.

How long does it take to open a Demat account?

With platforms like Upstox, you can open a Demat account online within minutes, subject to quick KYC verification.