What is a demat account?
A demat account (short for *dematerialised account*) holds your shares, mutual funds, ETFs, bonds and government securities in electronic form, the way a bank account holds your money. Before demat, shares were physical paper certificates that could be lost, torn or forged. Today SEBI requires securities to be held electronically, so you need a demat account to invest in the Indian stock market, buy an IPO or hold most ETFs.
Demat account vs trading account
People often confuse the two. You usually open both together with a broker, but they do different jobs.
| Account | What it does |
|---|---|
| Demat account | Stores your shares and securities, like a locker |
| Trading account | Places buy and sell orders on the exchange |
In short: the trading account transacts, the demat account holds what you own.
How to open a demat account
- Pick a SEBI-registered broker or depository participant (DP).
- Fill the online application with your PAN, Aadhaar and bank details.
- Complete KYC and in-person verification (IPV), usually a short video.
- E-sign the form with an Aadhaar OTP.
- The account opens in one to two working days and you get a BO (beneficiary owner) ID.
Most brokers now let you open a demat account online, paperless and often free in a few minutes.
Documents required
- PAN card (mandatory)
- Aadhaar (for KYC and e-sign)
- Bank proof - a cancelled cheque or recent statement
- Photograph and signature
- Income proof (only if you want to trade in futures and options)
Charges to check
- Account opening: frequently free, but confirm.
- Annual Maintenance Charge (AMC): roughly ₹0-₹750 a year depending on the broker.
- DP / transaction charges: a small fee each time you sell.
Once your account is active you can start a SIP, buy ETFs, or apply for an IPO. See the Investing Hub to decide what to buy first.