the process follows a fixed cycle.
opening. you open a demat account through a sebi-registered depository participant. after verification, you get a bo id (beneficial owner identification number). this is your unique account number .
buying. you place a buy order through your trading account. once the trade settles, the securities are credited to your demat account .
selling. when you sell, securities are debited from your demat account. the sale proceeds are credited to your bank account .
settlement. india follows a t+1 settlement cycle. shares move in or out of your demat account the next working day .
tracking. you can view all holdings, past transactions, and statements online anytime .
demat account vs trading account
these two work together but do different things.
you need both. the trading account executes trades. the demat account stores what you own.
benefits of a demat account
no physical certificates. you do not have to worry about lost, damaged, or stolen share certificates .
faster settlements. electronic settlement means sale proceeds reach your bank account quickly .
all investments in one place. shares, mutual funds, etfs, bonds, and ipo allotments can be held together .
easy transfers. you can transfer or gift shares electronically without paperwork .
use as collateral. you can pledge your securities to get loans .
nomination facility. you can nominate a beneficiary for your holdings .
types of demat accounts
about bsda. the basic services demat account was introduced by sebi to reduce costs for small investors. if your holdings are up to ₹4 lakh, there is no annual maintenance charge. if holdings are between ₹4 lakh and ₹10 lakh, the amc is capped at ₹100 per year plus gst .
demat account charges
several charges apply. some are one-time. some are recurring. some apply only when you trade.
bsda charges. for bsda accounts, amc is zero for holdings up to ₹4 lakh. for holdings between ₹4 lakh and ₹10 lakh, amc is capped at ₹100 per year plus gst .
how to open a demat account
step 1. choose a depository participant. select a sebi-registered broker or bank. compare charges, app quality, and customer support .
step 2. start the online application. visit the broker’s website or app. click on “open demat account.” enter your mobile number, email, and pan .
step 3. fill the form. provide personal details, nominee information, bank account details, and trading preferences. basic accounts do not require income proof .
step 4. upload documents. you will need pan card, aadhaar card or address proof, bank proof (cancelled cheque or statement), and signature .
step 5. complete e-kyc. verify your identity using aadhaar otp or digilocker. upload documents digitally .
step 6. sign digitally. use your aadhaar-linked mobile for digital signature on the client master agreement .
step 7. complete in-person verification. some brokers require a video call. others skip it for aadhaar-linked accounts .
step 8. pay and submit. account opening is often free. approval takes 24 to 48 hours .
step 9. activate. you will receive your client id, dp id, and login credentials by email or sms. link your bank account and start trading .
offline option. visit a broker branch with documents. fill forms manually. complete verification. account opens after approval .
recent sebi changes (2026)
sebi issued a circular effective april 2, 2026. key changes include :
- letter of confirmation removed for duplicate certificates, name corrections, and address changes
- securities credited directly to demat account for corporate actions
- form isr-4 and client master list required for service requests
- 30-day processing deadline for investor service requests
from september 1, 2026, new single-holder demat accounts require nomination details or an opt-out declaration .
frequently asked questions
1. do i need a demat account to invest in mutual funds?
no. you can invest in mutual funds directly through the fund house or platforms without a demat account. demat is only required for stocks, etfs, and bonds .
2. what is the minimum amount needed to open a demat account?
zero. you do not need any minimum balance to open a demat account .
3. can i have more than one demat account?
yes. you can have multiple demat accounts with different depository participants. but you can only have one bsda account across all depositories .
4. what is a bsda account?
a basic services demat account is a low-cost account for small investors. amc is zero for holdings up to ₹4 lakh. between ₹4 lakh and ₹10 lakh, amc is capped at ₹100 per year .
5. what happens if my demat account is inactive?
if you do not trade for a long period, the account may become dormant. you need to reactivate it by submitting kyc documents again. contact your depository participant to unfreeze it .
