How To Open a Demat Account

Demat Account

A Demat Account allows you to buy, sell and transact shares without endless paperwork and delay’s  It is also safe, secure, convenient and a must for trading in the share market.

The Demat account reduces brokerage charges, makes pledging / hypothecation of shares easier, enables quick ownership of securities on settlement resulting in increased liquidity, avoids confusion in the ownership title of securities, and provides easy receipt of public issue allotments.

Demat Account Holders

It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit.  Further, it eliminates the risks associated with forgery, counterfeiting, and loss due to fire, theft or mutilation.  Demat account holders can also avoid stamp duty (as against 0.5 per cent payable on physical shares), avoid filling up of transfer deeds, and obtain quick receipt of such benefits as stock splits and bonuses.

Around 200 “Depository Participants” (DPs) offer the Demat account facility.  A comparison of the fees charged by different DPs is detailed below.  But there are three distinct advantages of having a Demat account with a bank – quick processing, accessibility and online transaction.  Generally, banks credit your Demat account with shares in case of purchase, or credit your savings accounts with the
proceeds of a sale on the third day.

Opening a Demat Account

Banks are also advantageous because of the number of branches they have.  Some banks give the option of opening a Demat account in any branch, while others restrict themselves to a selected set of branches.

Some private bank also provide online access to the Demat account.  So, you can check on your holdings, transactions and status of requests through the net banking facility.  A broker who acts as a DP may not be able to provide these services.

Opening an individual Demat account is a two step process :

You approach a DP and fill up the Demat account-opening booklet.  The Web sites of the NSDL and the CDSL list the approved DPs.  You will then receive an account number and a DP ID number for the account.  Quote both the numbers in all future correspondence with your DP.

How Many Demat Accounts ?

• If your shares are held in Joint names, be sure to open the account in the same order of names.  If A, B and C jointly hold 100 shares in a company and have three share certificates all listing A,B and C as the first, second and third holders respectively, one account will suffice.


• For different combinations of names, open separate account for each combination.  If the three certificates are held as ABC, BAC and CBA three different account are necessary.


• There is no limit to the number of accounts you can open.


• There is no limit to the number of DPs you can have accounts with. 


• You can even open a multiple-sign Demat account, which can be operated by multiple holders, like a joint savings bank account.


• You can open a Demat account even before you acquire your first security.