What is a Demat Account?

A Demat account is used to hold securities in electronic form. “Demat” is short for dematerialised, which represents that physical securities are held electronically instead of as “paper certificates”.

When an investor buys shares for delivery, the shares are “credited” to the investor’s demat account after settlement. When shares are sold, they are “debited” from the account. In India, demat accounts are maintained through a Depository Participant (DP) connected to either of these two depositories: NSDL or CDSL.

Note: A demat account is different from a trading account. The trading account is used to place buy and sell orders, while the demat account holds the securities.

How to Open a Demat Account in India?

Firstly, you may choose an “SEBI-registered DP” after evaluating brokerage charges and platform features. Next, go to the broker’s website/app, and register by completing your KYC. Apply for opening a Demat account online and fill out the form.

During the process, you may be required to complete an “In-Person Verification (IPV)”. It is a 30-second video verification process where you may be required to show your PAN and enter a code on camera. It’s SEBI mandatory.

Lastly, “E-Sign” your filled form digitally, using the Aadhaar OTP. After verification, your Demat account number (BO ID – 16 digit) is generated within 24 to 48 hours. Once active, you get your login credentials and can start trading in NSE and BSE from the same dashboard.