Open a Free Demat Account with Step by Step process

What is Demat Account

A Demat Account is an electronic account used to hold and manage shares, bonds, mutual funds, and other securities in digital form. It replaces the need for physical share certificates, making trading safe, fast, and paperless. When an investor buys shares, they are credited to the Demat account, and when sold, they are debited. It works like a bank account but for investments.

In India, Demat accounts are maintained by depositories such as NSDL and CDSL through registered Depository Participants. This system ensures smooth, secure, and convenient handling of all investment transactions online.

Features of a Demat Account

When you decide to open Demat account, you must understand different Demat account features that make this account appealing:

  1. Electronic Storage:
    Holds all your shares, bonds, and securities in digital form, removing the need for physical certificates.
  2. Easy Access:
    Investors can check, manage, and track their holdings anytime through online or mobile platforms.
  3. Safe and Secure:
    Reduces the risk of theft, loss, or damage of paper certificates by keeping records electronically.
  4. Quick Transfer:
    Shares are instantly credited or debited from your account when you buy or sell them.
  5. Reduced Paperwork:
    Simplifies trading and record keeping by eliminating manual paperwork.
  6. Nomination Facility:
    Allows investors to assign a nominee to receive holdings in case of an unforeseen event.
  7. Corporate Benefits:
    Automatically receives dividends, interest, or bonus shares directly into the account.
  8. Linking Convenience:
    Easily linked with your trading and bank accounts for smooth fund and share transactions.
  9. Consolidation: Holds multiple financial instruments, such as stocks, bonds, mutual funds, and ETFs, in a single account.
  10. No stamp duty: Eliminates the stamp duty that would be applicable on the transfer of physical shares.

How to Open a Free Demat Account

Here is a guide to opening a free Demat account from the comfort of your home:

  • Choose a Depository Participant (DP): Select a reliable DP like Sherkhan, Dhan, Paytm, which offers free Demat account opening.
  • Visit the DP’s Website: Go to the official website or download the apps from your relevant app store.
  • Sign-up: Sign up by entering your email ID, address, and mobile number. Verify your details with the OTP to complete the registration.
  • Fill the Online Application: Provide your personal details, including your name, address, PAN number, Aadhaar number, and bank account information. You will also have the option to select a nominee for your Demat account.
  • Upload Documents: Submit scanned copies of the necessary documents for KYC verification, such as your PAN card, Aadhaar card, and a cancelled cheque or bank statement.
  • Select the Exchange: Select your preferred exchange (NSE or BSE) and trading segments (derivative, commodity, currency, equity trading). For F&O trading, upload salary slips, bank statements of the last 6 months, or the latest ITR.
  • E-Sign the Agreement: To authenticate your details, digitally sign the application form. Many broker offers an e-signing option.
  • Account Activation: Upon successful verification, your Demat account will be activated, and you will receive your account details.
  • Fund Your Account: Transfer an initial amount to start trading.

Following the above would allow you to open a free demat account quickly as all the steps can be completed in a few minutes.

Benefits of Opening a Demat Account

Many individuals choose to open a trading account along with a Demat account for seamless transactions. Here are the key benefits of opening a Demat account:

  • Convenience: Manage all your investments in one place, accessible 24/7.
  • Safety: Eliminate risks associated with physical certificates like loss, theft, or damage.
  • Cost-Effective: Reduce paperwork and associated costs of handling physical shares.
  • Quick Transactions: Execute trades faster, leading to better opportunities in the market.
  • Easy Portfolio Tracking: Monitor your investments and their performance in real-time.
  • Seamless Corporate Actions: Receive dividends, bonuses, and other benefits directly in your account.
  • Flexibility: Hold a variety of securities like shares, bonds, ETFs, and mutual funds in one account.
  • Loan Against Securities: Use your Demat holdings as collateral for loans.
  • Paperless IPO Applications: Apply for Initial Public Offerings (IPOs) directly through your Demat account.
  • Transparency: Get a clear view of all your transactions and holdings, aiding in better financial planning.

 

 

Documents Required for Opening a Demat Account

  1. Proof of Identity (POI):
    • PAN Card (mandatory)
    • Passport / Voter ID / Aadhaar Card / Driving License
  2. Proof of Address (POA):
    • Aadhaar Card / Passport / Voter ID / Utility Bill (not older than 3 months) / Bank Statement
  3. Proof of Income: (Required for trading in derivatives)
    • Salary slip / Income tax return / Bank statement (last 6 months)
  4. Bank Account Proof:
    • Cancelled cheque or passbook copy
  5. Passport-size Photographs:
    • Recent coloured photographs for KYC records
  6. In-Person Verification (IPV):
    • Verification by the broker or Depository Participant to confirm identity
  7. Income Proof: For F&O trading – salary slip, bank statement of last 6 months, or latest ITR
  8. Digital Signature: Captured through the app

Having these documents in digital format will expedite the online application process. Remember, the exact list may vary slightly depending on the DP you choose. If you choose a zero brokerage Demat account, the same set of documents required for Demat account is applicable.

What are Charges Applicable for Demat Account

While you can open a trading account for free with many brokers, there are some Demat account charges associated with maintaining and operating this account.

Let’s have a look at the charges for a Demat account of difference broker:

  • Account Opening Charges: ₹0 (Free account opening)
  • Brokerage on ETF: ₹0
  • Annual Maintenance Charges (AMC): ₹0 for the first year, thereafter ₹25 per month
  • Transaction Charges: Flat ₹20 per order for all intraday and delivery trades
  • Margin Trading Facility (MTF): Interest rate of 12% per annum. 0% for first 30 days
  • Dematerialization Charges:₹50 per share certificate, plus courier charges.
  • Pledge Invocation: ₹20 per transaction.
  • Other Charges: May include DP charges, statutory levies, and taxes as applicable

What are the Eligibility Criteria for Opening a Demat Account

Demat account eligibility criteria in India are as follows:

  • Age: You must be at least 18 years old to open a Demat account in your name.
  • Residency: Both resident Indians and Non-Resident Indians (NRIs) can open Demat accounts.
  • Valid Documents: You should have valid KYC documents, as mentioned in the documents section.
  • PAN Card: A valid PAN card is mandatory for opening a Demat account.
  • Bank Account: An active bank account in your name is required for fund transfers.
  • Mobile Number and Email: A valid mobile number and email ID for communication and verification.

There are no specific income criteria for opening a basic Demat account. However, brokers may have additional financial requirements for trading derivatives or using margin facilities.

Frequent Asked Questions

What is the difference between a Demat account and a trading account?

A Demat account is used to store your shares and securities electronically, similar to how a bank account holds your money

A Trading account, on the other hand, is used to buy and sell shares in the stock market.
When you purchase shares, they are credited to your Demat account; when you sell them, they are debited.
In short, the trading account is for transactions, while the Demat account is for holding your investments safely.

Yes, it is compulsory to have a Demat account if you want to invest in stocks in electronic (online) form.
All shares today are stored digitally, and a Demat account holds them safely after you buy.
Without a Demat account, you cannot receive or hold shares bought through the stock exchange.
However, for mutual funds or IPO applications, you may invest without directly using a trading account, though a Demat account is still recommended for easy tracking and management.


A Demat account works as an electronic storage system for your shares and securities, similar to how a bank account holds money.
When you buy shares, they are automatically credited to your Demat account in digital form.
When you sell shares, they are debited from your account and transferred to the buyer.
This process makes trading faster, safer, and free from risks like loss or forgery of paper certificates.
The account is managed through depositories such as NSDL or CDSL via your stockbroker.

If you apply online, a Demat account can be opened within a few minutes to a few hours, depending on document verification.
For offline applications, it may take 2 to 3 working days.
The process is faster if your Aadhaar and PAN are linked for e-KYC verification.

No, it is not possible to open a Demat account without a PAN card, as it is a mandatory document for all financial transactions in India.
Your Aadhaar card is also essential for completing e-KYC verification during the online account opening process.
These documents help verify your identity and ensure compliance with regulatory requirements set by SEBI.
Without them, the Demat account application cannot be processed.

The KYC (Know Your Customer) process is mandatory to verify your identity before opening a Demat account.

You need to submit documents like PAN card, Aadhaar card, bank proof, and a recent photograph.
Some brokers may also ask for an income proof if you wish to trade in derivatives.
This verification ensures your account is genuine and complies with SEBI regulations.

 
 

The charges for opening a Demat account vary depending on the broker or depository participant.
Many brokers offer free account opening, while some may charge a small one-time fee ranging from ₹100 to ₹500.
However, you may still need to pay annual maintenance charges (AMC) for keeping the account active.

 
 

Generally, there are no hidden charges if you choose a reputed and transparent broker.
However, some brokers may include small fees for transaction charges, pledge creation, or dematerialization services.
It’s always best to read the fee structure carefully before opening the account to avoid surprises later.

Most brokers do not charge any fee for closing a Demat account.
However, a few may charge a small processing fee if there are pending dues or untransferred holdings.
If you want to transfer your shares to another Demat account, brokers may charge a nominal transfer fee per company or per transaction.
It’s advisable to check your broker’s closure and transfer policy before initiating the process.

Yes, you can open multiple Demat accounts with different brokers using the same PAN card.
There is no restriction by SEBI on the number of accounts an investor can hold.
However, you should maintain them carefully, as each account may have separate charges and maintenance fees.

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