How to Use a Demat Account

Understanding how to use a Demat account is crucial for every investor stepping into the Indian stock market. A Demat account eliminates the need for physical share certificates by holding securities in electronic form, ensuring secure and efficient transactions. Whether it’s equities, mutual funds, bonds, or ETFs, a Demat account simplifies tracking, buying, and selling, all in one place.

A Demat account (short for dematerialised account) stores an investor's financial securities electronically. It acts as a digital vault, reducing paperwork, enhancing convenience, and offering better security. Managed by depositories like the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), it is essential for anyone investing in the Indian stock market.

Here is the step-by-step process for opening a demat account:

1. Choose a Depository Participant (DP): Typically a bank, broker, or financial institution registered with SEBI.

2. Fill Account Opening Form: Available online or at the DP’s branch.

3. KYC Documentation: Submit PAN card, Aadhaar card, address proof, income proof (for derivatives), and passport-sized photo.

4. In-Person Verification (IPV): Required for identity confirmation.

5. Receive Client ID and BO ID: These are your unique identifiers for trading and holding.

Linking with Other Accounts

To trade, you can link your demat account with:

• Trading Account: To place buy/sell orders.

• Bank Account: To fund your trades and receive credit from sales.

The following are ways in which you can utilise your demat account:

Buying Securities

After linking your Demat with trading and bank accounts, you're ready to buy stocks:

• Log in to your trading platform.
  

• Place a buy order by choosing the stock, quantity, and price.
  

• Upon trade execution, securities are credited to your Demat account on a T+2 basis (transaction date + 2 working days).
  

Selling Securities

The selling of securities works in the following way:

• Log in to the platform and view your holdings.
  

• Select securities to sell.
  

• Confirm trade and settlement.
  

• Securities are debited from your Demat account and funds credited to your bank account.
  

Tracking and Monitoring

Here’s what you can do to track and monitor your holdings:

• Use platforms like NSDL IDeAS or CDSL Easi to view holdings, transactions, and statements.
  

• Many brokers offer consolidated views of your Demat holdings across securities.

A Demat account offers several features that make it indispensable for modern investors these are as follows:

Convenience

Holds a variety of financial instruments—equity shares, mutual funds, government bonds, ETFs, and even IPO shares—all in one account.

Safety

Eliminates physical risks like loss, theft, or forgery of certificates.

Corporate Benefits

Automatically credits eligible securities such as:

• Dividends
  

• Bonus shares
  

• Rights issues
  

• Stock splits
  

Nomination Facility

Provides legal clarity and easy transmission of holdings to a nominee in case of the account holder’s death.

The following table highlights the benefits of a demat account and how it could help you:

1. Paperless - No need for physical certificates or stamp papers

2. Real-time Access - Instant updates on holdings and transactions

3. Cost Efficiency - Lower transaction charges, no handling fees

4. Faster Settlements - Standardised T+2 cycle ensures timely credits/debits

5. Flexibility - Easy to modify details like address, nominee, or bank account

Beyond basic shareholding, a demat account offers several value-added services to make investing and compliance easier.

Dematerialisation and Rematerialisation

• Dematerialisation: Convert physical shares to electronic format via a DRF (Demat Request Form).
  

• Rematerialisation: Convert back to physical format using an RRF (Rematerialisation Request Form).
  

Power of Attorney (PoA)

Optional document that allows your broker to execute trades and debit shares on your behalf. Important for seamless off-market transactions, but should be issued with caution.

Corporate Actions

Demat account ensures you receive:

• Interest payments
  

• Dividends
  

• Refunds
  

• Bonus or right shares

A Demat account is more than just a digital locker—it's the foundation of a modern, informed, and secure investing experience. From seamless settlements and easy monitoring to corporate benefit accruals and robust safety features, understanding its usage empowers investors with confidence and control.

This content is for educational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.

• NSDL Official Website
  

• CDSL Official Website
  

• SEBI - Investor Education
  

• Bajaj Finserv Markets