Trade at flat Rs. 5/order | Open free* Demat & Trading Account Now

A Demat account is where you can store all the securities or shares you have purchased from the stock market. This account also helps you sell or buy shares. Moreover, if you wish to trade and invest in the share market in India, it is mandatory to have a Demat account.

Before 1996, physical share certificates were used to trade and invest in the share market. However, with the coming of the NSDL (National Securities Depository Limited) in 1996, the trading and investment procedures are now managed electronically and via Demat accounts. The responsibility of managing Demat accounts in India is held by two entities, NSDL and CDSL (Central Depository Services Limited). The trading process has become more accessible and convenient with Demat and trading accounts.

Why Do You Need a Demat Account?

Share trading is an online process. Hence, you need an account to store all your purchases of shares and securities. A Demat account is a digital repository where you can store all the shares that you purchase. However, for executing buy and sell, you also need to open a trading account. So, both a Demat account and a trading account are required for stock trading.

 

Let's understand its features and use-

 

  • A Demat account lets you hold all your investments like mutual funds, shares, bonds, government securities, Exchange-traded Funds etc. in digital mode

  • A Demat account eliminates the heavy paperwork that was earlier associated with trade and investments in share market. So now, share trading has become swift and simplified.

  • As Demat and Trading accounts can be accessed online via mobile or laptop, it is convenient to track the share transactions and holdings

How Does a Demat Account Work?

To buy or sell shares or securities both Demat and trading accounts are needed. The Demat account’s work is to store all the bought shares and securities. And to place this order of buy or sell the trading account is needed. Once the order to buy shares is placed through a trading account, the exchange finds a suitable seller for your requirements. Once the deal is closed the clearing house settles the trade and the associated exchange of funds. The shares get credited in the Demat account of the buyer after T+2 days, where T is the day of the transaction.

Types of Demat Account

A Demat account can be of different types. Majorly these accounts are divided based on your place of residence. So, check your eligibility and choose accordingly-

  • Regular Demat Account

Indian residents who wish to trade and invest in the Indian share market need to open a regular Demat account.

  • Repatriable Demat Account

Non-resident Indians can open a Repatriable Demat account for trading. This account permits users to transfer funds overseas to other countries for trade and investment.

  • Non-Repatriable Demat Account

A Non-Repatriable Demat account is similar to a Repatriable account. However, individuals cannot transfer funds overseas with this account. A non-repatriable Demat account is meant for the NRIs. To open this account, an NRI has to be associated with an NRO (Non-Resident Ordinary) bank account.

What to Know Before Opening a Demat Account?

During a Demat account opening, there are a few things that you must be aware of and be careful about. Some of the essentials to know before you open a Demat account are-

  • Ease of Trading

In this fast-evolving technological world, now you can enjoy access to both trading and Demat accounts on a single platform. So, look for a broker that can provide you with such a feature and ease to access your account through the web and mobile app.

  • Demat Charges

There are certain charges associated with a Demat account, like account opening charge, annual maintenance charges, etc. Look for a broker that charges the least fees and gives you a free Demat account. With Bajaj Financial Securities Ltd., you get to enjoy free Demat account opening through its Freedom subscription plan.

  • Trustworthiness of Broker

Since you will be investing your savings in share market, look for brokers with active support system and has trust in the market.

Documents Required to Open a Demat Account

Here is the list of documents required to open a Demat account.

 

  • Identity Proof with photo – PAN Card, Driving Licence, Voter ID Card, or PAN Card, etc.

  • Address Proof - Aadhaar Card, Driving Licence, Passport, Bank Statement, etc.

  • Bank account details and proof - Bank account statement of last 3 months, Passbook, Cheque (It should contain account holder’s name, Bank IFSC code and Account number)

  • Income proof – Latest ITR, 6-Month Bank statement, Demat Holding Statement

How to Open a Demat Account?

Opening a Demat account is a hassle-free process. Firstly, you need to choose a Depository Participant (DP) and then fill out the Demat account form. Make sure you enter the details correctly. Submit the form along with documents and complete the KYC through in-person video verification. In the end, you will be given a login id and password, using which you can log in to your Demat and Trading account and continue trading.

Demat Account Identifiers

To view the details, you need to log into your account and click on your 'Profile/Account' option. Here you are shown all such details. However, if you are confused about what exactly are these terms, read the pointers below to understand-

  • What is a DP Name?

Depository Participant name (DP Name) is the name of the broker that has opened your Demat and trading account. For instance, if you have a Demat account with Bajaj Financial Securities Limited then your DP Name will be Bajaj Financial Securities Limited.

  • What Do You Mean by DP ID?

A DP ID is the registered identification number given to each DP (Depository Participant). This identification number is the same for all the customers.

  • What is BO ID?

It refers to the Beneficiary Owner Identification Number. This 8-digit unique identification number is given to each customer.

  • How Can I Know My Demat ID?

A Demat ID is 16 digits which basically includes your DP ID followed by your BO ID.

Account Opening Charges

You are charged some amount as account opening charges when you open an online Demat account. Here is a table inserted below to give you a quick insight into the fees and charges of opening a Demat account with Bajaj Financial Securities Limited-

Particulars

Fees and Charges

Account opening charges

Nil

Brokerage fees

INR 20 per order

Demat AMC charges

Nil

Difference Between Trading Accounts and Demat Accounts

Trading and Demat accounts are used simultaneously. However, both accounts differ in various instances. Let's understand them in detail to clear your doubts. Check out the table given below-

Demat Account

Trading Account

A Demat account holds the shares and securities in digital mode

A trading account lets you sell or purchase shares in the stock market

It is a repository account, which means a storage account

It is a transaction account, which means it is used for the purpose of a transaction

It keeps track of all the shares held by you

It shows all the transactions done by you to trade

A Demat account does not let you make transactions

A trading account does not allow you hold securities or shares

With only a Demat account (without a trading account) you can apply for IPO and hold existing securities

With only a trading account (without a Demat account) you can invest in F&O (Future and Options) and execute intraday trades where there is no delivery of shares

The table above clearly mentions the differences between a trading and a Demat account. To carry out full-fledged trading and investment, you need to have both Demat and a trading account.

 

While Demat is the storage account to keep the purchased securities, a trading account allows you to buy new securities or sell your existing ones. Hence, both these accounts are essential to invest and trade in the share market.

Benefits of Opening a Demat Account with Bajaj Financial Securities Limited

Apart from the fact that a Demat account helps you carry out trade and investment, what other benefits do you get to enjoy with Bajaj Financial Securities Demat Account? A Demat account has a lot to offer along with trading and investing. Find the answer to your questions in the points mentioned below-

  • Instant Transfer

Transferring securities through a Demat account is so easy, simple, and convenient. The primary reason behind it is the paperless process. Securities can be transferred with a few clicks minus the paperwork.

  • Eliminating Risks

With paperwork, there are high risks of errors and mistakes. Be it incorrect bank details, paper loss, theft, mutilation, etc. However, with the electronic storage of your security certificates, there are fewer chances of such risks.

  • Quick Disbursement of Benefits

Corporate benefits, such as stock split, bonus shares dividends, etc., reflect immediately in the Demat account.

  • Collateral for Loan

A Demat account is also a gateway to a loan. If you need an urgent loan and have enough securities in your Demat account, you can use those securities as collateral and get a loan approved.

  • Multiple Access:

A Demat and trading account helps trade and invest in the share market. You are not limited to only one access point when it comes to a Demat account, you can access your account and perform trade via several access points like mobile phones, laptops, computers, tablets, etc.

  • Security

Demat accounts will send you regular statements regarding your account and trading done through it. Also, a Demat account is one highly secure system. So, you need not worry about the casual risks associated with trading and investment when you have a Demat account.

FAQs

  • ✔️Why is a Demat account needed?

    In India, it is mandatory to open a Demat account if you wish to practice trade and investment. While a Demat account in India stores your purchases, a trade account lets you make transactions.

  • ✔️What are the different types of Demat accounts?

    There are three types of Demat account-

    • Regular Demat Account

    For Indian residents

     

    • Repatriable Demat Account

    For NRIs who wish to transfer funds abroad

     

    • Non-Repatriable Account

    For NRIs although the funds cannot be transferred overseas

  • ✔️What is the eligibility to open a Demat account?

    An individual, minimum 18 years old having valid proof of address, proof of identity, a bank account, and a PAN card can open a Demat account.

  • ✔️What are the fees & charges for opening an account with BFSL?

    BFSL gives the opportunity to open a free Demat & trading account through its Freedom subscription plan. There is zero Annual Maintenance Charge (AMC). From the second year onwards, Rs.365+GST is applicable for account renewal charges.

  • ✔️Can a Demat account be opened jointly?

    Yes, a joint Demat account can be opened. A Joint Demat account refers to a Demat account that has more than one account holder. 

  • ✔️Can I open multiple Demat accounts?

    Yes, you can open more than one Demat account but with different Depository Participants (DP). All the Demat accounts owned by an individual must be linked to his/her single PAN card.

     

  • ✔️How much time does it take to open a Demat account online?

    The account opening process for a Demat account is quite quick and easy. It varies across Depository Participants (DP) based on their internal process. You can expect a time duration between 10 mins to 1 hour to get your account opened and ready for use. Note that on Saturdays and Sundays, the account opening process might be delayed as the Exchange approval to activate the accounts might take extended time.