What is a Demat Account, how to open it, and what are its benefits?
Have you ever thought about what a Demat account is and how it works? You may have seen many articles or posts about it online, but you probably didn’t find easy information in Hindi. In this post, we will explain what a Demat account is in a simple way and tell you about its benefits.
To buy or sell shares in the stock market, you need to have a Demat account. You cannot trade without it. To open Demat account, you must have a PAN card. Without a PAN card, you can’t open a Demat account.
A few years ago, when someone bought shares of a company, the company used to send paper certificates as proof of ownership. These papers showed that you had invested in that company. But now, after the introduction of the Demat account, things have changed.
Let’s understand what a Demat account is and why it is important, in an easy way.
What is a Demat Account –
A Demat account is used to buy and sell shares in share market. Just like you keep your money in a bank account, you keep your shares in a Demat account in share market. It keeps your shares safe in digital form.
When we take out money from the bank, we get it as cash. But while it stays in the bank, it’s in digital form. If we use a debit card to pay somewhere, that’s also a digital or electronic payment.
In the same way, when shares are in a Demat account, they stay in digital form. We can easily send them to another person’s Demat account without needing paper or physical copies.
In simple terms, keeping shares in a digital or electronic way is called Demat. The full form of Demat is “Dematerialize”. When physical share certificates are changed into digital form, the process is called dematerialization.
Earlier, when someone bought a share, the company used to send them paper documents as proof. If you wanted to sell that share, you had to send those documents back to the company.
The company would then check the selling price and give you the money. This whole process took a lot of time and was complicated. That’s why many people didn’t want to invest in the share market.
But today, things have become much easier. When you buy a share in stock market, it gets added to your Demat account in a short time. And when you sell a share, you get the money soon after.
Now, you don’t even need a computer to buy or sell shares — you can do everything from your mobile phone.
To open and use your Demat account, you need a password for protect. And to buy or sell shares, you also need a special transaction password.
Definition of Demat Account
A Demat account is like a bank account, but instead of money, it holds your shares and other investments in digital form. It is used to keep shares safe without using paper. A Demat account protects your shares from getting lost or being misused.
How to Open a Demat and Trading Account in Zerodha trading account?
To open a Demat and Trading account in Zerodha, you need to submit some documents. In today’s time, Zerodha is considered one of the best discount brokers in India. Based on my experience, they give great service to their customers.
Documents Needed:
Here is a list of documents you need to open an account with Zerodha. Before you start, keep a copy or a digital version of these documents ready:
- PAN Card – This is needed for identification and to track your investments.
- Aadhaar Card – Used for your identity and address proof.
- Two Passport Size Photos – Needed for your account records.
- Cancelled Cheque or Bank Passbook – To link your bank account with Zerodha.
- How to Open a Demat Account in Zerodha (Easy Steps)
If you want to start investing in the stock market or share market, you can open a Demat account with Zerodha. Here’s how you can do it step by step:
Visit the Zerodha Website: Go to Zerodha’s official site and click on ‘Open an Account’.
Fill in Your Details: Enter your full name, mobile number, and email address. Then click on ‘Call Me’.
Get a Call from Zerodha: A local Zerodha representative will call you. They’ll fix a time to meet you, collect your documents, and get your signature on the form.
Pay Account Opening Fee: You’ll need to pay a small fee online (using net banking or card). The representative will tell you the exact amount.
Account Activation: After submitting your documents, your Demat and trading account will be ready in about 4 to 7 days.
If you’re doing this online, then you’ll need to send your signed form to Zerodha’s official address for open account.
Zerodha is a discount broker that makes it simple to invest and trade in shares market. You can easily open your Demat account and start buying shares in stock market.
How much does it cost to open a Demat account in any trading account?
If you think opening a Demat account is very expensive, then that’s not true. You can easily open one for just ₹300 to ₹700, and start investing in shares.
You only need to pay around ₹300 or a bit more to open the account. But after that, to keep the account running, the company (called DP or Depository Participant) charges different types of fees.
Here are the main charges:
Account Opening Fee: This is the first fee you pay when you open your Demat account.
Annual Maintenance Charge (AMC): This fee is charged once a year to take care of and manage your account. Most companies take it in advance.
Different companies may have slightly different fees.
Custodian Fees and Transaction Charges:
Custodian fees depend on how many shares you have. Some companies charge this fee once for the whole year, while others may charge it every month. It depends on the company.
Transaction fees are taken when you transfer shares from one Demat account to another. This fee can be based on the number of shares or the total value of the shares.
If you’re new to the stock market, it’s a good idea to take help from a broker before starting to invest.
Who opens a Demat Account?
In India, two big companies handle Demat accounts:
- NSDL (National Securities Depository Limited)
- CDSL (Central Depository Services Limited)
These companies have more than 500 agents called Depository Participants (DPs) who help people open Demat accounts. DPs can be banks or other companies.
Some examples of companies that can help you open a Demat account are Sharekhan, India Infoline, etc.
You can go to their office or open an account online from home using the internet. The process is easy. But remember, you must have a PAN card.
Who Can Open a Demat Account?
Anyone above 18 years of age can open a Demat account easily.
What is a Demat Account (in simple words)?
A Demat account is like a bank account, but instead of money, you keep shares and securities in electronic (digital) form.
Demat stands for Dematerialization — meaning converting physical share certificates into electronic format.
Benefits of a Demat Account:
Your shares are safe because they are stored digitally. There’s almost no risk of theft or fraud.
Share transfers are fast. Earlier, it took weeks or months, but now transfers happen in just a few minutes.
Earlier, you had to sell shares in bulk or in round numbers. Now, you can buy or sell even 1 share if you want.
You can now add a nominee (a person who will get the shares if something happens to you), which wasn’t possible with old paper certificates.
What did you learn today?
I hope you liked my article “What is a Demat Account”. I always try to give complete and clear information so that readers don’t need to search on other websites.
This saves your time and helps you find everything in one place.
If you have any questions or suggestions about this article, feel free to write them in the comment box below.
If you have any doubt about Demat Account, just leave a comment and I’ll try to help you.