Demat Account can be thought as a e-safe where the dematrilzed or paper less shares are kept. There are two Depository available in India namely CDSL and NSDL which are allowed to maintain e-share. Any investor who want to trade in Indian stock market either in Equity or Mutual Funds needs to have a active demat account.
This should not be mistaken with the brokerage account which is needed to trade in share. Demat account is just for safe keeping of shares. CDSL and NSDL don’t open account of retail customer directly but in turn they deal with Depository Participant (DP). Most of the major brokers provide seamless integration of your Demat account with the brokers account.
Opening a Demat account is simple and straight forward. The document required for opening of Demat account are :
1. Proof of Identity
2. Proof of address
3. PAN Card
(PAN card would work as a proof of id also).
For getting the account opening form, you can get in touch with any online brokers and they will collect all the required forms from you and submit it to the depository. The Demat account opening fees varies by DP and can range from Rs. 100-600.
Within 15 days of submitting the form you will be allotted a Unique DP Id-Client Id number which is your account number. You can start applying for shares or transfer in your shares from other DP’s or purchase shares from a broker or even apply for mutual funds, bonds etc.
It works almost the same way as a bank account works for cash. One thing to remember is that you can have multiple demat account but you have to pay a yearly fees for each of the active account. On the other hand you can have brokerage account at different companies and can link all of them to one Demat account.