Demat Account

Full form: Dematerialised Account

Investments

A demat account holds securities (shares, bonds, ETFs, mutual fund units) in electronic format, replacing physical share certificates. Mandatory for trading on Indian stock exchanges. Managed by NSDL or CDSL depositories.

In detail

To invest in stocks or ETFs: need demat account + trading account (broker) + bank account (3-in-1 account offered by brokers like Zerodha, Groww, HDFC Securities).nnCharges: Account opening (free at most discount brokers), Annual Maintenance Charge Rs 300-900/year (waived at some brokers for first year). Demat is not needed for regular mutual fund SIPs -- those can be done via AMC directly.

Real-life example

🇮🇳 India example

Ravi opens Zerodha account (free): gets demat + trading account linked to his bank. Buys Nifty 50 ETF units -- they appear in his demat account instantly after T+1 settlement. His regular SIPs in mutual funds are in his MF folio, not demat.

Frequently asked questions

Do I need a demat account for mutual fund SIPs? ▼

No. Regular mutual fund SIPs (via AMC, Groww, Kuvera, Zerodha Coin) do not require demat. Demat is needed only if buying ETFs, stocks, or holding mutual funds in demat form.