What is Demat Account - Meaning, Types and Benefits | ICICI Bank

What is a Demat Account? Meaning, Types, Benefits and Documents Required

More and more Indians are now actively investing in the markets to build long-term wealth. The first step in this is opening a Demat Account. A Demat Account is a digital repository that holds your financial securities, such as stocks, Mutual Funds and bonds, in electronic form. In this blog post, we will explore what a Demat Account is, its key features and benefits, the different types available and why opening a Demat Account with ICICI Bank could be the ideal starting point of your investment journey.

What is a Demat Account?

A Demat Account (short for Dematerialised Account) plays a crucial role in simplifying your investment journey. It allows you to hold financial securities- such as shares, bonds and Mutual Funds- in electronic form, eliminating the need for physical certificates. Think of it like a bank account, but instead of storing money, it securely stores your investments in a digital format, making trading and portfolio management more convenient and efficient.

Features of a Demat Account

Now that you understand the meaning of a Demat Account, let's explore some of its key features.

1. Paperless Transactions

With a Demat Account, you can carry out investment transactions digitally, which makes them easier and faster. You can easily buy, sell and hold securities electronically, ensuring easy management of investments.

2. Secure and Convenient

You can be assured that these accounts are secure and safe to use. When you open a Demat Account with ICICI Bank, you can be sure of the safety of your financial securities. You can also manage your holdings from anywhere and at any time through the iMobile app and Internet Banking.

3. Easy Transfer of Securities

Take advantage of seamless transfer of securities between accounts. You can choose to gift securities, pledge them for loans or transfer ownership without the need for physical paperwork.

4. Auto-Credit of Dividends and Benefits

Any dividends, interest or bonuses earned on securities are automatically credited to the your linked bank account, making investing easier and faster.

5. Nomination Facility

You can add a nominee to ensure the smooth transfer of securities after your demise.

Benefits of a Demat Account

The various benefits of having a Demat Account are:

1. Reduced Risk of Physical Shares

A Demat Account eliminates risks like theft, forgery and damage associated with physical certificates, ensuring a safer investment process.

2. Faster Settlements

With a Demat Account, trade settlements are faster, usually within 2-3 days, ensuring quicker fund transfers and reducing transaction delays.

3. Cost-Effective and Time-Saving

You can save on stamp duty, handling charges and storage costs as securities are held digitally, reducing paperwork and making investing more efficient.

4. Access to Multiple Investment Options

A Demat Account allows you to hold various financial instruments like stocks, Mutual Funds, ETFs, bonds and government securities in a single account.

5. Easy Monitoring and Tracking

You can monitor your investments in real time through mobile apps and online platforms, thus having better control over your portfolio.

How Does a Demat Account Work?

We know that a Demat Account serves as a digital repository to store your financial shares and securities in electronic form. Here’s how it works:

1. Suppose you want to buy shares. First, you have to log into your Demat and Trading Accounts that are linked with your Bank Account.

2. Once you have made a request to buy shares using the Trading Account, the associated Depository Participant (DP) forwards this request to the stock exchange.

3. The stock exchange matches your buy order with a corresponding sell order and completes the trade

4. Funds are debited from your linked Bank Account

5. The shares are credited to your Demat Account by the depository (NSDL or CDSL)

Note: You can have a Demat Account with a DP linked to either NSDL or CDSL. Even if the buyer and seller use different depositories, the transaction happens smoothly through a connected system.

Demat Account Number and DP ID

1. Demat Account Number: It is also known as the Beneficiary ID. This is a 16-digit number which is unique to every account.

2. DP ID or Depository Participant ID: This is the identification number assigned to your DP (broker or financial institution). It forms a part of your complete Demat Account Number.

3. Login Credentials: After account setup, you receive a unique login ID and password to access your Demat and Trading Accounts online.

4. POA Number: If you authorise your broker to manage your Account, a Power of Attorney (POA) number may also be provided.

Types of Demat Accounts

Here are the types of Demat Accounts to choose from:

1. Regular Demat Account

This type of account is meant for Indian investors who wish to trade in stocks, bonds and other securities.

2. Repatriable Demat Account

This account is for Non-Resident Indians (NRIs) who wish to invest in Indian stock markets. It requires an NRE (Non-Resident External) bank account for fund transfers.

3. Non-Repatriable Demat Account

This is also for NRIs, but funds cannot be transferred abroad. It requires an NRO (Non-Resident Ordinary) bank account for transactions.

Demat Account Charges

There are no charges for opening a Demat Account; however, there are some important charges that are levied to ensure a smoother investment process, as listed below:

1. Annual Maintenance Charges (AMC)

This is a yearly fee charged by most Depository Participants (such as a bank, broker or financial institution) to maintain your Demat Account. AMC can range from ₹ 0 to ₹ 1,000+ per year, depending upon the broker or bank.

2. Custodian Fees

Depositories (NSDL or CDSL) charge this fee for holding your securities safely. It can be one-time or annual, depending on the broker’s structure.

3. Demat and Remat Charges

These charges apply when converting shares from physical to electronic format (Demat) or vice versa (Remat). It's usually calculated as a percentage of the total transaction value.

4. Other Charges

These include additional fees such as credit transaction fees, rejected instruction charges, applicable taxes, GST and cess. These are not fixed and can vary.

Demat and Trading Accounts

Investors need both a Demat Account and a Trading Account to invest in the market and hold securities in a digital format. However, both these accounts differ in certain key aspects:

• A Demat Account is like a digital locker that holds your shares and securities in electronic form. It shows the securities you own. You cannot trade directly from a Demat account.

• A Trading Account is used to buy and sell shares, Mutual Funds, bonds etc. on the stock exchange.

ICICI Bank offers a 3-in-1 Account, which bundles a Savings Account, Demat Account and Trading Account together. The Trading Account helps in carrying out buy / sell transactions, the Savings Account holds the money used to buy securities / the money received from the sale of securities and the Demat Account stores the resulting holdings in electronic form.

Open an ICICI Bank Demat Account

ICICI Bank is one of the leading banks in India, offering seamless Demat Account services. Here’s why you should choose an ICICI Bank Demat Account:

1. 3-in-1 Account (Savings + Demat + Trading)

ICICI Bank provides an integrated account that combines Savings, Demat and Trading Accounts, ensuring smooth and hassle-free investments.

2. Easy Access on iMobile App

You can check your holdings, transactions and investment details on the go, through the iMobile app.

3. Customer Support

ICICI Bank offers specialised Customer Care for Demat-related queries, providing expert assistance for smooth investment management.

4. Extensive Branch Network

With over 5,000 branches across India, ICICI Bank ensures easy access to Demat services for investors.

Documents Required to Open a Demat Account

To open a Demat Account with ICICI Bank, you need an active Savings Account and the following documents:

- PAN Card

- Address Proof (Any one of the following):

•   Valid Passport

•   Valid Driving Licence

•   Voter ID Card

•   Aadhaar Card

• Proof of address issued by Central Government & Regulatory Authorities.

How to get a Demat Account

To open a Demat Account, you can follow the steps given below:

1. Choose a Depository Participant (DP) like ICICI Bank who acts as an intermediary between you and the central depositories such as NSDL or CDSL.

2. Submit required documents like your PAN Card, Aadhaar Card, address proof, bank details and a photograph.

3. Fill out the application form either online or offline, depending on the DP’s process.

4. The DP will verify your details.

5. After approval, you will receive your Demat Account number and login credentials.

6. Link your Bank Account to the Demat Account for transactions.

You can check the websites of any depository to get a list of DPs with whom you can open a Demat Account. The choice of a DP should ideally depend on its annual charges.

Note:

• You can have more than one Demat Account (but not with the same DP), which means that one PAN Card can be linked to multiple Demat and Trading Accounts

• Make sure to check the eligibility criteria and documents required to open a Demat Account to make the account opening process smooth.

How to Open a Demat Account Online

For Existing ICICI Bank Savings Account Holders:

1. Click here to log into the ICICI Bank website/ iMobile app. You will be redirected to the Demat section after logging in.

2. Validate your mobile number and e-mail ID via OTP.

3. Carry out Digilocker verification.

4. Choose your trading preferences and brokerage plan.

5. Add nominee.

6. Carry out live photo verification.

7. E-Sign and submit application.

For Customers Without an ICICI Bank Savings Account:

1. Visit the 3-in-1 Account page on the ICICI Bank website and apply.

2. Validate mobile number, PAN and Aadhaar Number.

3. Enter personal and financial details.

4. Add nominee details.

5. Choose trading preferences and brokerage plan.

6. Complete Video KYC.

7. E-Sign and submit application.

ICICI Bank ensures a smooth digital account opening process.

Conclusion

A Demat Account is essential for seamless and secure investments in the stock market. It eliminates the hassles of physical certificates, ensuring easy, cost-effective and quick transactions. With different types of Demat Accounts available, investors can choose the one that best suits their needs.

ICICI Bank offers convenient Demat Account services with the 3-in-1 Account and specialised Customer Care. Take the first step towards financial growth and apply for an ICICI Bank Demat Account today.

Useful Links

Open 3-in-1 Account

Online Demat Account Services

Service Charges and Fees

Disclaimer:

ICICI Bank provides Banking and Demat Services whereas trading services are provided by ICICI Securities. ‘Buy now, pay later’ services and research recommendations are provided by ICICI Securities, through the ICICI Direct platform.