When is it compulsory to have a Demat Account?

Demat or dematerialized account is one of the main requirements for buying and selling shares in the equity markets. One needs a demat account to hold financial instruments in electronic form. These accounts are maintained by depository organisations like NSDL and CDSL in India. Just like a bank account holds your money, a demat account holds your shares or securities.

A demat account is needed when you want to trade or hold shares on a delivery basis. On the other hand, if you want to trade in future and options (F&O) only, then there is no requirement for the account. A trading account is enough for dealing in the F&O segment as they are settled in cash.

A broker is needed for opening a demat account. Documents like Aadhar, PAN details and address proof etc are also required.


Once the Demat account is opened, make sure to get Demat Account number, DP ID and POA number. Demat Account number is known as ‘beneficiary ID’. It is of 16 characters. Power of Attorney agreement permits the stockbroker to operate an investor account as per given instructions.

You will receive a unique login ID and password for online access to your Demat and Trading Accounts.