Demat account

India had 23.8 crore demat accounts at the end of August 2026. That number comes up every month now, usually next to a chart about the retail investing boom. What nobody mentions is that most of those 23.8 crore people cannot answer a basic question: where are your shares, exactly?

The common answer is “with my broker”. It is wrong, and getting it wrong is what makes people panic when a broker gets into trouble. The demat account is the one piece of market plumbing every investor uses and almost nobody understands.

Paper first

My family has been in the broking business for four generations. The older generations dealt in physical share certificates: actual paper that proved ownership, stored in cupboards, sent by post for transfer, sometimes lost, sometimes forged. Settlement took weeks because the paper had to physically move.

Dematerialisation killed the paper. A demat account is just an electronic record of what you own. Your account has a 16-digit number: the first 8 digits identify your depository participant (your broker or bank), the last 8 identify you.

The records themselves sit with one of two depositories, NSDL (set up in 1996, promoted by NSE) or CDSL (1999, promoted by BSE). Every demat account in India is with one of the two. As of August 2026, CDSL holds about 19 crore accounts and NSDL about 4.7 crore active ones. Which one you are with is decided by your broker, and it makes almost no difference to you.

The vault and the door

New investors mix up the demat account and the trading account, because every broker opens both together and the apps hide the difference.

The trading account is the door. It is how you place a buy or sell order on the exchange. The demat account is the vault. When you buy, the shares land in your demat account after settlement, which in India is now T+1: buy on Monday, shares in the vault on Tuesday. When you sell, the shares leave the vault and the money lands in your bank account. Order through the door, storage in the vault.

Where your shares actually sit

Here is the part worth understanding. Your shares are not held by your broker. They sit in the depository’s records, under your account. The broker is only a depository participant, an interface between you and the vault.

This is why a broker failing is an inconvenience, not a wipeout. When Karvy went down in 2020, the panic was real, but client shares were never at Karvy. They were at NSDL and CDSL. What Karvy had misused was the power of attorney clients had signed, which let it move shares out of their demat accounts on its own. SEBI’s fix after that episode is the system you use today: no standing POA for selling, and every sell instruction authorised by you through a CDSL TPIN or e-DIS. The lesson is not “brokers are dangerous”. It is that the vault was never the weak point. The keys you hand over are.

What it costs

Three charges matter.

Account opening is free at most brokers now. Annual maintenance (AMC) runs from zero to a few hundred rupees a year depending on the broker.

If your holdings are small, you may not need to pay AMC at all. Under SEBI’s Basic Services Demat Account rules (June 2024 circular), if you hold only one demat account as sole or first holder and your holdings are worth up to Rs 10 lakh, the account qualifies as a BSDA: no AMC up to Rs 4 lakh of holdings, and a maximum of Rs 100 a year between Rs 4 and 10 lakh. Worth checking which category your account is in.

The charge that surprises people is the DP charge on selling. Every time shares leave your demat account, the depository charges a transaction fee and your broker usually adds a markup. It applies per scrip per day, not per share. Selling 10 shares of one company and selling 10,000 shares of the same company on the same day costs the same DP charge. Selling two different companies costs two. Buying attracts no DP charge at all.

The tool below shows how these small fixed charges add up against a trade. Play with a small ticket size and you will see why frequent tiny trades are expensive in percentage terms.

The one thing to do today

Register a nominee. Without one, your family inherits a probate process, not a portfolio: transmission of securities to legal heirs without a nomination can take years and real legal fees. With a nominee on record, the depository hands over the securities on submission of the death certificate and KYC of the nominee.

SEBI’s January 2025 nomination circular, effective March 2025, cleaned this up. You can now name up to ten nominees with percentage allocations, and new accounts either register a nominee or sign an explicit opt-out. If you opened your account years ago and never checked, your broker’s app will show the nomination status in the profile section. Checking takes two minutes.

Read: Starting to invest

A demat account is boring infrastructure, and that is exactly its virtue. The paper certificates my grandfather’s generation guarded in cupboards are now a line in a depository’s database, safer than the cupboard ever was. The only part still left to you is the nominee field, and it sits empty more often than it should.