Who Can Open a Demat Account in India? Eligibility, Benefits & Guidelines

Introduction

With increasing interest in stock market investing, having a Demat account is now a basic requirement for buying, selling, and holding securities in electronic form. But many investors still ask—who can open a Demat account in India? This blog explains the eligibility criteria, types of account holders, and key benefits of having one or even multiple Demat accounts.

Who Can Open a Demat Account in India?

1. Resident Individuals

• Indian citizens aged 18 and above with valid KYC documents (PAN, Aadhaar, address proof)

2. Minors

• A Demat account can be opened in the name of a minor, operated by a parent or legal guardian until the child turns 18

3. Non-Resident Indians (NRIs)

• NRIs can open NRE or NRO-linked Demat accounts via authorized DP (Depository Participant) and must comply with FEMA (Foreign Exchange Management Act) and RBI (Reserve Bank of India) guidelines

4. Hindu Undivided Family (HUF)

• HUFs can open Demat accounts through the Karta (head of the family)

5. Corporate Entities

• Companies registered under the Companies Act can open a Demat account for holding securities in the company’s name

6. Partnership Firms and Limited Liability Partnership (LLPs)

• Although a firm cannot open an account directly, partners can open an account in their individual names (You are recommended to seek advice from financial advisor before you take any/refrain from any action)

7. Trusts and Societies

• Registered trusts and societies may open Demat accounts with valid registration certificates and authorized signatories

Eligibility Criteria to Open a Demat Account

• Must be a person or entity listed above
• Must have a PAN card (mandatory for all applicants)
• Valid proof of identity and address (Aadhaar, passport, voter ID, utility bills, etc.)
• A bank account linked for fund transfers
• A passport-size photo and signature (for individuals)

(You are recommended to seek advice from financial advisor before you take any/refrain from any action)

Why Is a Demat Account Necessary?

• Digital Holding: Mandatory to hold listed shares, ETFs, and other securities
• Paperless Investing: Avoids loss/damage to physical share certificates
• Faster Settlement: T+1 or T+2 settlement via electronic transfer
• Required for IPOs: All IPO allotments are credited only to a valid Demat account
• Regulatory Compliance: As per SEBI, share trading must be done through Demat accounts

Benefits of a Demat Account

• Secure and Convenient: Protects securities from theft, forgery, and misplacement
• One-Stop Portfolio Management: Consolidates shares, bonds, ETFs, and mutual fund schemes in one place
• Automatic Updates: Corporate actions like dividends and bonuses are credited automatically
• Low Transaction Costs: Reduces paperwork and related costs
• Easy Loan Against Securities: Securities held in Demat can be pledged for loans

Can You Have Multiple Demat Accounts?

Yes. An individual can open multiple Demat accounts with different brokers as long as they’re all linked to the same PAN.

Benefits of Having Multiple Demat Accounts:

• Separate personal and trading portfolios
• Test different platforms or brokers
• Take advantage of zero AMC or promotional offers
   

Caution: Managing multiple accounts means more record-keeping and potential AMC (Annual Maintenance Charges).

The option of investing in mutual fund schemes has been made even more accessible with the introduction of 3-in-1 accounts that provide the functions of Demat, savings, and trading account. However, opening a Demat account is also relatively easy and hassle-free.

You may also invest through an Demat + Trading Account

• You must log on to Demat+Trading Account
• You then select the mutual fund house from the list of fund houses
• Pick the mutual fund scheme based on your investment objectives and risk tolerance and click on Invest now
• You must select the amount you plan to invest in the mutual fund scheme and the mode as either One Time or Monthly SIP.
   

One can also buy mutual funds units through NSE – MFSS and BSE - StAR MF just like a company stock. To avail this facility, one must complete a one-time online registration with NSE or BSE, as the case may be. For more information on NSE – MFSS and BSE - StAR MF, please visit www.nseindia.com / www.bseindia.com

(Please note that it may vary as per brokers requirements, thereby you are recommended to seek advice from financial advisor before you take any/refrain from any action)

Conclusion

From individual investors to companies and NRIs, almost anyone with valid KYC can open a Demat account in India. It is a vital tool for modern investing—enabling digital access, easy tracking, and regulatory compliance. Whether you're a first-time investor or expanding your portfolio, understanding your eligibility helps streamline the process.

Additional links:

What is a Mutual Fund? - Beginner's Guide to Investing

AMFI - Introduction to Mutual Funds

Know everything about SIP

FAQ-Dematerialisation

Securities and Exchange Board of India

How to open an Trading Account

Let’s Learn How to Invest in Securities Market