🎯 In 30 seconds: To buy shares in India you need three linked accounts: a bank account for money, a trading account with a broker for orders, and a demat account with a depository participant to hold the shares. Opening them needs your PAN and a one-time KYC that is stored with a KYC Registration Agency, so you do not repeat it for every firm. Small investors can ask for a Basic Services Demat Account with nil or low yearly charges. From 1 September 2026 you can name up to three nominees, and a new single-holder demat account must have a nominee unless you formally opt out. Minors, joint holders, HUFs and NRIs each have their own rules.
The kirana shop picture
Picture a kirana shop. The cash box holds the money. The counter is where orders are taken and goods change hands. The godown at the back is where stock is kept safely until it is needed.
Your three accounts work the same way. The bank account is the cash box. The trading account is the counter, where your orders go out to the exchange. The demat account is the godown, where your shares are held in electronic form. Each one does a different job, and you need all three to buy and hold a share.
Three accounts, three jobs
| Account | Held with | What it holds or does | What it costs |
|---|---|---|---|
| Savings bank account | Your bank | Your money. Linked to the trading account for adding and withdrawing funds | Your bank's usual terms |
| Trading account | A SEBI-registered stock broker | Places your orders on NSE and BSE and tracks money owed to or by you | Brokerage on trades, plus any account fees in the broker's tariff |
| Demat account | A depository participant (DP) of NSDL or CDSL | Your shares, ETFs, bonds and other securities, in your name | Annual maintenance charge (AMC) and a DP charge when shares leave the account |
Most people open the trading and demat accounts together with one company that is both a broker and a DP. That is a convenience, not a requirement. You can hold your demat with one DP and trade through a broker that is a different firm, though linking them takes more paperwork.
SEBI's depository rules say that no charges are payable for opening a demat account. If you see an account opening fee, ask what it covers.
KYC: who you are, checked once
KYC (know your client) is the identity check that every SEBI-registered intermediary must do before opening an account, under the Prevention of Money Laundering Act and its rules. You do it once, and it is then stored centrally.
- PAN is compulsory. SEBI calls it the key identification number for all transactions in the securities market. PAN is not, by itself, accepted as proof of identity, so you also need one of the officially valid documents.
- Officially valid documents for proof of identity and address include your passport, driving licence, proof of possession of an Aadhaar number, voter ID card, NREGA job card and a letter from the National Population Register.
- Digital KYC is how most people do it now: a live photo, the document through DigiLocker or Aadhaar, a live video capture, a time stamp and a geo-location check that you are in India, then e-signing with Aadhaar.
- Bank verification is usually done by a "penny drop": the broker sends a tiny amount to your account to confirm the name matches.
Your KYC record is uploaded to a KYC Registration Agency (KRA), a SEBI-registered agency that keeps KYC records for the securities market. When a KRA has verified your details, your record counts as validated, and you can use it with other brokers, DPs and mutual funds without starting again. If a KRA cannot verify your details, you will not be allowed to transact further until they are fixed. You can check your status on any KRA's website using your PAN.
Separately, your details go to the government's Central KYC Records Registry (CKYCR), run by CERSAI, which gives you a CKYC number and lets KYC records be reused across the financial sector.
Basic Services Demat Account (BSDA)
If you are a small investor, you can ask your DP for a BSDA, a demat account with capped charges. Under SEBI's circular of 28 June 2024, effective 1 September 2024:
- You must be an individual with only one demat account in which you are the sole or first holder, and only one BSDA across all depositories.
- The value of your holdings must be ₹10 lakh or less, counting debt and non-debt securities.
- The AMC is nil up to ₹4 lakh and at most ₹100 a year from ₹4 lakh to ₹10 lakh. Above ₹10 lakh it stops being a BSDA and regular charges can apply.
- Electronic statements are free. Physical statements cost at most ₹25 each.
A December 2025 amendment, effective 31 March 2026, stopped counting delisted securities and certain zero-coupon zero-principal bonds towards the ₹10 lakh limit, valued illiquid securities at their last closing price, and asked DPs to recheck eligibility every quarter.
Worked example. Priya, a college student, holds ₹60,000 of shares and ETFs. In a BSDA her AMC is ₹0. In a regular account at a DP charging a hypothetical ₹300 plus GST a year, she would pay ₹354 a year, about 0.6% of her holdings, before any trading. For a small account, asking for a BSDA is one of the easiest savings available. Some DPs offer it only on request, so ask.
Nominees: who gets the shares if you die
A nominee is the person who receives the securities in your demat account if you die, without your family having to go through a long legal process to claim them. SEBI rewrote the nomination rules several times in 2025 and 2026. The current version is SEBI's circular of 29 May 2026, effective 1 September 2026, which replaced all the earlier nomination circulars:
- You can name up to 3 nominees. (A January 2025 circular had allowed up to 10, but that framework was deferred and then replaced.)
- For a single-holder demat account opened on or after 1 September 2026, nomination is mandatory unless you submit an opt-out declaration, on a form or online.
- For joint accounts, nomination is optional, and every joint holder must consent to adding or changing a nominee.
- If you name more than one nominee and do not give percentages, the holdings are split equally.
- Online nomination is confirmed by a digital signature, e-sign or two-factor authentication with an OTP. A paper form needs your signature but no witness; a thumb impression needs two witnesses.
A nominee receives the shares, but the legal question of who finally owns them can still depend on a will or succession law. If that matters for your family, talk to a lawyer. For a young investor with a small account, naming a parent or sibling takes two minutes and saves a lot of trouble later.
Accounts for minors
A person under 18 can own shares, but cannot open or run an account alone.
- The demat account is opened in the minor's name and operated by a guardian, usually a parent.
- SEBI's depository rules require the PAN of both the minor and the guardian. KYC documents for the guardian and a document showing the relationship are also needed, along with the minor's birth certificate, passport, school leaving certificate or similar.
- A natural guardian can operate the minor's demat account without a court order.
- Brokers decide which segments a minor's trading account may use. Expect delivery investing only; check the broker's policy.
The guardian's authority ends when the minor turns 18. Ask the DP in advance what it needs then: expect fresh KYC in the young adult's own name and possibly a new account to which the holdings are moved. Tax on a minor's investment income has its own rules; see Taxes for traders and investors and check with a CA.
Joint holders and HUF accounts
Joint demat accounts can have more than one holder; the standard nomination form has signature lines for three. Every joint holder's consent is needed to add or change a nominee. Many brokers open trading accounts in a single name only, so a couple who want a joint demat account may still trade through the first holder's trading account. Ask the broker how it links them.
A Hindu Undivided Family (HUF) can hold shares too. The demat account is opened in the HUF's name and operated by the Karta, with the PAN of both the HUF and the Karta. If the Karta dies, a new Karta takes over the account under the procedure in SEBI's depository rules. Get advice before opening one.
Accounts for NRIs
Non-resident Indians can invest in Indian shares, subject to RBI and FEMA rules. The broad shape:
- Two kinds of bank account. An NRE account holds money brought in from abroad and is freely repatriable. An NRO account holds money earned in India, and taking it abroad is restricted. Your trading and demat accounts are linked to one of them.
- Repatriable and non-repatriable investing. Shares bought on the exchange with NRE money, under the RBI's portfolio investment route through your bank, are repatriable. Shares bought with NRO money are on a non-repatriation basis.
- A change of residence. If you move abroad while holding resident accounts, tell your bank, broker and DP; they will explain how to convert the accounts.
- Ownership limits. The RBI caps how much of a listed company any one NRI, and all NRIs together, may hold. The caps are set in the RBI's Master Direction on foreign investment, which was last updated in June 2026. Your bank and broker track these for you.
- KYC needs a passport (or a PIO or OCI card) and overseas address proof. Digital KYC works the same way as for residents.
The rules on what NRIs may trade, and which segments are open to them, are detailed and change from time to time. Check with the bank that runs your NRE or NRO account before you trade.
Letting shares out: DDPI or eDIS
When you sell, shares must leave your demat account to settle the sale. You authorise that in one of two ways, covered in detail in Your first trade:
- DDPI, a one-time instruction limited to settling your sales, pledging for margin, mutual fund transactions on the exchange platform, and tendering shares in open offers. It replaced the old broad power of attorney from 18 November 2022.
- eDIS, where you approve each sale yourself with a TPIN and an OTP generated by the depository.
DDPI is voluntary. SEBI's rules for brokers say they must not compel you to sign it or deny you services if you refuse, and you can revoke it later.
Which setup for which person
| You are | A sensible starting setup |
|---|---|
| 18 to 25, first investments, small amounts | Individual trading and demat account, BSDA if eligible, one nominee, eDIS or DDPI as you prefer, no MTF |
| Under 18 | Minor's demat account operated by a parent; delivery investing only |
| A couple investing together | Joint demat with nominee; check how the broker links trading |
| Working abroad | NRI trading and demat linked to an NRE or NRO account, after talking to the bank |
Try it
- Find your PAN and check that it is linked with Aadhaar on the income-tax e-filing portal.
- Look up your KYC status with your PAN on any KRA's website. Note whether it says validated.
- If you already have a demat account, open your latest Consolidated Account Statement and find your nominee status and the value of your holdings. Are you eligible for a BSDA?
- Draw your own version of the three-account picture: your bank, your broker, your DP and depository, with the names filled in.
- Which account holds your shares, and with whom? Answer: The demat account, held with a depository participant of NSDL or CDSL, in your own name.
- Is PAN accepted as proof of identity for KYC? Answer: No. PAN is compulsory as the key identification number, but you also need an officially valid document such as a passport, driving licence, voter ID or Aadhaar proof.
- Your holdings are worth ₹7 lakh in a BSDA. What is the most your DP can charge as AMC? Answer: ₹100 a year, since holdings are above ₹4 lakh but not above ₹10 lakh.
- From 1 September 2026, how many nominees can you name, and is nomination compulsory? Answer: Up to 3. It is mandatory for new single-holder accounts unless you formally opt out, and optional for joint accounts.
- Who operates a minor's demat account, and whose PAN is needed? Answer: A guardian operates it; the PAN of both the minor and the guardian is needed.
Sources
- SEBI: Frequently asked questions on KYC norms for the securities market (May 2024)
- SEBI: Master circular for depositories (3 December 2024): minors, HUF accounts, account opening charges, eDIS
- SEBI circular (28 June 2024): Basic Services Demat Account
- SEBI circular (24 December 2025): Enhancing the BSDA facility, effective 31 March 2026
- SEBI circular (29 May 2026): Modified norms for nomination, effective 1 September 2026
- SEBI: Master circular for stock brokers (17 June 2025): DDPI
- RBI: Master Direction, Foreign Investment in India (updated up to 15 June 2026)