Stock Market Basics · Lesson 3 of 14 · Updated October 2026 · 5 min read
To buy shares in India you need two accounts: a trading account to place orders and a demat account to hold the shares. Most brokers open both together, linked to your bank account, in one online application.
In short: Trading account = where you buy and sell. Demat account = where your shares are stored. Bank account = where the money comes from and goes to.
The three accounts and how they connect
| Account | What it does | Who provides it |
|---|---|---|
| Bank account | Sends money for purchases, receives money from sales and dividends | Your bank |
| Trading account | Places buy and sell orders on the exchange | Your broker |
| Demat account | Holds your shares electronically, in your name | A depository participant (usually your broker), with NSDL or CDSL |
Think of it like this: the trading account is the shop counter, the demat account is your locker, and the bank account is your wallet.
What you need to open them
- PAN card
- Aadhaar (for online KYC and e-signing)
- A bank account with a cancelled cheque or statement
- A selfie or in-person verification, as the broker asks
- Income proof only if you want to trade futures and options
The process is usually online and takes a day or two.
Charges to compare before choosing a broker
- Account opening fee: many brokers charge nothing.
- Annual maintenance charge (AMC) on the demat account: varies by broker; some waive it.
- Brokerage: some brokers charge nothing on delivery trades; others charge a percentage or a flat fee per order.
- DP charge: a small fee each time you sell shares from your demat account.
See share trading charges for the full list of costs on each trade.
Tips for choosing
- Pick a SEBI-registered broker with a simple app and clear charges.
- Add a nominee to your demat account.
- Turn on two-factor login and never share OTPs or passwords.
- Keep only the money you plan to invest in your trading account.
Common questions
Can I have more than one demat account?
Yes, with different brokers. But one or two is easier to track.
Do I need a demat account for mutual funds?
No. You can invest in mutual funds directly with the fund house or through apps, without a demat account.
Next lesson: How IPOs Work in India: Apply, Allotment and Listing → · See all 14 stock market lessons
Education, not investment advice. Figures and rules as of October 2026; check the latest before you act.