A demat account becomes easier when the common terms are clear. New investors often see words such as DP, ISIN, pledge, settlement, holding statement, nominee, and corporate action in apps and statements. This glossary explains them in simple language for Indian readers. It helps anyone planning to open demat account for shares, ETFs, bonds, or long-term investing.
What Is a Demat Account?
A demat account holds securities in electronic form. Instead of paper share certificates, investors hold shares and other eligible instruments digitally. It can hold listed shares, exchange-traded funds, bonds and government securities.
In India, depositories and intermediaries support these accounts for holdings, deliveries, statements, and corporate actions.
Basic Demat Account Terms
Demat Account
A demat account is an electronic account used to store securities. It works like a bank account, but it holds financial instruments instead of money.
Depository
A depository stores investors’ securities in electronic form. India has two main depositories, NSDL and CDSL. They maintain ownership records digitally.
Depository Participant
A Depository Participant, or DP, connects investors with the depository. Banks, brokers, and financial service providers can act as DPs.
Beneficial Owner
The beneficial owner is the actual owner of the securities held in the demat account. Records are electronic, but ownership stays with the investor.
DP ID
A DP ID identifies the depository participant. It helps show which DP maintains the account.
Client ID
A Client ID identifies the investor’s account with the DP. It may form part of the demat account number.
BO ID
BO ID means Beneficial Owner Identification Number. It is a unique number used to identify account details and demat holdings.
Account Setup and Access Terms
KYC
KYC means Know Your Customer. It includes verification of PAN, identity proof, address proof, bank details, mobile number, and email address.
Nominee
A nominee is the person chosen to receive securities if the account holder passes away. Nomination can make transmission easier for family members.
Trading Account
A trading account is used to place buy and sell orders. A demat account stores securities, while a trading account executes trades.
Linked Bank Account
A linked bank account is used for fund movement. Purchase money goes from this account, and sale proceeds return after settlement.
Power of Attorney
Power of Attorney, or POA, allows a broker to debit securities after a sale. Platforms may use digital authorisation.
TPIN
TPIN is a security PIN used by some platforms to authorise the debit of securities before sale.
Securities and Identification Terms
ISIN
ISIN means International Securities Identification Number. It is a unique code assigned to every security, such as a share, bond, or ETF.
Equity Share
An equity share represents ownership in a company. In demat form, it appears as a quantity under the company’s name.
ETF
An exchange-traded fund, or ETF, trades on the exchange like a share. ETF units can be held in a demat account.
Bond
A bond is a debt instrument through which an investor lends money to an issuer. Certain bonds can be held electronically.
Statement and Transaction Terms
| Term | Meaning |
| Holding Statement | Shows securities currently held in the account. |
| Transaction Statement | Shows credits, debits, transfers, and pledges. |
| Credit | Means securities have been added. |
| Debit | Means securities have moved out. |
| Free Balance | Securities available for sale, transfer, or pledge. |
| Locked-In Holding | Securities restricted for a period or reason. |
Trading and Settlement Terms
Delivery
Delivery means the investor takes ownership after buying securities. The securities are credited to the demat account after settlement.
Intraday
Intraday trading means buying and selling on the same trading day. Since the position is closed within the day, securities are not delivered.
Settlement
Settlement is the process by which securities and funds are exchanged after a trade. It decides when shares are credited, debited, or funds are released.
T+1
T+1 means trade date plus one working day. It helps investors understand when trades may settle, subject to market holidays and rules.
Charges Related to a Demat Account
Common charges may include:
- Account opening charges, if applicable.
- Annual maintenance charges for account upkeep.
- Transaction charges when securities are debited.
- Dematerialisation charges for converting paper certificates into electronic form.
Charges differ across providers. Check the schedule of charges before you open demat account with any broker, bank, or platform.
Corporate Action Terms
Dividend
A dividend is a payment made by a company to eligible shareholders. It is usually credited to the linked bank account.
Bonus Issue
A bonus issue gives additional shares to existing shareholders without extra payment. The new shares are credited to the demat account.
Rights Issue
A rights issue allows eligible shareholders to buy additional shares within a fixed period, usually at a stated price.
Stock Split
A stock split increases the number of shares and reduces the face value per share. The total holding value does not change only because of the split.
Record Date
The record date decides which investors are eligible for a corporate action. Holdings are checked on this date.
Transfer and Pledge Terms
Off-Market Transfer
An off-market transfer moves securities outside the stock exchange trade process. It may be used for gifting or shifting holdings.
DIS
DIS means Delivery Instruction Slip. It authorises the transfer of securities from one demat account to another. Many platforms provide electronic options.
Pledge
Pledging means using securities as collateral. Investors may pledge shares for margin or other approved purposes.
Unpledge
Unpledge means releasing pledged securities. Once released, they become available again, subject to account and market rules.
Final Thoughts
A demat account becomes easier to manage when its language is clear. Terms such as DP, ISIN, BO ID, settlement, pledge, nominee, and holding statement explain how securities are stored, moved, verified, and protected. Before choosing a provider, compare charges, access, safety, and support. A clear understanding helps investors manage holdings confidently.
| Term | Meaning |
|---|---|
| AMC (Annual Maintenance Charge) | Annual fee charged for maintaining a Demat account. |
| ASBA | Application Supported by Blocked Amount used for IPO applications. |
| Allotment | Allocation of shares to investors after an IPO. |
| Bear Market | A market where stock prices are generally falling. |
| Beneficial Owner (BO) | The actual owner of securities held in a Demat account. |
| Blue Chip Stocks | Shares of financially strong and well-established companies. |
| Bonus Shares | Free additional shares issued to existing shareholders. |
| Book Closure | Period during which shareholder records are updated. |
| Book Value | Net value of a company’s assets per share. |
| BSE | Bombay Stock Exchange, one of India’s leading stock exchanges. |
| Brokerage | Fee charged by a broker for buying or selling securities. |
| Bull Market | A market where stock prices are generally rising. |
| Buy Order | An instruction to purchase securities. |
| Capital Gain | Profit earned by selling securities at a higher price than the purchase price. |
| CDSL | Central Depository Services (India) Limited, one of India’s depositories. |
| Client ID | Unique number identifying a Demat account holder. |
| Corporate Action | Events like dividends, bonuses, rights issues, or stock splits. |
| Custodian | Institution responsible for safeguarding securities on behalf of investors. |
| Debenture | A debt instrument issued by a company to raise funds. |
| Delivery Trading | Buying shares to hold beyond the trading day. |
| Demat Account | Electronic account used to hold shares and securities. |
| Depository | Institution that holds securities electronically (NSDL or CDSL). |
| Depository Participant (DP) | Authorized intermediary that provides Demat account services. |
| Dividend | Portion of company profits distributed to shareholders. |
| DP ID | Unique identification number assigned to a Depository Participant. |
| Equity Shares | Ownership shares in a company. |
| Exchange Traded Fund (ETF) | Investment fund traded on stock exchanges like a stock. |
| Ex-Date | Date after which buyers are not eligible for declared corporate benefits. |
| Face Value | Nominal value assigned to a share by the company. |
| Folio Number | Unique number assigned to physical investments or mutual funds. |
| Fundamental Analysis | Analysis of a company’s financial health and performance. |
| Futures | Standardized contracts to buy or sell an asset at a future date. |
| GTT Order | Good Till Triggered order that executes when a specified price is reached. |
| Holding Statement | Statement showing securities held in a Demat account. |
| Intraday Trading | Buying and selling securities on the same trading day. |
| IPO | Initial Public Offering where a company offers shares to the public. |
| ISIN | International Securities Identification Number assigned to every security. |
| KYC | Know Your Customer verification required before opening a Demat account. |
| Large Cap Stocks | Shares of companies with high market capitalization. |
| Limit Order | Order executed only at a specified price or better. |
| Liquidity | Ease with which a security can be bought or sold. |
| Lock-in Period | Time during which securities cannot be sold or transferred. |
| Margin | Money deposited to trade using borrowed funds. |
| Margin Trading | Trading using borrowed funds provided by a broker. |
| Market Capitalization | Total market value of a company’s outstanding shares. |
| Market Order | Order executed immediately at the best available market price. |
| Mid Cap Stocks | Shares of medium-sized companies. |
| Mutual Fund Units | Investment units of a mutual fund that can be held in a Demat account. |
| NSE | National Stock Exchange of India. |
| NSDL | National Securities Depository Limited, India’s first depository. |
| Nomination | Facility to appoint a nominee for a Demat account. |
| Offer for Sale (OFS) | Method for promoters to sell shares through the stock exchange. |
| Off-Market Transfer | Transfer of securities outside the stock exchange. |
| Options | Financial contracts giving the right, but not the obligation, to buy or sell an asset. |
| PAN | Permanent Account Number required for opening a Demat account. |
| Portfolio | Collection of investments owned by an investor. |
| Pledge | Using securities as collateral for a loan. |
| Price-to-Earnings (P/E) Ratio | Ratio comparing a company’s share price with its earnings per share. |
| Primary Market | Market where new securities are issued. |
| Record Date | Date used to determine eligible shareholders for corporate benefits. |
| Registrar and Transfer Agent (RTA) | Entity responsible for maintaining shareholder records. |
| Rights Issue | Offer allowing existing shareholders to buy additional shares. |
| Risk Profile | Assessment of an investor’s ability and willingness to take investment risk. |
| SEBI | Securities and Exchange Board of India, the securities market regulator. |
| Secondary Market | Market where existing securities are bought and sold. |
| Securities | Financial assets such as shares, bonds, ETFs, and debentures. |
| Settlement Cycle (T+1) | Process where shares and funds are settled one business day after trading. |
| Share Certificate | Physical proof of ownership of shares. |
| Shareholder | Individual or entity owning company shares. |
| Small Cap Stocks | Shares of companies with relatively small market capitalization. |
| Split Shares | Division of existing shares into multiple shares with lower face value. |
| Stock Broker | Licensed intermediary who executes trades on behalf of investors. |
| Stock Exchange | Marketplace where securities are bought and sold. |
| Stop-Loss Order | Order that automatically limits losses by selling at a predetermined price. |
| Swing Trading | Holding stocks for several days or weeks to capture price movements. |
| Technical Analysis | Study of charts and market data to predict price movements. |
| Trading Account | Account used to buy and sell securities through a broker. |
| Trading Volume | Total number of shares traded during a specific period. |
| UPI IPO | IPO application using the Unified Payments Interface. |
| Volatility | Degree of price fluctuation in a security. |
| Voting Rights | Rights of shareholders to vote on company decisions. |
| Yield | Income generated from an investment, usually expressed as a percentage. |
| Zero Brokerage | Trading plan where brokers do not charge brokerage on selected transactions. |
Disclaimer: This glossary is for educational and informational purposes only. Definitions are based on commonly accepted financial terminology used in the Indian stock market. Regulations and market practices may change over time. Always verify information with official sources such as SEBI, NSDL, CDSL, NSE, BSE, or your registered stockbroker before making investment decisions.
