When you open a demat account, you may come across another term almost immediately: Depository Participant, or DP.
A DP is the link between you and the depository that maintains the electronic records of your securities.
If you hold shares, ETFs, bonds or other securities in dematerialised form, your DP provides the services that let you access and manage those holdings.
But what exactly does a DP do? Is a broker the same as a DP? What are DP charges? And what should you check before opening a demat account?
This guide explains the role of a Depository Participant in simple terms.
A Depository Participant (DP) is an intermediary through which investors access depository services.
India has two depositories:
Banks, stockbrokers and other eligible entities can act as DPs after meeting the applicable regulatory requirements.
Your DP helps with services such as opening and maintaining a demat account, holding securities electronically, transfers, dematerialisation, pledging and account-related requests.
A Depository Participant (DP) is an entity registered with a depository to provide depository-related services to investors.
A DP can be a bank, stockbroker or another eligible financial intermediary.
The relationship can be understood like this:
Investor → Depository Participant → Depository
For example, an investor may open a demat account with a broker that acts as a DP. The DP connects the investor’s demat account to the relevant depository.
Alice Blue, for example, provides demat services through its CDSL DP arrangement.
These two terms are often confused.
Depository | Depository Participant |
Maintains the central electronic records of securities | Provides depository services to investors |
CDSL and NSDL are the two depositories in India | Banks, brokers and other eligible entities can act as DPs |
Works at the depository level | Provides the investor-facing account and service layer |
Investors generally access services through DPs | Investors open and manage demat accounts through DPs |
A simple way to remember it:
Depository = central system
DP = your access point to that system
Your DP handles several activities related to your demat account.
When you open a demat account, the DP completes the required account-opening and KYC processes.
It then maintains your demat account and the records associated with it.
Your account is assigned the relevant account identifiers, such as a BO ID for a CDSL account.
Your securities are maintained electronically rather than through physical certificates.
The DP provides the account through which you can view and manage these holdings.
If you have eligible physical securities, a DP can provide the process for converting them into electronic form.
This is called dematerialisation.
The reverse process, where eligible electronic holdings are converted back into physical certificates, is called rematerialisation.
A DP can facilitate transfers of securities between eligible demat accounts.
For example, you may transfer shares when:
The exact process depends on the type of transfer and the DPs involved.
Your demat account is also used in connection with corporate actions such as:
The exact process and whether an investor needs to take action depends on the particular corporate action.
Eligible securities can be pledged through the depository system for permitted purposes.
Your DP facilitates the relevant pledge-related process and records.
Your DP can provide information relating to your holdings and transactions.
You may receive or access:
The format and delivery method depend on the DP.
Suppose you buy 100 shares of a company through your trading account.
The transaction goes through the applicable market and settlement process.
Once the securities are due to be credited, the relevant depository records the securities against the investor’s demat account through the DP.
The simplified relationship looks like this:
You place an order → Trade is executed → Settlement takes place → Securities are credited to your demat account
The DP provides the account and depository services needed for maintaining those electronic holdings.
This is different from saying that the DP itself executes your stock-market order. The broker/trading platform handles the trading side, while the DP handles the relevant depository side.
Suppose you have shares in one demat account and want to move them to another account.
The DP may facilitate the transfer through:
The exact method depends on the depository and the DPs involved.
You may need details such as the ISIN, DP ID, Client ID or BO ID of the receiving account.
For a detailed explanation of these identifiers, see Alice Blue’s guide to DP Name, DP ID, BO ID and Demat ID.
DP charges are fees related to depository services.
They are different from brokerage charges.
Depending on the DP and the service, charges may apply for activities such as:
There is no single DP charge applicable to every broker.
Even DPs connected to the same depository can have different tariff structures. CDSL publishes DP tariff information and advises investors to compare the charges imposed by individual DPs.
So, before opening an account, check the DP’s latest tariff rather than relying on an old charge mentioned on a third-party website.
These charges are not the same.
Charge | What it relates to |
Brokerage | Charges related to executing trades, where applicable |
DP charges | Charges for specified depository-related transactions or services |
AMC | Annual maintenance of the demat account, where applicable |
Statutory charges | Government, regulatory or other applicable charges |
For example, selling shares through your trading account may involve brokerage or other trading-related charges, while a separate DP charge may apply to the corresponding debit from the demat account, depending on the DP’s tariff.
Always check the latest tariff for the account you are considering.
There is no single DP that suits every investor.
Instead of looking only at the account-opening fee, compare the services and charges that matter to you.
Check the annual maintenance charge and whether any BSDA-related pricing applies to your account.
Look at the charge applicable when securities are debited from your demat account.
If you expect to move shares between demat accounts, check the charges and process for off-market and inter-depository transfers.
Check whether the DP supports services you may need, such as:
If you prefer managing your investments online, check the quality and availability of the broker’s app and web platform.
Check how you can contact the DP when you have an account-related issue.
Before opening an account, verify that the entity is registered with the relevant regulator and depository.
SEBI maintains lists of registered DPs for both CDSL and NSDL.
A DP operates within the regulatory and depository framework applicable to its activities.
However, investors should still take basic precautions.
Do not share:
Be cautious about calls, messages or links asking for account information.
Review your holding and transaction statements regularly.
If you notice a transaction or debit you do not recognise, contact your DP promptly.
Read the terms before providing any authorisation such as a Power of Attorney or other mandate.
Understand what the authorisation permits and whether there are alternatives available.
Your registered mobile number, email address and other KYC details should remain current so you can receive relevant account notifications.
If you notice an issue with your demat account, start by raising it with your DP.
If the issue is not resolved through the applicable grievance process, you can use the relevant escalation mechanism available through the depository and SEBI.
CDSL, for example, publishes information on complaints and actions involving its DPs.
For Alice Blue users, the Alice Blue Support Centre provides account-related assistance.
Yes. An investor can have multiple demat accounts, including accounts with different DPs, subject to the applicable account-opening requirements.
For example, you may have one demat account with one broker and another with a different broker.
Each account will have its own account details.
Having multiple accounts can be useful in some situations, but it also means keeping track of multiple statements, charges and account records.
A Depository Participant is the link between an investor and the depository system.
While CDSL and NSDL maintain the central electronic records of securities, the DP provides the account and services that investors use to manage those holdings.
Your DP can help with activities such as opening and maintaining a demat account, securities transfers, corporate-action processing, pledging, dematerialisation and account statements.
When choosing a DP, don’t look only at the account-opening fee. Compare AMC, DP charges, transfer charges, available services, digital access and customer support.
Understanding these differences can make it much easier to manage your demat account and know what you’re actually being charged for.
Attention Investors!
Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020. Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from the depository on your email id and/or mobile number to create a pledge. Pay 20% upfront margin of the transaction early to trade in the cash market segment. Investors may please refer to the Exchange’s Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020, and NSE/INSP/45534 dated August 31, 2020, and other guidelines issued from time to time in this regard. Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month.
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