Can I have brokerage and DEMAT accounts in two separate institutions - or do they have to be in the same institutions? For example, can I have a brokerage account at zerodha.com and a DEMAT account elsewhere?
In theory yes, you can have a brokerage account with different institution than DEMAT. I had for example Demat at HDFC and brokerage account with ILFS. This was quite common 10 years ago. Most brokers did not offer Demat and tied up with others.
Today practically all brokers offer Demat. It then makes it easier for them to operate. Connecting to other Demat for withdrawal is complex. So you may not find a broker who would take Demat from other institute.
Well, it is very much possible. Only the concern is people are not aware of the work or process flow of the stock market and end with misconceptions. I am going to acknowledge you about 3 terms: Trading Account, Demat Account and the Depository.
There are two accounts trading and demat; trading is what you are calling as brokerage account.
A trading account is used to place buy or sell orders; in simple words to trade in the stock market. The demat account is used to store the shares bought and are deposited in, and where shares sold are taken from.
For investing, you need to have three things - a bank account, a trading account and demat account. Now what is demat: it’s an account that holds all the shares that you purchase in electronic or dematerialized form. Basically, a demat account is to your shares what a bank account is to your money. Like the bank account, a demat account holds the certificates of your financial instruments like shares, bonds, government securities, mutual funds and exchange traded funds (ETFs).
A depository is similar to a bank. It holds shares, which belong to investors, in electronic form. The investor has to open an account with the depository, through a Depository Participant (Broker). The broker is an intermediary between the depository and the investor. In India, there are two depositories, National Securities Depository and Central Depository Services. A number of banks (HDFC Bank, ICICI Bank, SBI, and so on), brokers (Zerodha, India Infoline, Motilal Oswal and Indiabulls) and institutions function as DPs.
Now when you know these terms let me tell you this you have to open a demat account first at your favorite THEN open your trading account with Zerodha and when you have your trading account with Zerodha provide them with the Depository ID and you will have them synchronized.
If you are willing to learn more about stock market please prefer reading Daily Capital Market Dose that's a blog that can help you learn alot. It is a popular blog you will find it via Google or visit: Daily Capital Market Dose