Everything You Must Know About Opening A Demat Account In India

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The investor with an interest in equity trading needs a Demat account! For the Demat account opening procedure, a depository and depository participant is vital.

Here are some of the benefits you can expect with a Demat account:

Benefits:

¨ It eliminates risks arising from theft, fake securities and bad deliveries. Demat account opening procedure is simple, and you can cover this risk.

¨ There will be no stamp duty applicable when you transfer securities.

¨Another menace that Demat accounts block is that nobody can forge your holdings. 

¨ Pledging your online digital securities for easy loans is yet another advantage.

¨ It is versatile and can hold not only shares, but F&O (Futures and Options), ULIPs (Unit Linked Insurance Plan), and others.

¨ Your settlements are much quicker, for dividends, bonuses, and buying/selling is just a click away.

As an investor, you know an open Demat account is crucial for trading!

What is a Demat Account?

Demat or otherwise known as Dematerialised account is a pre-requisite for trading in securities and other portfolios in India. This is an account that allows digital storage and supports online trading. Bonds, F & O, shares, commodities are stored by opening a Demat account with a DP. In India the NSDL and CDSL is the depository. Dematerialisation involves the conversion of physical share certificates to the digital or electronic format. This allows an investor to exclude the need to have a physical certificate for a holding. Demat account support unified tracking and upkeep of holdings. With the Demat account the customer will hold shares, bonds, F & O, commodities, government securities, and others in a single platform.

Documentation for a Demat Account:

The documentation is the same for all the firms and organisations that support the process. You would need the below listed documents (KYC):

  1. PAN card
  2. Income Proof
  3. Proof of Bank Account
  4. Address Proof
  5. ID Proof
  6. Passport size photos – 1 to 3

Protocols for admissible documents have to be followed in submitting the same.

What are the formalities for opening a Demat Account?

A Demat account can be conveniently opened either offline or online. To take advantage of the paybacks from stock market trading by opening a Demat the following is important:

  1. Depository Participant:

Choose the depository participant that suits your future trading needs. It could be a bank or a brokerage firm that is registered with CSDL or NSDL. To open Demat account the services of depository participants can be compared online to take a decision. You would need to list out benefits, customer support, the interface, and cost while comparing.

2. Submit Opening Form:

The bank or brokerage firm would give you an opening form. After filling the form, submit the same with the KYC documents.  

3. Verification:

The depository participant will facilitate an in person verification of the KYC documents and the investor. The fee varies between depository participants. 

4. Approval:

After the verification, on approval the Demat account is opened with a unique number for identification. You will receive vital information like DP ID, copy of right and obligations, tariff sheet, client ID, and master client report.

Online Account

It takes only few minutes to open Demat account online with a smart phone, laptop, or a PC.

  1. Open the official website of the DP you prefer. You can research on the DP charges and services.
  2. Fill a form with your personal information for the lead. You may have to verify your phone number with an OTP.
  3. In another or the following form enter your KYC details and OTP.

You will now receive your account information on your mobile or email. You can have multiple accounts with the same DP or different DPs.

Am I Eligible for a Demat Account:

NRI and a citizen of India who proves the same is eligible for a Demat account. SEBI has few restrictions when for an NRI. The account can have two other joint account holders thus three account holders is the maximum. A Demat account can have a nominee.

To enjoy maximum benefits of an open Demat account, a share trading account, and a bank account is essential.

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