Last Updated on March 12, 2024 by ethinos
In the current digital age, you can open any kind of account you like online. From savings bank accounts to NRI accounts, account opening processes are virtually at your fingertips. You can even start to trade on the stock market if you open a Demat account and a trading account online. A Demat account is one of the easiest to open today. Before you learn the convenient online process to open a Demat account, you should know what it is and why you should have one.
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A Demat Account Explained
A Demat account or a dematerialised account is one in which all your securities like stocks and bonds are held in an electronic or digital format. Previously, there was no such thing as a Demat account and securities were held in paper form. However, with the advent of the electronic holding of securities, Demat accounts have become popular. A Demat account is necessary if you want to hold your shares and other assets and trade on the financial markets of India. While a Demat account is a holding account, you can link it to a trading account to buy and sell shares and other securities in the Indian financial markets. In a Demat account, you can hold any type of securities like stocks, bonds, ETFs, and mutual funds.
So, what is a Demat account? It is an electronic account to store your securities and must be opened if you want to trade on the Indian markets. A Demat account can be opened with a bank or a broker, called a DP or depository participant, a body that is authorised to open a Demat account on behalf of an investor. While choosing a broker to open a Demat account, investors must make sure that they are registered with the Securities and Exchange Board of India (SEBI) to open accounts. Today, most online financial platforms of banks and brokers offer you methods to open your Demat account online free of cost.
Additional Read: Eligibility Criteria to Open Demat Account
How to Open a Demat Account
The procedure to open a Demat account is available both offline and online. Although you have the choice of opening the account either way, the online process is quicker and takes a few clicks. Here are the ways to open a Demat account:
Open a Demat account Online
If you want to open a Demat account online, first you have to select a DP and visit the portal of the DP (a bank or brokerage). While choosing a DP, you have to do some research and select one keeping costs in mind, and the facilities that the DP provides you. Then, you can follow these steps to open a Demat account online:
Additional Read: How Does a Demat Account Work
- Each DP may be different in terms of the portal you choose, but there are certain standard and general steps you need to follow while you open a Demat account. First, go to the tab which says “Open a Demat account”.
- Click on the tab and you will see a Demat account opening form. This must be filled with all the relevant details required.
- You may receive an OTP that you must also submit for verification purposes.
- After submitting the online account opening form, you will be required to submit some proof documents like your PAN and Aadhaar cards, bank statements, photographs, etc. You can upload these online.
- Then authenticate your KYC details. These are verified and you may have to go through an in-person verification by video call.
- After the in-person verification, your documents are validated.
- Now, your Demat account is officially opened and you get a unique account number.
Open an Offline Demat Account
Just as you open a Demat account online, you start your process offline by identifying a reliable DP. Then you can follow the steps mentioned below:
- Visit your DP.
- Get an account opening form and fill out your details.
- Submit your application with supporting documentation like your PAN and Aadhaar cards, bank statements, passport-size photos, etc.
- You will be required to sign an agreement accepting the terms and conditions of the Demat account with your DP.
- Once your application and documents are verified, you will get a Demat ID and your Demat account will be opened.
- Your DP will provide you with an instruction slip booklet which is used for certain depository services like transfers, sales, purchases, etc.
When you approach any DP to open a Demat account, make sure of whether you can open a free Demat account or whether there are charges involved.
Final Lines
A Demat account may be more useful than you can imagine, especially if you are on the road to investing in various securities like shares, bonds, etc, in a bid to diversify your financial portfolio. Additionally, when you wish to transact securities, a Demat account facilitates easy processes as well as stores your securities in a safe place. With a linked trading account, you can access various investment options and features, monitor your investments, and plan further trades.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only.
