If you are planning to invest or trade in the stock market or looking to gather useful information on demat account in India, let’s know about it and the procedure on how to open a demat account.
Demat is an abbreviation of dematerialization, and it is an account where securities are kept in electronic form. For any investor willing to trade or invest in stock market, it is mandatory to hold a demat account. It acts same as a bank account where securities are held in electronic form. All you require is to open a demat account.
Note: Demat account can be opened and maintained even with nil balance
Presently, with the help of demat account investing and holding different types of securities have become hassle free, safe and quick. Investors can see all the transactions, documents, statements, etc. at a fingertip with a respective unique login ID and password. Demat account opening is a very easy and a simple process; also, there is no minimum initial holdings or balance required.
The cost to open a demat account varies from depository participant or stockbroker, type of account or terms and condition laid by the depository. Though there is zero account opening charge, the stockbroker on opening the account charges fees including AMC (Annual Maintenance Charge) and fees per transactions. If in case the investor failed to pay these charges it may result in freezing of the account.
To invest in stocks, it is mandatory to hold a demat account, without a demat account you cannot invest your money in stocks. As demat account acts like a bank account wherein, the shares are kept in a place of money/cash. With demat account, a trading account is also important to buy shares in the market. As in trading account, the transactions of buying shares can be done whereas demat account is a repository of your shares. Therefore, it is utmost important to hold a demat and trading account to buy shares and trade in market.
Usually, there is no account opening charge for demat account however, the depository participant or stockbroker collect Annual Maintenance Charges (AMC). AMC is referred to as a maintenance charge which is levied in advance to offer good services throughout your trading journey. Also, brokerage or transaction fees are charged along with AMC which depends on the scheme and plan opted by the investor.
Yes, you can open demat account online within a short span of time, all you require is to fill an online account opening form along with submitting copies of required documents i.e. PAN card, Aadhaar card, cancelled cheque or bank statement and photographs. Once you have filled the form, an in-person verification will be done to verify the details by Skype or video call. After processing of application, you will be provided with a client ID and password to access your account.
Note: To trade in the market you need to sign and submit the Power Of Attorney (POA) document in physical format to the depository participant you opened an account with.
Demat account is safe as compared to physical certificates. Demat account provides the user a secure, safe, easy and convenient way of holding shares and securities. Demat account also eliminates the risk of theft, forgery, damage or loss of physical document or certificates. In demat account, the securities are held in electronic making it risk free.
No, to apply for IPO (Initial Public Offering) it is mandatory to hold a demat account. If an investor is willing to apply for an IPO, they must hold a demat account, if the shares are allotted under the IPO investment process, the shares will get credited directly in the demat account. Therefore, an investor must responsibly enter the correct details i.e. DP ID and client ID at the time of form filling and bidding for an IPO. Also, it is easy to trade shares in electronic form.
Demat & Trading A/c – Get up to Rs.5,500/-*