How to Open Demat Account Online - Step Wise Procedure to Open Demat
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.
Steps to Open Demat Account
- To open a demat account you must choose a depository participant from the websites of depositories i.e. Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL).
Fill the account opening form with the following details:
- PAN card
- Aadhaar card
- Cancelled cheque
- Bank statement
- You will be provided with a copy of rules and regulations, the terms of the agreement and the charges that you will incur wherein you will have to sign and agree.
- An In-Person Verification would be carried out.
- On account processing, your DP will provide you with a demat account number and a client ID to access your account.
Note: Demat account can be opened and maintained even with nil balance
Features of Demat account:
- Convenient: Demat Accounts have given easy access to investors and traders to operate from any place.
- Time saving: Another feature of Demat Account is that it is time saving as trading and transfer of shares is quick, unlike earlier when it would take about a month’s time for the same process.
- Reduces risk: Holding of securities in electronic form removes the risks that used to come with holding physical documents like loss, damage, theft forgery, etc.
- Reduces costs: Demat Accounts have brought down a lot of physical effort that was involved in trading and holding securities earlier resulting in reduction of related charges, as now there is also no stamp duty required on transfer of shares in demat.
- Ease of operation: With the help of demat account various tasks like address change can be done easily and the hassle of corresponding with companies for change of personal details has been eliminated.
- Easy tracking & monitoring: Demat account has made it easy for investors to monitor their investments and track the growth of the investments. Other than monitoring and tracking, investors can see the statements, etc.
- Smooth management: Demat account not only manages smoothly the increasing volume of trade but also, encourages more stock market participants because of the ease and convenience it offers.
- Multiple accessing option: Demat account can be operated from anywhere using multiple accessing facilities like mobile, tablet, web, etc.
- Speed e-facility: As NSDL allows user to send instruction slip electronically rather than physical copy that has made it easy and faster.
- Corporate benefits & actions: In case the company offers corporate benefits, these are automatically made available in the demat account.
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.
FAQ: How to Open Demat Account
+How much does it cost to open a demat account?
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.
+How can I buy shares without demat 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.
+What is the minimum amount to open demat account?
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.
+Can I open demat account online?
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.
+Is demat account safe?
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.
+Can I apply for IPO without demat account?
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.