HOW TO OPEN DEMAT ACCOUNT?
What is Demat account?
Demat account allows an investor to hold securities in an electronic form rather than physical form which has made the whole trading, investing, holding and monitoring of securities convenient and quick. For stock market trading it is utmost important to hold a demat account. It works same as a bank account, when shares are purchased your money gets deducted and vice versa. There are two depositories who manage demat account:
- National Securities Depository Limited (NSDL)
- Central Depository Services Limited (CDSL)
To trade in share market, all you need is to hold a bank account, demat account and a trading account. Demat account helps you reduce risks, save cost, save transaction time and also increases liquidity. Under demat account, your share certificates are converted from physical form to electronic form so as to increase their accessibility. The facilities offered by demat account are:
- Transfer of shares
- Loan facility
- Dematerialization & Rematerialization
- Multiple access options
- Corporate actions
- Speed e-facility
A demat account holds all the investments an individual makes in shares, exchange-traded funds, bonds and mutual funds, etc. in one place. It has become a necessary thing in case you want to invest in stock markets. It makes the entire process of share trading easy, secure and speedy. Demat account allows you to buy shares and safely store them. A good note is you can open a demat account without possessing any shares and can maintain a zero balance in your account.
How to open demat account?
The procedure to open a demat account is easy and quick. Below are the steps to guide on how to open a demat account.
- Firstly, choose a Depository Participant to open a demat account
- Complete the account opening procedure and as required attach the documents. Remember to carry original documents during verification
- Further in-person verification will be done for which a representative will be assigned
- On successful processing, the client will receive a Client ID from DP, these details will be required to access demat account online
- On becoming a demat account holder, you would be required to pay AMC for maintenance of account. Also, transaction fee would be charged for conducting trade transaction. In case you hold physical shares, the DP may charge you a separate fee for dematerialization of the shares
- Benefit of demat account is you can open it without having any shareholdings and there’s no mandate to maintain a minimum balance
Documents required for opening a demat account:
- Aadhaar Card
- Canceled personalized cheque
- Passport size photograph