Opening a Demat Account is very simple and it can be completed in few easy steps. Demat account store shares digitally for online trading. Nowadays shares are traded in online mode, demat-account are essential to get start with online trading. It is important as an investor to know how to open a demat-account and use it to grow their wealth. it is now possible to open a demate account online from home in just a few clicks.
What exactly is a Demat account, and how does it work?
Prior to 1996, trading was conducted in person. However, with the introduction of Demat accounts by SEBI, the way people invest changed – it became a digital procedure. The introduction of Demat-accounts was one of the most daring initiatives done by the Securities Exchange Board of India, allowing laypeople to begin participating in stock markets with relative ease.
A Demat Account, also known as a Dematerialised Account, is a necessary need for trading in the stock market. A Dematerialised Account’s purpose is to electronically store the shares you buy. In your Dematerialised Account, you can hold a variety of securities such as stocks, ETFs, bonds, and mutual funds.
As the name suggests, a Demat account is utilized to invest in digital securities and shares. Because an investor can access their Dematerialised Account from any location, it ensures more easy access. Dematerialised Accounts convert physical share certificates into digital format, allowing account holders to access them on demand.
What documents are needed to open a Demat Account?
When you decide it is time to start trading and investing in the stock market, you will need to submit a few documents along with the Demat account opening form. These documents are standard and mandated by SEBI. The good news is that the documentation needed to start a Dematerialised Account are modest, and you won’t have to run from pillar to post gathering them. As a consequence, retail investors can easily fill out the account opening form and provide the relevant papers.
To open a Demat account, you will required to submit the following Documents.
- Pan card
- Passport size photo
- A copy of your signature
- Proof of Identity – Your PAN card will serve as the proof of identity
- Proof of address – Any of these documents can be submitted- Aadhar card, Voter ID, Passport, Driving License, and/or utility bill (not more than 3 months old)
- Bank statement or copy of the account passbook as proof of having a bank account
- Cancelled cheque
- IT return or payslip if you are interested in currency or derivative market
Steps for opening a Demat account Online.
Step 1: Find a depository participant.
Choose a DP with whom you want to open your Demat account. Consider the DP’s reputation and whether it can give the services you require.
Step 2: Provide basic information
Fill out an online account opening form on the DP’s website after choosing one. To begin, you must enter basic information such as your name, phone number, and email address. You will also need to enter your PAN Card information.
Step 3: Enter your bank information.
You must provide banking information such as account number, account type, IFSC code, and so on. Adding a bank account is necessary since it is used to credit any amount payable to you by the issuer firm whose shares you may hold in your Dematerialised Account, such as dividends or interest.
Step 4: Upload Documents
To finish this step, upload your photo as well as the documents relevant to your proof of address and proof of identification.
Step 5: Verification in person
You may complete verification at home because the entire process is digital. There is no need to wait for a DP agent to visit you and verify your identity. Simply film a brief video of yourself reading the specified script (your name, PAN number, address, etc.) and upload it to finish the process.
Step 6: Sign electronically
Most DPs will allow you to sign your application digitally using your Aadhar-linked cellphone number. It is a safe and convenient solution that reduces paperwork.
Step 7: Complete the form
After completing these steps, you can submit your form and your Demat account will be created shortly. Account information, such as your Demat account number, as well as login credentials to access your account, will be provided to you.
The various fees involved with opening a Demat account
Stockbrokers impose fees for opening a Demat account and using related services. The charge varies depending on the stockbroker. As a result, it is critical to choose the correct stockbroker so that you pay the least price for opening a Dematerialised Account while still enjoying the services and benefits that come with it.
These charges are basically classified as follows:
- Fee for creating an account: When you open a Demat account for the first time, you will usually be charged an account opening fee. Following that, the brokerage will not charge you this fee again.
- Annual maintenance charge (AMC): An annual maintenance charge is a regular fee imposed by the DP to the Demat Account holder for maintaining their Demat Account.
- Charge for pledging: It is the cost of pledging securities in a Demat account in order to get trading limitations.
- Unpledging charge: This charge is applied when pledged shares are unpledged.
- Dematerialization fee: A physical share certificate can be transformed to digital form using Dematerialization. This involves the Dematerialization Charge.
- Rematerialisation fee: It is the opposite of dematerialization in that a digital share certificate is transformed to physical form.
- DP charges: A DP charge is applied every time an ISIN is deducted from a Demat account.
Things to keep in mind while setting a Demat account
Certain things must be examined before opening a Demat account. Almost all budget stockbrokers now provide both Demat and Trading accounts; however, if you just register a Demat account with a broker, it is also vital to open a Trading account and link it to your Demat Account, through which you will be able to purchase and sell shares. Before you choose a broker to open your Dematerialised Account, consider the following points to ensure you open a Demat and trading account with the proper broker.
- A reliable brand name: It is critical to select a reliable platform with a strong market reputation. The portal where you open your Demat account should be SEBI registered. It must be a depository participant and follow all criteria published by the relevant government bodies.
- A secure platform: The platform you select must guarantee the total security of your Dematerialised Account.
- Brokerage-fees: Before you open a Demat account, carefully examine the brokerage that will be charged by the broker, as this would be a long-term transaction.
- Simple user interface: A decent online trading platform will make things simple for you with its straightforward Ul and uncomplicated navigation inside the app.
- Help and support: If you are stuck in a deal and require immediate assistance, the platform should be able to provide it.