How to open Demat account? A step-by-step guide!!
Equity investing has been a prevalent practice in India as new retail investors seek higher returns than other investment options and expand their wealth over time. The Securities and Exchange Board of India, which supervises the Indian securities market, has made significant efforts to transition the investing process from physical to digital.
Today, it only takes a few clicks on a smartphone or a laptop to purchase and sell stocks. However, because they are unfamiliar with the investment process, new investors have a tough time getting to the point of investing. One of the most prevalent issues is not understanding how to register a Demat account online.
A Demat account is required for investing in equities shares, and it is a regularly used terminology in the trading and investment world. Saving habits among Indians have shifted dramatically from traditional fixed deposits to alternative options such as equities and shares, resulting in an increase in the number of Demat accounts.
Furthermore, opening a Demat account has been increasingly popular in recent years. With 10.7 million Demat accounts created by 2021, the popularity of these accounts has reached new heights.
Because a Demat account is required to invest, it is necessary to know how to open a Demat account online. This post will teach you all you need to know about Demat accounts and how to open them up.
What is Dematerialisation?
Dematerialization is a proper way of keeping records online in a Demat account that is designed to provide greater security and increased speed for buying and selling in an electronic form.
A Demat Account provides the electronic purchase and sale of shares and securities via the Dematerialisation process. Financial transactions involving the investor’s stocks and other investment securities are kept in the Demat Account for fast and easy and hassle-free trading.
What are the Demat account and Trading account?
A Demat Account stores shares and securities in electronic or dematerialized form. It is a simple and convenient way to own assets such as stocks, ETFs, government securities, and bonds.
A Demat Account facilitates fast, safe, and easy transactions for the purchase and sale of shares and other securities. A Demat Account allows you to easily access shares or other financial instruments and instantly check any activity by simply login into the account at any time. To facilitate stock market transactions, a Demat Account is linked to a trading account.
While In simple words a Demat account acts as a storage space for financial securities in a digital form, the Trading accounts help the user to buy and sell shares in the stock market. Two repositories prolong the Demat accounts. One is Central Depository Services Limited, and the other is National Securities Depository Limited. Some popular platforms are Zerodha, Groww, Upstox, Angel One, etc.
How to open a Demat Account online?
The brainstorming question must be How to open a Demat Account online after learning the Share market basics. The process to open the account is easy, but you require some documents and valid details while initiating the process. Follow the steps below!!
The procedure for Opening a Demat account:
Step 1: You have to select Depository Participant (DP)
The first and initial step to opening a Demat account is selecting a depository participant (DP). You can select the best DP services in India from banks, stockbrokers, and online investing platforms like upstox, Angelone, Zerodha, etc. Look for a service provider whose services and features satisfy your demands and criteria when choosing a DP.
Step 2: Fill out and submit the Demat Account Opening Form
To open a Demat and trading account, go to your DP’s website and fill out the online Demat account opening form. Many depository participants enable you to open trading and Demat accounts at the same time.
Step 3: Comply with KYC (Know Your Customer) requirements
Meet the KYC requirements. To complete this step, you need documents like bank account statements, ID proof, Income proof, and Address proof. Keep all the documents with you at the time of the process
Step 4: Complete the Verification Procedure
After giving your KYC information, you must go through an ‘In-Person Verification’ process (IPV). This is an essential activity that you must perform in order to verify the accuracy of your records. Based on your DP, you may be required to present in person at either of your service provider’s offices. Many depository participants, on the other hand, now provide IPV services online with the use of a camera or a smartphone.
Step 5: Sign Copies of the Agreement
Sign Agreement and wait for the approval. You will get a Beneficial Owner Identification Number on approval. After all these procedures, users can trade in stocks/IPO/ mutual funds, etc.
Step 6: Get Your BO ID Number after the above processes are done
Your DP will begin processing your Demat account application when you sign the agreement. When your application is granted, you will be given a unique Beneficial Owner Identification Number (BO ID). Using this BO ID, you may access your Demat account.
Documents required for opening a Demat account
The paperwork needed to start a Demat account is low. This makes it easy for new applicants to follow the procedure from start to finish without facing any obstacles. Only the following documents must be submitted.
- As proof of your bank account, a copy of your bank account passbook or bank statement (not older than 3 months)
- Photocopy of your PAN card as identification
- Evidence of your earnings: a photocopy of your most recent pay stubs or tax return (mandatory for currency and derivatives segment)
- Cheque Cancelled
- 2 passport-sized photos
- Address proof: As proof of residency, a copy of any of the following papers will suffice.
- A landline telephone bill
A bank account statement or passbook (not older than 3 months from the date of receipt of documents)
- Voter registration card
- The Aadhaar card
- The gas bill
- Bill for apartment maintenance
- Ration card
- Registered lease contract
- The electric bill
- A current driver’s license
- A current passport
Things to Remember while Opening a Demat Account
The majority of the learning involves understanding how to open a Demat account online as well as the processes to open a Demat account. However, there are a few things you should keep in mind while setting up a Demat account.
1. Link your Demat account to your trading account:
It is recommended that you link your Demat account to your trading account because it is useless without it. You might also go with a depository participant like Upstox, which provides both Demat and Trading accounts under one roof.
2. Be wary of all Demat account charges/fees:
Before completing your Demat account opening form, carefully read the charges statement (opening and AMC charges). Knowing the expenses ahead of time ensures that you get the greatest deal with no stuff.
3. Fill in your information correctly:
Remember to double-check the information on your Demat account opening form before submitting it to verify that there are no errors or blank entries. Errors in your application may result in its rejection.
4. Enter your nomination: Having a nominee for your Demat account is important since it makes future share transfers easier.
This writing gave you a brief introduction to the Demat account along with the steps to open it. Please note that dealing in share markets involves risk, so make decisions at your own risk. Moreover, we are not promoting any Depository Provider mentioned in this piece, so select upon reading the agreements. Thanks!!