Opening a demat account is simple and can be completed in a few steps. Demat Account stores the shares digitally when you trade online. Since shares are traded in digital mode today, Demat account is essential to get started with online trading. Hence, it is essential as an investor to know how to open demat account and use it to build and grow their wealth. Thanks to the internet, it is now possible to open demat account with a few clicks while sitting in the comfort of your home.
What is Demat Account and How Does It Work?
Prior to 1996, trading used to take place physically. However, with the introduction of demat account by SEBI, it transformed the way people invest – it became a digital process. Introducing demat accounts became one of the boldest steps taken by the Securities Exchange Board of India, and that, in turn, enabled laypeople to begin investing in the stock markets with relative ease.
Demat Account, often known as a dematerialized account, is an important requirement to trade in the stock market. The objective of a Demat account is to electronically store the shares you purchase. You can hold several securities, like stocks, ETFs, bonds, and mutual funds in your Demat account.
As the name suggests, demat account is used to invest in the digital form of securities and shares. Since an investor can access their demat account from anywhere, it ensure more convenient access. With demat accounts, physical share certificates get converted into digital format, ensuring that account holders can access them on demand.
Step by Step Procedure to open a Demat Account
You can open a demat account without stepping out of your home. The entire process is digitized and can be completed in less than 10-15 minutes with just a mobile phone. Detailed below are the steps that will help you open a demat account:
- Step One: Search for depository participant
Select a DP with whom you want to open your demat account. Consider the reputation of the DP and whether it can provide the specific services you are looking for
- Step Two: Provide Basic Details
Once selecting a DP, next fill up an online account opening form on DP’s website. In the beginning you will need to provide basic details like your name, phone number, email, address, etc. You will also need to add your PAN Card details
- Step Three: Add Bank Details
You need to add bank details like account number, account type, IFSC code, etc. Adding bank account is essential since it is used for crediting any amount payable to you, like dividend, interest, etc. by the issuer company whose shares you might hold in the demat account
- Step Four: Document upload
Upload your photo, and the documents related to your proof of address and proof of identity to complete this step
- Step Five: In-person verification
Since the entire process is digitized, you can perform verification by yourself at your home. No need to wait for an agent from the DP to visit you and confirm your identity. Just record a short video of yourself, reading out the given script (your name, PAN number, address, etc.) and submit it to complete the step
- Step Six: E-sign
Most DPs will provide you the option to sign your application digitally using Aadhar linked mobile number. It is a convenient and secure method and reduces paperwork
- Step Seven: Form Submission
Once you have finished these steps, you can submit your form and your demat account will be created shortly. You will receive details of your account like demat account number, and the login credentials to access your account
Types of Charges Associated with Opening a Demat Account
Stockbrokers levy charges for opening demat account and for availing associated services. The fee varies across stockbrokers. Hence, it is imperative to select the right stockbroker so that you pay minimal amount for opening demat account but still enjoy the features and benefits that come with having this account.
These charges can be broadly categorized as below:
- Account Opening Fee: Usually, account opening fee is charged one time when you open the demat account for the first time. Thereafter, the stockbroker will not charge you this fee again.
- Annual Maintenance Charge (AMC): Annual maintenance charge is a recurring fee charged from the Demat Account holder by the DP for maintaining their Demat Account.
- Pledging Charge: It is the fee charged for pledging securities in demat account to avail trading limits.
- Unpledging charge: When pledged shares are to be unpledged, this charge comes into play.
- Dematerialization Charge: A physical share certificate can be converted to digital form via dematerialization. This involves Dematerialization Charge.
- Rematerialization charge: It is the opposite of dematerialization, where a digital share certificate is converted to physical form.
- DP Charges: DP charge is applicable every-time an ISIN is debited from Demat account.
Some stockbrokers may waive off demat account opening charge. For example, with Bajaj Financial Securities the Demat Account opening charges are nil. There are subscription packs that give investors option to choose different brokerage rates while trading.
What are the documents required to open a Demat Account?
When you decide that it is time to begin trading and investing in the stock markets, you will have to submit a few essential documents along with the Demat account opening form. These documents are standard and stipulated by SEBI. The good news is that the documents required to open demat account are minimal and there is no need to run from pillar to post to collate them. As a result, it becomes easy for retail investors to fill out the account opening form and furnish the necessary documents without any hassle.
To open a demat account you will need to submit the below 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 ard, 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
Additional Read: How to start trading online
Why Do You Need to Open a Demat Account?
If a person wants to invest his/ her money by trading in stock market, he/ she cannot do so until and unless they have a Demat account. Online brokers have made it simple for retail investors to get a demat account quickly and effortlessly. So, knowing how to open a demat account online allows to understand the KYC requirements, which are mandated by SEBI and all stockbrokers have to adhere to them.
Your demat account will hold the financial securities such as shares, bonds, mutual funds etc. in an electronic form, as stated before. Other than keeping the securities in a digital mode, there are other reasons as well which makes the Demat account more important such as:
- Protection/ Safety: Previously, when the shares were in physical form, it was very difficult to maintain them. The risk of losing it by misplacing or getting stolen was always there. Now, with a demat account, one can hold the securities in electronic form which is much safer. The rules, regulations and statutory compliances makes a demat account more protected and a safer option.
- Handiness: Since, all the securities are in electronic form, one can access them from anywhere anytime.
- One-Stop: There are many financial products where an investor invests. It is confusing plus time-consuming to maintain separate accounts for these products. A demat account helps an investor to hold their multiple securities in one single account and makes the tracking hassle-free.
- Ease of Transfer: When you execute a trade, the stockbroker can directly transfer the securities from the seller to the buyer. If you are maintaining demat account for a minor, you can purchase the shares and conveniently transfer from your demat account to the minor’s demat account.
- Effortless Dematerialization of Securities: If you have physical certificates, you can easily convert them to electronic form through your demat account. You can also convert electronically held securities into physical form with a simple click of a button.
- Instant and Easy Access: A demat account allows you to easily access your investments using the internet. So, at any given time, you will know the investments you have and make smarter decisions to build your wealth.
- Convenient Access to Dividends: Before the introduction of demat account, it used to be a time-consuming process to request for dividends. However, now dividends are automatically credited to demat accounts using an electronic clearing service. Each demat account has a unique ID and when you buy shares and securities, any resultant dividend is paid to that ID.
Click here to open demat and trading account now!
Benefits of Opening a Demat Account With BFSL
BFSL is one of the prominent stockbrokers in India. It is a registered stockbroker and enables investors to choose between National Securities Depository Limited and Central Depositories Services Limited as their depository partner and offers transparent trading opportunities to investors. Retail investors enjoy several benefits when they open a demat account with Bajaj Financial Securities Limited.
- Nil Charges for Demat Account Opening: BFSL enables retail investors to open a demat account online without incurring any costs. They do not have to pay any charges for opening and maintaining their demat accounts.
- Begin Trading in Minutes: The entire account opening process with BFSL hardly takes 15 minutes. If you keep your PAN card, address proof, and bank details on hand, you can open your demat account within no time and begin trading.
- Diversified Investment Portfolio: Besides investing in shares and stocks, a demat account with BFSL also allows you to invest in equities, mutual funds, IPOs, and equity derivatives. When you diversify your investment portfolio, you not only minimize risks but also maximize profits.
- User-friendly Trading Platforms: You will find that BFSL gives you access to a number of trading platforms that are not just user-friendly but also convenient. Using the mobile app for iOS or Android, you can trade on the go.
- Low Brokerage Charges: BFSL helps to maximize profits of retail investors by charging one of the lowest brokerage charges in the market. With the help of affordably priced subscription plans, retail investors can save up to 99% of brokerage charges, depending on the plan their choose.
Things to Remember while Opening a Demat Account
Before you open a Demat account, there are certain things that must be considered. Almost all discount stockbrokers today offer Demat and Trading account together, however, if you are opening only Demat account with a broker it is also important to open a Trading account and link it to your Demat Account, through which you will be able to buy and sell shares. Before you choose a broker to open your Demat account you should check the below mentioned points to ensure you open a Demat and trading account with the right broker.
- A Trusted Brand Name: Choosing a trusted platform with a great market reputation is important. The platform where you are opening your Demat account should be a SEBI registered platform. It must be a depository participant and adhere to all the guidelines issued by all relevant government agencies.
- A Secured Platform: The platform you choose must ensure complete security of your Demat account.
- Brokerage-Fees: Before you open a Demat account, please check the brokerage that will be charged by the broker as it will be a long-term affair.
- Easy to Use User Interface: A good online trading platform will make things simple for you with its simple UI and uncomplicated navigation within the app.
- Help & Support: If you are stuck on a trade and need urgent support, the platform should have the ability to do that.
How to open Demat Account FAQ’s
How much does it cost to open a Demat account?
Demat account opening charges are waived off by some brokers. However, certain charges are levied by brokers for account maintenance. Brokerage charges are also levied and these charges vary across brokers.
You can open a free Demat account if you sign up for the Freedom Trading Pack from Bajaj Financial Securities. With this pack, Demat AMC for the first year is NIL and for the second year, it is Rs. 365+GST.
How can I open a Demat account for free?
You can open a free demat account if you sign in for the Freedom Trading Pack from Bajaj Financial Securities Limited. The procedure can be performed in a paperless manner at the convenience of your home. Fill in the basic details and submit your KYC form and you are good to go. Demat account is imperative to perform online trading.
How much time does it take to open a Demat Account online?
To open a Bajaj Financial service Demat account it takes 10-15 minutes of your time. As the process of opening the Demat account can happen online, it is easy and convenient for the investors. The procedure is absolutely paperless and hassle-free. By filling a few basic details and keeping KYC documents ready, you have got your Demat account ready.
Can an NRI open demat account?
Yes. NRIs can open a demat account with any Indian brokerage but have to use their specific accounts for bank transactions. The following types of demat accounts are available based on the type of bank account used.
- Repatriable Demat account: This demat account is for NRIs who can transfer the funds overseas. The account has to be associated with an NRE account
- Non-Repatriable Demat account: This demat is also for NRIs, but they cannot transfer their funds abroad from it. It has to be first linked to an NRO account
Do I require a Demat Account for SIP?
No. It is not compulsory to have a demat account for SIP. However, with increasing avenues to invest, a demat is a one-stop-shop for trading in all securities including mutual funds and SIP. Having all your investment through the same account can save you the effort and hassle of maintaining multiple logins and accounts. With a demat account, you can also view your entire portfolio with periodic updates.
How to get Demat Account?
- To get Demat Account, you must have a PAN Card and valid documents for proof of address and proof of identity
- Once this is met, you can visit the Account Opening form on the website of Depository Participant
- Fill the form and upload the necessary documents (PAN, Proof of Address, Proof of Identity, Bank Proof)
- E-sign the application
What are the types of Demat accounts?
There are three types of demat accounts that retail investors can open. The regular demat account is for residents and citizens of India. On the other hand repatriable and non-repatriable demat accounts are better suited for NRIs.
Can an individual open multiple Demat accounts?
Yes, it is possible for an invidividual to open multiple demat accounts with different stockbrokers. However, you cannot open multiple accounts with the same stockbroker.
Can the Demat account be transferred?
You can transfer a demat account from one stockbroker to the other. You can transfer the account through the CDSL website and after the new stockbroker completes the verification, you will be able to operate the demat account. During the transfer process, details of your trades stay safe so you have no reason to worry.
Is a Demat account compulsory to apply for an IPO in India?
Yes, it is mandatory to have a demat account if you want to apply for an IPO in India.
Can I withdraw money from the Demat account?
Once you sell shares or securities, it takes a couple of days to reflect in your demat account. Once you see the amount, you can withdraw the money via your trading account.
Can I open a demat account without opening a trading account?
If you want to invest and build wealth, you will need not just a demat account but also a trading account. A demat account functions as a repository for securities in digital format. To invest and execute trades, you need a trading account so that your securities can be held in the demat account. Hence, there is no point in having a demat account without a trading account.
Is it necessary to link a trading account to a demat account?
If you trade in the cash segment, such as shares, it is mandatory to link your trading account with your demat account. The trades will be executed from your trading account and after being process, they will reflect in your demat account.
Even if you do not trade in the cash segment, linking is advisable. That way, you will not have to put effort providing the details of your demat account in case share transfer is required.
Can I link my new trading account with a demat account?
Yes, you can link your new trading account with a demat account. You need to contact your broker and follow the necessary process.
What are the charges of a demat account?
BFSL has nil charges for opening demat account. You can easily subscribe to one of the affordably priced subscription plans to get access to minimize brokerage charges. BFSL does not levy annual account maintenance fee.
So, what are you waiting for? Open a Demat Account today and start your investment journey!
Account opening is free for Freedom Pack, with zero Annual Maintenance Charge (AMC) for 1st year & Rs. 365+GST from the 2nd year.
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