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 accounts is essential to get started with online trading.
What is Demat Account?
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.
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:
- 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
- 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
- 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
- Document upload: Upload your photo, and the documents related to your proof of address and proof of identity to complete this step
- 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
- 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
- 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
Charges to open a Demat Account
To avail the services of a Demat Account, certain charges are levied. These charges vary across the DPs and can be broadly categorized under Account opening charge and Annual Maintenance charge. Demat Account opening charge is waived off by some DPs. 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. Annual maintenance charge is a recurring fee charged from the Demat Account holder by the DP for maintaining their Demat Account.
What are the documents required to open a Demat Account?
To open a demat account you will need to submit the below documents
- Pan Card
- Your 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, utility bill (not more than 3 months old)
Additional Read: How to start trading online
Why Do I 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. It is an account which holds the financial securities such as shares, bonds, mutual funds etc. in an electronic form. 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.
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Benefits of Demat Account
A Demat Account has several benefits. Let's have a look at some key benefits of Demat Account:
- Store all your shares in digital format: Before digitization, the shares existed as paper certificates. Storing and handling them was cumbersome. With demat account you can store all your shares electronically
- Get safety and security: Since your shares are stored in digital format, it stays safe and secure. It eliminates the risk of theft or forgery associated with physical copies of paper certificates
- Get an overview of all your shares at one place: This is a great benefit of demat account that you can view the details of all your shares at one place. It makes it easier to keep a track of them
- Necessary for online trading: Demat Account is essential for online trading. When you buy a share, it needs a repository to get stored. That storage space is your demat account. Hence it is necessary to have a demat account for trading online
- Easy transfer of shares:Since shares are stored in digital format in a demat account transfer of shares become fast and easier. Unlike physical shares, it cuts down paperwork to zero and makes the transfer of shares extremely convenient
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
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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