How To Open A Demat Account?

How To Open A Demat Account?

Last Updated: Dec 09, 2022 - 04:04 am 166.5k Views
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If you want to start trading or investing in the stock markets, you will need to open a demat account. Opening a demat account involves a small and easy, four-step procedure. Before understanding the process of opening a demat account, it is very important to know its basics.

A demat account stores shares in a dematerialized (electronic) form unlike the physical shares that used to be issued previously. These are stored with a depository participant (DP), who is either associated with the NSDL (National Securities Depository Ltd.) or the CDSL (Central Depository Services Ltd.).

How to Open Demat Account

You have to Follow below steps in order to open a demat account:

Step 1: Look for a depository participant: The first step to open a demat account is selecting a suitable depository participant (DP). A DP could be a bank, a broker, or an online investment platform. Make sure that the DP you choose fulfills the necessary criteria and matches your requirements. To compare between different DPs, you could look for the list and other details on the CDSL and NSDL websites.

Step 2: Fulfill the KYC formalities: To register yourself with the DP and to open a demat account, it is very important to complete the KYC (Know your Customer) formalities. KYC formalities include submission of a duly filled application form along with the copies of required documents

Step 3: Perform verification: Once the application form is submitted along with the KYC documents, you might be required to be present at the DP’s office in person in order to check the authenticity of the KYC by performing verification.

Step 4: Acquire Beneficiary Owner Identity (BOID): Once the DP has processed the application, a unique Beneficiary Owner Identity, commonly known as BOID, is generated. You need to acquire this BOID in order to make transactions and to be able to access your demat account in the future.

If you are looking to trade in the share market on an intraday basis, you would also be needing a trading account.

Documents Required for Demat Account

Here is the list of documents generally required (for KYC) while opening a demat account:

Proof of Identity: You would require copies of any of the following as a proof of identity.

  • Voter's ID
  • Aadhaar card
  • PAN card
  • Passport
  • Driving licence

Proof of Address: You would require copies of any of the following as a proof of address.

  • Ration card
  • Electricity bills
  • Telephone bills
  • Property tax receipts
  • Passport
  • Bank passbook
  • Voter's ID
  • Aadhaar card

Features & Benefits of Demat Account

A demat account can be used for the following:

  1. To dematerialize securities and store them in an electronic format
  2. To rematerialize securities from electronic to physical format
  3. To invest in different securities such as bonds, exchange-traded funds, mutual funds, shares, etc.
  4. To track and monitor the progress of assets
  5. To get statements, including details such as transfers and current holdings, periodically
  6. To receive corporate benefits such as dividends, bonus, split, etc.
  7. To transfer assets, register Power of Attorney.           

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