What is Demat Account
Demat Account or Dematerialised Account allows any investor in holding company shares and securities electronically. Demat account means to have an account for holding dematerialised securities like stocks, mutual funds, bonds, exchange-traded funds (ETF’s) etc., in a Demat account.
A Demat Account can be opened online. For this, at first, you need to look for a Depository participant, then complete the KYC formalities, perform verification and finally acquire Beneficiary Owner Identity.
List of Documents Required for Opening a Demat Account
Let us check which are the required documents for opening the Demat Account:
- Identity Proof
- Address Proof
- Proof of Income
- PAN Card
- Cancelled Cheque
POI or Proof of Identity Admissible Documents:
- PAN card with a photograph that is valid. This is mandatory for all applicants.
- Unique Identification Number UIDAI (by The Unique Identification Authority of India) bearing documents like Aadhaar Card, Passport, Voter’s Card, Driving License.
- Any Identity card/ document with applicant’s photo that has been issued by Central/ State Government and the Departments under it, Statutory/ Regulatory Authorities, Public Sector Undertakings (PSUs),etc.
POA or Proof of Address Admissible Documents
- Voters Identity Card, Ration Card, Passport, Registered Lease or Sale Agreement of Residence, Driving License, Flat Maintenance bill or Insurance Copy
- Utility bills like landline telephone bill, Electricity Bill or Gas Bill which is not more than 3 months old.
- Bank Account Statement or Passbook that is not more than 3 months old.
- Self- Declaration by judges of High Court and Supreme Court, giving the new address in respect of their individual accounts.
- Proof of Address dispensed by any of the following:
- Bank Managers of Scheduled Commercial or Co-Operative Banks or Multinational Foreign Banks.
- Gazetted Officer/ Notary public/ Elected representatives to Legislative Assembly or Parliament/ Documents that have been issued by any Government or Statutory Authority.
- Identity Card/ document with address, issued by any of the following:
- Central/ State Government and their departments.
- Statutory/ Regulatory Authorities.
- Public Sector Undertakings. (PSUs)
- For FII/sub-account: Power of Attorney document provided by FII/ sub-account to Custodians (which are duly notarized and/or apostilled or consularised) mentioning the registered address.
Proof of Income Admissible Documents
- A photocopy of Income Tax Return (ITR) acknowledgement slip submitted to the IT department.
- Recent Salary Slip or relevant document proving income or net worth like Form16.
- Net Worth Certificate that has been certified by a Chartered Accountant; or a photocopy of Annual Accounts.
- Bank A/C statement of the current bank having the income history of the past 6 months.
- Document or Statement of Demat Account holding with an eligible Depository Participant.
- Other documents substantiating ownership of assets through self-declaration along with documents supporting the same.
- Cancelled personalised cheque.
Mandatory KYC Updation
To open a Demat account, SEBI has made the KYC process mandatory. It enables authorities to track the flow of funds to and from your account. The details of your bank accounts are stored in a centralised database. Updated and genuine KYC documentation is indispensable for curbing illegal practices like money laundering fraud and funding of terrorist activities.
Benefits of Paperless Demat Account
A paperless Demat account is the best Demat account for various reasons. The primary benefit is the digitisation of documents. It helps in faster transactions because everything is stored in databases, so less time required to retrieve information. The high security in the system makes the whole network secured and less prone to risks. It is cost-effective and hassle-free. Many Demat account apps, available in the play store, save your time and money and prevent your sensitive data from leaking.
Benefits of Discount Brokers over Traditional Brokers:
While opening a Demat Account online, you can select the discount brokers to facilitate your transactions. Traditional brokers make you sign a 30-40 pages booklet, whereas, with discount brokers, it is a simple online process that requires KYC. Moreover, budget brokers offer far lower brokerage rates than the others. It requires hardly 5 minutes to open a Demat account through a budget broker since the whole process is conducted online. However, the traditional brokers carry out a lengthy and tedious task.