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What is Demat Account
Demat Account or Dematerialised Account allows investors to hold various financial assets electronically, such as stocks, mutual funds, bonds, and exchange-traded funds (ETFs), without the need for physical certificates.
To open a Demat Account online, first you need to identify a Depository Participant that helps you manage your Demat Account. Then, complete the KYC formalities by providing identification and address proof. Once your documents are submitted, the depository participant will verify the documents to ensure compliance. Finally, you'll receive a unique ID for your Demat Account, showing that you're the rightful owner of the assets held within it.
Check: How to open a Demat account
List of Documents Required for Opening a Demat Account
Let us check in detail the list of documents required or opening a 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 Numbers UIDAI (by The Unique Identification Authority of India) bearing documents like an Aadhaar Card, Passport, Voter’s Card, and driver's License.
- Any Identity card/ document with the applicant’s photo that has been issued by the Central/ State Government and the Departments under it, Statutory/ Regulatory Authorities, Public Sector Undertakings (PSUs), etc.
Identification Card or 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 consularized) mentioning the registered address.
POA or Proof of Address Admissible Documents
- Voter 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 the 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.
Proof of Income Admissible Documents
- A photocopy of the Income Tax Return (ITR) acknowledgment slip submitted to the IT department.
- Recent Salary Slip or relevant document proving income or net worth like Form 16.
- 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.
- Canceled personalized cheque.
Benefits of Paperless Demat Account
A paperless Demat account is a top choice for several good reasons. One of the main advantages is that it digitalizes all your documents, making everything more efficient. Because all the information is stored electronically, transactions happen faster since there's no need to sift through paperwork. Plus, it's super secure, reducing the chances of any risks. This kind of account is also cost-effective and hassle-free. You can find many Demat account apps on the Play Store that not only save you time and money but also keep your sensitive information safe from any leaks.
Benefits of Discount Brokers over Traditional Brokers
While opening a Demat Account online, you have the option to choose between traditional brokers and discount brokers to handle your investments. Traditional brokers often involve lengthy paperwork, with 30-40 page booklets to sign. In contrast, discount brokers offer a much simpler and quicker online process that involves KYC (Know Your Customer) requirements. Moreover, discount brokers also provide lower brokerage rates. It takes just about 5 minutes to open a Demat account through a discount broker because the entire process is digital. So, if you prefer a hassle-free and cost-effective approach, discount brokers are a more convenient choice for opening a Demat Account.