The demat account can be easily opened. The procedure requires a few simple steps to complete. When you trade online, your shares have to be stored in your demat account digitally. For share trading online, you must have a demat account. You should be aware of opening a demat account if you want to invest in shares and other securities. Due to increased internet facilities, we can even open a demat account without visiting the branch physically. But you should keep in several important things to make sure that you will choose the best platform to buy commodities.
What is a demat account and how it works?
Before 1996, trading took place physically. However demat account was introduced by SEBI which transformed the way people invest. Now it is a digital process. The introduction of a demat account is one of the boldest steps taken by the Security and Exchange Board of India. Consequently, people began investing in the stock market with relative ease. This account holds the shares in electronic form purchased by the investor. We can also store other securities such as stocks and mutual funds in a demat account. The demat account can be easily accessed from any place. Due to the emergence of demat accounts, physical share certificates get converted into digital format.
Steps to open a demat account online
We can open a demat account by just sitting at home without going anywhere. The whole process is digitized and can be done within 10 to 15 minutes just by using a mobile phone. The steps of the process are as follows:
- Search for a depository participant
At first, you have to select a depository participant who will open your demat account. Before choosing a DP, consider the reputation and the specific services provided by them you are looking for.
- Provide basic details
Once you have selected a DP, you have to fill up an online account opening form on the website. There you have to provide your basic details like your name, e-mail, phone number, address, etc. It will also require the details of your PAN card.
- Add bank details
You will also have to add your bank details like account number, account type, IFC code, etc. This step is essential because it is used for crediting the amount payable to you like interest, dividend, etc. by the company whose shares you might hold in your demat account.
- Document upload
The next step is to upload your photo and the other documents that are related to your proof of address and proof of identity.
- In-person verification
As the entire process is digitalized, you can perform verification at your home. There is no need to wait for an agent to visit you and confirm your identity. You can just record a short video of yourself reading out the given script (your name, address, PAN number, etc) and submit it to complete the step.
- E-sign
In most cases, DP provides you the option to sign your application digitally by using a linked mobile number. This method is considered convenient and secure which also reduces paperwork.
- Form submission
After completing the above-mentioned steps, you have to submit your form and your demat account will be created within a short period. You will receive the details of your account like your account number and login credentials. With these details, you can easily access your account.
Types of charges associated with opening a demat account
Charges are levied by stock brokers for opening demat accounts and for availing associated services. The fee can vary from stockbroker to stockbroker. Hence you need to select the right stock broker so that you can pay a minimal amount for opening a demat account and enjoy the features and benefits of having this account. These charges can be broadly categorized below.
- Account opening fee: it is a one-time fee that you have to pay while opening a Demat account for the first time. After that stockbroker cannot charge you this fee again.
- Annual maintenance charge: it is an annual charge that you have to pay for maintenance of your demat account.
- Pledging charge: This fee is charged for pledging securities in a Demat account to avail trading limits.
- Unpledging charge: You have to pay this charge when pledged shares are to be unpledged.
- Dematerialization charge: Dematerialization refers to the process when physical share certificates are converted into digital form. You have to pay a dematerialization charge for it.
- Rematerialization charge: when your digital share certificate is converted into a physical form, you have to pay a rematerialization charge. It is the opposite of dematerialization.
- DP charges: this charge is applicable every time an ISIN is debited from a demat account.
Documents required to open a demat account
When one wants to start trading and investing in stock markets, one has to submit various essential documents. These documents are mandatory by SEBI. But don’t worry, there are just a few documents needed for this process. You will not have to run here and there to collect them. The documents needed to open a Demat account are given below:
- Pan card
- Passport size photo
- A copy of your signature
- Proof of identity such as a Pan-card
- Proof of address like an Adhar card, voter ID, passport, driving license, or utility bill
- Bank statement or copy of account passbook
- Cancelled check
In this article, we have discussed various things that are needed during opening a demat account. This account must be opened if you are interested in investing in the stock market. But before you open a demat account you should consider various things. You should always choose a trusted brand name that has a great market reputation. The platform should be SEBI registered platform. The depository participant must adhere to the guidelines issued by government agencies. Also, make sure that the platform chosen by you is secure. Also, consider the brokerage that will be charged by the broker before you open a demat account. Choose a platform that will make things simple for you without any complications. The best platform to buy commodities should be available and able to provide you with urgent support whenever needed.