Opening a demat account is one of the first steps an investor should take to start trading in the stock markets. As investors have a better risk appetite for their investment portfolios, over the past 3 years the number of demat accounts has more than doubled to over 7.38 crore. A demat account is a mandatory medium for trading, through demat accounts, one can hold stocks, securities like initial public offerings (IPO), bonds, government securities, mutual fund shares as well than exchange-traded funds (ETFs). A demat account will facilitate the process of maintaining the portfolio.
How can you open a Demat account?
To open a demat account, you must first select a Depositary Participant (DP). A DP can be a bank, financial institution or broker. Usually, an investor selects the DP based on brokerage fees, annual fees, and leverage offered. You can visit the website of an online DP, and the demat account form will be available there. On the website, you will need to put your email ID, mobile number, one-time password (OTP) assigned to your registered mobile number and city for authentication.
After selecting the DP, you need to review the KYC process. You will need to submit a completed demat account opening form and a KYC form. Along with the form, you will need to attach your Pan card, proof of residence (this may be an Aadhaar card), proof of identity and a passport size photo. At the time of verification, you must bring the original copies of the documents submitted. In addition to the documents, the DP will also need your own void check for dividend bank details.
You will need to sign an agreement, mentioning the regulations and rights regarding holding a demat account. After submitting the documents and forms to the DP, these will be signed by an authorized person. A copy of the document will be given to the account holder.
If all your documents and forms are accepted, the demat account will be opened and you will receive a unique client ID of the particular DP. It will help you access your demat account online. The DP will also provide you with instruction sheets. This will help you access services such as transfer, purchase, etc.
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Article first published: Saturday, August 13, 2022, 4:20 p.m. [IST]