Having a Demat account is a mandatory requirement if you wish to trade in securities electronically. In simple words, it essentially works similarly to a savings account. As you park your funds in a bank savings account, a Demat account stores your shares and securities.
If you are wondering about how to open a Demat account, know that the process is simple. Thanks to digitization and fintech, you can open a Demat account in just a few clicks. You can even start an account from the comfort of your home, as a majority of depository participants (DP) offer such services via mobile apps or web portals.
To help you understand the various steps involved in opening a Demat account in India, read on.
A Guide to Opening a Demat Account Online
While you can open a Demat account offline or online, the latter is comparatively quicker than the former. Before understanding how to open a Demat account, you need to know the working of the account.
Initially, trading would occur by transferring securities using physical documents. This process changed for the better when SEBI (Securities and Exchange Board of India) launched the concept of Demat accounts.
Here, you can transact or hold shares electronically, saving you from the hassles of managing physical securities. As a result, the process of trading became efficient and more reliable.
This is because a Demat account allows you to convert your physical shares into electronic format, enabling higher accessibility. Now that you know the significance of a Demat account and its working, learn how to open a Demat account in India by following the process outlined below.
A Step-by-Step Process on How to Open a Demat Account
You can create a Demat account online with a DP of your choice. Remember that as an investor, you are not allowed to involve in trading directly with the stock exchange. Instead, you require an intermediary to help you do so.
This intermediary who allows you to trade freely in the stock market is known as a depository participant. With a multitude of DPs offering numerous Demat accounts, you need to run a thorough check to help you choose from the best Demat accounts in India.
To that end, here is a list of essential steps you must follow for a quick and hassle-free Demat account opening.
Step 1: Select your Depository Participant
This is the most crucial step you must consider when opening a Demat account. Do a careful analysis of the options and select a suitable DP. This will be one that offers better security and reliability.
You may visit the website of DP to understand the various types of services they offer. Furthermore, following this step religiously helps you choose the best Demat account in India, which can affect your investment too. With the right account, you could get access to better tools and key services.
Step 2: Complete the Online Application Form
Once you have zeroed in on the right DP, visit the official website and click on the option that allows you to open/start a Demat Account. Most DPs will have a page that outlines the process with a clear set of instructions.
While this will differ for each DP, you will always be required to fill out a simple application form to get started. Here, you will be required to submit basic information, such as:
- Name
- Mobile number
- Residential address
- Email ID
- PAN card information
Do note that the information you are required to share must be as listed on your official documents. Discrepancies will cause issues and delays.
Step 3: Provide Bank Account Details
After completing your personal details, you have to enter your bank information, such as your account number, type of your account, IFSC code of the bank, and other relevant details.
Providing bank details helps the issuer company debit money as per your trading requirements, and credit the amount payable to you in the form of interest or dividends.
Step 4: Upload Relevant Documents
This step is mandatory as it confirms your genuineness. Submit all the necessary KYC documents (ID and address proof) along with your recent photograph to help you complete the process of opening a Demat account online.
Step 5: Do a Self-verification Process
Thanks to the digitized Demat account opening process, you can complete our verification from the comfort of your home. There is no need to wait for a DP agent to authorize your verification.
All you have to do is simply record a video. In some cases, you may be asked to mention your name, address, PAN details, and other specific KYC information. In others, a simple video wherein you are required to blink several times will suffice. That is all that is required to complete the verification process.
Step 6: Sign Your Application Form Digitally
With most depository participants allowing you to sign digitally, you can provide your signature using the Aadhaar-linked mobile number. This not only speeds up the process but also minimizes the paperwork.
Once you complete the e-signature process, you can submit the completed form to open a new Demat account. After this step, you will get login details to access the account along with other specific account-related information.
Now that you are familiar with how to open a Demat account, consider important factors such as DP brokerage, charges, DP user interface, and the ease of opening an account before you choose a depository participant.
Considering these factors is crucial as they help you choose the best Demat account in India. Assess various features and select a DP charging you minimal account maintenance fees and brokerage charges to help you initiate smooth and hassle-free transactions.