Since most trading happens online, they need to be maintained in a digital format.
This is where a Demat account comes in handy. It will store all the transactions and information online, and with the click of a few buttons, you can easily take a buy or sell a position in the market.
So, the first step to start trading is to open a Demat account. Here’s how you can proceed with the account opening.
What is a Demat Account?
The term Demat stands for Dematerialisation account. Any investor looking to trade in equities needs to have a Demat account. They are usually maintained and governed by two of India’s depositories, Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL).
With a Demat account, you will be able to always have your trading information with you at all times, since it holds them in the digital platform.
Check out some of the Best Demat Account in India here.
Documents required to Open a Demat Account
So before understanding the process of how to open the account, it is important that the person first gathers all the documents required for the account opening, as well as also are eligible to open one.
The major eligibility criteria are to be of 18 years and above. Once this is met, they can start gathering the documents listed below:
Identity proof: Aadhar card, PAN card, driving license or Voter ID can be used as identity proof. Just ensure that the photo in the ID is clear.
Address Proof: the address proof can be provided through the registered lease agreement, utility bills, passport or copy of the insurance.
Bank account proof: As the back account also gets linked to the Demat account, proof of bank account is also required. You can share your passbook details or a cancelled check to verify the account.
Proof of Income: For currency and derivative trading, income proof is necessary. Thus, you can provide your latest income tax return documents or salary slip as proof.
Photographs: Keep 3-4 passport-sized photographs handy.
Demat Account Opening Process
There are two methods of opening a Demat account:
- Select the appropriate stockbroker house. Make sure that their services are in line with your requirements.
- Visit their official website and click on “open account”. This will redirect you to a form.
- Fill out the form with all the correct details and click submit.
- Next prepare scanned copies of all the documents required and upload them are the required places.
- Once completed uploading the files, the next step is to digitally sign the documents.
- Next, select the appropriate investment amount and brokerage plan.
- Once all the payments are received, and the documents verified, your request for account opening will be approved.
- Within a few business days, you will receive your login details which will be used to handle the Demat account.
Zerodha Demat Account is one of the Pioneers in India to provide online demat account opening services.
- Locate the nearest stock broking branch.
- Speak with their executive about wanting to open a Demat account.
- They will ask you to fill out a form. It is a similar type of form with you will come across on the website as well.
- Check the details filled in and once sure of the accuracy, submit it to the executive.
- The next step is to provide them with all of your documents. Make sure to carry a clear photocopy of all the documents.
- On successful submission, the documents will get verified and the application will accordingly get accepted or rejected.
- If the application is accepted, the concerned person will receive an email containing the login details.
Benefits of Demat Account
Paperless process: When it comes to trading in equities, if you have a digital account through your Demat, you will be able to transact from anywhere at any point in time without any long paperwork.
Pocket friendly: with a Demat account, you will be able to carry your trading account in your pocket. Thus, have multiple features and financial products just in the palm of your hand and will be able to trade freely.
Avoid Risks: since all the documents are digital, there is no risk of misplacing them in real-time. Also, when physically trading in bonds and shares, there is always a risk of forgery. With a paperless Demat account, this risk is also mitigated.
Global Investment: As globalisation is becoming more and more prominent, with a Demat account you will be able to trade in global markets.
No TDS: When a transaction takes place through the Demat account, the account holder is free from paying any TDS. Also, no tax will be deducted on the interests received on binds and securities.
SEBI has made it mandatory for traders to have a Demat account. Even if it seems like an additional chore, the easy account opening procedure makes it feasible for every trader in the country. So, planning to start trading, first, make sure to have a Demat account with the stock broker of your choice.