How to Open a Demat Account Online?

Are you thinking of investing in the stock market and want to know how to open a Demat account online? If yes then you have come to the right place. Here, we will tell you everything that can help you in opening a Demat account online.

Most financial advisors recommend investors open a Demat account for online trading. To invest in the shares market online, one must need a broking account which can be opened by approaching any brokerage company. The popularity of the Demat online has been raised to 4 million, in 2018, an increase of 13% from the past years.

Increasing demand for the Demat account encourages brokerage firms to offer extensive at minimal cost to benefit investors. Plus, SEBI has mandated holding a Demat account for online trading.

Before we head over to our main subject, we would like to give you some advice on online trading. Online trading has achieved so much acceptance of the traders and investors, because of its remarkable flexibility of investing in any company stock at one click.

Plus, you can take the help of Robo advisory to find out the best stocks. To get the benefits of these facilities of online trading, you need to open a Demat account.

Demat Account in India: Understanding the Basics

To understand the Demat account effectively learn its three crucial terms that are listed below-

1. Depository Participants

A depository participant is an agent that offers namesakes services to the investors. There are two depository participants in India which are regulated by SEBI-

  • NSDL
  • CSDL

A depository is a link between companies which issues securities and depositories. The primary function of the depository participant converts paper shares into Demat accounts. Plus, make facility security issues and offers available to the traders and investors.

2. Unique 16 Digit Client ID

The Demat account number is a unique 16 digits provided by the Depository Participant to the investors and traders for carrying out online trading. If you wish to invest in any security online, a Demat account is a must-have. This unique code is referred to as a Demat account number.

3. Dematerialisation

Dematerialization is a process of converting physical shares and documents into electronic format.

A Step-By-Step Guide on How to Open a Demat Account

To open a Demat account you can sign up using your mobile on any broker site. To get started, you will receive an OTP on your phone number. Want to know more about this procedure in a descriptive way? Then keep scrolling

Opening a Demat account is a hassle-free and straightforward process. One needs to ensure that they select the right depository participant. If you want to open a Demat account for stock trading then follow the steps we have mentioned below-

Step1: Choose the Depository Participant

The very first step to open a Demat account is choosing the right depository participant. Most financial institutions and brokerage firms offer the service. The selection of DP should be based on credibility, reputation, market presence, and service charges levied.

Step2: Submit Demat Account Opening Form

Once you choose the Depository Participant, now you need to fill the online Demat account opening form. Fill out the form carefully and check it before clicking on the submit button.

Step3: Fulfill KYC Norms

After submitting the Demat account form, you will be asked to fulfill KYC norms. For that, you need to submit scanned copies of KYC documents, like, identity proof, address proof, bank account details, and income proof. Before applying for the Demat account, it would be good if you keep all the documents in your system.

Step4: Go through the verification process

Now, once you end up with a Demat account opening form and KYC norms, it’s time for the verification process. You will be asked by your depository participant to go through the process called ‘In-Person Verification”. It is mandatory. Many depository participants request you to present in person for verification. However, some of them can execute this exercise via webcam online.

Step5: Sign the Agreement Copies

Upon completion of the verification process, you will be requested to sign the agreement copies with your DP. It’s a crucial online Demat account opening process. It’s an agreement which contains all the duties and rights of the DP, so before signing it read it carefully.

Step6: Get your BO ID Number

Once your application gets approved, you will be provided with a BO ID number, which is used to access the Demat account.

Documents Required for Online Demat Account Opening

To make the process for the newbie investors hassle-free the documentation required in the online Demat account opening is minimal.

You will be asked to submit the following documents that we have listed below:

Identity Proof- PAN, Aadhar Number, with your Photo

  • Voter’s identity card
  • Registered lease agreement
  • Driver’s license
  • Passport
  • Aadhaar card
  • Landline telephone bill
  • Electricity bill
  • Apartment maintenance bill
  • Copy of your insurance
  • Ration card
  • Gas bill
  • Bank Passbook

Proof of Income- Salary Slip

Bank account proof- A copy of your past three months’ bank statements.

Why do you need to open a Demat account?

Understand the importance of opening a Demat account with this example. Mr. X has various separate investments in different financial products, like mutual funds, equity, debt securities, and so on.

Maintaining them in a different place is a quite confusing task for him. His financial advisor advises him to open a Demat account, where he stores all the securities electronically in one place.

Plus, he can track and monitor his investments in one click. Dealing with physical stocks is quite a difficult task for investors. With a Demat account, it would be highly convenient for you to handle your investment

If you wish to invest in stock trading online, then you should open a Demat account. Without a Demat account, you cannot do anything. That’s the reason why a Demat account is important for the investor.

Some of the other reasons that make a Demat account is crucial are listed below:

1. Safety

Each record of the shares that you have in the Demat account is genuine, so there will be no place for fake share certificates.

2. Convenience

A Demat account can convert your physical shares certificates into electronic form. So, there is no risk of losing or damaging certificates.

3. Accessibility

All the share certificates are online and in electronic format, you can easily access them from any platform and anywhere at any point for time.

4. Lower Charges

Opening a Demat account is very cheap. And it doesn’t take any additional charges for handling the share certificates.

5. Multiple Securities

A Demat account doesn’t only support the equity market, but it also handles bonds, stocks, mutual funds, debt securities, and others. It helps you to track all your multiple securities under a roof.

Things to Keep in Mind When opening a Demat Account

Mr. X is a successful investor and what thing has made him successful is his research and sincerity regarding his investment.

Before opening a Demat account, he has considered the following things that we have mentioned below:

1. Link your Demat account to a trading account

A trading account is a must-have for buying/ selling shares in the share market. That’s why it is important to link your trading account with a Demat account.

2. Ensure you are aware of all Demat charges

It is wise to read all the duties, rights, and charges before submitting the Demat account form. To get the best deal, you could compare them with other depository participants.

3. Fill in your details correctly

Don’t rush, read the form, and then fill in your details correctly. Errors in the application form can increase the chances of rejection, so remember to double-check before submitting the form.

Conclusion

We hope this comprehensive guide on how to open a Demat account helps you a lot. Opening a Demat account is a quite straightforward process. By keeping this guide in mind, you can open a Demat account for stock trading hassle-free.

 

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About Geet Sharma

My Name is Geet Sharma Financial Blogger & Founder of Paisabank.org. We are a personal finance blog dedicated to finance & financial planners. The main aim of this blog is to help people to informed about financial decisions.
View all posts by Geet Sharma →

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