Demat account basics – features and benefits and opening the account online

There are two ways in which one can hold their shares, stocks and other market instruments – in physical form and in dematerialised form. One has the option to convert physical securities into electronic format through dematerialisation. More investors today prefer to hold securities in the dematerialised form in their demat account purely because it is convenient. Additionally, monitoring physical share certificates is also more of a hassle and fewer agents today, prefer to deal in physical shares. Yes, demat accounts have become popular among investors. Here is some basic demat account information that all investors need to know; how to open an online demat account and features and benefits of these accounts.

How to open a demat account online

The process of opening your demat account online is very simple and straight-forward. Just follow these below mentioned steps.

1. Select an investment company (also known as depository participant or DP). You need to research and find a DP by considering the services provided and the charges levied for transactions and then begin the account opening process.
2. Visit the website of the DP and search for the demat account opening tab.
3. Fill the account opening form available on the website. You have to provide your personal details such as name, e-mail ID and phone number among things in this form
4. The DP will send you a One Time Password (OTP) on the mobile number provided in the form which you need to enter in the appropriate tab to proceed.
5. You must now enter details such as your date of birth, address, PAN Number, and bank account details. You are required to enter your bank account number, IFSC code, and branch details so that whenever you place an order to purchase/sell securities, the sums are directly debited/credited to your bank account.
6. Next, you need to pay the annual account maintenance charges for the account services offered by the DP.
7. Once you have paid the annual maintenance charges, the details of your demat account will be sent to your registered e-mail ID. You can log into your account with the default password provided and change it.

Note that you also have to complete your e-KYC (know your customer) for ­online demat account opening. For this, you need to provide self-attested copies of your identity and address proof documents. PAN Card is mandatory for e-KYC.

Features and benefits

Here are some of the main features and benefits of demat accounts

Easy to hold and monitor securities: Maintaining physical share certificate and keeping track of their performance is both, tedious and outdated. Demat accounts are easy to hold and you can easily monitor your investments from anywhere, through a single account.

All investments under one roof: You can hold all your investments, be it shares, mutual funds, government bonds, money market instruments and so on under one single demat account.

Availability of mobile apps: Most DPs provide mobile applications through which you can check the performance of your investments and place orders. You also get access to research reports, investment tips and daily news about market trends on the app.

Reduced costs: Expenses related to physical certificates such as handling charges, stamp duty charges etc. are no longer applicable. Since the need to conduct physical transactions is eliminated, brokerage charges are also reduced considerably.

Demat accounts make it possible for you to conduct your transactions in a hassle-free manner. You can transfer shares easily and access your account easily via various electronic mediums. Ensure you research demat account information before choosing a depository partner to get the best services.

Maithili Pawar is a finance professor. She has written on share market basics. Through this article, she has provided detailed information on stock market.