What are the steps to open a Demat Account?

If you want to invest in the stock market, every investor needs to open a Dematerialised Account. If you ask about Demat Account introduction, it is where all the securities are held in one place electronically. It means that you can hold anything from shares to mutual funds to money market instruments to Government securities to bonds in the Account. It is mandatory to link the Account with trading as well as a bank account to facilitate the credit and debit of the amount instead of an investment.

So, how to open Demat Account? The process is as follows –

Choose a reputed DP

You need to select a known depository participant who offers different types of Demat Account. These include the regular ones to the resident to a non-resident, which also include the repatriable and non-repatriable. Banks and investment brokerage firms serve as DPs and act as mediators working under the larger depositories of India – CDSL and NSDL. Once you have selected the DP, you can start the account opening formality.

Fill the form thoroughly

The first step towards opening the Account once selected the DP is filling the application form. Visit the nearest bank branch or the DP website. The form requires you to add necessary details such as name, address, contact details, along with the bank details. Link your bank account to the Demat Account for facilitating automated transactions for buying and selling market securities.

Submit the documents

You need to submit the relevant documents as mentioned in the account opening form. These include your PAN card and other ID proofs, address proofs along with your income proofs. Besides, you need to produce a cancelled cheque of the savings account linked to the Demat Account and details of the bank account. In this step, you need to pay the account opening fees too.

Complete KYC formalities

No financial account opening is complete without having the KYC details in place. This is mandatory for all your financial transactions. Your Demat Account, even if active, deems as inactive if the KYC is not in place. If you have opened the Account online, you can opt for the e-KYC facility.

Active Demat Account

Once you have completed the mention steps, the DP starts the Demat Account opening procedure. Your documents and information provided get verified. Consumers who have opted for the online method may need to visit the DP for completing the verification personally. The DP then issues the Demat Account number and a default password that you need to change as soon as you log in.

The account opening process is indeed simple and hassle-free. Once done, you can invest in different kinds of securities like IPOs, shares, mutual funds, bonds, etc. The benefits and uses of Demat Account are aplenty.

The process to open the Demat Account offline is almost similar. Yet, let us run through the steps –

• Visit the branch office or your selected DP• Fill the account opening form
• Submit photocopies of the PAN card, ID, address, employment, and income proofs. Carry the original documents as well for verification purpose
• Complete the KYC compliance by submitting another set of the mentioned papers
• The documents get verified and your account is open for use within seven days

The process to open the Account is simple. Once opened, you can start investing in different investments including applying for IPOs, buying shares, mutual funds, bonds, etc. The benefits and uses of Demat Account are many. You can safely store all the investments and conduct trades anytime through this account.

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