Open a Demat Account
HOW TO OPEN A DEMAT ACCOUNT
You will need a Demat account to de-materialize the physical shares in electronic form. The opening of the Demat account involves certain steps you needed to follow. The online or offline process can be chosen by investors. However, in both cases, the documents needed for the opening of the Demat account remain the same.
Step 1:- Select a Depository Participant:
The very first step to open a Demat account is to select the participant (DP) in the depository. It is a depository-investor intermediary. The two working depositories in India are:-
- CDSL (Central Depositaries Services Limited)
- NSDL (National Securities Depository Limited)
These custodians keep your securities in Demat format. There are many depository participants in India, such as financial institutions and brokers, offering services related to the depository. Upon finding out the few items like brokerage, annual maintenance fees, etc., you can pick the DP.
Ensure that the stockbroker is licensed under section 12 (subsection 1A) of the Indian Securities & Exchange Board (SEBI) Act is appointed to provide depository-related services.
Bear in mind, however, that the stockbroker you select here will open a Demat-cum trading account for you. If you opt for a Demat account, you will get the trading account services as well.
Step 2:- Fill up the Form:
The next step is to fill out and submit the Demat account opening form, along with the necessary document copies and a passport size photograph.
Following are the required documents to open a Demat Account:-
- Filled Demat Account opening form
- Passport size photograph
- PAN card
- Address proof copies (Aadhaar card, voter ID, driving license)
- Canceled Personalized Cheque (or more than 3 months bank statements)
Step 3:- Sign up the DP Agreement:
While submitting the documents, you will receive a copy of the rules & regulations along with the terms of the agreement, when you open a Demat account. You must sign every DP Agreement page. You will get the information in the same agreement about the charges you will incur when using a Demat account.
Therefore, it would be best to read all the details of the agreement and, if you have trouble understanding anything at any point, you can ask the depository participant for clarification.
The DP will provide you with a Demat account number, or Beneficial Owner Identification Number, once the application verification process is complete. You can use your account to maintain a minimum balance in holding securities without any requirement.
How to open a Trading Account:-
The process by which a Trading Account is opened is no different from the method by which a Demat account is opened. Furthermore, if one is meant to apply for IPO’s, to hold long-term shares in the allocation or hold securities, then the Demat account alone will suffice, but if one is meant to trade only in futures & options in the derivatives segment, then Demat Account is not required. Instead, one should go for trading account opening. But if somebody wants to trade in equities–intraday or not, then a Demat account is a must!
You need to pick a product code to classify the type of the order when placing an order for the exchange. Many product codes exist, namely:-
- Normal Order (NRML)
- Cash N Carry (CNC)
- Cover Order
- Bracket Order
- Margin Intraday Square-Off (MIS)
A Demat account and trading account may be different, but if you want to invest in stocks, both are required. The growth of stock market technology means you can now quickly and easily open, both a Demat account and a Trading account. Open a Demat account with us and chart your path to success, if you are looking to start your investment journey.
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