How to Open a Demat Account – All in 1 Guide

How to Open a Demat Account

Topic Covered in This Article – GO TO THE FOLLOWED LINKS

  1. Procedure to How to Open a Demat Account
  2. What is Demat Account?
  3. Why Demat Account?
  4. Benefits of Demat Account
  5. Where to Open Demat Account
  6. Who are Depository and Depository Participants?
  7. Charges on Demat Account
  8. How Many Demat Accounts Can An Individual Open
  9. Top Demat Accounts in India
  10. Open Demat Account Online

How to open a demat account or how to open a demat account online is very relevant question today. After demonetization, the interest of people in stock market trading has grown significantly.

Initially, there were only few investment avenues that were considered good and safe by the people.

Like for example, Indians always preferred investing their savings in gold and real estate segment. But with a gradual increase in legal compliance in both the traditional investment avenues, people have moved towards stock markets to invest their savings.

To invest in stock market, the basic requirement is to have a demat account. So let us understand everything about a demat account.

Why Demat Account?

How to open a demat account is an important question because it’s the first step towards investing in the stock market. To put in another way, an individual cannot trade in shares and securities unless he has a demat account.

Therefore, the primary requirement to start trading or investing in the stock markets is to open a demat account or dematerialised account.

Any individual who is holding shares in form of certificate i.e. physical form also needs to open a demat account to convert them into electronic form before transacting in them.

After understanding the importance of opening a demat account, we shall learn the meaning of demat account.

What is Demat Account?

A demat account is an account where the shares and securities, government securities, mutual funds, electronic traded funds, etc. are held in electronic form. Demat account is also called dematerialised account.

It is very similar to a bank account. Like for example, the bank holds an individual’s money in the account. Similarly, a demat account holds the shares and securities in the account. Every purchase and sale of shares are credited and debited to the demat account. Therefore, it is compulsory for everyone who wishes to trade in shares and securities to open a demat account.

Before looking at the procedure of how to open a demat account. Let us see some of the benefits of opening a demat account.

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Benefits of Opening Demat Account

Few of the benefits of demat accountare listed below:

  • With ademataccount, the shares get security and privacy of highest quality.
  • Demat account helps in easy maintenance of the account.
  • The facility of electronic settlement in demat account makes the process simpler and faster.
  • By having a demat account, an investor can buy and sell any quantity of shares.
  • It eliminates the risk of theft or any kind of loss.
  • With the help of demat account, the shares and debt instruments can be traded in the same account.
  • With ademat account, an investor can invest any amount in any shares at any time.

After understanding the benefits of demat account, it is important to know where an investor can open his demat account.

Where to Open a Demat Account?

NSDL and CDSL are two organizations that have the authority to open a demat account. They are termed as depositories. However, a retail investor cannot reach either NSDL or CDSL to open a demat account directly. Instead, they have to open their demat accounts via intermediaries, also known as Depository Participants (DPs).

The depository participants are basically the famous stock brokers or brokerage houses. The investors can reach them and open their demat account.

Who are Depository and Depository Participants?

As we read above, there are two depositories in India i.e. NSDL and CDSL.  NSDL was established in 1996 and CDSL in 1999. They have the authority to maintain the shares and securities in the electronic form.

They also look after the process of de-materialisation. As per the statistics, these two depositories have dematerialised more than 2000 crores of physical shares into electronic form. On the other hand, the organizations in the financial services sector, banking sector are eligible to become the depository participants.

However, they can become DPs only after they get clearance from Depository and Securities and Exchange Board of India (SEBI).  Few examples of depository participants are HDFC, Sharekhan, Angel Broking, ICICI Direct, etc.

Now moving ahead, let us have a look at the procedure of how to open demat account / how to open ademat account online.

Procedure to How To Open a Demat Account Online:

The following procedure will help an individual in successfully opening a demat account.

1. Firstly, visit the depository participant or its website with whom you want to open the demat account. The depository participant can be a broker, bank or any agent who acts as a link between the depository and the investor.

2. Next, you need to fill the demat account opening form. The following documents must be compulsorily attached with the demat account opening form.

-> PAN card.

-> Any identity proof like Passport, Aadhar card, Driving license, Voter ID card, etc.

-> Any residence proof like Aadhar card, Voter ID card, Ration card, etc.

-> Passport size photo with self-attestation

If you need a corporate demat account, following additional documents are also required to be submitted.

-> Photograph, proof of identity, proof of address, PAN number, and DIN number of the   directors

-> Balance sheet copies for the last two financial years

-> Copy of the shareholding controls

-> List of authorized signatories

-> Copy of the resolution for investment in securities

-> Copies of Certificate of Incorporation, MOA and AOA

3. In the next step, the investor and the depository participant shall enter into an agreement. The agreement will bind them by certain rules and regulations. The depository participant will give a copy of the agreement to the investor.

4. After signing the agreement, verification of the submitted documents is done. This process takes around 10-15 days. After a successful verification, the online demat account number is allotted to the investor. Now, all the transactions in relation to shares and securities shall be done via the demat account. The demat account is also called BO ID i.e. beneficiary owner’s identification number.

5. Once the demat account is opened, the investor can keep a track of transactions and its holdings in the portfolio. The account of the investor gets automatically updated whenever any transaction takes place.

After learning the procedure to open a demat account, let us have a look at the charges on the demat account.

Charges on Demat Account

When an investor opens a demat account, he should also be aware of the charges that are associated with the demat account. Below is the list of few charges on thedemat account.

  • Charges on account opening:

This is a one-time charge that is levied while opening a demat account for the first time. However, these days many brokers are offering demat account opening for free.

  • Charges on maintenance of demat account:

These charges differ from broker to broker. The account maintenance charges are levied on anannual basis. The charges range from Rs. 300 to Rs. 700 annually.

  • Brokerage charges:

The brokerage charges are the charges that are incurred while buying or selling of shares. Again, these charges vary from broker to broker. The components involved in the brokerage cost include service tax, brokerage, stamp duty, GST, security transaction tax and different types of cess.

Apart from the above charges, often there are other charges that are levied. However, the other charges are in relation to the services provided by the broker to the demat account holder. Few of such services include:

  • De-materialisation Charges

If the investor is still holding some shares in physical form, he is required to convert them into digital form i.e. dematerialise them. This can be done by paying a nominal fee to the broker. The physical shares shall be credited to the demat account of the holder.

  • Transfer of Shares

Transfer of shares involves transferring shares from one demat account to another demat account. This can be done by following a simple procedure and paying off some nominal charges for the same.

After understanding the basics about how to open a demat account online and charges on the demat account, let us know some other basic details about the demat account.

How Many Demat Accounts Can An Individual Open?

There is no specific limit for opening a demat account. An individual can open as many demat accountsas he wants using his PAN number with different brokers. However, in most cases, the depository participants have a threshold limit for thedemat account. Therefore, an individual needs to check with the depository participant before opening multiple demat accounts.

Next important question while opening a demat account is whether thedemat account can be opened in form of a joint account.

Can Demat Account be Opened in Form of Joint Account?

The answer to the question is yes. A demat account can be opened jointly i.e. an individual can open a demat account with his/her spouse. There can be maximum of three holders in a single demat account. However, there would be one main account holder and the other two persons would be considered as joint holders. Furthermore, a minor cannot be a joint holder.

Another important question is that, if minor cannot be a joint holder in demat account, can a demat account be opened in his name.

Can Demat Account be Opened in The Name of Minor?

Even though a minor cannot be a joint holder in demat account, yet an account can be opened in his name. In that case, the demat account of the minor will be maintained by a guardian i.e. minor’s father. However, if minor does not have afather, themother can act as a guardian. If the minor does not have either father or mother, the guardian shall be appointed by the court. The demat account of the minor shall be operated by the guardian until he becomes a major.

Next, we shall look at the top Demat accounts in India.

Top Demat Accounts in India

Below is the list of few of the top demat accounts in India.

  • IIFL Online – [ How to open a Demat Account ]

India Infoline is one of the top demat accounts in India. The demat account can be opened at nominal rate and services are good. Know about how to open demat account in IIFL Online by visiting their website https://ttweb.indiainfoline.com/Trade/Index.aspx?ReturnUrl=%2ftrade%2f

  • ICICI Direct [ How to open a Demat Account ]

ICICI Direct demat account is one of the first picks among the investors. It is among the top demat accounts in India because of the trust of retail investors and incredible services. Visit ICICI Direct’s website http://content.icicidirect.com/idirectcontent/Home/Home.aspx and learn how to open a demat account in ICICI Direct.

  • Angel Broking [ How to open a Demat Account ]

Angel Broking is another popular brokerage house in India.  They have PAN India presence and have a number of sub-brokers. One can know about how to open demat account in Angel Broking by visiting their website http://www.angelbroking.com/

  • SBI Securities [ How to open a Demat Account ]

SBI is one of the leading banks in India. The bank provides demat services via SBI Securities. The wide reach and availability of branch at every corner of the India make it the first choice among retailers. Visit the SBI website https://www.sbismart.com/ to learn abouthow to open ademat account in SBI Bank.

  • Zerodha [ How to open a Demat Account ]

Zerodha is one of the most popular online trading platforms for trading in shares and securities. The discounted brokerage charges make it the most attractive online demat account. Download Zerodha app or visit their website https://zerodha.com/ to know how to open ademat account in Zerodha.

The above are few of the top demat accounts in India. There are many other brokerage houses and banks like Sharekhan, HDFC Bank, Axis Bank, etc. which are popular for providing seamless services and retailerscan open ademat account there.

Where Do We Stand?

Opening a demat account is the first step of trading in the stock market. But to be a successful trader, one must gain complete knowledge about the stock market. Things like how doesa stock market work, what are the types of stock market trading, strategies of trading, when to enter and exit a stock position, etc. It is important to learn all of these and the learning must be a continuous process. At Nifty Trading Academy, we impart stock market education through our expert blogs and articles.

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