The complete guide for beginners on how to open a Demat account

The term demat account is used frequently in the world of investing and trading. The popularity of Demat accounts has increased by 13 percent in 2018, to nearly 4,000,000. This is due to the drastic shift in saving patterns of Indians from traditional instruments to stock options. The demand for these accounts has increased, and Depository Participants (DP) responded by offering the best features at a low cost to investors. A Demat account is required for stock market trading.

Basics of a Demat account for Beginners in India

To get a better understanding of India's demat account operation, consider these three definitions.

Unique 16-Digit Client ID

Each Demat account is assigned a unique 16-digit client ID. This serves as the investor’s identity. The ID's first eight digits reflect the participant in the Demat account, while the eight last digits are used to identify the investor and make it easier for them to buy or sell securities.

Participants (DP)

Depository participants act as intermediaries or representatives for the central depository and provide the same services to traders and investors as the central depositories. NSDL, CDSL (the two central depositories registered with SEBI), India's investment and apex regulatory body) are currently the registered central depositories. A depository participant must have a license from one of these licenced operators to open a Demat account.

Dematerialisation

This is a process that converts share certificates from electronic to physical form. After that, shares can be purchased more easily and can be accessed from any location on the globe. Dematerialisation allows you to track and control your holdings from anywhere.

Do You Have a Step-by-Step Guide on How to Manage Demat Accounts Online.

It is easy to open a Demat account. This step-by-step guide will assist you in setting up a Demat account.

Choosing a DP

First, you must choose a Depository Participant (DP) to open a Demat account. DP services can be accessed in India by banks, stockbrokers and online investment platforms. Look for a service provider that offers the features and offerings that best suit your requirements and preferences when choosing a DP.

Complete the form to open a demat account and send it in

Go to the website of your DP and complete the online Demat account opening application. Depository members such as IIFL allow you to open trading and depository accounts.

Review the KYC guidelines

Once you have completed the Demat account application you will be required to complete the Know Your Client (KYC). You will need to submit scanned copies of KYC documents, such as proofs of identity, proofs of address, bank statements, proofs of income, and proofs of identity. You will be able to move the application process along faster if you have all the required paperwork.

Perform the verification procedure

Your DP will request that you complete an "In Person Verification" (IPV) process. This is necessary to verify the validity of your records. Your DP may require you to appear at one of the service providers offices. Many depository users now offer IPV services online via a webcam, or a smartphone.

Copy of the Agreement to Sign

After you have completed IPV, your DP will ask you to sign a contract. This contract outlines all rights and responsibilities of both the investor and depository participant.

Get your BO Identification Number

Once this has been completed, your DP will start processing your Demat account request. Once your application is approved, you will receive a unique Beneficial Owner Identification number (BOID). This BO ID is used to access your Demat account.

Beginners Need to Submit the Following Documents

There is very little paperwork needed to open a Demat bank account. It is therefore easier for new applicants not to have to go through the entire process from start to finish. You must only submit the following documents.

  • As identification, a copy of your PAN Card with your photo
  • As proof of residence, a copy of any one of the following documents is sufficient: Voter ID, Passport or driving licence.
  • As evidence of your bank account, a copy of your checking account statement or passbook (not older than three months)
  • You must provide proof of earnings by providing a copy of your most recent pay slips or your tax return. This is mandatory for the currency and derivatives segments.

What's the purpose of having a Demat account?

A Demat account is essential if you are looking to invest in stock market now. It is essential to learn how to use a Demat account in stock trading. Below are some other reasons why a Demat account is so important.

Safety

If you have a Demat account, you won't need to deal with fake or bogus shares certificates. Every record in your Demat account contains shares that are authentic.

Reliability

It can be difficult for physical share certificates to be stored and maintained. Your certificates could also be lost or stolen. A Demat account can resolve all of these problems.

Affordability

You can access any document associated with a Demat account online at any time.

Lower fees

A Demat account eliminates any additional costs related to physical share certificates such as stamp duties and processing fees. This will result in significant savings and reduced costs.

Demat account Closure

It's just as simple to close a demat bank account as it is for one to open. If you want to close a demat bank account, you will need to fill out a request form signed by all account holders. You must verify all account holdings before closing a demat account. The DP will not process your closure submission if there are any Dematerialization requests pending.

Wrapping up - Demat Account for Beginners

Although it may seem like opening a Demat account online can be difficult, the process is very straightforward if you follow some basic steps. A demat account is required for beginners to trade. A Demat account is easy to set up. Demat Accounts have given stock trading a fresh face. Investors can now avoid the hassle of maintaining physical records. These accounts can be accessed from both mobile devices and computers. You will have a totally different trading experience with the help of Demat and trading account.


How to open a Demat account?


Documents required for opening Demat account


Features and Benefits of Demat Account


How to use a Demat account?


Concepts & procedures for demat accounts


What is Dematerialization of securities?


Benefits and Advantages of Dematerialisation of shares


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Basics of Demat account


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