How to Open Demat Account in Online in India: A Step-by-Step Guide
Stock trading in India has also become common in recent times due to increased availability of the internet to invest in the share market. However, the most important prerequisite needed to begin trading in stocks is the possession of a Demat account. It has your securities in a digital form so that both buying and selling of investment tools as well as holding them is easy to perform. It has also become easier and faster to open a Demat account through the internet sitting right in your house. Here, we will start with how to open a Demat Account online, which documents are needed, details of types of Accounts, and most important sources of Instructions for selection of the best service provider for Demat Account.
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What is Demat Account ?
Demat account is again also known as Dematerialized account where shares, bonds, mutual funds, ETFs etc are held electronically. Before 1996 security investment started with papers, so purchasing and selling securities required paperwork and many times fraud or theft chances were high. The Demat system was launched later with the stock market since it transformed the physical certificate into an electronic form.
A Demat account allows investors to:
Holding securities in Digital form Safely.
Having access to stock exchanges like NSE and BSE.
Seamless buying and selling process without any paperwork.
Avail faster settlement of trades (T+2 cycle)
You need two accounts to trade in stock market:
Demat Account – For holding the securities
Trading Account – For buying and selling Shares
To make this process seamless many brokers integrate both accounts.
Requirements for Obtaining a Dematerialized Account
Before entering the process it is important to know what to expect. Here’s a checklist of what you will need:
- PAN Card: For operating a Demat account, it is necessary to produce a Permanent Account Number (PAN) card.
- Aadhaar Card: With your Aadhaar card, you do not need to worry about an identity and address proof.
- Bank Account: A transaction or a savings account for connectivity with the Demat account.
- Photograph: A passport-sized photo.
- Income Proof: Needed only for the derivatives segment (but voluntary in the equity segment).
- Signature: Transmission of a photocopy of your signature.
These documents are to be submitted during the online application process and so it will be wise to make them easily accessible.
A detailed guide: how to open demat account in online ?
Step 1: It provided necessary details to choose a Depository Participant (DP).
A DP basically is an agent to you and the depository, normally it could be NSDL or CDSL depending on the depository link. Hence, DPs can be banks, stock brokers or other financial institutions. Moreover, You will require a DP to open your Demat account. There are several key factors to consider when selecting a DP:
- Charges: Each of the DPs has different charges for account opening and subsequent operation of the account. This relates to other charges associated with account opening, annual, and for other transactions like transfer and withdrawal.
- Reputation: Select a DP that has excellent performance that will be testified to by previous clients.
- Customer Support: Make sure they provide proper customer service for the help desk.
- User Interface: Select DP with an uncomplicated and user-friendly website interface.
Top stock brokers (DPs) in India
- Zerodha
- Angel One
- Dhan
- ICICI Direct
- Groww
Step 2: Visit the DP’s Website or App
After choosing your DP, you can go directly to the DP’s official site or download their mobile application to open an account. Almost every website will have a separate menu for opening a Demat account. On the web page, locate the link or button marked ‘Open Demat Account.’
Step 3: Enter Your Details
You will first be prompted to provide basic information like:
- Full Name
- Email Address
- Mobile Number
- PAN Number
- Date of Birth
Type all the inputs accurately to be cleared because they undergo editing and validation processes.
Step 4: Full KYC (Know Your Customer)
The next step is to finish the verification of KYC. Currently, the government has made some measures such as KYC that has been imposed on all financial services with a view of eradicating money laundering. Here’s how to do it:
- Identity Proof: Please scan your PAN card and upload it.
- Address Proof: Take a scanned copy of Aadhaar card or passport or any other valid photo identity proof such as a driving license.
- Bank Details: What do I need to produce to support this account? A canceled cheque or a photocopy of your bank passbook will suffice. This is to combine your bank account with your Demat account.
- Income Proof (Optional): If one is going to trade in derivatives, he/she has to produce income proofs like the salary slip, IT returns or bank statements etc.
Step 5: In-Person Verification (IPV)
As a result, the only similar process left to meet the regulatory norms is the In-Person Verification (IPV). There are two ways to complete IPV:
- Video KYC: Most Android Prepaid DPs provide video-based KYC in which you have to record a couple of seconds’ video while holding your PAN card.
- Aadhaar-Based eKYC: In case your Aadhaar is linked with your mobile number, it is easy to do e-KYC, where after the One Time Password sent to your Aadhaar registered mobile number is verified.
Step 6: E-Signature and Submission
After this, if you are a first time user of the portal, then you will be needed to upload your documents as well as e-sign the application form through Aadhaar based e-signature. This will, however, necessitate you to use OTP to authenticate your Aadhaar. Inasmuch the algorithm above shows a recommended format, after signing, submit the application.
Step 7: Wait for Account Activation
Following the submission of your compiled information, the DP will go through it and grant your account. It usually takes 1-3 business days depending on the distance between us and the client. You will receive a notification either through a mail alert or a text message informing the activation of your Demat account. The DP will also share with you your Demat account number – known as Beneficial Owner Identification (BOID) – and facilitate login to their web terminal.
Redemption of Demative Account Charges
When opening a Demat account, it is essential to be aware of the various charges involved:
- Account Opening Fee: Certain DPs have opening fees for the Demat account, and there are others where the account opening will be free.
- Annual Maintenance Charges (AMC): virtually all DPs charge an AMC for managing your account. It could vary from ₹ 300/ ₹ 400 / ₹ 500 up to ₹ 500 per year. Such benefits from some brokers include zero AMC for the first year.
- Transaction Charges: When you purchase or dispose of shares, the brokerage will always come up with a transaction cost. This fee also differs from one broker to the other; it could be a fixed amount or form a certain percentage of the value of the transactions.
- Custodian Fees: Some DPs demand what is known as a custodian fee in relation to securities, although this fee is not common with modern platforms.
List of Documents required for Opening Demat Account
Here’s a checklist of the documents you’ll need to upload during the account opening process:
- PAN Card (mandatory)
- Aadhaar Card is mandatory for eKYC, in case the customer does not have Aadhaar Card then the customer will be required to submit other ID proof.
- Bank Details Any one of the following documents, canceled cheque/ photocopy of passbook.
- Photograph (passport size)
- Signature (scanned copy)
- Income Proof (additional for equity, verifying for derivatives)
Types of Demat Accounts
There are three types of Demat accounts available in India, based on the investor’s residency status:
- Regular Demat Account: It is for Indians living in India who are interested in share trading.
- Repatriable Demat Account: This is for those NRIs who intend to transfer money outside the country based on their need for foreign currency. It has to be associated with an NRE (Non-Resident External) bank account.
- Non-Repatriable Demat Account: This is also for NRIs but funds cannot be transferred abroad. Owners of QROPS overseas are linked to an NRO (Non-Resident Ordinary) account.
Beneficiary Owner Demat Account: A Beneficial Owner Identification Number (BO ID) is a unique 16-digit code assigned to demat account holders by CDSL or NSDL.
Why You Should Open a Demat Account
- Safe and Secure: Reduces chances of theft, forgery and destruction of securities that comes with physical security.
- Convenient: Open, view and trade your investments at the convenience of your mobile device.
- Faster Settlements: Delisted shares that can be credited faster due to decrease in settlement cycle time (T+2).
- Nomination Facility: You can also include a nominee to your account in case of any incidences that will enable easy passing of the assets.
- Loan Against Securities: Another advantage of a Demat account is that its holder can obtain a loan through the securities it possesses.
Also Read : Top 10 Stock Market Institutes in India
Conclusion
Investors who wish to open a Demat account online can do so in few days in India and it is quite easy. You can be able to trade on the stock market, invest in different securities and easily handle you portfolio with a Demat account. Still, by going through the steps provided in this guide, one will be able to open a Demat account while being at home and start this journey. Happy investing!
FAQ'S
What is Demat account ?
A Demat or Dematerialized account is an account of the security and shares maintained in electronic form. It does away with tomato-garden share certificates and makes it easier to deal in other financial instruments such as stocks, bonds and mutual funds.
Let’s understand the need for a Demat account ?
In order to start trading stocks or other financial instruments in electronic format, the Demat account is required. Without it, you cannot trade in the stock market since they enable electronic dealing in financial security and storage.
Is it possible to open a Demat account in conjunction with another person ?
Yes, most of the depository participants allow investors to open Joint Demat account with a maximum of three persons. The procedure of creating the account is also similar; however, all individuals who are identified as the account holders will be required to provide the necessary documents and pass the KYC.
What are the fees for initiating a Demat account?
While some of the DPs may possess zero or low fees for opening an account. But, there are normally AMC charges for each year starting from ₹300 to ₹800, transaction charges and other service charges.
