Demat Account Opening Procedure
Demat (dematerialisation)account means an online account used to hold securities in an electronic form. It holds all your physical certificates in Digital format. It’s one type of your Bank account where you can save your certificate and other financial documents, Exchange traded funds in Electronics formats. When the shares and other securities are dematerialisation their account is kept and maintained in the Demat account of Depository Participants. DP is authorised by CDSL /NSDL to operate Demat Account.
Before opening a demat account, you should know following Information.
FAQ (Frequently asked Questions): Things to know while opening Demat A/C
- What is Demat Account?
- Why Open Demat Account?
- How Demat Account Works?
- What are the Documents Required to Open a Demat Account?
- What are the Charges for Opening Demat Account?
- Which is the Best Online Discount Broker in India?
- Is Free Demat Account Possible?
- How to Open Demat Account Online in Zerodha?
Why to Open Demat Account?
After 2002 Demat account is must if you want to trade in Equity market in cash segment in India. NSDL & CDSL two depositories in India provide Demat services.
NSDL – National Securities Depository Limited
CDSL – Central Depository Securities Limited
All shares are held by various depository participants either in NSDL or CDSL. Both depositories manage all equity and other investment product details in your DP account.
Read more: What is Demat Account?
Find best online demat account in 2021
There are lots of banks, financial institutions and brokerage firms who offer opening the DEMAT accounts. To open a DEMAT account online documents like PAN card, AADHAR card and Bank details are required. A person can also Open Demat account offline. PAN card details are linked to any DEMAT account. However Opening DEMAT account without AADHAR card is possible because the government hasn’t made it mandatory for linking aadhar to a DEMAT account.
- For opening Demat Account , Choose your Depository Participant. They will provide you with an Account Opening form.
- Submit that DEMAT account opening form and complete the KYC requirements.
- Next in line is the verification process regarding the documents submitted.
- After verification you are handled your DEMAT ID and password.
Now you can hold your investment documents like equity , debenture , ETF , MF digitality in your DP account. SPEED-e by NSDL and Easiest by CDSL will help you to manage your DP account online.
How Demat Account Works?
- Depository – NSDL / CDSL work like Bank – you can held your investment securities in digital form
- You can use services by open account with anyone approved Depository participant like Zerodha / HDFC Bank / SBI Bank / Icici Bank / Motilal Oswal etc
- By online facilities of Depository – SPEED -e ( by NSDL ) & Easiest ( by CDSL ) you can use your dp account online
- You can use transfer shares offline by help of your DP service provider – Instruction Slip
- You can also provide POA to your Broker for standing instruction of you sell quantity stock transfer from your DP.
Firstly a person places an order with stock exchange and gets them into his Demat account. Later when he wants to square off the position he has to verify the transaction with his depository so he verifies it online through his stockbroker and completes the entire cycle of transaction.
Read more: How Demat Account Works?
How to Open Best Demat Account for Trading?
With Aadhar number you can open Demat account online instantly. Before selecting DP ( Depository Participant ) check their other services and compare their cost too.
After Selecting best Broker and Depository Participant you can process open DP account two way
- Online ( with Aadhar Number )
Documents Required to Open a Demat Account
- Pan Card
- Aadhar Card (For open online Demat Account Aadhar number is compulsory)
- Bank Account Details (MICR code required for online transfer) – Cancel Cheque or Bank statement
- Passport Size Photograph
- Proof of Resident (All Govt. approved Documents are eligible for proof of Residence Address)
- Identity Proof (All Govt. approved Identity Proof acceptable)
Charges associated with Demat account
- Demat account opening charges
It is levied one time for the account opening with any designated broker. Nowadays many brokers have no account opening charges policy.
- Account maintenance charges
This is the most important and tricky charge because it is a recurring charge. Demat account holders pay this every year . The rates are normally between 300 – 500 Rs annually + GST in the market. The lowest charges for the same are levied by Zerodha (300 Rs. + GST)
Demat Account in India
As per the reports by SEBI, in 2020 the number of DEMAT have increased by almost 30%.
ZERODHA has more than 25 lakh active trading accounts which makes it the best firm to open DEMAT account in 2020. It provides Zero Delivery Brokerage in NSE & BSE. It charges the lowest brokerage which is 0.03% of turnover of Rs.20 whichever is lower.
Other applications by Zerodha (Free access with one DEMAT account)
Kite – India’s most advanced online web trading platform with features of technical and chart analysis.
Coin – It offers you a direct mutual fund investment option.
Varsity – It provides you stock market learning from fundamentals study to technical chart reading.
Streak – It is Zerodha’s algo trading platform.