Learn how to Open a Demat Account in Quick and Easy Tips

Equity investment is one of the most popular choices for investors looking to diversify their investments and expand their wealth. To ensure a smooth investment experience, the Securities and Exchange Board of India (SEBI), the backbone of the Indian securities market, have made strives and is bound to ensure so. One of the SEBI’s historic steps was replacing paper securities with digital ones. 

This was made possible with the introduction of the demat account. It is mandatory to have a demat account to trade in the market. Thus, you need to open a demat account online. The process of opening a demat account can be daunting if you are new and have no idea. Thus, this post will help you understand how you can easily open a demat account. But before that, let us learn what is a demat account.

What is a Demat Account?

A Demat account, short for “Dematerialised account,” is a digital repository for efficiently managing your financial assets and investments electronically. It plays an important role in storing, transferring, and transacting your securities. 

Eligibility Criteria to Open a Demat Account 

To open a demat account online, you must meet specific eligibility criteria, which include:

1. Age

Individuals who are 18 years or older are eligible to open a Demat account. Some DPs may allow minors to open accounts with the consent of a guardian. The only condition is that parents or guardians can manage minors’ accounts till they turn 18 years old. 

2. Customer (KYC) Documentation

Know Your Customer (KYC) verification is mandatory. You must provide identity and address proof, such as a PAN or Aadhaar card while opening an online or offline Demat account in India.

Documents Required to Open a Demat Account

You must keep the following documents handy to initiate a hassle-free demat account opening process. Here is a list of the documents required:

1. PAN Card Copy

You must provide a self-attested copy of your PAN card, a mandatory requirement.

2. Proof of Identity

Identity verification requires a self-attested copy of any of the documents, such as a Passport, Aadhaar card, or Voter ID.

3. Proof of Address

To verify your address, you should include a self-attested copy of documents such as a Passport, Aadhaar card, or Voter ID.

4. Bank Account Details

Essential banking requirements includes your bank account number, IFSC code, and a cancelled cheque.

5. Photograph

For your offline application, a passport-sized photograph is also necessary.

Charges Associated with a Demat Account

Opening a free Demat Account comes with several applicable charges. Some of them are:

1. Account Opening Charge

These are the fees charged by the broker when opening the account. Some brokers offer free account opening, while others may charge a nominal fee. Certain brokers may provide a free demat account, i.e., there are no account opening charges.

2. Annual Maintenance Charges (AMC)

The broker charges this annual fee to maintain your Demat account. The amount can vary based on the broker and the type of account. 

3. Transaction Charge

Every time you buy or sell shares, your broker may charge a small transaction fee. This charge is often calculated as a percentage of the transaction value.

4. Dematerialisation Charge

If you have physical shares that you want to convert into electronic form, your broker may charge a dematerialisation fee.

5. Rematerialisation Charges

Your broker may charge a rematerialisation fee if you want to convert your electronic shares back into physical certificates.

Steps to Open a Demat Account 

Steps to open demat account online is a simple procedure. You just have to follow these steps:

Step 1: Choose a Depository Participant (DP)

Select a suitable DP based on services and fees.

Step 2: Visit DP’s Website

Go to the DP’s official website.

Step 3: Click Open Demat Account

Locate and click “Open Demat Account.”

Step 4: Fill Demat Account Form

Complete the online form with essential details.

Step 5: Receive OTP

You will get an OTP for verification.

Step 6: Submit Documents

Provide your PAN card and banking information.

Step 7: Complete e-KYC

Verify your KYC information online during account setup.

Conclusion

The digitisation of the services has made the process of opening a demat account straightforward. Moreover, the process hardly takes more than a few minutes. Additionally, if you are looking to open a Demat account, then you must conduct thorough research on the charges and the features of the provider to make the most out of your Demat account.