In the field of stock market investment and trading, the Demat account plays an important role. A Demat or dematerialization account refers to a digital and electronic system to hold and record financial securities in the stock market. Financial securities comprise direct equity, bonds, government securities, mutual fund schemes, short-term money market instruments, and exchange-traded funds.
Without a Demat account, it would be difficult for you to buy any security in the stock market directly. In India, various financial service firms and brokers permit to open Demat accounts with low charges.
How to open a demat account?
For a complete lowdown on the Demat account opening procedure follow these steps. To open an account, you need to follow the following steps:
1. Select depository participant/broker with proper analysis:
In India, you can open your Demat account with any financial institution, NBFCs, and stockbrokers. These financial parties have their own Demat service portal and applications. Compare brokers in terms of their subscription plans for trading, portal facility, and customer service. Following variables can be taken to compare the depository participants:
- Account activation period.
- Different types of charges like per-transaction fees, annual maintenance fees, initial expenses, and other required brokerage charges.
- Documents requirement.
- Account verification norms.
- Additional services and support activities.
With these variables, you can compare and see how to open the best demat account that will offer you services with less charges.
2. Fill and submit application form with a selected broker:
This step would be a starting point for opening an account with a broker. In this step, you will be provided an application form wherein you would be asked to give your personal details. Proper application form filling takes around an hour or less time.
3. Uploading documents for KYC verification:
Giving personal as well as other information can be confirmed with the KYC process. For this purpose, you need to upload several documents. These documents must be in perfect quality and format.
Following are the required documents to be uploaded in the Demat account application form:
- Identity proof documents: PAN card, Voter card, Aadhar card, etc
- Address proof: Voter card, license, Passport, electricity bill, maintenance bill, ration card. You can upload any one document, as per desire and availability, from the above address proofs.
- Bank documents: Account details document, 6-month account statements.
- Salary slip (if any) or any other Income proof, bank statement (not older than 3 months) and ITR receipt.
Presenting all documents while opening the demat account will make it a quick process. After uploading the documents, a stockbroker firm will start verifying your profile. Generally, this process takes around a day to complete.
4. Agreement signature for terms and conditions:
To ensure you follow the SEBI trading guidelines you would be asked to sign on terms and conditions. By signing this agreement, you would be a registered client of a concerned depository.
5. Get unique client ID:
Successful account opening will provide you with a unique ID with depository participants under a related depository. You will get a 16-digit unique client ID to start trading and investment. By following certain steps above, you can get your Demat account in your hand. With this account, you can trade in the stock market.
In the Indian stock market, stock trading and investment can float through a demat/trading account. with this account, you can’t just hold your securities, rather you can buy and sell your desirable security. Before dealing with it, you need to reach various demat service providers to open your account. With proper steps, you will get a client ID for an account that acts as a pathway between you and the penalty stock market.