How to Open Demat Account Online
Step 1
Fill the lead form to Open Demat Account
DEMAT ACCOUNT
What is a Demat Account?
Initially, stocks and shares used to be exchanged via physical receipts called certificates. However, this resulted in lengthy paperwork and took up a lot of time. To counter this and to take advantage of an electronic trading platform which was gaining traction in West and the Asian Markets, the process of dematerialisation (demat) of shares was initiated in 1996. Physical share certificates were converted into electronic form securities of equivalent number and price and were credited to the investor’s demat account. Thus, the advent of trading commenced this way.
In a more simplistic approach, demat accounts allow the investor to buy and sell as well as transact not only shares and stocks but other products conveniently without the need of any sort of paperwork.
Open your Demat account by registering with a Stock Broker.
Why you need to Open Demat Account?
Such accounts are of crucial importance today because, the entire financial platform of investing, trading and maintaining have become digitised. Hence, to enable the user with a seamless and straightforward experience, demat accounts are the necessity of the day. These accounts are essential to trade in India’s stock exchanges. Although SEBI – Securities and Exchange Board of India, has permitted traded up to 500 shares to be settled in the physical form, it is not a preferable option these days since it causes excessive inconvenience of maintenance and tracking.
This account retains certificates of financial instruments such as shares, bonds, government securities, etc. Thus, the dematerialisation account aids the investor to maintain their investments systematically as well as concedes an easy movement to buy and sell any products they desire.
Investing in physical shares is a lot of paperwork together with a lengthy procedure and a high risk of receiving fake shares. To keep this entire process simple and streamlined, an investor should choose to open a demat account.
Online trading, enables the shares and securities to be held in such an account in dematerialised or electronic format. Dematerialisation is the process of converting the physical share certificates to an electronic form to increase its accessibility.
As per SEBI guidelines, such accounts is mandatory for every shareholder who intends to trade in stocks and shares and other products.
Hence, to settle trades electronically, an investor requires a specific demat account number.
It is a similar concept to that of a bank account; wherein there is a record of the debt and credit of the balances maintained in a bank passbook. Likewise, when a purchase or sale of a share is undertaken, it will be either credited or debited to or from the account respectively. Thus, holding a such an account allows the investor to buy and sell shares or any other product and hold them safe and sound.
A demat account can be used to retain several investments like shares, stocks, index and gold, bonds, Government securities, initial public offerings(IPOs), Exchange traded funds (ETFs), non-convertible debentures(NCDs), mutual funds, etc. which are traded on the exchanges. You can open a demat account without owning any shares or products together with maintaining a zero balance account.
FUNCTIONING OF A DEMAT ACCOUNT
All your shares and investments namely securities, bonds, mutual funds, government securities, ETFs are held either in electronic or demat form in your demat account. It is imperative to understand the process and bodies involved with the working of such an account. Below are the main functions of a demat account :
Depository: at present, two depositories are registered with SEBI (i) CDSL – Central Depository of Securities Ltd. (ii) NSDL – National Depository of Securities Ltd. These depositories hold your demat account on your behalf. The working is similar to that of a bank.
Depository Participant(s)(DP): is an agent of the depository through which it interfaces with the investor. Financial institutions, scheduled commercial banks, foreign banks having operations in India approved via RBI – Reserve bank of India, stock brokers, clearing corporations or houses, state financial corporations, NBFCs, share transfer agent, etc., complying with the conditions proposed by SEBI can be registered as a DP. Banking services can be availed through a branch; however, depository services can be availed via a DP.
Portfolio Holding: the demat account enables you to view your portfolio holdings of investments every time a transaction is undertaken. Since it is an automated process every purchase and sale is recorded with the minutest details of price, date of purchase or date of purchase, quantity etc.
Unique ID: every single demat account has a unique verification identity number. This is used during transactions to aid the companies to identify and credit the securities in the specific investor's account. It is a unique 16 digit number, the first eight digits are the DP id, and the last 8 are the Client Id ( investor account).
FACILITIES OFFERED BY A DEMAT ACCOUNT
Demat account opening offers a wide range of facilities for the investor. Let us look at a few of them below:
Transfer of Investments: A demat account aids the transfer of shares of an investor. By filling in a Delivery Instruction Slip ( DIS ) with all the relevant investor specifics, it enables an effortless transfer of shares. However, it is not only limited to shares, but various investments or security holding can also be transferred through a such an account.
Dematerialisation and Rematerialisation: A demat account assists the conversion of securities into different formats easily. By instructing your DP – depository participant for dematerialisation, to carry out the formalities to convert the physical share certificate into an electronic form. On the other hand, the investor can get their electronic security holding converted back to the physical form via the process of Rematerialization, wherein an RRF – Remat Request form is to be filled in by the DP.
Loan Facility: the securities held in the account can provide the investor his exact and detailed holding to enable him to apply for a loan from a bank or financial institution. The securities can be provided as collateral towards the loan.
Corporate Actions: Such accounts assist the investor in tracking and maintaining his securities. This is specifically required to monitor split of any equity shares, bonus issues or any other action taken by the companies for their shareholders. These are directly updated in the account.
Freezing your demat account: Investors are provided the option to freeze your account for a specific period or as per requirement. At times this is undertaken to prevent unexpected activities in the account. However, to avail this facility a particular amount of shares should be present in the investor's account.
Speed E- facility: NSDL has provided an electronic facility for their investors to complete a transaction through the submission of an e-slip which is then sent to their DP.
We provide these demat facilities to their investors and may more convenient and easy methods for trading.
HOW TO OPEN DEMAT ACCOUNT
Demat Account Opening is an easy process with these simple steps :
Step 1: choose a Depository Participant (DP) to open the account with. A beneficial owner (BO ) account is opened with the depository.
Step 2: an account opening form is required to be filled in with all the investor details, together with the supporting documentation copies of proof of address, proof of identity, proof of income etc. A PAN card is mandatory to open the account. All documentation should be presented in original as well for verification.
Step 3: you will be provided with a copy of the rules and regulations as well as the necessary charges to be paid to your DP. An in-person verification will be conducted by a representative of the DP to confirm all the details and documentation provided by the investor.
Step 4 – Once approved and documentation is submitted, your Demat account is opened and operational.
An investor can open the account online in minutes through any bank or financial institution. There are various options available to open the account online; one such option is of Angel Broking.
However, opening an account comes with its fair share of charges which would involve an annual maintenance fee, a transaction fee or commission for every transaction carried out by the DP. Additionally, depending on the DP a fee may be charged for dematerialisation of the shares. But on a brighter side, there are no mandates to sustain a minimum balance. Such accounts can be opened without holding any securities.