Well, the process is simple and straight and we are here with the complete guide that helps you to get into a trade easily.
Before opening a Demat Account, its good to know about Demat Account Rules. This will help you to begin your journey in a smarter way and in accomplishing your financial goals.
Since the world of trading and investing brings you ample opportunities so it is important to be clear about the process associated with the opening of a Demat account.
So, let’s get started!
Procedure for Opening a Demat Account
If you want to start trade in the share market then it is important to have a Demat and trading account. On one hand where trading account holds the cash to trade in stocks, on the other Demat account is useful to hold your stocks in the electronic form.
So if you are planning for a long term investment then having a Demat account is mandatory to keep your stocks safe and secure.
To open a Demat account is a piece of cakewalk these days with some of the stockbroking firms claiming to offer you account details within 4 hours.
By the time, this duration will get even smaller and probably be competing with some of the pizza delivery promises! You never know.
Also, technology advancement has now made it easy for everyone to open a Demat account without leaving their comfort zone. In simple terms, you can now open an account with the reliable stockbroker online.
For the online Demat account opening process, you just have to ensure that you have a good internet connection and a laptop or desktop.
Just sit online and fill the account opening form, upload the documents, make a payment, and on verification, you will get the account details in your email id.
To know the detailed information, here we are with the review where we will talk about how to open a Demat account with the complete process of the different steps involved. Besides opening the account know how to use your Demat account.
There are multiple ways to open a demat account in India. With the growing advancement, one can now open the account online.
But before that it becomes important to consider a few important factors like finding the right stock broker, keeping all documents ready and knowing about the charges associated with the demat account opening.
When thinking of opening a demat account you can look for the bank-based stockbroker. Bank-based stockbrokers provide you with a perception of safety (although most of the SEBI registered stockbrokers are safe in nature) since they come from the roots of a banking brand.
Such types of brokers are known to provide a reasonable quality of customer support, 3 in 1 Demat Account, etc.
However, banking stockbrokers are the most expensive ones. Generally, they end up charging you 0.4% to 0.6% of your trade value (in the delivery segment) which kills the profit you can potentially make from your trades.
Discount brokers are no-frills low-cost stockbrokers that offer no research, no offline presence, average customer support. However, the trading platforms provided are of high-performance to go along with low brokerage charges across trading segments.
You can also get in touch with us for stockbroker selection where we can help you narrow down the most suitable stock broker as per your preferences and requirements.
Once you have been able to decide on which stockbroker to go ahead with, the next obvious thing (in the process of how to open a demat account) you need to do is set up a callback and get started with the formalities involved. These formalities include:
Fill up the registration form (like the one shown at the end of this review)
Attach the following documents
ID Proof (any of these – Voter Id, Aadhar Card, Passport, Driving License)
Address Proof (any of these – Ration Card, Driving License, Passport, etc)
Dispatch the documents or get a pick up arranged by the stockbroker
Apart from these documents, you will be required to sign a POA document.
POA or Power of Attorney, as per the regulatory bodies, is not a mandatory document.
However, in case you are looking to trade in the delivery segment where the stocks you buy will be stored in your demat account, in such cases, signing a POA is required.
Otherwise, if you are looking to trade at intraday or in the derivatives segment, then in such cases, there is no need to sign a POA.
For more information, check this detailed review on the documents required for the demat account.
Make sure to get a copy of the account opening form, POA, or any other documents you might have signed.
Here is a quick infographic on How to Open a Demat Account in India
Step 3: In-Person Verification
Once you have dispatched the documents, the stockbroker will perform an IPV or an In-Person verification where they’d either:
Send an authorized person to your address and verify you in person or
Get the IPV done online through Skype, Whatsapp or any other video calling mechanism
The latter option has been recently adopted by one and many stockbrokers to quicken the process of onboarding a client. This step is taken to make sure the submitted details match with the actual person, thus, to avoid any sort of unforeseen forgery issues.
For instance, if you are looking to open a Zerodha Demat account, you need to click your photograph using your laptop or phone along with displaying an OTP that is sent to you for Zerodha IPV
Yes, you can. There are a few stockbrokers in India, that provide the facility of a free demat and a free trading account. Furthermore, some even allow a demat account with zero AMC i.e. Annual maintenance charges.
Q. I just opened a demat account. How can I use it?
Once you have gone through the process to open a demat account, now you are supposed to use it to trade in the stock market. You need to follow some basic steps to go about it, as listed below:
The stocks you buy move to the demat account in an electronic format i.e. you do not get any physical copies of the shares bought.
Regularly keep an eye on the stored shares and other investment products bought by you.
You can use your demat account to transfer the shares as well.
Feel free to add a nominee who can own the shares
You can add/edit information to your demat account through an online process without any need for any outside assistance.
Q. Which is the best demat account in India?
Well, this is a very subjective question as the definition of the word “best” for a demat account varies from one trader to another. This is for the simple reason that one trader may look for lower brokerage while someone else may look for a top trading application.