First of all, we would like to congratulate you on taking this decision to open a Demat account. The world of trading and investing has ample opportunities for those who do due diligence and are always wary of the steps they take. We will explain the process of how to open a demat account in India in 4 easy steps.
Open a Demat Account Process
To open a demat account is a piece of cakewalk these days with some of the stockbroking firms claiming to open a demat account 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.
In this detailed review, we will talk about how to open a demat account with the complete process on the different steps involved.
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’d need to provide a set of documentation that we have discussed in the next section.
Step 2: Open a Demat Account Documents
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)
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 in order 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
Here are some of the most frequently asked questions one may look answers for when in the process to open a demat account:
Q. How may trading account types are available for me to pick from?
There are at least 6 types of trading or demat accounts available viz:
Equity Demat Account
Derivatives Trading Account
Commodity Demat Account
Commodity Trading Account
Discount Broking Account
Full-Service Demat Account
In order to trade in the stock market with regular buy and sell transactions, you would need at least 1 demat and 1 trading account against your PAN card.
Q. Can I Open a Demat Account for Free?
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 in order 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 of 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.