How to open a Demat Account ?

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What is demat account and How to Open Demat Account? An important question that every individual must know before trading or investing in the stock market. In fact, investing in the stock market is not possible without a demat account.Furthermore, the stock market is now the most attractive investment avenue. Moreover, after demonetisation, most of the people park their savings in the stock market. Therefore, in this article, we shall understand all the concepts of demat account.

Investing in the stock market is one of the most popular activities today. Therefore, how to open a demat account is one of the most popular questions among the investors. In fact, the reason to do so is also right i.e. higher returns in the stock market. To turn into an investor in the stock market, one must open a demat account first. It is the first step towards investing. In fact, to transact in shares or securities opening a demat account is the primary step. Therefore, first thing that every investor should know in the stock market is meaning of account.

Investing in the stock market is one of the most popular activities today. Therefore, how to open a demat account is one of the most popular questions among the investors. In fact, the reason to do so is also right i.e. higher returns in the stock market. To turn into an investor in the stock market, one must open a demat account first. It is the first step towards investing. In fact, to transact in shares or securities opening a demat account is the primary step. Therefore, first thing that every investor should know in the stock market is meaning of account.

Demat account is also known as a dematerialised account. In this account, the investor can keep or hold his shares or securities in the electronic form. To put it another way, just like a bank holds the money in the account. Similarly, the account holds shares and security in the account.

If an investor is holding shares in physical form, the shareholder first needs to convert it into electronic form. Therefore, the investor can trade in those physical shares only after they are transferred into the account or converted into electronic form.

The loss of shares and securities due to theft, damage or any unforeseen event is not there in case demat account. In fact, with account, there is no requirement to keep the shares in physical form. Therefore, account is lesser risky.

Before demat account, the buying of shares had to be done in fixed lot size. However, with the introduction of demat account; the investor can purchase the shares or securities of any quantity. Therefore, account provides an investor the convenience to deal in odd lots.

The demat account reduces the cost of investing in the stock market. Earlier, dealing in physical securities was a costly affair. In fact, many charges such as stamp duty, handling charges and other charges were applicable. However, with account, such costs are eliminated.

Shares and securities in demat form are easy to maintain. Furthermore, the portfolio in the account can be viewed easily. Moreover, it becomes easier to take investment decision when shares can be tracked in a single account.

Since we now know the benefits of demat account, it is essential to know where to open a demat account. In this segment, we shall help the investor in understanding that where he can open a demat account.

Step 1: To open a demat account, you have to approach a depository participant (DP), an agent of depository, and fill up an account opening form.

The investor can open demat account at CDSL and NSDL. They have the authority to open the demat account. In fact, CDSL and NSDL are two depositories of the country. The investor can reach out to the depository participants that function under either of the two depositories to open a account. The depository participants include the most famous brokers or brokerage houses in the country. Therefore, an investor can approach any of the deposit or participants to open a account.

Step 2: Along with the account opening form, you must enclose photocopies of some documents for proof of identity and proof of address.

CDSL and NSDL are the only two depositories in India. They maintain the shares and securities in dematerialised form. The depository participants function under the depository. In fact, depository participants are an organisation in the financial sector and banking sector. Moreover, they can become depository participants only after they get permission from the Depository and Securities and Exchange Board of India (SEBI). For instance, few of the popular depository participants of India include HDFC Securities, Kotak Securities, IIFL, Zerodha, ICICI Direct, Sharekhan, etc.

Step 3: You will have to sign an agreement with DP in the depository prescribed standard format, which gives details of rights and duties of investor and DP. You are entitled to receive a copy of the agreement and schedule of charges for future reference.

Firstly, the individual should visit the depository participant. The depository participants are the brokers with whom an individual shall deal or place orders. The depository participants can be a bank or an agent who is operating as a link between the depository and investor. In addition, an individual looking to open a demat account online must visit the website of the depository participant.

Step 4: The DP will then open an account and give you the demat account number. This is also called beneficial owner identification number (BO ID). All your purchases / investments in securities will be credited to this account. If you sell your securities, your demat account will be debited.

In the third step, the depository participant and investor shall enter into an agreement. Furthermore, the agreement shall be binding along with certain rules and regulations. In addition, the investor must carefully read the copy of the agreement given by the depository participant.

You can have multiple demat accounts if you so wish. You can choose your DP as per your convenience and there is no compulsion to open DP account with your stock broker.

This is a one-time demat account opening charge. However, many depositoryparticipantsprovide afree opening of demat account these days.

You can have multiple demat accounts if you so wish. You can choose your DP as per your convenience and there is no compulsion to open DP account with your stock broker.

The demat account maintenance charges are applicable on annual basis. In addition, these charges vary from one broker to another. In fact, the annual account maintenance charges range from Rs. 300 to Rs. 700.

Update your bank account details (bank account number, IFSC code) and postal address etc of your demat account as and when there is a change.