Before you begin investing in shares, there is one important account that you need to set up. Yes, you guessed it right - the Demat account. With Indians warming up to financial investments, Demat accounts are being opened up at a pretty fast pace. About 40 lakh demat (dematerialized) accounts were opened in 2018, taking the total number of such accounts to over 3.48 crore. In this article, we will explain to you what it is a Demat account, how to open a Demat account online, and key things to remember as you do these activities. Read on to know more.
Demat account is very similar to a bank account. While a bank account holds your money in electronic format, a Demat account holds shares/securities. It is a facility to hold shares in an electronic format. The word demat is a short form of 'dematerialized'. A Demat account allows you to transfer and receive shares, without using actual physical share certificates.
Opening a Demat account is the foremost step to invest in the equity markets in India. However, you should not settle for any ordinary for your Demat account. But, choosing the best option requires some homework and precision planning. To open a Demat account, you need to choose a depository that would be best suited for you to trade in the share exchanges. Thus, you have to select the best Demat account for trading to begin your journey in investing shares.
For investing, one needs to have a demat account for trading. Let us find out how to open demat account
A demat account holds shares/securities. Brokers have tied up with either NSDL or CDSL (both are DP). Like a bank account, a demat account has to be opened with an appropriate institution.
1. Fill the Demat Account opening form
2. Enter Mobile Number (Your mobile number will be the first point of contact).
3. Email Id
4. Upload a photo or a scan copy of the below mentioned documents. Maximum size of the image is 4 MB
5. Segment selection
6. FATCA Details
7. Basic Details
9. Bank Details
10. Client E-sign
11. In-Person Verification (IPV)
As a demat account holder, please remember you will would need to know the charges for demat account annual maintenance. There will also be transaction fee that will be levied for debiting securities to and from the account.
Both the annual maintenance fees and transaction fees may be waived off for limited period. But, every service provider will charge them once the 'free period' is over. These fees differ and every Depository Participant has a different structure.
Also, do remember that a demat account can be opened with zero balance of shares. This means it does not require that a minimum balance of shares be maintained in a demat account.
Here is a broad list of documents that can be used as proofs for Demat Account Opening.
These documents will be required to meet the proof of identity and proof of address requirements for opening a demat account.
Proof of identity - For this, one can use PAN card, voter's ID, passport, driver's licence, Income Tax returns, electricity bill, telephone bill etc. ID cards with applicant's photo issued by the government, among others, can also be eligible as proof of identity.
Proof of address - For this, one can use ration card, passport, voter ID card, driving licence, bank passbook or bank statement etc. Verified copies of electricity bills, telephone bills (residence), identity card or a document with address issued by the government also is accepted, among others.
A Demat account number is a 16-digit unique account number assigned by the Depository Participant. The first 8-digit is your DP ID whereas the last 8-digits of your Demat account number is your customer ID. If you have opened a new Demat account, you will receive a welcome kit from your broker which will contain important details like your account number, customer ID, and login credentials.
There are plenty of benefits for you to open an account with Nirmal Bang
Almost everyone has an idea of how to open a Demat account. But, very few know how to close it. There is a common issue that many investors deal with. They end up opening multiple Demat accounts without realizing that there is an annual fee for each account. To close a Demat account, you need to make sure that there are no shares in your Demat account and there is no negative balance. Further, you need to download the Demat account closure and then submit the form to the depository. Your Demat account will be suspended within a week.
In order to reduce the risks associated with share trading in paper format, the Dematerialisation was introduced in the Indian Financial Market. It is the process through which an investor’s physical share certificate is converted to an electronic form that is maintained in an account with the Depository Participant. This method is not only used for shares, but also for debt instruments like bonds. At present, you can hold all your investments in a single account. India is embracing the Demat System successfully and further, there are plans to facilitate the trading of almost all financial assets in Demat format in the future.
Yes. In fact, several stock broking companies offer free demat accounts to their clients. You too can open a broking and trading account with a stock broking company. But opt for the company that offers you additional features along with broking and trading.
Demat accounts are only for the shares you hold and cannot be used to transact anything else.
A demat account cannot be opened if all the necessary documents have not been submitted by you. These documents are mandated by the stock exchange regulator and no amends can be made.
Yes, you can hold multiple securities in one Demat account.
When a Demat account is not operated for long it is termed as inactive by the Depository Participant before it is classified as dormant.
Yes, you can have multiple Demat accounts. But, you cannot have multiple trading accounts or Demat accounts with the same Depository Participant.
No, PAN Card is mandatory for opening a Demat Account.
A nominee can only be an individual. It cannot be a society, trust, partnership firm, or a power of attorney holder.
Yes, you can change the nominee by filling up the nomination form and submitting it to your broker.
Yes, the Depository Participant provides the facility to freeze Demat account.
The AMC for our Demat Account is INR
To open a Demat Account with Nirmal Bang, it takes upto 1 day
The user ID and password will be sent to you once you open the account. You will receive a welcome mail with your login credentials.
Any residential Indian or corporate can open a Demat Account with Nirmal Bang.