Everything You Need To Know About Opening a DEMAT Account

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Everything You Need To Know About Opening a DEMAT Account

10 January, 2022



Everything You Need To Know About Opening a DEMAT Account

Are you interested in trading in the stock market? 

It is a place that attracts many investors. Trading in shares is a form of financial freedom for many. However, if you are new to the whole scenario and are looking to begin your trading journey, then you need to prepare a few things in order to get started. 

The most important of these things is a DEMAT account. 

What Is A DEMAT Account? 

A Dematerialized account, also known as a DEMAT account is a digitized account where shares and other securities like mutual funds, policies, debentures and more, can be traded in an electronic form. Traditionally shares were traded physically in the form of paper which made the whole trading process tedious. 

With the introduction of a DEMAT account, the process was centralized and digitized. It is now easier and quicker to buy and sell shares. Hence, today it is mandatory to have a DEMAT before you start investing. In India, the Central Depository of Securities Ltd and National Securities Depository Ltd. are the only two depositories that hold shares. 

Benefits Of Opening A DEMAT Account? 

  • A DEMAT account eradicates the need for maintaining physical shares. Hence, you can trade as much as you want without worrying about physical space. 
  • Your DEMAT account information can be accessed anywhere online. This is impossible in the case of traditional paper shares as you would have had to carry them with you. 
  • The account is safe and you can trade securities without worrying about fraudulent share certificates 
  • A DEMAT account curbs stamp duties and handling charges as the shares are in electronic form. All you need to pay is annual maintenance and account opening fees. 
  • It can be used to hold various securities other than shares including mutual funds, bonds etc. 

How To Open A DEMAT Account? 

A DEMAT account can be opened with offline as well as online processes. 

Offline Process

Choose Depository Participant:

Choose the Depository Participant (DP) with whom you wish to open an account with, this would include either banking institutes, trading institutes, third party online platforms, or brokers. 

Submit Documents:

Once done, you need to submit a copy of the account opening form, PAN Card, Aadhar card, address proof, ID proof, and passport size photos. 

Complete KYC:

You will have to fulfill KYC formalities, these formalities will be carried out by your DP.

Link Account: 

You will also be asked for a canceled cheque, ensure that you give the cheque of an account that you want to be linked to your DEMAT account as transactions would be conducted through it. 

In-Person Verification:

Once your documents are submitted, an In-Person Verification (IPV) is conducted by your DP. The person conducting the IPV will verify your documents, your address as well as your KYC details. 

Sign Agreement:

Once your documents are verified, you will then need to sign an agreement with the DP. This will be an account opening agreement that would state all the necessary rules, legal compliances, and regulations. Ensure that you read the terms carefully before signing. 

Unique ID

Finally, you will be given a unique Beneficial Owner Identification Number or BO ID by the DP, you can use this number to operate your account. 

Please note: The application process as well as the account maintenance would require an amount of fee. This fee will vary from DP to DP, please ensure that you ask about all the rates and charges before you apply for a DEMAT. 

Online Process

Sign Up: 

The first step is to register on your chosen Depository Participant’s (DP) website. You will be asked to sign up with your registered email address and generate a password. 

Fill In Details: 

The next step is to complete your profile. Fill in all the important details like your name, address, contact details, etc. You may also be asked to upload scanned copies of your required documents, however, this step can vary from DP to DP. 

Submit KYC:

Submit KYC details for verification, it is a mandatory step. Your DP will verify your KYC to ensure that everything is legal and transparent. 

Unique ID: 

Once everything is verified, you will be assigned a Unique Beneficiary Owner Identity  (UBOI). This ID confirms the opening of your DEMAT account as well as can be used to operate it.

Please note: The fees and charges of opening and maintaining a DEMAT account vary based on your chosen DP. Please ensure that you are aware of all the chargers before opting for account opening. 

Loan Against Securities

Did you know? You can leverage your investments by getting a loan against equity shares? At spark.loans, we provide you with the easiest ways to get a loan against shares through our mobile app. Get a loan based on the value of your portfolio in the form of a credit line. 

 

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