In our Demat Account Opening Guide, we will show you how to open a Demat Account and the process of opening a Demat account in India. Open Demat account and apply for IPO.
To open a demat account in India, you can follow these general steps:
- Choose a Depository Participant (DP): A DP is a market intermediary registered with the Securities and Exchange Board of India (SEBI) that acts as an agent between the depository and the investor. Some popular DPs in India include HDFC Bank, ICICI Bank, and Kotak Securities.
- Fill out the account opening form: You can obtain the account opening form from the DP or download it from their website. Fill out the form with your personal details such as name, address, PAN card number, and bank account details.
- Submit supporting documents: Along with the account opening form, you will need to submit supporting documents such as PAN card, address proof, identity proof, and a passport-size photograph.
- Complete the In-Person Verification (IPV): You will need to complete the IPV process either by visiting the DP in person or through a video call.
- Sign the agreement: You will need to sign the depository participant agreement with the DP, which outlines the terms and conditions for maintaining the demat account.
- Fund the account: Once your account is opened, you will need to fund it with a minimum amount, which varies by DP.
It’s important to note that the process may vary slightly depending on the DP you choose. Additionally, it’s always a good idea to do your own research and compare the fees and services offered by different DPs before choosing one.
What is a Demat Account?
Do you know what is Demat Account and why you need a Demat Account? The simple answer is if you want to trade in the stock market or to apply the IPOs or you need to buy Mutual Funds or any securities you need a Demat account. Demat Account is a short word of dematerialized account. The Demat account is maintained by CDSL (Central Depository Services Limited) and NSDL (National Securities Depository Limited).
As the physical share certificates are no more, the Demat account is mandatory to hold the stocks or mutual funds that is the electronic form of holding the shares or mutual funds. For Demat account holders, it requires an internet password and transaction password to trade in the stock market. The securities that are traded in the Demat account will be transferred automatically to the Demat account once the transactions are confirmed and completed.
Each Demat account number includes a unique 16-digit client id. For NSDL the Demat account number should be like IN000000 00000000 that starts from IN while CDSL the Demat account number should be like 00000000 00000000. The first 8 letters will be the DP ID while the last 8 numbers will be the Client ID.
6 Easy Steps to Open Demat Account
There are 6 easy steps are there to open a Demat account with the stockbrokers in India. There are so many stockbrokers available but you can choose as per your requirement and the brokerage / Demat charges.
- Choose the Depository Participant (DP)
- Submit Demat Account Opening Form
- Fulfill KYC (Know Your Customer) Norms
- Go through the Verification Process
- Sign the Agreement Copies
- Get Your BO ID Number
Documents Required for Opening a Demat Account
We have already gone through the easy steps but it requires a few documents to open a Demat account. Check the below list of documents and submit them while opening a Demat account.
- Identity proof: A Copy of PAN Card with Photo
- Address proof: Voters ID, Driving License, Passport, Aadhaar Card, Landline Telephone Bill, Electricity Bill, Ration Card, Bank Passbook or Bank Account Statement
- Bank Account Proof: Copy of Bank Account Passbook or Bank Account Statement (Not Older Than 3 Months)
- Proof of your income: Latest Salary Slip, Income Tax Return (Mandatory for Currency and Derivatives)
Opening a Trading Account
The trading account is always an associated account with the Demat account. One can open a trading account and Demat account with different stock brokers but we advise opening the trading and Demat with the same broker to avoid issues. If you open trading and Demat with different brokers, it requires a linking process and it would require form fill up and documentation. The trading account will help you to buy and sell the stocks in the Demat account number. If you open the trading account with the same broker the process will have fewer steps and the broker will automatically open a trading account linked with Demat. The trading account is chargeable as per the broker rules.
Demat Charges in India
As per the current scenario, there are some brokers who provide FREE Demat Accounts. The Demat charges might vary as per the stock brokers. Some provide free Demat accounts but charge for trading accounts. Some brokers provide 1 year free Demat and Trading accounts. Some brokers take the charges from 99 to 999 to open a Demat account and trading account. So based on the stockbrokers one should pay the charges accordingly.