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How to Open Demat Account in Just 4 Simple Steps

Demat account

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People who have been wondering how to open a Demat account in India can find it easy with the advent of technology in the present day. The dematerialization of securities (DEMAT) moves from physical certificates to electronic records. The original stock certificates for the securities are then retired from circulation instead of being exchanged for electronic records. In online trading, shares are purchased and held in the Demat Account, facilitating easy trade for the users. A Demat Account consolidates all of an individual’s investments in shares, government securities, exchange-traded funds, bonds, and mutual funds.

Demat facilitated the digitization of the Indian stock trading market and compelled SEBI to provide greater oversight. Furthermore, the Demat account reduced the risks of storing, theft, damage, and malpractices by storing stocks electronically. NSE originally presented it in 1996. Initially, the account opening process was manual, and investors had to wait several days to activate it. However, a Demat account may get opened online in less than 5 minutes in today’s world. Moreover, due to the end-to-end digital process, Demat has gained popularity in the pandemic

A Demat account can store the following securities:

  • Shares
  • Stocks
  • E-gold
  • Bonds
  • Government debt securities
  • IPOs
  • ETFs (exchange-traded funds)
  • Debentures that aren’t convertible
  • Mutual funds are publicly traded on the stock exchange.

How to Open a Demat Account?

Opening a Demat account is the first step in an investor’s journey. However, you will need a bank account, a Demat account, and a trading account to begin trading. A Demat account is simply a deposit account used to retain securities while trading. To conduct real-world trades, you must have a trading account. A trading account allows you to invest in various investment instruments such as stocks, commodities, derivatives, a nd e-gold.

If you find it difficult to manage three trading accounts, you can choose a three-in-one account that allows seamless trading. Use the three-in-one account to save time switching between accounts, leading to the loss of a good trading opportunity.

Open a Demat Account in 4 Steps

These are the following ways to open a Demat account and help you in the process.

Step 1: You must choose a Depository Participants (DP)

A Depository Participant (‘DP’) is a depository’s agent or licensed stockbroker. A depository is an entity that holds an investor’s securities through a depository participant. It provides services related to these securities. It keeps investors’ securities in electronic forms, such as shares, debentures, government securities, bonds, mutual fund units, and so on. It serves as a conduit between the corporations that issue shares and their shareholders. The depository cannot get contacted directly. However, a Demat account can get opened and maintained through the DP.

So, the investor has the option to go to any DP or brokerage firm to open their account. There are many firms to choose from, and you can select a firm as per your requirements. You can do the process either online or offline.

Step 2: Be ready with Documentation Proof

A Demat account can get opened with the following documents:

  • Identity proof 

Identify proof that you will be submitting must get registered with the Government of India for its approval. Although PAN Card is a compulsory document, some may ask for more documents like Aadhaar Card, Ration Card, Driving License, Voter ID card, or passport.

  • Address proof

For this, you need to submit a document that has your current address as valid proof. These documents come under this criteria, AadhaarCard, Passport, Voter id, driving license, or Utility bills( Electricity bill, Phone/internet bill, gas, water bill should be of last three months.)

  • Income proof 

To open a Demat account, you also need to show proof of your income. These are some of the documents you can show, like your six-month bank statements or three-month salary slips, Income tax returns statement, and Networth Certificate Issued by a CA.

  • Bank proof

For these, you can show any of the following documents like a Canceled cheque, last six months’ bank account statement, or passbook.

  • Photos 

To finish your documentation, the last thing you need is one passport size photograph.

Step 3: Sign an agreement 

The agreement between you and DP should be done before discussing all the agreement terms, and you should ask all the queries beforehand. After that, sign the agreement with DP (the agreement will state the rights & obligations of both parties). The fee structure of your DP will get included in the agreement. Your DP will provide you with a copy of the signed agreement for your records.

Step 4: Create your account 

Now that you have finished with all of the above processes. It is time to create your account through the company’s website by logging in with your unique id and password, which the company provides. After logging in, change your password and set a different password than before to stay safe from any hackers. Once you are logged in, you can start investing from your Demat account through the company website or app.

After the account opening process, your Demat service provider must supply you with the following information:

  • DP ID code
  • Beneficiary Identification Number or Demat Account Number
  • Number of Power of Attorney (POA)
  • These are particularly useful if you intend to apply for an initial public offering (IPO)

You can open a Demat account with IIFL Securities. They are among the leading stockbrokers in India. Along with helping you open a Demat account, they help you in trading as well. They provide the latest news and research reports, which you can refer to. They help you with hot stocks too that you can use for the best low price shares to buy today. IIFL will help you open a Demat account in simple steps to start your investing journey today.

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