How To Open A Demat Account; Check Step-by-Step Guide

Investing has become a common practice in India. Active investors are always looking to make better profits and multiply their wealth over time. Moreover, it is now easier than ever to invest, thanks to the advent of online trading. Before 1996, trading used to take place physically, however, the introduction of the Demat account by SEBI has allowed everyone to open an account online and buy stocks with just a few clicks. It has resulted in a significant rise in the number of active investors. Recent news by Business Standard shows that the number of active dematerialised (Demat) accounts in the country jumped 63 per cent in the past 12 months to 89.7 million in the financial year 2021-22 (FY22).

The major advantage of investing online is that it gives you access to many different brokers who will help guide you through the process of choosing which broker is right for your needs and will give advice, when necessary, without charging any additional fees for their services.

Now, if you’re also planning to step into the world of online investing and open a Demat account, we’re here to help. In this article, we’re going to explain the complete process of opening a Demat account. Let’s first get started with its basics.

A Demat account is often known as a dematerialised account which is an important requirement to trade in the stock market. The major purpose of a Demat account is to electronically store the share that you purchase. A Demat account often helps you hold several securities, like stocks, ETFs, bonds and mutual funds in your Demat account. It allows you to buy and sell shares online from anywhere at any time, provided that there is enough balance in your account to complete the transaction.

Opening a Demat account is simple and can be easily completed in a few steps. The process can be done in just 10-15 minutes without stepping out of your home. 

Step 1: Choose a Depository Participant (DP)

The first step in opening a Demat account is to choose a Depository Participant (DP). A DP is an institution that offers Demat services to investors. You can choose a DP based on factors such as the fees they charge, the convenience of their services, and the reputation of the institution.

Step 2: Provide the Necessary details

Once you select a DP, you need to fill up an online account opening form on DP’s website. To do so, you’ll need to provide basic details like your name, phone number, email ID, address etc.

Step 3: Add your bank details

Once you finish providing the necessary details, add your bank details like account number, account type, IFSC code, etc. Also, please note that you cannot skip this step as a bank account is essential for crediting any amount payable to you, like dividends, interest etc.

Step 4: Gather Required Documents

To open a Demat account, you will need to submit certain documents. These may include proof of identity, proof of address, and proof of income. You may also need to provide a PAN card and a cancelled cheque.

Step 5: In-person verification

As the entire process is digitised, it allows you to perform verification by yourself. You’re just required to shoot a video of yourself reading out the given script (your name, PAN number, address etc.) and submit it to complete the step.

Step 6: e-Sign

Once you complete in-person verification, it is time to digitally sign using your Aadhar-linked mobile number.

Step 7: Submit the Form

Once you complete all the above-mentioned steps, submit your online form.

Brokers are the companies that help you with your trading. Therefore, before you choose a broker, make sure that they are reliable and trustworthy.

Here are some of the things to look out for when choosing a broker:

●      Good reputation - Does the broker have a good reputation among its clients? Do they have many positive reviews online? In case of any problems with their services or products, how fast were they able to resolve them? If there is no information about the broker online, then this should ring alarm bells in your ears!

●      Track record - How long has this particular brokerage been around for? Are there any other brokers or financial institutions that use their services as well? Check if there is any information available about them on regulatory bodies such as SEBI.

●      Customer service - What kind of customer support does the brokerage provide its customers with? Is it available 24x7x365 days so that whenever an issue arises in relation to trades being made through them then there will always be someone ready at hand who can help resolve those issues quickly without much hassle on behalf of either party involved (trader/broker)?

Once your Demat account is set up and linked to a bank account, you can start trading. You can place orders through your broker, who will then execute the trades on your behalf.

Also Read: Best Ways To Protect Your Demat Account From Fraud And Hacks

In conclusion, opening a Demat account and selecting a broker is a straightforward process. It involves choosing a DP, selecting a broker, gathering required documents, filling out the account opening form, and linking the Demat account to a bank account. By following these steps, you can easily start investing in the stock market.