Gone are the days when investing in equity shares needed lengthy procedures and a lot of paperwork, and the danger of receiving fake shares. Now, all you need to do is open Demat account to invest in the stock market. In fact, it is a mandatory requirement now to keep the overall experience simple and smooth. Demat accounts help you maintain an electronic ledger of your shares bought and sold electronically.
What is a Demat Account?
A dematerialised account, popularly known as a Demat account, is an account that stores shares and securities in electronic form. The goal of a Demat account is to keep the shares that have been purchased electronically safe and make share trading an easy process.
All the shares received in this Demat account are kept in digital format. It is the responsibility of The National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) to ensure that there are no issues of forged shares.
What is a Depository Participant (DP)?
A Depository Participant (DP) is an intermediary agent which helps realise all transactions between the Demat account holder and the depository. If you wish to open a Demat account, your first point of contact is a DP which helps you with the same. In simple words, DPs are nothing but stockbrokers of the depositories.
How to Open a Demat Account in India?
You can open a Demat account by following the below-mentioned steps –
Step 1: Choose a trusted stock broker depository participant (DP).
Step 2: Fill and submit the Demat account opening form to the Depository Participant (DP) along with other necessary documents.
Step 3: When the Depository Participant (DP) obtains all documents, they start with the verification procedure.
Step 4: Once the process of verification is completed, the Demat account is opened by the depository participant on the applicant’s part.
Step 5: After the opening of your Demat account, you will be provided with all important details such as DP ID, tariff sheet, master client report, client ID, and a copy of the rights and obligations of the beneficial owner and depository participant.
The depository participant (DP) will also provide you with an access ID, username and security password, using which you would be able to begin your stock market trading journey.
Documents Required to Open Demat Account
- ID proof such as Aadhaar card, PAN card, passport, etc
- Address proof such as a utility bill, bank passbook, etc
- Income proof such as income tax return, last 6 months’ bank statement, etc
- Bank account proof such as a cancelled cheque
- Passport-sized photograph
- Signature on white paper.
A Demat account is all that you need if you wish to trade stocks. And opening a Demat account is highly quick, easy, and convenient. All you need to know is to choose a depository participant and submit the required documents. In order to make your trades successful, you must research well and understand the market before putting in your money.
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