Demat Account Opening Procedure

A Demat account is used to store and manage your stocks and securities via electronic means. It makes it easier to trade as it allows you to keep all your investments without any paper shares involved. However, to begin investing through electronic means, you need to follow several easy steps to open a demat account. This blog will help you understand how to open a demat account online and offline, the costs charged for doing so, and the necessary documents required. Let’s dive in and understand about it in detail.

Key Highlights

• A Demat account helps you to store your securities and other holdings electronically. 

• The process of opening a demat account includes visiting the DP, filling out the application form, attaching relevant documents, and signing the agreement.

• There are fees applicable on a demat account like the account maintenance charge and transaction fees. 

• Documents like proof of identity, income, and address are essential to be submitted to open your Demat account.

How to Open a Demat Account Online?

To open a Demat account online, there are some steps to be followed. Let’s discuss them in detail:

Step 1: Choose a Depositary Participant

To start with, you must choose a Depository Participant (DP). This may be a bank, brokerage firm, or financial institution. Find a DP who will help you with services, fees, and customer support terms.

Step 2: Visit DP’s Website

Visit the official website of the selected DP. Then, search for the demat accounts section and there should be an option to open an account online.

Step 3: Fill in the Application Form Online

The next step is to fill in the application form. There you will be asked to fill in your personal information such as your name, permanent address, means of communication, and PAN card number. You must ensure that you accurately fill every section.

Step 4: Documentation

After filling out the form you need to upload some documents that will be compulsory to be submitted. These documents include:

• PAN Card
• Aadhaar Card
• Bank Statement
• Passport-sized Photograph

Step 5: KYC Process

You will have to complete the KYC process (Know Your Customer). This process includes the verification of some of your additional details. Thus, it is advised to follow the guidelines provided by your DP.

Step 6: Sign the Agreement

You will have to sign an agreement. Normally, accepting terms and conditions online is the way it is done. However, ensure that you read through them carefully before agreeing.

After following these steps, once your application is processed, you will obtain your demat account number along with its details. It could be either emailed to you or delivered through SMS.

How to Open a Demat Account Offline?

Follow the below-given steps to open a Demat account through the offline mode:

Step 1: Visit the Depositary Participant’s Office

You need to visit the office of a Depository Participant (DP) near you. The Securities and Exchange Board of India (SEBI) has registered DPs as organisations that are meant to render dematerialised account services in India.

Step 2: Request for Application Form

Request for the demat account opening form from the DP. They will give you the required documents to be filled by you to initiate the process.

Step 3: Fill in the Form

Make sure you’re filling out the form carefully and accurately. Mention your details like name, address, and contact information.

Step 4: Documentation

Submit the photocopies of documents like:

• PAN card
• Aadhar card
• Bank statements
• Passport size photographs

Step 5: Signatures

Sign the form wherever required. This is the most important part as it verifies that the request to open a demat account is made and verified by you. 

Step 6: Verification and Submission

Once you have filled the form, cross-check and identify if there are any errors. After doing that you can submit the form to the DP.

After the documents have been verified and your application processed by the DP, they will establish the demat account in your name. A confirmation and an account number (DP ID) will be provided to you. You will also get a welcome pack that contains details of the demat account such as terms and conditions, among other things.

Fees & Charges for Opening a Demat Account

Opening a demat account incurs certain fees. It is necessary to know these expenses to prevent any unexpected results. Here’s a breakdown of the common charges you could come across:

Account Opening Charges

Earlier, opening a demat account used to require payment of a one-time fee by DPs (depository participants). However, due to technological advancements and improved access to demat accounts, DPs now offer an account opening service without any charges.

Account Maintenance Charges (AMC)

Your account will be subject to an Annual Maintenance Charge (AMC) to be paid after opening. This is a yearly fee required for keeping your demat account operational. The AMC can vary from some hundreds of rupees to some thousand depending upon the DP and kind of accounts.

Transaction Fees

Buying or selling securities sometimes incurs a trading fee. Generally, a portion of the transaction amount determines this fee and it differs from one DP to another. It is significant to inquire about such charges since they could affect your total investment cost.

Documents Required for Opening a Demat Account

There are some specific documents required for opening a Demat account. Let’s discuss the documents required:

Proof of Identity

To verify your identity, you can use documents like: 

PAN Card: Should be accompanied by a photo. 

Aadhaar Card: Contains the Unique Identification Numbers (UID). 

Passport: An identification card issued by a competent authority (government). 

Voter ID Card: That normally has an image of the holder. 

Driving License: A document issues out by the Regional Transport Office (RTO). 

Ration Card: When it bears your passport-size picture too. 

Government-Issued ID: It may be issued by either central or state governments, PSUs, banks, or professional bodies such as ICAI, ICSI, or Bar Council.

Proof of Address

Documents included in this category are:

Passport: Address underlined. 

Voter ID Card: Indicates domicile location. 

Ration Card: Must be registered and avail of your location. 

Lease or Sale Agreement: Proof of residence registered. 

Driving Licence: Should bear your present location. 

Utility Bill: Like a water bill, or an electricity bill of the last three months. 

Bank Statement/Passbook: Not older than three months. 

Insurance Policy: One such document ought to have your address. 

Government Document: Official papers compiled by an authenticated entity. 

Proof of Income

Documents required are:

Income Tax Return (ITR): The most recent ITR copy 

Net Worth Certificate: Certified by Chartered Accountant. 

Salary Slip: A current pay slip from your boss. 

Bank Statement: This shows the income details for the previous six months. 

Conclusion

Opening a demat account is simple, whether it is done online or offline. There are certain procedures you need to follow, understand the fees involved, and consider the relevant documentation that one has to submit. Once you are familiar with these steps you can easily open your demat account and start tracking your investment options. Moreover, you should beware of fraud and engage with a depositary participant who is reliable and has a license from SEBI.

FAQs on Demat Account Opening