A Demat account is used to hold different types of financial instruments like mutual funds, equities, ETFs, IPOs (Initial Public Offerings), government securities, etc. As the shares are in the electronic form, they are safe and require minimum maintenance charges. Moreover, it is easy to buy, sell, and transfer shares by using a Demat and trading account.
If you want to benefit from the volatility in the prices of the stocks then opening a Demat account is one of the first things you must do apart from understanding the fundamentals of trading in the stock market. Let us see what’s the Demat account meaning and how you can open one online.
How To Open A Demat Account Offline?
Follow these steps to open an Demat account by visiting the branch office of your broker.
Step 1: Contact a depository partner
- A depository partner acts as an intermediary between you and the depository body. A DP can be a stockbroker, financial organization, or bank who is authorized by a depository body (NSDL or CDSL).
- You should compare the brokerage, maintenance charges, flexibility when it comes to products, and services offered by different DPs before finalizing one.
Step 2: Complete the KYC
- After contacting a DP, you will be given an application form that you will need to fill with the necessary details.
- You will also need to fill a KYC application and submit documents that confirm your identity and address proof along with a passport size photo.
Step 3: Document Verification
After that, you will need to visit the branch office of the DP with all the necessary documents and one canceled cheque. Carry the original documents with you as they will be required for verification.
Step 3: Sign up account opening form with DP
- Once the verification is completed, the DP will provide you an agreement that carries information related to brokerage charges, duties of DP and investor, rules of depository body, etc.
- Sign this agreement only after reading it thoroughly. You will also be given a copy of the agreement along with an identification number or Client ID. Preserve it as you will need it to sign-in while accessing your Demat account.
- The DP will also give some slips that will come handy while selling, buying, or transferring shares.
How To Open Demat Account Online?
If you want to know how to open Demat account online, then you will need to follow the below steps:
- Go to the website of the depository partner and use the ‘Open Demat’ option to submit details like your name, mobile number, email address, address, etc.
- After that, you will get a one-time password on your mobile number which you will have to submit to complete the further process. After submitting the OTP you will be asked to provide your identity proof, address proof, birth date, etc. KYC verification can also be done online via the cKYC repository.
- Some bank details also need to be provided during this step after which you will be asked to choose a mode of payment.
- Now, you will get the BO ID No. (Beneficiary Account Identification Number) and you can start using your Demat account for online transactions.
As you see, opening an online Demat account is relatively easier and hassles free and hence it is the best way to open a Demat account.
A Demat account can be opened with zero balance i.e. without any securities and you can also open multiple Demat accounts by using a single PAN. However, you cannot use the same broker or DP for all the accounts.
Always go for the discount brokers who allow you to broaden your investment portfolio by investing in various investment products with low-cost brokerage fee. Also, the option of technology based platforms like apps for accessing the Demat account can enable you to trade from the comfort of your home.
Some discount brokers even provide subscription packages that include flat brokerage fees per trade instead of volume based brokerage fee. As a result, you don’t have to pay hefty commission every time you make a profit.