Demat Account
Why Should You open a Demat Account?
The purpose of opening a Demat account is to hold shares that have been bought or dematerialised (converted from physical to electronic shares), thus making share trading easy for the users during online trading.What is Demat account?
A Demat Account or Dematerialised Account provides the facility of holding shares and securities in an electronic format. During online trading, shares are bought and held in a Demat Account, thus, facilitating easy trade for the users. A Demat Account holds all the investments an individual makes in shares, government securities, exchange-traded funds, bonds and mutual funds in one place.
Demat enabled the digitisation process of the Indian stock trading market and enforced better governance by SEBI. In addition, the Demat account reduced the risks of storing, theft, damage, and malpractices by storing securities in electronic format. It was first introduced in 1996 by NSE. Initially, the account opening process was manual, and it took investors several days to get it activated. Today, one can open a Demat account online in 5 mins. The end-to-end digital process has contributed to popularising Demat, which skyrocketed in the pandemic.
What is dematerialisation?
Dematerialisation is the process of converting the physical share certificates into electronic form, which is a lot easier to maintain and is accessible from anywhere throughout the world. An investor who wants to trade online needs to open a Demat with a Depository Participant (DP). The purpose of dematerialisation is to eliminate the need for the investor to hold physical share certificates and facilitating a seamless tracking and monitoring of holdings.
Earlier, the share certificate issuance process was time-consuming and cumbersome, which Demat has helped transform by speeding the entire process and storing security certificates in digital format. Once your Demat account is active, you can convert paper certificates into digital format by submitting all your physical securities along with a Dematerialisation Request Form (DRF). Also, remember to deface each physical certificate by mentioning ‘ Surrendered for Dematerialisation’ on it. You will receive an acknowledgement slip when you surrender your share certificates.
According to the Securities Exchange Board of India (SEBI), a demat account is mandatory for anyone trading in financial securities. According to a report, in 2018 about 3.76 million fresh Demat account were open – the highest in a year after 3 million accounts were opened between 2007-2008. It is an indication that interest is growing among investors to directly invest in the equity market.
When it comes to investing in the stock market, opening Demat account is a prerequisite. And, if you are a new investor, having queries regarding Demat account is normal. In this article we will try to answer all your questions regarding Demat account.
How to open demat account?
Conveniently enough, opening a demat account is easy. It can be done in two ways: offline and online.
Offline Method:
Online Method:
List of accepted KYC documents
In order to open a demat account, you will require certain documents. You will need one proof of identity and one proof of address. Here is a list of accepted documentation that can serve as:
Proof of identity
passport
driver’s license
voter’s ID
IT returns
Verified copy of electricity/phone bill
PAN card
Bank attestation
A photo ID card issued by a central or state government body
ICAI, ICWAI, ICSI, bar council etc, issued identification card with photograph
Proof of address
Voter’s ID
Ration card
Passport
Driving license
Bank passbook/ bank statement
Leave and license agreement/ agreement for sale,
Verified copies of residential telephone/ electricity bills
Self-declaration by High Court/Supreme Court judges
A photo ID card with address issued by a central or state government body
ICAI, ICWAI, ICSI, bar council etc., issued identification card with photograph and address.
Is it possible to open a Demat account online?
Yes, digitisation has helped in making the account opening process very easy. The modern e-KYC process has made the process quick and seamless. Now you can open a Demat, complete KYC verification, link bank account, and start trading with just a few clicks on a computer.
How many days it takes to open a Demat account?
Initially, it used to take 48 to 72 hours to activate a Demat account. But with the introduction of e-KYC verification and self-attestation, the process has become effortless. With Angel One, your Demat account gets activated within an hour.
How many Demat accounts can I open?
You can have multiple Demat accounts, and it’s completely legal. However, if you want to have multiple accounts, keep the following in mind.
Your Demat account is linked to your PAN, which functions as a unique identifier. If SEBI wants to track your transactions, it will do it through tracking your PAN number
Aadhar linking is also important to open a Demat. However, it is a one-time task
You can’t open multiple Demat accounts with the same broker
It is a common practice for many traders to have at least two Demat accounts. One with a full-service broker and another with a discount broker. They switch between the two depending on transaction patterns, frequency, and charges.
Is Demat account safe?
Securities stored in digital format in the Demat account are safe from theft or damage. However, risks associated with fraud and misuse remain. So, investors need to stay vigilant of any unauthorised activities related to their Demat account. The broker or Depository Participant will send you regular updates on SMS and emails regarding activities on your Demat account, which you need to track to protect your interest.
Can I open Demat account without Aadhar?
To open a Demat, PAN is essential. However, linking Aadhhar to your Demat isn’t compulsory if your mobile number isn’t linked to your Aadhaar card. Here are two options available to you. To complete the online Demat account opening process, you would need to verify your mobile number through the OTP-based authentication process. You can’t open a Demat online if your Aadhaar isn’t linked to your mobile number. In the above case, you’ll have to follow the offline route – filling up the form manually and sending it to our office.
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