How to open a Demat Account?

A demat, or ‘dematerialized’ account is an essential requirement for any new investor looking to try their hand in the stock market. This is where all your financial instruments stay safely, without the risk of any physical harm or loss.

Demat Account
Demat Account

A demat account is used to hold shares and other securities in electronic formats. Instead of physical possessions of stock certificates, an investor can just convert physical shares into electronic formats for ease of transactions.

SEBI - Securities and Exchange Board of India
SEBI - Securities and Exchange Board of India

It is mandatory to have a demat account for any kind of trade, as per the regulations set by the regulatory authority, SEBI. A demat account only makes an investor’s work simpler. It holds not just stock certificates but all your financial instruments like shares, bonds, government securities etc. A demat account is a hassle-free way to trade that practically nullifies the storage risks of paper certificates. It also reduces the time consumed otherwise in offline trading to mere seconds, with minimal effort.

Open Your Demat Account
Open Your Demat Account

All major banks and investment firms in India offer demat services to their customers. The procedure for demat account opening is pretty easy and similar for all outlets. If you are a prospective investor, here is a breakdown of the process for you:

Opening a demat account in India involves four easy steps

Step 1 :- Select a Depository Participant (DP) with whom you would like to open your account. A DP can be your bank, a stockbroker or online investment platforms. Your DP is essentially your intermediary between you and your depository. You can check for DPs through the list available on the websites of depositories like CDSL (Central Depository Services (India) Ltd and NSDL (National Securities Depository Ltd).

Step 2 :- You will be provided with an account opening form. Along with that, you need to attach photocopies of your KYC documents, passport size photographs and other required documents. The KYC form also has the Depository Participant-Investor agreement, which includes the terms of agreement, rules and regulations, and charges you will incur whilst holding a Demat account. This form also includes the rights of the investor and duties of the DP.

Step 3 :- You may be required to appear for an In-Person verification to ensure the authenticity of your details. An agent of your DP’s firm may carry this out.

Step 4 :- After your application has been processed, you will receive a Beneficiary Owner Identity (BOID). This demat account number is your unique identity number which you need to access your account, facilitate trade, and make transactions. Once you have this number, you are ready to go.