Know about the Things to Keep in Mind Before Opening a Demat Account | Espresso

Things to Keep in Mind Before Opening a Demat Account

As financial markets are a lucrative proposition, several investors enjoy the opportunity to invest and trade stocks and securities. The first step to trading in the capital market is to open a demat account. In this quick-paced world, having a demat account online increases the convenience and efficiency of trading in the stock market. A demat account online has therefore become an indispensable element of investing in the financial market.

 

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For a newcomer, these rules and prerequisites might seem overwhelming. To assist you in your journey for a good trading experience, we have a guide explaining the things to remember before opening a demat account in India.

How to Open a Demat Account in India?

Demat stands for dematerialisation. A demat account, therefore, holds your shares and securities in an electronic (dematerialised) form. It is easy to open a demat account, and acquainting yourself with the procedure ensures your decisions are informed. Following are the steps to open a demat account in India:

  • Step 1: Choose a reliable depository participant (DP) with whom you would like to open a demat account. A DP is someone who acts as the moderator between the depository and the investor. It could be your broker, a bank, or other financial institutions.

Before choosing a DP, consider factors such as the convenience of the account opening procedure, availability of different trading platforms, diversity of trading resources offered by them, charges to open a demat account, etc.
Also Read: Eligibility Criteria to Open a Demat Account  

  • Step 2: Visit the official website of your DP and select the option to open a demat account.
  • Step 3: Fill out the account opening form with the relevant details
  • Step 4: Upload scanned copies of your KYC documents. These include proof of your income, address, and identity.
  • Step 5: When you submit the necessary documents, your request will be processed by your DP, following which you will receive your customer ID to access your demat account online.

Once you know how to open a demat account, you can ready the required documents and prepare yourself beforehand.

 

What are the Documents Required to Open a Demat Account in India?

Just as it is important to know how to open a demat account, you must know how what are the documents needed for the procedure. To open a demat account in India, you will need to complete the KYC (know your customer). The KYC procedure is simply meant to verify the information you provide so that the security of every trader is assured. Following are the list of documents needed: -

  • Proof of Identity: The documents to verify your identity include a PAN card, Aadhar card, passport, driving license, etc.
  • Proof of Address: Ration card, passport, electricity bill, voter’s ID, etc., can all be used to verify your address.
  • Proof of Income: This can be your salary slip, Form no. 16, etc.  

Demat Account Opening Charges

Amongst the things to remember before opening a demat account, this one is important because it can help you choose the right DP and compare services. You can look for a demat account online to ensure you get competitive rates and the right selection of offerings. The charges to open a demat account vary from one DP to another. Usually, the charges for opening a demat account online include: - 

  • Account Opening Charges: This is the first charge levied to open your demat account. Some DPs allow you to open your demat account for free.
  • Annual Maintenance Charges: The convenience to have your demat account online comes with a maintenance fee. This includes the charges for various services offered.
  • Transaction Charges: These are charges levied upon transactions. The transaction charges depend upon several factors.

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Frequently Asked Questions

If you don’t know how to open a demat account and the procedure overwhelms you, you can break it down into steps. The most crucial aspect of opening a demat account is choosing a reliable DP. Here are some tips to choosing a suitable DP to open your demat account in India:

  • Verify the charges for account opening and other charges involved
  • See if there is room for customisation of your demat account
  • Ensure that the trading interface is user-friendly

You will essentially need to ready the KYC documents to open a demat account. These documents will have to be scanned and then uploaded: -

  • Proof of identification such as PAN card or Aadhar card
  • Proof of address such as a passport or ration card and
  • Proof of income such as form no. 16

 

The three most crucial things to remember are: -

  • Checking whether your DP is reliable and offers convenient services online
  • Checking the documents needed for account opening and
  • Checking the charges to open your demat account online