Demat Account Opening
Demat accounts, short for Dematerialized Accounts, have a similar fundamental principle to bank accounts. The key difference is that instead of money, they hold securities and financial instruments. Although traders normally use brokerage companies, these accounts have become the primary means of keeping securities and are regulated and managed by depositories such as the NSDL or CSDL in India.
Since their formation, Demat accounts have significantly fast-tracked the trading process and substantially eliminated the danger of theft, loss, or damage to physical paper-based trades. They are a requirement for anyone wishing to trade shares or other financial products online. The method for opening Demat accounts is fairly consistent across banks, brokerage firms, and other financial organizations that provide online trading platforms.
How To Open A Demat Account?
Demat accounts can be opened offline, by visiting a stock broker’s office or a bank that offers Demat services. A Demat account can also be opened online. Many brokers provide a free Demat account opening service. Few brokerage houses offer three accounts in one – Demat, trading, and savings – through their accounts.
Documentary Requirements To Open A Demat Account Are As Follows:
- Proof of Identity: Such as a Voter ID, driving license, PAN card, and UID or Unique Identification Number, etc.
- Proof of Address: Voter ID, Passport, Aadhaar cards or a ration card may suffice.
- Proof of Income: This is critical when trading derivatives like futures and options. This condition should be met with a copy of an Income Tax Return Acknowledgement.
- Proof of Bank Account: A canceled cheque leaf is likely to be accepted.
- PAN Card: With some exceptions, such as individuals who are exempt from having to apply for a PAN card, having a PAN card is required if you want to open a Demat account.
- Size Photographs: When applying for a Demat account, you must additionally supply 1 to 3 passport-size pictures to the broker, bank, or financial institution.
Is It Necessary to Have A PAN Card When Opening A Demat Account?
According to the circular published by SEBI, India on April 27th, 2007, providing your PAN card is required when opening a Demat account, regardless of the quantity of the investment or the purpose of the account. In the case of a joint account, each of the account holders will be required to provide their respective PAN cards for examination prior to creating an account.
When registering an online Demat account, you must additionally submit your PAN card if you are an NRI or a person of Indian ancestry. Provided you are unable to obtain a PAN Card due to unforeseen circumstances, you may be allowed to register a ‘limited purpose Beneficiary Owner account’ if you have stocks in physical form and are exclusively interested in selling them.
If you want to register a Demat account to invest in stocks or other financial instruments, Choice Broking is a great place to start. Choice’s cutting-edge trading platform, esteemed research team, intuitive interface, and affordable account charges and fees may offer you the ideal starting point for a successful trading career.