Are you considering investing in the Share Market? Maybe wish to park some funds in Mutual Funds? Some of the requirements for investing, such as a functioning Bank Account and a PAN card, are common among investors. But you need a crucial element to ensure your journey goes smoothly: a Demat Account.
What is the account about?
The shares traded on the stock exchanges are generally electronic. This means that, unlike earlier times, when companies used to provide share certificates for share purchases physically, they are all online now. The account consolidates your investments as a Demat Account. The word Demat stands for dematerialised. It is the process to convert physical shares into electronic form.
Almost all brokers have adopted this concept, which makes it convenient to trade. A Bank and Demat Account work on similar concepts. It tracks the instruments purchased and sold. You get the balance statement, which shows the shares, Mutual Funds, and other devices you own on a specific date. This makes it convenient to maintain records and access them anytime.
What are the steps to open a Demat Account?
It is possible to open a Demat Account online and offline. The process is almost similar. The company with whom you open a Demat Account is a depository participant. In India, two depositories maintain investor records: National Securities Depository Limited and Central Depository Services Limited. Each DP is affiliated with either NSDL or CDSL.
Depending on the Demat Account charges and services, you need to select the DP you want to open an account with. Under online application, you can apply on the DP’s website, and someone from the DP will contact you to collect your documents and sign the Power of Attorney. The POA is necessary because it allows DPs to make transactions in your name.
The DP requires the following documents of yours to fulfil Know Your Customer (KYC) norms. These include:
- Filled KYC application form
- PAN card
- Address proofs
- Recent passport-size photographs
- A cancelled cheque with all the Bank Account details
Once the application form is collected and processed along with the documents, the DP issues a unique Demat Account number. One important point to remember is there are Demat Account charges for account opening, purchase, sale, annual maintenance, and other costs. Reading about these charges before opening a Demat Account is essential.
Once you are aware of them, only then proceed to open the account. Once the opening procedures are done, you can watch live Sensex today data and operate other trading transactions.
