Dematerialized account, commonly known as a demat account is a kind of online portfolio that holds the shares and securities in electronic or digital form owned by a customer. Introduced in India, demat transactions brought an end to the need of holding physical copies of share certificates.
31st March 2019 onwards, SEBI made it mandatory for all listed companies to dematerialize their shares and debentures to be able to transact on the stock exchange. A Demat account can have a varied portfolio of the stock market assets such as mutual funds, bonds, ETFs etc, held by a trader.
Types Of Demat Accounts
- Regular Account- A regular account can be opened by any residing Indian citizen.
- Repatriable Account- A repatriable demat account has been designed to let a Non Resident Indian open a Demat account in India. If this account is linked to the NRE bank account, money from overseas can be transferred into this account.
- Non-repatriable Account- These types of accounts are also meant for the NRIs but they cannot transfer money from abroad into these accounts. This particular demat account can only be operated if the owner has linked an NRO bank account.
Procedure For Online Demat Account Opening
You can open an online demat by using the below mentioned easy procedure:
- The primary step to begin the demat account opening procedure is choosing a Depository Partner. Stockbrokers, banks and online investment platforms offer Depository Participant services in India. You can select a DP who offers services matching your requirements.
- Most of the depository participants offer both demat and trading account services. To open demat account, charges vary from DP to DP. After selecting your DZP, visit their website and fill out their online demat account opening form.
- After you have successfully filled and submitted the demat account opening form, the next step in the process would be to fulfill the DP’s Know Your Customer norms requirements. A scanned copy of the KYC documents such as address proof, identity proof, income proof and bank account statement needs to be submitted here.
- Once you have submitted your account opening form and the required KYC documents, you will have to go through the In Person Verification (IPV) process. This exercise is done to authenticate your documents. You may be asked to visit one of the offices of your DP or do your IPV process online through a smartphone or a webcam.
- Once your IPV is complete, you would be asked to sign an agreement that lays down the duties and rights of the investor as well as the DP.
- After this, your account opening form would be processed by the DP. A unique Beneficial Owner Identification Number (BO ID) shall be generated and provided to you after this, which shall let you access your demat account.
Documents Needed For Opening Demat Account
The below given list of documents is needed by an individual to open a demat account:
- Address proof: Driver’s license, Aadhar card, Passport, Voter’s identity card, Registered lease agreement, Electricity bill, Landline telephone bill, copy of insurance, ration card apartment maintenance bill, gas bill and Bank account statement or passbook, all qualify for a valid address proof.
- Identity proof: A copy of the applicant’s PAN card along with his photo.
- Bank account proof: A copy of the applicant’s bank account passbook, or a copy of his bank statement. The bank statement should not be older than 3 months.
- Proof of income: A copy of the latest salary slip or the Income tax return of the applicant.
Points to Remember When You Open A Demat Account
- It makes sense to link your demat to your trading account since a demat account can only hold your financial assets and you would need a trading account to buy and sell shares in the market.
- Enquire about the account opening and maintenance charges before opening the account.
- Fill the details properly in the account opening form and file a nominee for easy transmission of shares.