What is a Demat Account? How to open a Demat account?
Demat stands for dematerialized and its account refers to the benefit of holding securities and shares in an electronic format. Demat account and online trading come hand in hand as the shares you buy online are held in this account. The process eases out trade for the users. The demat account records all the investments people make in shares, exchange-traded funds, government securities, bonds, mutual funds, in one place.
How can you open a Demat account?
With the help of your Aadhaar card and an online broker, you can open a Demat account and online trading. The best part about the process is it takes you a few minutes. Read below to know how you can open your account in no time.
- What you need
Only people with a valid Aadhar card, a phone number linked to Aadhar card, and an email ID, can use a Demat account and online trading. You also need to avail the e-KYC facility to open the account. You will need the soft copies of your Aadhar and PAN card for validation.
- The first step
You need to first visit the online portal of your broker and open the Demat account and online trading account. The website will ask you for basic details like name, phone number, Aadhar number, PAN number, and it will send an OTP for verification in your cellphone.
- Account opening
Once your details are verified, you need to select the market segment you prefer. You need to address to the brokerage plan you want to avail. You will then have to give your other personal information and bank details. Depending on the plan, you might need more documents for validation.
- Process of person verification
After you finish the details and upload the documents, you will go through the in-person verification. These will include documents for proof along with the physical presence of the user. You will have to go through a video call session by the broker’s officials. Once they accept your application, you will have to give an e-sign along with an OTP verification that will come to your cellphone. When you give the OTP, they will accept the e-sign. The process of e-KYC completes here and you get a unique client code (UCC) exclusively for yourself.
Cost of having a Demat account and online trading
The investors need to pay money for:
- Dematerialisation and rematerialisation of their securities
- An amount for maintaining their account annually
- Sell transaction fees
- The cost of DPs is available in different terms as mentioned on the website of depositories.
How to demat your shares?
To demat the physical certificates, you need to approach the DP and provide documents of:
- Separate DRF filled for every ISIN
- Dematerialization Request Form (DRF)
- Physical certificates by creating “Surrendered for Dematerialization”
Facts you need to know
- The DP can revise the costs by giving you a 30-day notice beforehand
- If you close your Demat account and online trading account in-between a year, you will have to pay the maintenance charges accounted quarterly
- You don’t need to have a minimum number of shares for a Demat account
- There is no money levied on closing DP account
- No money is needed to transfer holding from one DP to another account when the investor is not satisfied with services in the existing DP.
Finally, you must note that it is good to have nomination with Demat account and online trading. It eases out the process of transmission of securities to your successors after your death. You need to avail nomination separately for physical shares and from every company where you have your shares invested in. However, if you avail nomination for the demat account, all the investments come under one nomination.