A demat account helps you to hold securities in an electronic form. To open a demat account online, you can visit the website of DP and fill out an application form. Along with the application form, you need to provide some documents that validate your identity and address. The kind of documents required for opening a demat account is mentioned in the below table:
|Identity Proof Documents||Address Proof Documents|
|PAN Card||Ration Card|
|Voter’s ID||Bank Passbook|
|Driving Licence||Bank Statement|
|ITR or Form 16||Government-approved ID card with your residence address|
|Telephone bill||Utility bills|
|Electricity bill||Voter’s ID|
|Any government-approved ID card that has a photo||Aadhaar Card|
Once you provide these documents to the DP, you will be called for in-person verification where you will need to be present along with the documents mentioned above. These days, many DPs also facilitate online verification that makes it easy for you to open a demat account. The online trading account is also provided with the demat account to facilitate seamless trading.
After your application gets processed, you will get a demat account number. It is a 16-digit number that is unique for each user. Along with that, you will also receive your user ID and password. You can reset your password for security reasons. The benefits of having a demat account are given below:
Holding multiple securities
On a demat account, you can hold multiple securities like currencies, stocks, futures and options, commodities, etc. You may also open multiple demat accounts for handling each of these securities separately. However, multiple demat accounts may require you to pay a higher amount as AMC (Account Maintenance Charges) as each account will attract a separate AMC every year.
Transfer of securities
Transfer of securities from one account to another becomes smooth with the help of a demat account.
Buying & Selling Shares
You don’t have to fill a DIS slip anymore to buy or sell shares. Buying and selling shares can be processed online with a click of a button. This makes the entire process a lot more convenient for traders.
Many DPs are offering intuitive dashboards through their demat account. Through this dashboard, you can observe the different types of holdings and the number of shares or securities you hold of every company. Moreover, access to charts and analytical tools enables you to trade wisely.
Checking the background, annual turnover, and other technical data of companies active in the share market is also possible through a demat account. You can also check your P&L i.e. Profit and Loss statement on this account.
Free opening of account
Many stockbrokers allow you to open a demat account without paying any charges. The AMC fees might also be waived off for the first year. However, you will have to pay the AMC from the second year onwards.
You can check the brokerage, AMC fees, trading facilities, and many other factors while choosing a DP. Be careful while choosing a DP as it will determine your trading or investing experience afterward.