Demat and trading account is necessary for investing in the stock market, know the process of opening
During the months of lockdown, there was a rapid growth in the participation of retail investors in the stock market and these people also made huge profits in the market during this period. Demat and trading accounts need to be opened for investing in the stock market. It is quite easy to open a Demat account. You can open your Demat and trading account in minutes through your mobile phone sitting at home.
Eligibility and required documents
Any person above the age of 18 years can open a Demat and trading account. A PAN card copy, bank account, ID and address proof, cancellation check, bank statement, income proof and signature copy are required to open a Demat account. It also requires KYC.
This is the process
Step 1. First, you have to choose a Depository Participant (DP). We call it the broker. It can be an official bank or a financial institution or a broker. You can choose one DP to open a Demat account, depending on your convenience and requirements.
Step 2. Now you have to go to the website or app of the selected Depository Participant and click on the ‘Open Demat Account’ tab. Here you have to enter basic information like your name, mobile number and email ID. Some brokers also open Demat accounts through Aadhaar.
Step 3. Now you have to pay the fees charged for opening an account through net banking or credit card. Some brokers also offer the facility of opening a free Demat account.
Pay attention to maintenance charges
There is a convenience fee in the Demat account. Before starting your Demat account, you should read the document carefully to know about the charges associated with it. These charges include the opening of Demat account, maintenance fee, transaction fee and custodian fee etc. These fees vary for each broker.
A depository is like a bank, with securities held in electronic form. There are two depositories in India. The first is – National Securities Depository Limited (NSDL) and the second is – Central Depository Services Limited (CDSL). Under the Depositories Act, investors can use the services of these depositories through depository participants.
Keep in mind that it is important to add a nominee while opening a Demat account. Once your application to open your account is processed, you get a Demat account number and client ID. Your broker provides you with a Beneficiary Owner Identification Number, which is necessary for all your transactions in the account.