The stock markets are a clear indicator of the extraordinary growth we're seeing in our economy. After learning about the dynamics of the stock market, mutual funds, and other financial instruments, a rising number of people appear to be more willing to make large investments in these markets.
Is it, however, possible for everyone to join in? Only if they have a dematerialized account will they be eligible. It's crucial to first determine whether you're eligible to register a demat account.
- What is a Demat account and how does it work?
All of your securities (stocks, commodities, ETFs, and so on) are held in an electronic format in a dematerialized account. Without one, you won't be able to trade on the stock market. First, let's get the essentials out of the way. Here's a rundown of what you'll need to know about how this account works:
1. Depository
There are two depositories in India that will hold your stock accounts for you. The CDSL (Central Depository Services Limited) and the NSDL (National Securities Depository Limited) are two among them (National Securities Depository Limited).
2. Unique identifier
Every dematerialized account has a unique ID that can be used to identify it. This number is used for transactions as well as assisting individual firms in appropriately identifying you in order to credit shares to your account.
3. Participants in the Depository
Depository Participants, or brokers, provide access to your stock account, which is stored by the central depository. They serve as a go-between for the central depository and the investor. Traditional banks, financial institutions, and, more recently, discount brokers, are all examples of DPs.
4. Holding a Portfolio
A stock holding account contains all of the account's activities in depth. Each instant a transaction is made, they are continually added.
- Demat Account Opening Eligibility Criteria
1. Age
Contrary to popular belief, you do not need to be 18 to begin. In order to invest in the stock market, you must be at least 18 years old. Stocks can be purchased by both minors and adults. After presenting their appropriate documentation, the parents or authorised guardian can open a demat account in the minor's name. The account will be managed by the minor's parents or guardians until the minor reaches maturity.
Following the minor's 18th birthday, the depository participant will send the individual an advisory requesting necessary KYC (Know Your Client) documentation in order to open and transfer details to a new account.
2. PAN and KYC information
To get started with your demat account, you'll need a PAN card. When you open the demat account, you'll need to send a copy of your PAN card along with the KYC document.
The Aadhaar-based KYC process is being phased out in favour of an online version. It is Upstox's most popular registration method. You can also complete your eKYC online.
Wrapping Up
The stock markets are the ideal venues to start investing in a flourishing economy. However, you'll need a dematerialized account to get started. Anyone, regardless of age, can open a demat account by presenting a PAN card, evidence of identity and address, and completing a KYC form. Your broker such as Motilal Oswal validates your paperwork and completes the account opening process. Following the process, a client ID is generated, which can be used for future transactions.
Related Articles: Why is a Demat Account a must for 21st Century Investor | Evolution of Demat and Trading Account in India | Factors to Consider When Opening a Demat Account
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