Physical trading of stocks has diminished to a great extent over the years and almost everyone prefers trading via the internet as it’s convenient, safer and faster. For the same purpose, opening a demat account is the prerequisite for stock trading electronically. There are mainly two types of Demat accounts that can be opened in India: NSDL Demat and CDSL Demat. Both of these are depositories. Here's a brief guide to NSDL Demat account opening:
What's a Demat account?
Demat account is an electronic repository of securities like equities, bonds, stocks. It's akin to a bank account for shares and stocks. Physical certificates have largely become obsolete, so the record of traded equities is stored in electronic format in a Demat account. Other than the usual benefits of enhanced safety, user-friendly format and additional security, NSDL Demat account allows easy transfer of shares, dividends and bonuses.
What's NSDL Demat account?
NSDL or the National Securities Depository Limited is India's oldest and most renowned provider of demat account services. NSDL also provides a wide range of services related to shares to its customers. Any Demat account opened with the NSDL is termed an NSDL Demat account. It can only be opened via a depository participant (DP) registered with NSDL.
After going through the entire list of depository participants registered with NSDL, check the website of the one that you are interested in opening an account through a DP. Most stock brokerage firms also act as depository participants. So, you can just ring any reputed stockbroker and inquire whether or not they are registered with NSDL.
How to open an NSDL demat account?
NSDL Demat account can be easily opened by just following these steps:
- Touch base with a depository participant (DP) registered with NSDL.
- Fill the account opening form and submit all the KYC (Know your Customer) details. A photocopy of PAN card, address proof and bank account details need to be submitted to the depository participant.
- After the depository participant receives all the documents, a verification process is initiated.
-Once the verification process is complete, the depository participant opens the NSDL Demat account on the behalf of the applicant.
- After the account is opened, all the necessary details like DP ID, client ID, master client report, tariff sheet, and a copy of rights & obligations of beneficial owner and depository participant, will be provided to you.
- DP will also give you NSDL Demat account login ID and password using which you can log into the account and start online stock trading. It needs to be remembered that NSDL demat login details should not be shared with anyone. These are highly confidential details that the account holder should keep safely with him.
Conclusion: Opening an NSDL Demat account is a fairly easy process. All one needs to do is to contact a depository participant registered with NSDL. Once an NSDL demat account is opened, the person can buy and sell shares. If a person possesses physical shares that he bought long back, they can be converted into electronic format through dematerialization of shares with the help of the DP. The share credit will reflect in the Demat account after the conversion process is complete. NSDL Demat account comes with other benefits like NSDL mobile phone app and Delivery Instruction Slip(DIS).