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Where to Open a Demat Account

31 Jul 2023

A Demat or dematerialised account allows you to electronically hold multiple securities, including stocks, bonds, mutual funds, Initial Public Offerings (IPOs), government securities, Exchange-Traded Funds (ETFs), etc. It lets you buy and sell different securities quickly, securely, and conveniently. 

The process to open a Demat account is simple. That’s why there has been a significant rise in Demat accounts recently. 

Steps to open a Demat account

Find a Depository Participant (DP)

Identify a DP that offers Demat accounts. Stockbrokers, banks, or financial institutions come under this category.  

Fill out the application form

After selecting the DP, fill out an account opening form. The application is available on the DP’s official website. The basic details to enter include your name, email address, phone number, address, date of birth, etc. 

Submit bank details

Add your bank details like account number, bank name and branch, IFSC code, etc. It is vital to provide bank details for receiving returns like dividends, interest, etc., from the issuer company. The brokerage charges are also deducted from this account. 

Upload documents

Upload the necessary documents, such as your photo, proof of identity, proof of address, and PAN Card. 

Complete the verification process

Depending on your DP, the verification process will require digital or in-person verification. You will also need to sign the application digitally using your Aadhaar details and registered mobile number. 

After validating all the documents and approving your account, the DP will activate and share user credentials for your Demat account.  

Understanding DPs

You must reach out to a DP to open a Demat account. They serve as intermediaries between you and the depository. 

India has two depositories - the Central Depository Service Limited (CDSL) and the National Securities Depository Limited (NSDL). Each DP is registered with these depositories. The National Stock Exchange, Unit Trust of India, and Industrial Development Bank of India promote NSDL. The Bombay Stock Exchange, Bank of India, and State Bank of India promote CDSL. 

The Depository Act of 1996 governs the relationship between the DP and the two depositories in India. The act's provisions allow a DP to offer depository-related services after registering with the Security and Exchange Board of India (SEBI). 

Documents required for opening a Demat account

Here is a list of documents you must submit with the DP to open a Demat account:

  • PAN Card
  • Two passport-sized photos
  • Proof of identity
  • Proof of address - Voter ID, passport, Aadhar Card, driving license, or any utility bill
  • Bank statement
  • Cancelled cheque

Points to note before opening a Demat account

Remember to consider certain aspects before opening a Demat account. Most stockbrokers today offer a Demat and trading account together because it is essential to have a trading account linked to your Demat account. Make sure you pick a broker carefully after assessing the points mentioned below:

  • Reputation: It is essential to select a trusted platform. Ensure the entity is registered with SEBI before opening your Demat account. The chosen DP must adhere to the provisions put down by all authorised government agencies. 
  • Security: The platform must have strict security measures to protect your personal and financial data.
  • Brokerage fees: Inquire about the brokerage fees charged by the DP. Compare it with other brokers. 
  • Trading platforms: Explore the broker’s trading platforms to ensure they provide the required tools and features. 
  • Customer service: The broker’s customer support should be available to offer timely services when you’re stuck on a trade. 

Summing up

A Demat account lets you store and manage your financial investments securely. To open a Demat account, start by researching and comparing different DPs. Evaluate their credibility and service charges. Furthermore, understand the security measures the bank, broker, or financial institution has laid down to protect your investments and financial data.  

Motilal Oswal is a reputable stockbroking entity that lets you open a Demat account hassle-free. 

 

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account 

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