A Dematerialisation Account addressed as Demat is an account that electronically deposits the ownership documents in shares and securities. Dematerialization is the process by which physical certificates of an investor get converted to an equivalent number of securities digitally. It is like a Bank Account, where instead of money, investments are held.
In India, it is compulsory to open a Demat Account for buying and selling shares in the Stock Market. Holding securities in Demat is easy, safe, and secure. It is simpler to retrieve securities held in Demat. Details of all transactions are available for all categories of investments like Shares, Bonds, Mutual Funds, etc.
Opening of the account
Presently, there are only two depositories where one can open a Demat Account: National Securities Depository Limited and Central Depository Limited. However, you cannot open Demat directly with NSDL or CDSL. It is only possible through an agent under NSDL, or CDSL called the depository participant or DP. The agents are public financial institutions, banks, stockbrokers, an NBFC, custodians, share transfer agents, and registrars.
Quick online Demat opening steps
Certain essential documents are required for Demat Account opening. These need to get scanned and uploaded, so keeping them handy is advisable:
· Valid identity proofs with photos like an Aadhaar, PAN, Voters ID, Driving license, etc.
· Residential proofs such as utility bills, passport, Aadhaar, Ration Card, etc.
· Bank details like a copy of the bank passbook and statements less than three months old are needed. It is essential to give bank details as benefits like dividends, interests, and redemption amounts get directly credited. A copy of a canceled cheque is also a must.
· Aadhaar linked to a mobile number is a must for the online process.
Open the Demat Account by following the steps:
1. Select a DP with whom you wish to open Demat. It could be a bank, stockbroker, etc. It is advisable to open Demat and Trading Account together to ease operation. Else, the former will get separately mapped with the Trading Account.
2. Application form: Duly fill the form with the details like name, address, email, phone number, bank details, nomination details, etc.
3. Document uploading: As guided by the online process, upload the required documents like photographs signed across, identity proofs, bank statements, canceled cheques, and address proofs. A wet signature is also needed as the forms will be e-signed, and no witness is required.
4. Verification: Online in-person verification is compulsory. Earlier, in-person verification was done by executives’ visits to the service provider’s office. Now, it gets done in real-time. Then, signing agreements and forms is done digitally, and forms are submitted.
5. Activation: The DematAccountgets verified and activated. A client master, along with the details of the client and the beneficial owner identification, a unique ID number, gets mailed to the client. The document, including the rights and obligations, is also sent.
Keywords: Demat Account, Demat Account opening
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