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Demat account is a vital aspect of participating in the stock market. The word ‘Demat’ is short for dematerialisation, which is converting your physical financial certificate into an electronic form. The Demat account is used to store electronic securities. Documents for the Demat account opening are mentioned in the article below. By owning a Demat account, you can hold multiple types of assets, including shares, bonds, mutual funds, government securities, Exchange Traded Funds (ETFs), etc. All these assets are stored in electronic format. As a trader or novice investor, you can have the benefits of holding the financial certificate remotely. However, some government documents are required to open a Demat account in India.
A Demat account is helpful to keep all your financial assets secure under your ownership. First, you need to select a depository participant (DP), which can be any bank or financial institution that offers the service of opening a Demat account and catering for your trading needs. A broker like Share India is registered with the Securities and Exchange Board of India (SEBI) to open your Demat account. Once you choose a trusted broker, you can proceed with all the terms and conditions to understand the documents required to initiate your account opening process. Also, if you are planning to open a Demat account, you need to understand the stock market.
To simplify the functions of a Demat account, we can think of it as a bank account that stores financial certificates instead of money. Delve deeper into the meaning of a Demat account and the benefits of opening one with Share India. You can open a Demat account using the following documents. There are various ways to open a Demat account, but the most preferred one is the online method. We have divided the required documents for the Demat account in the following section:
Table of Contents
The Proof of Identity
- PAN card
- Aadhaar Card
- Driving Licence
- Voter Identity Card
- Passport
- National Rural Employment Guarantee Act (NREGA) Job Card
You can also use other documents issued by the central government of India.
The Proof of Address
You need to submit valid address proof to avail of the service of the Demat account.
- Aadhar Card
- Voter ID
- Ration Card
- Driving Licence
- A utility bill, such as electricity bills, telephone, gas, and water bills
- Other documents issued by government regularities
- Bank statement
Proof of income
The last and most important document for the Demat account is the proof of income. You need to show proof of bank account, and along with that, you need to show proof of income along with a cancelled cheque. If you have an option for the online account process, you need to upload and wait for confirmation from the stockbroker.
In income proof, you need to add the following documents for the Demat account:
- Bank account name
- Bank statement
- Some brokers allow you to submit your bank details in which your name and IFSC code are clearly mentioned and visible through the scanning and submitting process for the Demat account opening.
For the Non-Resident Indian (NRI) Demat account or Hindi Undivided Family (HUF), additional documents are required apart from the ones mentioned above.
You need to add your email ID and mobile number, which will be verified by the broker. In the case of a minor account, you also have to add the guardian’s personal information and the minor details. The minor account will be handled by the guardian only till the minor reaches adult age.
You also need to add a nominee who will take charge of your Demat account and its assets in case something happens to you.
You also need to sign a depository participant investor agreement, which lays down the terms and conditions. This contains the charges, rules, and regulations to do trading in the stock market. It also tells you about the rights and duties set by the governing body SEBI.
An in-person verification is also required to check that your details are valid. Then the Demat account can be successfully completed.
After all the formalities are completed, you will receive a Beneficiary Owner Identification number (BO ID) or a unique client code. This unique code number will be used in all future transactions that will be conducted. Electronic Know Your Customer (eKYC) check will also be done, but it won’t take too long.
The paper registration process can be cumbersome and can take a long time to complete. So, it’s a lot easier now to open a Demat account with an online stock broker. Suppose you have soft copies of all your registered documents, such as your Aadhaar and PAN card. Then, you can open your Demat account in just a few steps.
You can open a Demat account with Share India in just ten minutes. The online eKYC process of Share India is fast and reliable. You can open a Demat account free of any charges. Just download the Share India app, enter your number and email ID, and start your eKYC process.
You will receive an OTP to confirm your mobile number, and then you can proceed.
A Non-Individual Person Who Can Open A Demat Account
Some other types of Demat accounts that can open for non-individuals are
- The corporation and businesses
- A trust which is registered and unregistered names on the Demat account in a partnership way.
- Partnership firms with a Demat account in the name of the partner’s partnership firm with a Demat account under the name of partners of societies with Demat accounts in the names of the member’s societies that are either registered or unregistered and have a Demat account in the name of societies or the member of societies.
- An Association of People (AOP)
- A Limited Liability Partnership (LLP)
Mutual funds houses and financial firms are also able to open a Demat account. The foreign institutional investor can create a financial portfolio with a Demat account.
The Benefits of Opening a Demat Account
As we know, the paperless Demat account is the most recommended way to utilise your money market investments. The primary part of online trading is the digitisation of your financial certificates. Online trading helps in faster transactions because everything is in the secured database, so buying and selling is quite simple and super fast. The high security in the trading system makes the network secure and trustworthy. It will become less prone to risk and theft factors. It is a cost-effective way to invest and trade in the Indian stock market.
Let’s look further into some of the benefits of Demat accounts:
Quick Share Transfer
The user does not need to wait for any approval or stamp to own a share. Using the Demat account, you can quickly sell off your shares in the stock market. In addition to this process, you can also transfer shares from one Demat account to the other through the delivery instruction slip or the receipt instruction slip (RIS). In both cases, the slips allow users to enter relevant information and the necessary details for carrying out a transaction in the quickest way possible.
Converting Physical Certificates
If your parents or grandparents hold some physical certificates, you can convert the physical financial certificate into an electronic format with your online Demat account. Furthermore, if the investor holds a certificate in digital format and wants to convert it into a physical format, this request can also be fulfilled by owning a Demat account.
Freezing/Unfreezing Demat Account
A Demat account holder has the authority to freeze a particular type or quantity of securities in the Demat account. They also have the right to choose the duration of freezing the Demat account.
By freezing your Demat account, you can stop all the transaction activities from your Demat account.
Conclusion
A Demat account plays a major role in managing trade. Here, we came to know about all the documents that are required for a Demat account.
Also, making your trading partner with a trusted broker such as Share India can be a good stepping stone in the stock market. You can have lots of resources, insights, and financial consulting with the Share India platform. So why wait? Make trading your side hustle and do smart trading with one of the most reliable platforms in India – Share India.