Business

How to open a Demat account for share trading?

7:32 PM Lokesh kumar 0 Comments

Demat account is important for the process of trading. As the SEBI has made it mandatory for every share trader as well as an investor to have a demat account, the significance of the same has been increased a lot. The shares which are issued by the companies or purchased by an investor from the open market are provided in a soft copy which one needs to keep in the demat account only. This account also proves useful when it comes to having the investment in ETFs and MFs also.  If you wish to buy and sell the stock, you need a demat account. If you are interested in trading and are unaware of the procedure of opening a demat account, here’s a look:
  1. To open the demat account the first step is to approach the depository participant, an agent of depository followed by filling the account form. One can find the list of DPs available on the website of depositories- CDSL and NDSL.
  2. While opening the account, along with the form you also need to enclose the photocopies of few documents which serve as an identity proof. You also need to provide your address proof.
  3. The next step in opening the demat account is to sign an agreement with the depository participant in the prescribed format. The agreement contains the details of duties and rights of both the DP and the investor. You must receive a copy of the agreement along with a schedule of charges for any reference purpose in future.
  4. Now, the DP will open the demat account and give you a demat account number. The demat account number is also known as beneficial owner identification number. All of your investments and purchases in the security will be credited in the demat When you sell the securities, the demat account will be debited.

Note- You can get more than one demat account opened and chose the DP as per your convenience. It is not mandatory to open the demat account with your stockbroker. Also, you should update the account details and postal address of the demat account if there is a change as all the corporate correspondences, the credit of refunds, interests, dividends, redemption payment and annual reports on the address mentioned.

Keeping these tips in mind, you can easily get the best demat account in India opened at the bank of your preference. The investor is supposed to pay few charges on the demat account such as:

  • Re-materialization and dematerialization of the securities
  • Annual account maintenance fee
  • Transaction fee for selling transactions
  • The charges of the DP

Other features of the demat account

  • If you hold various folios of a single company and wish to consolidate all of them into one folio, you should forward the physical securities with the letter signed to the RSTA of the company.
  • You can freeze your demat account for any given period of time.
  • Just like a bank account, you can open demat in single or joint names.