A Demat account is used to hold shares, bonds, and other securities of an individual in a Dematerialized or electronic form. It facilitates a hassle-free process for trading, keeps your investments secure, and even allows you to track them easily.
However, you don’t have to apply for it separately as it is provided with the Demat account itself.
If you want to know how to open a Demat account online you can follow the below process:
Choose a depository organization
SEBI i.e. Securities and Exchange Board of India has recognized two depository organizations viz. NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited).
To open a Demat account you will have to choose one of these depository bodies.
Seek the services of a DP
You cannot contact NSDL or CDSL directly to open a Demat account. Instead, you will have to approach a DP i.e. depository partner who is authorized by these depository bodies.
Numerous DPs work under each of the depository bodies and you can visit the official portals of NSDL or CDSL to find the right DP for you. A DP offers various investment products and services and charges a price for them.
DP is also qualified to handle your Demat Account and charges an AMC i.e. Account Maintenance Charges annually for maintaining it. Therefore, you must compare the charges, services, and products offered by various DPs before selecting one.
You have to be careful while choosing a depository partner because he must be able to satiate all your requirements related to investments and trading.
Registering with a DP
You can register with a depository partner through both offline and online means. Some essential documents like proof of income, identity proofs, etc. are required while registering with a DP.
To register with a DP online, you usually have to go through the process listed below:
- Visit the official portal of a DP you are interested in.
- On this portal, you will find an option for an open Demat account. Click on this option and provide details like your name, mobile number, email id, city name, etc. after which you will get an OTP on the email id or mobile number that you had entered.
- Upon entering this OTP, you will be asked for your birth date and PAN Card details.
- After providing these details, you will be provided an online form to fill in some additional information like your bank account number, IFSC code, experience in trading, and other personal details.
- You will also have to select a payment mode and provide documents like address proof, canceled cheque, passport size, etc. during this step.
- Once you have submitted these details, your documents will be verified and the depository partner will provide a Demat account number that comprises 16 digits.
DPS are of two types viz. full-service brokers and discount brokers. Full-service brokers offer a wide array of products, services, pricing packages whereas discount brokers provide selected services and products.
They usually charge much more than a discount broker. Nowadays, even some discount brokers are offering multiple services and products along with a technology-based platform to the customers.
Therefore, you can choose one of these depository partners as per your investment plans and requirements.
Investments in the securities market are subject to market risk, read all the related documents carefully before investing.