Read on to know how to open demat account easily.
What is a demat account?
A demat account, short for a dematerialized account, is an electronic account that holds securities such as shares, bonds, mutual funds, and exchange-traded funds (ETFs) in a digital format. It is similar to a bank account that holds money, but instead of holding physical share certificates and other securities, a demat account holds them electronically.
This type of account lets investors buy, sell, and hold securities paperless. It eliminates the need for physical share certificates, which can be easily lost or stolen, and makes it easier for investors to track their investments and transfer them electronically.
What are the different types of charges associated with a demat account?
Demat accounts are primarily used for holding and trading in securities such as stocks, bonds, mutual funds, and exchange-traded funds. There are various charges associated with demat accounts, some of which are as follows:
- Account opening charges: This is a one-time fee charged by the depository participant (DP) for opening a demat account.
- Annual maintenance charges (AMC): This is an annual fee charged by the DP for maintaining the demat account. The AMC varies depending on the DP and the type of account.
- Transaction charges: This is a fee charged by the DP for every transaction made in the demat account. The transaction charges may vary based on the type of security and the value of the transaction.
- Custodian fees: This is a fee charged by the DP for safekeeping and maintaining the securities held in the demat account.
- Pledge fees: This is a fee charged by the DP for pledging securities held in the demat account as collateral for a loan.
- Account closing charges: This is a one-time fee charged by the DP for closing the demat account.
It is essential to check the fees and charges associated with a demat account before opening one to ensure that you are aware of all the costs and fees involved.
Documents required to open a demat account?
To open a demat account in India, the following documents are usually required:
- PAN Card: PAN card is mandatory for opening a demat account, as it serves as a proof of identity and is required for all financial transactions.
- Proof of Address: Any one of the following documents can be submitted as proof of address: an aadhaar Card, Voter ID card, passport, driving licence, bank statement, electricity bill, telephone bill, rent agreement, etc.
- Proof of Identity: Apart from a PAN card, one of the following documents can be submitted as proof of identity: Aadhaar card, Voter ID Card, passport, driving license, etc.
- Passport-size photographs: Usually, two passport-size photographs are required to open a demat account.
- Bank Account Details: You will also need to provide details of your bank account to link it with your demat account.
How to open a demat account in 7 simple steps?
Opening a demat account is a necessary step if you want to invest in stocks or other securities in India. Follow the below-mentioned steps to open the account easily:
Click on www.smifs.com and choose the option to open an account, and now you will be redirected to the client registration page.
- Choose a depository participant (DP) with whom you are willing to open a demat account before moving ahead, check if your chosen DP has all the services you desire.
- The next step after selecting a DP is to fill up an online account opening form on the DP’s app or website. The online form will ask you to fill in all your basic details like name, e-mail, phone number and residential address etc. Keep your PAN card handy as you need to fill up your PAN details.
- Adding your bank account details is the next step. Details like your account number, account type, IFSC code etc needs to be added as the account is used to credit any amount that is payable to you in the form of dividends, interest etc.
- Upload all the documents asked along with your photo and complete this step
- The next step is to complete the in-person verification or iPV. This process can be completed easily from your home as it is an online process. Just record a video reading out your name and shwoing your PAN number and aadhaar card number with the first 8 digits masked with your finger.
- Using your aadhaar linked which is linked with your mobile number, you can e-sign your application digitally as it is a secure and convenient method.
- Submit your application once you complete all the above-mentioned steps and your demat account will be created. All your demat account details like your demat account number and your login credentials will be sent to you.
Some pointers you should keep in mind before opening a demat account
Before opening a demat account, here are some important pointers to keep in mind:
- Purpose: Determine the purpose of opening a demat account. Is it for long-term investment or short-term trading? Different brokers offer different services, so it’s important to choose one that meets your needs.
- Brokerage Fees: Understand the brokerage fees charged by the broker. Some brokers charge a fixed fee per trade, while others charge a percentage of the traded value. It’s important to choose a broker with reasonable fees that fits your budget.
- Research: Research the broker’s reputation and track record. Look for online reviews, check their credentials, and verify if they are registered with SEBI (Securities and Exchange Board of India).
- Trading Platform: Check the broker’s trading platform. It should be user-friendly, secure, and reliable. You should also ensure that it provides real-time stock quotes, news updates, and other useful features.
- Customer Service: Check the broker’s customer service quality. They should be responsive and able to provide timely assistance and support when needed.
- Additional Services: Some brokers offer additional services such as research reports, investment advisory, and portfolio management. You should evaluate if these services are useful for your investment goals.
- Account Opening Process: Check the account opening process and documentation requirements. It should be easy and hassle-free. Some brokers offer online account opening, which can save time and effort.
By keeping these pointers in mind, you can choose the right broker and open a demat account that suits your investment needs.
FAQs on how to open demat account online
Q) Can I open multiple demat accounts? / How many demat accounts I can open?
Ans: Yes, you can open multiple demat accounts. There is no limit to the number of demat accounts you can have. However, having multiple demat accounts can be difficult to manage and may lead to additional fees.
Q) Is the demat account free?
Ans: No, demat accounts are not free. Brokers charge an account opening fee, annual maintenance charges, transaction charges, and other fees for the services they provide. These charges may vary depending on the broker you choose.
Q) Are trading and demat accounts different?
Ans: Yes, trading and Demat accounts are different. A trading account is used to place buy and sell orders for stocks, while a Demat account is used to hold and store the stocks you own. You need both accounts to trade in the stock market.
Q) What if I don’t have a pan card or an aadhaar card?
Ans: Having a PAN card is mandatory to open a demat account. If you don’t have a PAN card, you can apply for one and then open a demat account. If you don’t have an Aadhaar card, you can use other documents like a passport, driving license, or voter ID to open a demat account.
Q) I already have some shares in other demat accounts, can I transfer them?
Ans: Yes, you can transfer shares from one demat account to another. You need to submit a transfer request to the depository participant (DP) of the account from which you want to transfer the shares. The DP will then initiate the transfer process.
Q) Can I open a demat account for my kid?
Ans: Yes, you can open a demat account for your kid. However, the account will be in the name of the kid and will require a guardian to manage it until the kid turns 18 years old. The guardian will have to provide their KYC details and documents to open the account.
Q) Can I invest in the share market without a demat account?
Ans: No, you cannot invest in the share market without a demat account. A demat account is necessary to hold and store the stocks you own. You need to open a demat account with a broker to invest in the share market.
Open your demat account online and start investing today. If you want to know how to open your demat account specifically with SMIFS, then you would be happy to know that we offer we FREE demat and trading account. If you want to know more about the connection between demat and trading account, then we also a blog for that.
Stop thinking and start your investment journey!