Step by step Guide to open a Demat account.

Demat Account FAQs 15 December 2020 10:37:AM

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Demat account’ is a frequently used term in the world of trading and investments. Increasing demand for these accounts has also led to depository participants offering the best features at minimum costs, thus benefiting investors. As SEBI Depository act 1996, has mandated holding a Demat account for stock market trading. 

Demat Account in India: Understanding the Basics

Take a look at three crucial terms in this context for a better understanding of the Demat account in India.

Dematerialization:

It is a process that facilitates the conversion of share certificates from physical to electronic form. Shares held thereafter are easier to manage while providing more accessibility from anywhere around the globe.

Dematerialization also allows you to monitor and track your holdings seamlessly, on-the-go.

Depositary participants

A depository participant acts as an intermediary or agent of a central depository and provides namesake services to investors and traders. India currently has two central depositories registered with the apex trading and investment regulatory body SEBI.

  • NSDL
  • CDSL

A depository participant must, therefore, be registered with either of these two licensed operators to open a Demat account.

Unique 16-digit client ID:

Each Demat account is assigned with a unique 16-digit client ID that acts as the investor’s identity. The first 8 digits of the ID represent the depository participant while the last 8 digits act as a unique identifier for the investor, facilitating the sale or purchase of shares and securities.

A Step-by-Step Guide on How to Open a Demat Account?

Opening a Demat account is quite a straightforward process. If you’re interested in opening one, this step-by-step guide can help put things in perspective.

Step 1: Choose Depository Participant (DP)

Choosing a depository participant (DP) is the first step to open a Demat account. In India, banks, stockbrokers, and online investment platforms offer DP services. While choosing a DP, it is advisable to go for a service provider whose services and features match your needs and requirements.

Step 2: Submit the Demat Account Opening Form

Visit your DP’s website and fill out the online Demat account opening form for opening a Demat account. Many depository participants like GEPL offer the ability to open both trading and Demat accounts.

Step 3: Fulfill KYC (Know Your Customer) Norms

Once you have duly filled the Demat account opening form, you will be asked to fulfill the Know Your Customer (KYC) norms. This would require you to submit scanned copies of KYC documents such as your identity proof, address proof, bank account statement, and income proof. It is a good idea to have all of the relevant documents by your side before applying since this can help you get through the process faster.

Step 4: Go through the Verification Process

After submitting your Demat account opening form along with the requisite proofs, you will be asked by your DP to go through a process called ‘In Person Verification’ (IPV). This exercise is mandatory, and it’s carried out with the intention of verifying the authenticity of your documents. Depending on your DP, you may be asked to be present in person at any one of your service provider’s offices. However, many depository participants now offer IPV services online through the use of a webcam or a smartphone.

Step 5: Sign the Agreement Copies

Upon completion of IPV, you will be asked to sign an agreement with your DP. This agreement generally contains all the duties and rights of the depository participant and the investor.

Step 6: Get Your BO ID Number

Once this is done, your DP shall proceed to process your Demat account opening form. Upon approval of your application, you will be provided with a unique Beneficial Owner Identification Number (BO ID). This BO ID is used to access your Demat account.

Documents Required for Opening a Demat Account

The documentation involved in opening a Demat account is minimal. This makes it easier for new applicants to see the process through from start to finish without any hassles. You are only required to submit the following documents.

  1. Identity proof: A copy of your PAN card with your photo
  2. Address proof: A copy of any one of the following documents shall serve as proof of your residence.
  • Voter’s identity card
  • Registered lease agreement
  • Driver’s license
  • Passport
  • Aadhaar card
  • Landline telephone bill
  • Electricity bill
  • Apartment maintenance bill
  • Ration card
  • Bank passbook or account statement (not older than 3 months from the date of receipt of documents)
  1. Bank account proof: A copy of your bank account passbook or bank statement (not older than 3 months)
  2. Proof of your income: A copy of your latest salary slips or your Income Tax Return (mandatory for currency and derivatives segment)

What are the Fees & Charges for Opening a Demat Account:

The Demat account charges levied by GEPL are highly competitive and transparent, and they cause no significant financial burden to investors and traders. The entire schedule of fees and charges for opening a Demat account is tabulated below.

Why Do I Need to Open a Demat Account?

In the current scenario, if you’re interested in investing in the share market, you cannot do so without a Demat account. That’s how important a Demat account is to share trading. Some of the other reasons that make a Demat account so important are briefly explained below.


Safety:

With a Demat account, you don’t have to worry about dealing with forged or fake share certificates. Each record of shares that you have in your account is genuine.


Convenience:

Proper storage and maintenance of physical share certificates can be tiresome. Also, there’s the risk of having your certificates lost or damaged. A Demat account solves all of these issues.


Accessibility:

Since all the records associated with a Demat account are online and electronic, you can access them from anywhere and at any point in time.


Lower charges:

A Demat account does away with additional costs such as handling charges and stamp duties, which were levied on physical share certificates. This translates to lower costs and significant savings.


Multiple securities:

A Demat account doesn’t merely support the equity share market. It can also be used to hold other electronic financial instruments such as bonds, mutual funds, and debt securities, among others. This enables you to track and monitor all of your investments under a single roof.


Things to Remember while Opening a Demat Account.

Before you go ahead and open a Demat account with a depository participant, you need to keep in mind certain essential pointers. Here are some things to remember before opening a Demat account.


Link your Demat account to your trading account:

A trading account is necessary for buying and selling shares in the stock market. Without it, there isn’t much use for a Demat account, except to hold your financial assets. Therefore, it is a wise idea to link both these accounts when you’re opening a Demat account. Alternatively, you could also opt for a depository participant like GEPL, who offers both Trading and Demat accounts under one roof.


Ensure you're aware of all the Demat account charges:

Before submitting your Demat account opening form, always read through the statement of fees and charges. You could also compare them with other depository participants to ensure that you’re getting a good deal. Being aware of the charges upfront ensures that you are not caught unawares once you’ve begun trading.


Fill in your details correctly:

Remember to double-check the details in your Demat account opening form before submitting it. This way, you can make sure that there aren’t any mistakes or fields left unfilled. Errors like these could lead to your application getting rejected. To ensure that your details are all correct, you could also enlist the help of a third person to verify your form before submitting it.


File your nomination:

Most people tend to miss this step while opening a Demat account. It’s not a good idea to put off filing a nominee because you might tend to forget to do it in the future altogether. Having a nominee for your Demat account is critical since it makes the process of transmission of shares much easier in the future.


Tips to Choose the Best Demat Account for Your Requirement

When it comes to choosing the right Demat account for you, your needs and requirements play a significant role in influencing your choice. Here are some points that you should consider when you’re opening a Demat account.


Type of depository participant:

Primarily, there are two different types of depository participants - discount stockbrokers and full-service stockbrokers. A discount stockbroker generally does not provide any other services apart from share trading and trading in the derivatives segment. On the other hand, a full-service stockbroker like GEPL offers plenty of additional services such as mutual fund investments and investment in IPOs. The depository participant that you choose can shape your stock market experience significantly.


Fees and Demat account charges:

The fees and charges that DPs charge vary widely from one to another. Therefore, it’s always a good idea to thoroughly read through the fees and charges section before signing up with a depository participant for opening a Demat account. This will prevent you from getting caught unawares with hidden charges or fees at a later point in time.


Customer support:

Customer support is another important metric that you can use to choose the best Demat account. Your depository participant should possess a robust customer support mechanism to help resolve queries and issues. When things go out of control, you should be able to bank on your DP to help bring things back on track as soon as possible.


Things to Note:

What is the ISIN number?

ISIN (International Securities Identification Number) is a unique 12-digit alpha-numeric identification code that is used to identify specific securities. (E.g. INE214T01019).


How to find the ISIN number?

One could find the details related to the ISIN number of securities on the website Central Depository Services (India) Ltd ( CDSL ).


Power of attorney (PoA)

  • A Power of Attorney authorizes some other person to operate your DP account on your behalf. You could authorize any individual to exercise PoA rights after submitting it to the DP.
  • You have the option to grant PoA in favor of your broker and/or DP to operate your account, i.e. make transactions DP account and buy or sell shares on your behalf.
  •  However, it is advised to carefully read and understand all the clauses of the PoA before signing it.
  • PoA is not a mandatory facility and thus, purely optional. No stockbroker or DP can deny services to you if you refuse to execute it. You can revoke a PoA at any time.


Other Features Of Demat Account


Consolidation: If you want to consolidate various folios of a particular company into a single folio, you can forward the physical certificates along with the letter signed by you to the RSTA of the company.


Account freezing: You have the option of freezing your account, any specific security, or even a particular number of securities for any given period of time.


Account types: Just like a bank account, you can open a Demat account in single/joint names/multiple accounts. But in the case of a minor account, a guardian should be appointed for operating the account.


Why GEPL CAPITAL PVT LTD?

To make the most of your access to the stock market, you require a depository participant that offers state-of-the-art features and dependable support. GEPL excels in these areas, which is why you’ll be glad to choose us. By opening a demat account with GEPL, you stand to gain in more ways than one. Here’s a glimpse at how a GEPL Demat account can benefit you.

  • We charge no fees for opening a Demat account.
  • The annual Demat account charges for maintaining your account are also nil for the first year.
  • Through a single Demat account on the GEPL platform, you can trade in a variety of instruments and options like equities, derivatives, IPOs, mutual funds, and bonds, among others.

Conclusion: Opening a DEMAT account is a simple, speedy, and smooth process. By keeping in mind the set of aforementioned factors and details, you, too, can open a DEMAT account at GEPL in a completely hassle-free manner.


Frequently Asked Questions (FAQs)


Which document proof I need to submit to open a Demat account?

Submit the following documents to kick start your Demat account opening process.

  • Proof of Identity (Copy of your PAN Card)
  • Proof of Address (Driving License/Passport/Voter ID Card/Aadhar Card)
  • Proof of Income (Copy of your salary slip/ITR)
  • Proof of Bank account (Copy of your bank account passbook or statement)

Is nomination compulsory in the Demat account?

  • What are the key features of a Demat account?
  • It is advisable to add a nominee in the Demat account as it makes the process of transmission of shares much convenient in the future.

Now Due to technology and internet speed, all these steps will get completed with the pace.  To get the best Demat account click here and within a few minutes, you can get your Demat account and can easily make your first trade. 

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