Best Demat Account for Students: Can a Student Open Demat Account?

About Demat account

A Demat account is a dematerialised account that stores all your shares and other securities like exchange-traded funds, bonds, debentures, futures and options, mutual funds, Initial Public Offers (IPOs), etc. It is similar to a bank savings account that holds your money. However, instead of money, a Demat account holds your investments electronically. Since you cannot store your shares in a physical form, the Demat account dematerialises it for you and converts it to an electronic format.

Eligibility criteria to open a Demat account

Here are the eligibility criteria to open a Demat account:

-     There is no specific age limit to invest in the stock market. However, you need to be at least 18 years old to open a Demat account. Students above 18 can open their accounts themselves. Those below the age of 18 can ask a parent or guardian to open it for them.

-     You must be a citizen of India to open a regular Demat account. If you are a Non-Resident Indian (NRI), you can use other types of Demat accounts, such as a repatriable or a non-repatriable Demat account.

-     You must have a valid Pan Card to open a Demat account.

-     You must have proof of identity or address, such as an Aadhaar card, driver’s license, passport, ration card, etc.

-     Brokers may ask for proof of your net worth, such as bank statements, Income Tax Return (ITR) statements, income certificates, etc., to process your application.

Can a student open a demat account?

Yes, a student may open a demat account. But there are certain terms and conditions that students need to know. They are as under:

• Students above 18 years of age, may open both demat and trading accounts. However, like all stock market traders, they need to have a valid PAN card to be eligible for trading.
• Students below 18 years of age (minors) may open demat accounts, but they may not open trading accounts, and therefore such students cannot purchase and sell share market securities.
• Minors may not enter into any trades because of the Indian Contract Act of 1872 that prohibits minors from entering into any contracts. Since share trading involves - contracts between a broker and a client, minors are not allowed to open a trading account.
• Demat accounts can be opened in the name of a minor child only by the natural guardian (parents) or court-appointed guardians.

How to open a demat account?

• Identify and approach a Depository Participant (DP). A DP is an intermediary associated with Central Depositories in India – the CDSL and NSDL. The DP could be a bank or a stockbroking firm.
• Fill up the account opening form. Along with the application form, submit your KYC (Know Your Customer) documents. These include – passport-sized photos, PAN Card, proof of identity and proof of residential address.
• The DP verifies your documents and opens your account by allotting a beneficiary ID (Demat account number). The DP ID and Beneficiary ID merged becomes your unique demat account number.

Advantage of opening a demat account

• You do not need to store the securities bought in a physical form.
• It is more convenient and involves minimal paperwork
• Demat accounts eliminate the risks of theft and fraud associated with the exchange of physical stock certificates.
• The execution of trade transactions and settlements are also simplified.

Demat accounts have revolutionized share market investments. As a student, the earlier you begin your investment journey, the more substantial are the benefits.

Disclaimer: The contents herein mentioned are solely for informational purpose and shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.

Conclusion

A Demat account can allow students to start their financial journal in investing from a young age. This can make you financially disciplined and offer you a head start in life, taking you a step closer to your goals. Stock market investments do not require large sums of money and can be initiated with a small amount. Moreover, with minimal fees and a simple account opening process, most students can open a Demat account easily without any hassles. So, instead of waiting to start investing when you begin your career, start as a student and get your Demat account today!

FAQs:

     1. How can I open a Demat account as a student?

If you are over the age of 18 and have a valid Pan Card, you can go ahead and open a Demat account for yourself by contacting a Depository Participant (DP). You will be asked to fill up the account opening form and submit your KYC (Know Your Customer) documents. The DP will verify your documents and open your account. Once the process is complete, you will get a Demat account number.

If you are below 18, you can request your parent or guardian to do so for you.

     2. Can an 18 year old open a Demat account?

Yes, an 18 year old can open a Demat account. However, you will need a valid Pan Card to complete the KYC for the account. 

     3. Can students invest in stocks?

Yes, students can invest in stocks of other companies. There is no minimum age to invest in the stock market, and both minors and adults can buy and sell stocks. 

     4. What is the minimum age to open a Demat account?

The minimum age to open a Demat account is 18 years. However, minors below 18 can also open their account through their parents or guardians and buy and sell stocks.

Disclaimer

The contents herein mentioned are solely for informational purpose and shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.