How Can You Open a Demat Account Online or Offline in India?

Once you have decided to open the demat account, the next question to answer is how to open demat account. Thanks to the progress on technology and the simplification of rules, opening a demat account is a breeze today. In this segment you can find out how to create demat account and more importantly how to open demat account online. The process to open demat account online is a lot simpler and more elegant compared to the old ways.

The procedure to open demat account can either be an offline process or an online process, although the latter is quicker and more effective. You often get to hear about opening a free demat account. Here is what is meant by a free demat account and here is how to open a free demat account.

Online Vs Offline Demat Account Opening

Today demat account is mandatory to trade equities. To trade equities you need a trading account, but then your trading account is a transaction account and cannot store equities. That job is done by the demat account. Demat account gets credited when you buy shares through the trading account and gets debited if you sell shares through trading account. Demat account can also be credited if you receive shares by way of gift, transmission or offline transfer-in of shares. Demat account is not just for equity shares but  you can hold gold ETFs, index ETFs, G-Secs, corporate bonds, RBI gold bonds and mutual funds in demat.

You can open a demat account either through the online method or the offline account opening method. The online method is not only quicker but also more efficient and you are good to trade in less than 48 hours, including the in-person verification (IPV). Both the offline and online process require a detailed KYC to be done.

 What is the Process of Opening Demat Account Online

Before opening the demat account, it is important that you select your broker cum DP. There is no compulsion to have the same broker and DP, but it is always advisable for convenience. Select your broker cum DP based on factors like services provided, reputation in the market, online interface etc. Also, look at the comparative costs and take a decision. We focus on the online process first, since that is more popular these days.

The online demat account process is also called the new-age paperless Aadhar based authentication. There is no elaborate KYC required but everything can be done through the Aadhar card. The entire process is online and can be completed in a very short time. The only requirements are an Aadhar Card and Mobile mapped to your name and the right residential address. Here are the steps to open demat account online.

• You can open demat account online by visiting the website of the broker. Here you start by entering your basic details and signing up.

• It is advisable to keep scanned digital copies of your Aadhaar Card, Income Tax PAN Card, Cancelled Cheque and your latest bank statement handy with you.

• The first step to authenticate is to enter Aadhaar details and immediately the OTP (one-time password is sent to your linked mobile number to verify your identity.

• Once that is done and documents uploaded, demat account is live.

Even in online demat account opening, there is need for in person verification (IPV). This can be done either through authenticated video call or by your visiting the designated centre with all documents to establish proof of identity and residence.

Process of Opening Demat Account Offline

This is the traditional method we have all followed for a long time before online KYC Aadhar authentication was permitted by SEBI. You can either call for a representative from the broker office to visit you or you can go to the broker’s office for offline account opening. Here are the steps to follow for offline demat account opening.

• Fill out the demat application form and attach proof of identity and a proof of address. These proofs can be photocopies of appropriate documents, but it is mandatory to carry the originals with  you for spot verification.

• The next step is to execute the client agreement with your broker / DP. It outlines your responsibilities and rights as a trader/investor as well as where you stand vis-à-vis your brokerage firm / DP. This is an important document for future reference.

• Then the broker verifies the documents and if found fit in all aspects, the Beneficial Owner Identification Number (or BOID) and the Unique Client Code (UCC) is allocated. If you are an online trade, the login and password are also given for access.

The online demat account opening happens in just less than 2 days while the offline process can take 5-7 days. Demat account opening along with the trading account requires proof of identity, proof of residence, PAN Card, Cancelled Cheque as proof of bank account and bank statement / tax returns as proof of income.

Benefits of Opening Demat Account 

Below are some benefits of opening a Demat Account:

Safe and Secure Holdings: One of the primary benefits of a Demat account is that it provides a secure way to hold your investments electronically. Instead of holding physical share certificates, your securities are stored in electronic form, reducing the risk of loss, theft, or damage.

Convenience: With a Demat account, you can conveniently buy, sell, and transfer securities online. You can access your account anytime, anywhere, through online trading platforms like ICICI Direct.

Portfolio Diversification: A Demat account allows you to invest in a wide range of securities, including stocks, mutual funds, bonds, exchange-traded funds (ETFs), and government securities. It enables you to diversify your investment portfolio spread risk across different asset classes, and go beyond traditional investment options.

Access to IPOs and FPOs: With Demat accounts, you have easier access to participate in Initial Public Offerings (IPOs) and Follow-on Public Offerings (FPOs) of companies. You can apply for shares online and receive allotments directly into your Demat accounts.

Loan Against Securities: Many financial institutions offer the facility of availing loans against securities held in your Demat account. It provides liquidity without needing to sell your investments, which can be a lifesaver if the markets are down.

Conclusion

Opening a Demat account is a straightforward process that empowers you to participate in the stock markets and manage your investments efficiently. By following the step-by-step guide outlined above and choosing a reputable broker, you can embark on your investment journey with confidence.