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What is the procedure to open a Demat Account?

A Demat or Dematerialised account is an account used to provide an electronic facility for holding shares and securities. Such an account has all investment, including government securities, shares, ETFs, mutual funds and bonds, in electronic form for ease of use. In India, the Demat account facility provided by depositories such as NSDL (National  Securities Depository Ltd)  and CDSL (Central Depository Services India Ltd). These Demat services facilitated by depository participants, intermediaries or stockbrokers, charge based on the volume in the account and the type of subscription.

You can open a Demat account via a Depository Participant (DP), with both a bank or broker or by online registration at any leading firm.  Once the account is active, the actual shares held by any one of the two National depositories of India, NSDL  and CDSL. Every DP has to be a member of any one of the depositories. Demat account opening is combined with a trading account; a Demat account holds the securities, and a Trading account facilitates the trading of those securities.

An account with NSDL and CDSL is identified from their different formats. For CDSL, the Demat account is a 16-digit unique number issued when opening the account. For NSDL, the Demat account has an alpha-numeric formation that contains ‘IN’ followed by the 14-digit unique account number.

The procedure for opening a Demat account comprises of the following steps:

Choosing a Depositary Partner (DP)

A depositary partner can be a financial institution, authorized bank or a broker. Usually, many traders prefer opting for those DPs who can double as a stockbroker to access both services under the same banner. Before deciding on a depository partner, you need to be well aware of the brokerage they charge, their value-added services and the leverage they offer.

Paperwork

You need to fill both the Demat account form and the KYC form. The other documents required along with the two forms are

  • PAN card
  • Identity proof (Aadhar card, driving license, etc.)
  • Income proof (ITR or salary slip)
  • Passport size photograph of the person
  • Address proof

Receipt and reading rules and regulations carefully

After verification and documentation, a copy of the rules and regulations is given by the depository partner to you. It is always a good idea to seek assistance in understanding the directions thoroughly before you sign on the dotted line

Accessing and operating the account

The credentials of the account are given by the DP to you when your account is made active. It necessary for operating the account.

To open a Demat account online, you have to follow the steps given below:

  • Filling and submitting brokering firm’s account opening form together with the required KYC details, that is, Date of Birth, PAN card, Email address and bank account
  • The Depository participant’s KYC form forms the DP-Investor agreement, i.e. agreement between you and the DP. this contains the rules and regulations, obligations, and rights as an investor. 
  • Then an OTP is received on your registered mobile number, and the details of the account are shared on your registered email ID 
  • At times, the DP firms require an in-person verification, which can be done by the DP visiting your residence or a branch visit by you 
  • Once the verification is done, the Demat number is sent to you

The key to maximising the utilisation of Demat is knowing to identify a suitable DP who could give you good facilities and services to make your investments easy and smooth.

Disclaimer: ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470.  The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  Investments in securities market are subject to market risks, read all the related documents carefully before investing. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents are solely for informational and educational purpose.

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