Home Finance How Easy Is it to Open a Demat Account in India? 

How Easy Is it to Open a Demat Account in India? 

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How Easy Is it to Open a Demat Account in India? 

Demat accounts have become immensely popular in the past few years. A Demat account stands for Dematerialisation account. It’s a word used in the trading and financial worlds.  It is important to have a Demat account if you want to invest. 

What is a Demat Account?

Demat stands for Dematerialisation. Having a Demat account makes holding the shares and securities in an electronic form. It also helps to keep proper track of all investments an individual makes in shares, bonds, securities and mutual funds in one place. 

Earlier shares got held in the physical form, which was unmanageable to store and transfer. The occurrence of Demat accounts made it a lot easier to handle shares. To transfer physical shares into digital form, an investor must first create a Demat account with a depository participant (DP) 

What is Dematerialisation? 

Dematerialisation is a process that helps the conversion of share certificates from physical to digital form. Shares held after that are easier to manage while providing more flexibility from anywhere and anytime globally.

What is Depository Participants (DPs)

A depository participant acts as an agent and provides namesake services to the investors and traders. Currently, India has two depositories registered with the apex trading and investment regulatory body SEBI. Later, a depository participant must register with either NSDL or CDSL to open a Demat account.

Benefits of a Demat Account 

A Demat Account Eliminates the Risk of Paper-Based Shares Certificates 

Opening a Demat account can help you store all your shares and securities digitally in a safe and secure digital repository. 

Stores Various Investments

A Demat account can also hold multiple assets like mutual funds, bonds, securities and many more.

Convenient Share Storage and Transfer

A Demat account helps you store any number of shares so that you can trade in bulk and track the details of all your shares held in a Demat account. It also helps in a smooth transfer of shares while trading online.

Easy to Access

You can easily access your Demat account anytime and anywhere through your smartphone or laptop.

Nomination

The Demat account also provides the nomination facility as per the process given by the depository institution. 

Importance of a Demat Account for an Investor?

Investments like equity shares, debentures, bonds, exchange-traded funds, mutual funds, and even government securities are held in a Demat account.

A Demat account is necessary since it simplifies holding shares and securities in an electronic format for the investor. It also makes it easier and more appealing for consumers to take financial risks by investing in inequities.

Why Do You Need a Demat Account? 

If you want to start trading, you must have a Demat account. You cannot start trading without having one.

Safety

A Demat account provides you with safety. You won’t have to deal with any fake or phoney stock certificates. Every record of shares in your account is real.

Low Cost

Additional costs associated with actual share certificates, such as handling fees and stamp taxes, are eliminated with a Demat account. As a result, there will be decreased costs and huge savings.

Accessibility

You may view all of the data linked with a Demat account from anywhere and anytime. They are all online and electronic.

Multiple Securities

With a Demat account, you can store multiple securities like bonds, debt securities, mutual funds, etc.

How to Use a Demat Account? 

Using a Demat account is quite easy. Once you open a Demat account, it gets linked with your trading account, which later gets linked with your bank account. To begin with trading, you need to transfer funds to the trading account. You may use your trading account to place an order to acquire shares after adding funds. Once your order is placed, the shares will get transferred to your Demat account. As both Demat and Trading accounts are closely integrated, the process is seamless. You can later sell a share in your Demat account by placing a sell order in the stock exchange using your trading account.

How to Open a Demat Account? 

The procedure of opening a Demat account is pretty simple. IIFL Securities is a good place to start if you’re interested in starting one. IIFL Securities makes the procedure straightforward. This step-by-step method can assist in putting things into context.

Step 1: Apply for a Demat account online. 

Submit your mobile number and email address in the form to register a free Demat account using the IIFL Securities app or website.

Step 2: Submit your KYC details online 

To get registered with the DP and open a Demat account, you must submit your KYC details online.

Step 3: Document verification 

Once you submit your KYC details, you need to verify your KYC with your DP agent.

Step 4: Beneficiaries 

You will later receive a unique 16-digit Demat account number from the DP. Once you get your BOID, you have successfully created a free Demat account with IIFL Securities.

Documents Required for Opening a Demat Account 

The paperwork required to start a Demat account is simple. It makes it easy for new candidates to follow the procedure from beginning to end without experiencing any difficulties. Only the documents listed below must get submitted.

  • PAN Card for Identification proof.
  • Address proof (It can be Adhaar card, electricity bill, passport, etc.)
  • Bank account statement
  • Income proof 

To sum up, the procedure of opening a Demat account is straightforward, quick, and painless. You, too, may create a Demat account fully hassle-free if you bear in mind the elements mentioned above and data.

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