The term Demat account is widely used in the field of investments and trading. Right now, the popularity has scaled to a new height with close to around 4 million Demat accounts, as opened in 2018 just alone, giving an increase of 13% from its previous year. That growth has been like it, and till now, the number is towards the growing scale.
The dramatic shift in the saving patterns from the traditional instruments to the alternatives available like the stock is the main reason behind this jump. The increased demand for such accounts has actually led to depository participants providing the best features and within minimal costs. It is one way to benefit the investors well. On the other hand, the rules from SEBI have been mandatory to hold a Demat account for the stock market trading.
Understanding The Basics Is A Necessity Now:
Make sure to understand the basics of the demat account before you can move forward with it. Take a quick look at the three major terms in this context and get a better understanding of the Demat account in India.
It is one procedure that facilitates the conversion of the share certificates from being physical to electronic form. The shares held after that will be easier to manage while providing extra accessibility from anywhere globally. Dematerialization will allow you to monitor and then track holdings in a seamless manner and right on the go.
- Depository Participants:
A depository participant will act more like an agent or intermediary of the central depository. It will offer the namesake services to all the traders and investors. India presently comprises two central depositories, which are registered with the investment regulatory body – SEBI. Those two options are CDSL and NSDL. A depository participant will be registered with either of these two licensed operators for opening a proper Demat account.
- The Unique 16-Digit ID Of The Client:
Each possible Demat account is well assigned with a 16-digit client ID, which will work out as the investor’s identity. The first 8 digits of the same ID will represent the depository participant. Then you have the last 8 digits, which will work out as unique identification for the said investor. The main goal right here is to facilitate the sale or the purchase of securities and shares.
The Step By Step Guide On Ways To Open Demat:
So, you are pretty interested in opening up a demat trading account for your own use, right? Well, opening such an account is a straightforward procedure. There is step-by-step guidance, which you have to follow in order to put the major things in perspective.
- Choose The Depository Participant:
At first, choosing a DP is a great call for opening up a Demat account. In India, stockbrokers, banks, and online investing platforms are here to offer the Depository Participant services. While choosing one, it is vital to head for the service provider, whose features and services must match the requirements and needs.
- Submission Of The Demat Account Opening Form:
Make sure to visit the website of DP and then fill out the online Demat account-based opening form. Most of the participants like the ICICI Direct are here to present you with the opportunity to open trading account and demat account with ICICI Bank too.
- Fulfill KYC Norms:
After filling up the opening form, make sure to cover up the KYC norms. For that, you need to submit scanned copies of KYC documents as asked for, like income proof and more. Make sure to keep the relevant documents handy.
- Verification Process:
Once you have submitted the Demat opening form with requisite proofs, you need to go through the Verification Process or IPV. This is mandatory and will be carried out to verify the authenticity of documents. Based on DP, you have to be present in the service provider’s office. Now, some services are available online through the use of a smartphone or webcam.
- Receive Rights & Obligation document:
Once the verification process has been taken care of, you have to receive Rights & Obligation document from DP. This will have all the rights and duties of the depository participant and the said investor.
- Get The BO ID Number:
When the above steps have been taken care of, the DP must proceed to process the Demat Account opening form. After approval, you will be given the BO ID. It is widely used for accessing the Demat Account.
Be Sure Of The Documents:
Make sure to keep all the documents necessary for the Demat Account and handy by your side. Staying prepared beforehand is always a good call and will make the entire process of opening up the Demat Account an easy task for anyone to cover with ease.