Everything you need to know about opening a demat account

A demat account is a facility that enables investors to hold equity shares electronically. Anyone interested in securities trading must have a demat account. Not only does it take away the hassles of physical trading by storing all documents and proof electronically, it also has multiple advantages, such as:

  • The ease of trading remotely.
  • Eliminating problems associated with physical holding and transfer of documents.
  • Immediate credit of shares in the demat account.
  • Automatic credit of shares arising out of splits or bonds.
  • Reduced transaction cost.

How to open a demat account?

Now that you know that a demat account is definitely a better bet, let’s look at the next important question: How to open a demat account.

  • Choose the right depository participant to open a demat account with. A good way to gauge the right participant is by considering the additional facilities provided. For instance, Kotak Securities’ three-in-one demat account puts your trading, demat, and bank account in one place, which automates the process by reducing the need for manually transferring money to the trading account.
  • Fill the account opening form.
  • Submit the necessary documents.
  • Go through the terms and conditions carefully.
  • Make sure the in-person verification of the details you’ve provided in the form is done smoothly.
  • After completion of the verification process, you will receive a customer ID or account number, which you can then use to immediately access your demat account.

What documents are needed to open a demat account?

To open a demat account, you will have to submit two types of document proof – proof of identity and proof of address.

Identity Proof

You can submit the following id proof to open your demat account:

  • Aadhaar card
  • PAN card
  • Voter’s ID card
  • Passport
  • Driver’s License
  • Bank Attestation
  • IT Returns
  • Electricity Bill
  • Telephone Bill
  • Any other identity card issued by either the Central or the State Government; public sector undertakings (PSUs); statutory/regulatory authorities; certain universities and colleges affiliated to universities; or identity document issued by professional bodies, such as ICWAI, ICAI, Bar Council, ICSI, etc.; and identity proof documents issued by public financial institutions. Please note that it is mandatory for these identity proofs to bear your picture and name correctly.

Address Proof

The following documents serve as acceptable proof of your address:

  • Ration Card
  • Passport
  • Voter’s ID Card
  • Driving License
  • Bank Passbook/Statement
  • Verified Electricity Bill (copy)
  • Residence Telephone Bill
  • Leave and License Agreement
  • Sale Agreement
  • Self Declaration from the High Court or the Supreme Court
  • Any other identity card or document bearing the address, and issued by the central or state government or any of its departments; statutory/regulatory authorities; public sector undertakings (PSUs); public financial institutions; scheduled commercial banks; universities and colleges affiliated to universities; or documents issued by professional bodies, such as ICWAI, ICAI or the Bar Council, etc.

What are some things to keep in mind while opening a demat account?

You can open a demat account with no share balance – A demat account can be opened without any share balance and there’s no mandatory minimum balance required to be maintained.

Fees – Two types of fees are levied on demat accounts – an annual maintenance fee and a monthly transaction fee for a debit of securities to/from the account every month. Note that the transaction fee differs from one depository participant to another, and could either be a flat fee or pegged on the transaction value with a pre-decided minimum amount.