A demat account is quite similar to your savings bank account. Just like you can hold your savings in cash in your savings account, you can save your investments in electronic or dematerialised form in your demat account. The online demat accounts can hold your various securities such as your shares, mutual funds, money market instruments, exchange traded funds and so on securely. You can open demat account easily –either by visiting the offices of an investment broker or through their websites, online. But, whether you open the account online or offline, you need to submit some necessary documents. They are as under:
Personal documents
The personal demat account opening documents you need to submit include your proof of identity and address proof documents.
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ID proof documents: An ID proof document is one featuring your age and your photograph. Although it is mandatory to submit your PAN card for share market investments, you also need to provide an additional ID proof document along with it. The admissible ID proof documents you can submit are:
- Aadhaar Card
- Voter ID card
- Driving license
- Passport
- Identity card issued by a nationalised bank or any other public sector company in India
Address proof documents: An address proof document is one featuring your permanent address. Brokerage firms generally allow you to submit the following documents as address proof:
- Aadhaar Card
- Voter ID card
- Driving license
- Passport
- Latest utility bills
- Ration card
- Bank account statements
Employment and income proof documents
Another set of documents for demat account opening that you need to provide include your income and employment documents. Generally brokerage firms accept the below mentioned documents; especially from investors interested in daily trading.
- Proof of salary documents including salary slips of the last 3-6 months
- Net worth certificate document certified by a Chartered Accountant
- A photocopy of your Income Tax Returns
- Duly filled Form 16
- Self-attested documents substantiating ownership of assets and additional documents supporting the claim
In case you already have an active demat account and you wish to open a second account, you also need to submit a statement of your existing demat account holdings with eligible Depository Participants.
Opening the demat account
After you have collected the above-mentioned documents, you can start the account opening process. The steps you need to follow depend upon whether you are opening the account online or offline
How to open demat account?
Here are the steps you need to follow in order to open your demat account.
Choose your depository participant: Choose your depository participant between the two main DPs in India – The National Securities Depository Limited (NSDL) and The Central Securities Depository Limited (CSDL).
Choose your investment brokerage firm: Demat accounts are offered by both, banks as well as specialised investment brokerage firms. You can approach one at their office or apply to open the account online.
Fill the account opening form and submit your documents: You need to fill the account opening form and submit the demat account opening documents along with it. You have to submit hard copies of your documents if you opt for the offline account opening method and scanned copies if you opt for the online account opening method.
After submitting your request to open demat account, you also have to complete your KYC compliance formality. The brokerage firm verifies all the documents provided by you, after which it allots you a demat account number and other information for operating the account. The details of the same are sent to you either via post or through e-mail correspondence, after which you can use the account regularly.
