A Demat Account is a digital platform that allows users to hold shares and securities in electronic format, facilitating easy trading during online trading. It was introduced in 1996 by the NSE and has significantly digitised the Indian stock trading market, reducing risks of storing, theft, damage, and malpractices. Dematerialisation is converting physical share certificates into electronic form, making them easier to maintain and accessible worldwide. To open a Demat account, investors must open a Depository Participant (DP) and submit all their physical securities with a Dematerialisation Request Form (DRF). Once active, they can convert paper certificates into digital format by mentioning 'Surrendered for Dematerialisation' on the DRF. An acknowledgement slip is received when surrendering share certificates.
What are the Steps to Open a Demat Account?
Here are the steps to open a Demat account online
Step 1: Mobile & Email Verification
Step 2: Enter PAN & Choose Plan.
Step 3: Submit Bank Account & Documents via Digilocker
Step 4: Upload Signature & Selfie
Step 5: Nomination & eSign
Documents required to Open Demat Account
To open a Demat account, you need to have some essential documents, some of which are as follows:
Proof of Identity (POI)
- Aadhaar card
- Passport
- Voter ID card
- Driver's license
- PAN card (Permanent Account Number)
- Any government-issued photo ID
Proof of Address (POA)
- Aadhaar card
- Passport
- Voter ID card
- Driver's license
- Utility bills (electricity bill, water bill, gas bill, etc.) not older than three months
- Bank account statement (can use recent three-month statements)
- Rent agreement (only for residential addresses)
- Passport-size photographs: You will need to provide a few recent passport-sized photographs as per the DP's requirements.
You also need to attach bank account details, including your bank account number, and IFSC code and link this account to your bank account for seamless transactions.
Types of Demat Account
Following are a few different kinds of Demat accounts made to meet the unique requirements and tastes of investors:
Regular Demat Account
Indian citizens extensively use this online Demat account to trade stocks, shares, and securities. Linking it to a trading account is necessary for more complex activities like options and futures. The accompanying annual maintenance price, or AMC, differs across suppliers. To cater to smaller investors, SEBI launched the Basic Services Demat Account (BSDA), which reduces or eliminates the AMC depending on the size of the investment, making it more affordable for people with modest assets.
Basic Services Demat Account
SEBI has created a new variety of Demat accounts. If the holding value of these accounts is less than Rs 50,000, no maintenance adjustments are made. The adjustments range from Rs 50,000 to Rs 2 lakh, or Rs 100. The new account type is intended for novice investors who haven't opened a Demat account yet.
Repatriable Demat Account
To transfer their profits from the Indian market overseas, non-resident Indian investors register a repatriable account. To open a repatriable account, you must create an external non-resident account to accept payments and cancel your ordinary Demat account in India.
Non-repatriable Account
This account is also for non-resident Indians, but it doesn't allow fund transfers to foreign locations.
SEBI has made it mandatory for investors to have a Demat account. If you do not have a Demat, you are unable to trade on the Indian stock exchange. Update yourself on the account opening process, charges, and select a trusted depository participant.
Advantages of Opening a Demat Account with BlinkX
Let’s understand free demat account opening online advantages:
- Convenience: BlinkX Demat account allows you to conveniently hold your shares & trade in the share market. This makes it easy to manage your portfolio.
- Better Speed: Online trading is much faster than traditional paper-based trading. You can buy and sell shares in real time during market hours.
- Competitive Brokerage Charges: BlinkX trading platform offers lower brokerage fees and other charges compared to traditional brokerage houses.
- Calculate the brokerage charges using BlinkX Brokerage Calculator.
- Ease of tracking: You can easily track your portfolio performance and valuation on a real-time basis through the BlinkX trading app. You also get regular account statements on your register.
- Safe environment: Get a safe & secure environment for online trading. Holding shares in an electronic demat format eliminates the risk associated with your physical certificate storage like theft, forgery, damage etc.
- Investing in IPOs: Having a demat account makes you eligible to apply for IPOs online through the BlinkX stock trading app.
Common Terms of a Demat Account
You will frequently see the following terminology when utilising a Demat Account:
- Depository: Currently, CDSL, the Central Depository of Securities Ltd., and NSDL, the National Depository of Securities Ltd., are the two depositories registered with SEBI. These depositories hold your demat account on your behalf, a task akin to what a bank would do.
- Depository Participant(s)(DP): Through an agency, all investors transact with the depository (CDSL/NSDL). A DP can be registered by financial institutions, scheduled commercial banks, foreign banks that have their operations in India approved by the Reserve Bank of India (RBI), stock brokers, Share transfer agents, NBFCs, state financial companies, clearing houses, etc.
as long as they meet the requirements set forth by SEBI. Just as banking services are accessible through branches, depository services are also accessible through DPs.
- Portfolio Holding: Each time a transaction is made, you may examine your investments in your portfolio through your demat account. Every sale and buy is meticulously documented, including the exact amount, quantity, date of purchase, and price, due to the automated nature of the process.
- Unique ID: A unique verification identity number is assigned to each and every demat account. This helps the firms identify and credit the securities in the investor's account during transactions. This 16-digit number is distinct; the DP ID is represented by the first eight digits, and the client ID (investment account) by the last eight.
- Demat Account Statement: A statement sent by the DP each month to account holders showing the holdings and transactions during that period.
- Delivery Instruction Slip (DIS): This is an authorization slip issued by the investor to the DP to debit or credit shares to the trader’s Demat account for transactions.
- Pledge: The process of pledging Demat account shares with a lender to avail loans against shares.
- Settlement: The process of transferring shares and funds between the buyer's and seller's Demat account after a trading transaction.
