Free Demat Account Opening Online

We have all seen emails from our banks where they offer free Demat accounts which can be opened online. There are multiple registered brokers available in the market today that provide free Demat account opening services and a digital user interface to operate the same. While each broker has their own free online Demat account opening process, given here are the basics of the same to enable users to get a general idea and the documents needed for the process. 

Read More: Best Demat accounts for beginners in India

What is a Demat account and why do you need it?

A Demat account, short for “Dematerialized account,” is an electronic account used to hold securities such as stocks, bonds, and mutual funds in a digital format. When an investor buys securities, they are credited to their Demat account, and when they sell securities, they are debited from their Demat account.

It eliminates the need for physical certificates of securities, making it easier and more secure for investors to hold and trade securities. Demat account provides a safe and secure portal eliminating the risk of loss, theft, or damage to the physical certificates. 

What is the process of opening a Demat account online?

The steps involved in opening a Demat account online are highlighted below. 

1. Choose a Depository Participant (DP)

A Depository Participant (DP) is a registered intermediary authorized by the Securities and Exchange Board of India (SEBI) to offer Demat services. The first step towards opening a free online Demat account is to choose a DP that is registered with either the National Securities Depository Limited (NSDL) or the Central Depository Services Limited (CDSL). The list of authorized DPs is available on their respective websites.

2. Fill out an online application form

The next step is to visit the DP’s website and fill out the online application form for opening a Demat account. Investors are required to provide personal details such as name, address, phone number, email ID, and PAN card number. Furthermore, they will also need to select the type of account to be opened (an individual account or a joint account).

3. Upload documents

After providing all the necessary details, investors will need to upload the required documents in the form of scanned copies. The general list of documents includes the identity proof, address proof, and PAN card. Investors can provide a passport, voter ID card, driving license, or Aadhaar card as identity proof. The documents for address proof can be a bank statement, utility bill, or rental agreement. The copies of these documents have to be clear and valid.

4. In-person verification

The next step in the process of opening the free online Demat account is to complete an in-person verification (IPV) process. This can be done through video verification or by visiting a nearby branch of the DP. In case of video verification, a DP representative will conduct a video call to verify the identity of the investor. In case of physical verification, investors will need to visit the DP’s branch office with the original documents for verification.

5. Sign the agreement

Once the IPV process is completed, investors receive an agreement for the Demat account which has to be read and understood carefully before signing. The agreement also contains information about the fees, charges, and terms and conditions of the Demat account.

6. Receive the Demat account number and login details

After signing the agreement and making the initial payment, investors will receive their Demat account number, DP ID, and login details. The initial payment can be made through net banking, debit card, or credit card, or any other digital payment mode offered by the broker.

7. Link the Demat account with the trading account

A trading account is necessary to buy and sell securities. Finally, investors will need to link the Demat account with their trading account which is also available through the online portal of the broker. 

What are the benefits of opening Demat account?

Some of the key benefits of opening a Demat account are highlighted below.

• Opening a Demat account makes it an easy, quick, and convenient way to trade in securities online.
• Most brokers offer to open the demat accounts for free, i.e, without any charge. Such brokers may or may not charge ancillary charges on such demat accounts like Annual Maintenance Charges or Demat Account Annual Charges depending on their individual policies. Conversely, few brokers can also charge nominal account opening fees in the range of Rs. 20 to Rs. 300 to open a Demat account and offer a huge range of services to their customers.  
• There is a reduced amount of paperwork involved in using the Demat account as there is no need for physical certificates. 
• All the transactions of the Demat account are stored electronically and hence can be easily accessed and traced. 
• Demat accounts enable faster processing and settlement of the orders as security are transferred electronically. 
• Demat account provides and safe and secure portal to hold securities without the risks of loss, theft, or damage to securities.
• Demat accounts also provide a quicker and better way to access IPOs and mutual funds enabling better diversification of the investment portfolio. 
• Investors can also avail loans against their securities held in the Demat account. 

Conclusion

Free online Demat account has become one common feature offered by stockbrokers to attract more investors. The ease of opening the Demat account online and the multiple benefits of having one make it easy and attractive for investors across the country. The huge influx of investors and traders over the past years is a testament to the increasing awareness of investment in stock markets backed by the benefit of technology of user-friendly interface. 

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