You will have to open a demat account if you want an online platform that allows you to engage in share trading safely. It negates the need of maintaining securities in physical form as it allows you to hold NCD (Non-convertible Debentures), ETFs, mutual funds, stocks, and other securities in electronic form.
To know more about demat account and to access demat services; you will have to select a depository body first. A depository body acts as a bank but instead of holding money, it holds securities in electronic format.
NSDL and CDSL are the two authorized depository bodies in India. After visiting their website, you can check the list of depository partners who are registered with them.
These depository partners communicate with the depository on your behalf and also provide the required assistance while opening a demat account.
Follow the below process to start a paperless demat account online:
Register with DP
- Firstly, you will have to consult with a depository partner who is registered with the depository. After that, you will have to sign-up on their portal and download an application form.
- Along with the application form, you will also have to submit KYC documents like passport, Aadhaar card, PAN card, and a passport-sized photo.
- The form and documents can be submitted by visiting the branch office of DP or can also be submitted online if the DP provides an eKYC procedure.
Verification of documents
- Once you submit the documents, they will be verified by the DP. The verification is either done online or you will have to meet the depository partner in person as it depends on the DP you have chosen.
Signing up the form
- After the successful verification of your documents, you will be asked to enter an agreement with the DP.
- This agreement contains details about the services, brokerage fee, AMC (annual maintenance charges), and responsibilities/duties that are to be fulfilled by both DP and the investor.
Demat Account number is provided
- Once your application is processed, you will get demat account number and credentials to login to your account.
- You don’t have to fill a new application form for opening a trading account as online demat and trading account are provided at the same time.
Benefits of a demat account
- As electronic shares are held in a demat account, you don’t require to spend on maintenance and stamp duties while buying, selling, or transferring them.
- This not only saves your money but is even profitable to the depositories as they do not have to print physical certificates while issuing shares.
- A demat account ensures the safety of transactions as it eliminates the risk of duplicate or fake certificates of securities.
- All the transactions get duly registered in this account and therefore, you have a transparent picture of your investments.
Easy access to investments
- Since you can hold multiple securities under one roof with the help of a demat account, you can access and track your investments conveniently.
However, you need to be careful while choosing a depository partner as he should be capable enough to handle all your investment needs. Not only that, register with a DP who offers all the services and instruments that you are interested in.
Going for a full-service broker can be costly as they charge a high commission in exchange for the wide range of demat services they offer to you. Instead, you can go for modern-day discount brokers who offer packages as per your requirements.
These days, you can also connect with tech-savvy discount brokers who facilitate a technology-based platform for trading.