Demat Account holds the shares, bonds, mutual fund units, Exchange Traded Funds (ETFs), etc. in a digital format. It replaces the physical certificates with their digital equivalent for easy storage and transfer. Imagine what it would be like to manage dozens of paper certificates of all the shares and mutual funds you hold.Before beginning the process of investing it is important for an investor to understand what is demat account and how it functions, so they will be able to use it efficiently for generating profits. An investor can open a Demat account without possessing any shares and can maintain a zero balance in their account.
Why do you need a demat account?
There are two reasons. Firstly, a demat account helps you trade and invest in a simple and seamless manner. You no longer need to get physical certificates to prove that you own the shares. It eliminates the legwork and paperwork one had to do earlier to carry out every single trade.
Secondly, you are not allowed to hold more than 500 physical shares at any given point. This is why opening a demat account becomes important. It allows you to trade without any restriction.
Documents required to open a Trading & Demat Account Online. You need to have a soft copy of the following documents while opening an account online:
Identity Proof (PAN Card Mandatory)Address Proof (Aadhar, Voter ID, Passport, etc)Passport Size PhotoIncome Proof (Latest six month’s bank statement, Latest ITR copy, Three month’s salary slip)Scanned copy of the signature
How To Create a Trading & Demat Account ?
In India, you can open a trading & demat account either online or offline. Opening an account online is much more convenient and faster compared to the offline process.
With that said, let us explore both online and offline account processes in detail.
Step 1: To open a demat account, you have to approach a depository participant (DP), an agent of depository, and fill up an account opening form.
Documents required to open a Trading & Demat Account Online.
You need to have a soft copy of the following documents while opening an account online:
Identity Proof (PAN Card Mandatory)
Address Proof (Aadhar, Voter ID, Passport, etc)
Passport Size Photo
Income Proof (Latest six month’s bank statement, Latest ITR copy, Three month’s salary slip)
Scanned copy of the signature
Go through how to open a demat account to know the process of Demat account opening.