How to open a demat account?

Procedure to open demat account

Individual investors can either opt to open demat account online all by themselves or with the assistance. The documents required for Demat Account opening remains the same for both processes which are as:

1. PAN Card
2. Aadhaar Card
3. Passport size photograph
4. Cancelled personalized cheque (or more than 3 months of bank statement)


Some important points  required to be remembered while opening a demat account are as follows :

Step 1 – Identify and select your DP to open  demat account

DP stands for depository participants of India. In India DP’s is the agent of a depository. These depositories are institutions to hold your securities in de-mat format. 
Keep in mind that in general the broker which you choose will open your trading-cum de-mat account. It is always better that you have your trading account and demat account with the same broker.

Step 2 – You will require specific documentation to open a demat account as mentioned earlier

One thing you need to remember is that all documents must be a self-attested photocopy.

Step 3 – You need to sign the DP agreement

The SEBI sets guidelines for such agreements. Make sure to obtain a copy of the agreement and an updated schedule of charges for later reference.

Step 4 – Don’t forget to fill nomination along with demat account opening form

Step 5 – Signing a power of attorney with your depository participant

For a day trader, the signing up of power of attorney is somewhat mandatory. However, for an investor, this authorization is not needed but it has some demerits also. Broker always ask you to sign a Power of Attorney during the time of opening the demat account. This empowers your broker to automatically debit your account when you sell securities. However, some broker misuses it as well. To recover some charges they can sell from your demat account after sending you an email regarding charges overdue. So to avoid such mishaps you need not have to sign this POA during applying for Demat account opening.

Step 6 – Digital online demat account opening using aadhaar

You can also open an online demat account with depository participants. Let us also learn how to open a demat account online. You can open a demat account using your Aadhaar Card authentication.
For this, your aadhaar card must be mapped with your bank account. The mobile number must be the same for your aadhaar card and in your demat account opening form.  The authorization and all your verification are done via OTP sent to your mobile by the depository participants. Your demat account opening is done through Aadhaar authentication.
The only other document you need to submit with your broker is a scanned copy of your PAN card and a canceled cheque uploaded online.
At last, there is a second level of verification. Second level verification is done either through video conferencing or through an in-person-verification (IVP) at the nearest customer point of the DP you choose.


DISCLAIMER : 

This post contains information, which is subject to change without prior notice. You should keep track of the changes / amendments to the Bye Laws and Business Rules of NSDL, SEBI (Depositories & Participants) Regulations, 1996 and the Depositories Act, 1996. This post  cannot be any basis for any claims or demand or cause of action.