A Demat account is a “Dematerialised securities account” which helps the individuals or account holder hold shares, mutual funds, bonds and other securities in a digital format. Like a bank account holds your money, a Demat account holds securities like stocks, mutual funds, Dematerialised gold units, bonds, debentures, etc.
A Demat account helps you hold your securities in digital format. In India, there are 2 depositories that provide Demat services namely NSDL and CDSL. Depository participants or stockbrokers like Samco facilitate services of opening a free Demat account.
With the age of computers and the Depository Trust Company, securities no longer need to be in certificate form. They can be registered and transferred electronically.
Through dematerialization, so-called DEMAT accounts allow for electronic transactions when shares of stock are bought and sold. Within a DEMAT account, the certificates for stocks and other securities of the user are held as a means for seamless trades to be made.
Any document that is registered with the government and that has your photograph on it is admissible as proof of your identity. Typically, these are some options that can act as an identity proof.
To fit into this category, your documents need to contain your address. Any of these documents can be admitted as proof of address for the purpose of opening your demat account.
Any utility bill with your address on it, such as an apartment maintenance bill, a gas bill, the telephone bill for your fixed landline connection, or your electricity bill, provided they’re not older than 3 months from the date of application.
An insurance copy
A copy of your bank account statement or passbook, not more than 3 months older than the date on which you’re applying for your demat account opening.
Another set of documents required for demat account opening deals with providing proof of your income. Some examples of papers that are admissible as proof of your income are listed here.
Other Documents Required to Open a Demat Account
Your PAN card is a mandatory proof required for demat account opening. In addition to the documents mentioned above, you will also be required to submit these papers.
A proof of your bank account, such as a cancelled cheque or your passbook
A recent passport-sized photograph of yourself
Demat and trading account – the linkage and relationship
While people commonly mistake Demat account and trading account as the same thing, they are tightly linked to each other, but they are NOT the same.
A Demat account is in essence like a custody account where financial assets are held in custody for the account holder. No movement of funds happens in a Demat account.
However, to actually buy and sell shares, an investor needs an online trading account that is linked to a Demat account. Both, movement of funds and securities happen in an online trading account.
A Demat account is, in a way, like your bank account. If you open a Demat account online, you will have to upload your PAN card and proof of address by logging in to the DP (broker / bank) website. The documents are mandatory. a common requirement across brokers, banks and other financial institutions that act as an online trading platform. You will need to ensure that the papers are valid as at the date of delivery and that they have not crossed the expiry date.
Personal details: Furnish identity proof and address proof in the prescribed format. Most brokers / banks fill them in advance once you provide them with PAN and other documents. Validate and cross-check.
Bank, income details: You will need to share with them your Bank Account Number and IFSC code for opening a Demat account. However, there is no cause for concern as the information is secure with the broker. You will also have to provide your income details.
Apart of the documents for demat account, you will also have to provide two to three photographs of your Deposit Participant (DP) from your checklist.
Documents to open a quick checklist Demat account
A of documents required to opening a Demat account with a financial institution, including whether a broker or bank would be:
Professional Identity (POI): Driving license, Voter ID, UID or Unique Identification Number etc will be accepted as proof of identity.
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