How to Open a Demat Account?


Demat Account Opening Guide:

‘Demat account’ is a frequently used term in the world of trading and investments. The popularity of these accounts has scaled new heights with close to 4 million Demat accounts opened in 2018 singularly, a 13% increase from the previous year.

The dramatic shift in the savings pattern of Indians from traditional instruments to available alternatives such as stocks is primarily responsible for the jump.

Increasing demand for these accounts has also led to depository participants offering the best features at minimum costs, thus benefiting investors. Plus, SEBI has mandated holding a Demat account for stock market trading.

Demat Account in India: Understanding the Basics

Take a look at three crucial terms in this context for a better understanding of Demat account in India.

Dematerialisation

It is a process that facilitates the conversion of share certificates from physical to the electronic form. Shares held thereafter are easier to manage while providing more accessibility from anywhere around the globe

Dematerialisation also allows you to monitor and track your holdings seamlessly, on-the-go.

Depositary participants

A depository participant acts as an intermediary or agent of a central depository and provides namesake services to investors and traders. India currently has two central depositories registered with the apex trading and investment regulatory body SEBI.

  • NSDL
  • CDSL

A depository participant must, therefore, be registered with either of these two licensed operators to open a Demat account.

Unique 16-digit client ID

Each Demat account is assigned with a unique 16-digit client ID that acts as the investor’s identity. The first 8 digits of the ID represent the depository participant while the last 8 digits act as a unique identification for the investor, facilitating sale or purchase of shares and securities.

A Step-by-Step Guide on How to Open a Demat Account?

Opening a Demat account is quite a straightforward process. If you’re interested in opening one, this step-by-step guide can help put things in perspective.

How to Open Demat Account

Step 1: Choose Depository Participant (DP)

Choosing a depository participant (DP) is the first step to open a Demat account. In India, banks, stockbrokers, and online investment platforms offer DP services. While choosing a DP, it is advisable to go for a service provider whose services and features match your needs and requirements.

Step 2: Submit Demat Account Opening Form

Visit your DP’s website and fill out the online Demat account opening form for opening a Demat account. Many depository participants like IIFL offer the ability to open both trading and Demat accounts.

Step 3: Fulfill KYC (Know Your Customer) Norms

Once you have duly filled the Demat account opening form, you will be asked to fulfil the Know Your Customer (KYC) norms. This would require you to submit scanned copies of KYC documents such as your identity proof, address proof, bank account statement, and income proof. It is a good idea to have all of the relevant documents by your side before applying, since this can help you get through the process faster.

Step 4: Go through the Verification Process

After submitting your Demat account opening form along with the requisite proofs, you will be asked by your DP to go through a process called ‘In Person Verification’ (IPV). This exercise is mandatory, and it’s carried out with the intention of verifying the authenticity of your documents. Depending on your DP, you may be asked to be present in person at any one of your service provider’s offices. However, many depository participants now offer IPV services online through the use of a webcam or a smartphone.

Step 5: Sign the Agreement Copies

Upon completion of IPV, you will be asked to sign an agreement with your DP. This agreement generally contains all the duties and rights of the depository participant and the investor.

Step 6: Get Your BO ID Number

Once this is done, your DP shall proceed to process your Demat account opening form. Upon approval of your application, you will be provided with a unique Beneficial Owner Identification Number (BO ID). This BO ID is used to access your Demat account.

Documents Required for Opening a Demat Account

The documentation involved in opening a Demat account is minimal. This makes it easier for new applicants to see the process through from start to finish without any hassles. You are only required to submit the following documents.

  • Identity proof: A copy of your PAN card with your photo
  • Address proof: A copy of any one of the following documents shall serve as proof of your residence.
    • Voter’s identity card
    • Registered lease agreement
    • Driver’s license
    • Passport
    • Aadhaar card
    • Landline telephone bill
    • Electricity bill
    • Apartment maintenance bill
    • Copy of your insurance
    • Ration card
    • Gas bill
    • Bank passbook or account statement (not older than 3 months from the date of receipt of documents)
  • Bank account proof: A copy of your bank account passbook or bank statement (not older than 3 months)
  • Proof of your income: A copy of your latest salary slips or your Income Tax Return (mandatory for currency and derivatives segment)

What are the Fees & Charges for Opening a Demat Account

The Demat account charges levied by India Infoline are highly competitive and transparent, and they cause no significant financial burden to investors and traders. The entire schedule of fees and charges for opening a Demat account are tabulated below.

Particulars of service Charges (in Rs.)
Account opening fee Free*
Annual Maintenance Charges (AMC) Rs. 400
Dematerialization of share certificates Rs. 15 (per certificate)
Rematerialization of share certificates Rs. 15 (per certificate or per 100 units/shares, whichever is higher)
Conversion of Mutual Fund units Rs. 15
Destatementization Rs. 15(per Statement of Account)
Reconversion of Mutual Fund units into Statement of Account Rs. 15
Redemption/Restatementization Rs. 15(per Statement of Account)
Postal charges Rs. 40 (per request)

Why Do I Need to Open a Demat Account?

In the current scenario, if you’re interested in investing in the share market, you cannot do so without a Demat account. That’s how important a Demat account is to share trading. Some of the other reasons that make a Demat account so important are briefly explained below.

Safety:

With a Demat account, you don’t have to worry about dealing with forged or fake share certificates. Each record of shares that you have in your account is genuine.

Convenience:

Proper storage and maintenance of physical share certificates can be tiresome. Also, there’s the risk of having your certificates lost or damaged. A Demat account solves all of these issues.

Accessibility:

Since all the records associated with a Demat account are online and electronic, you can access them from anywhere and at any point in time.

Lower charges:

A Demat account does away with additional costs such as handling charges and stamp duties, which were levied on physical share certificates. This translates to lower costs and significant savings.

Multiple securities:

A Demat account doesn’t merely support the equity share market. It can also be used to hold other electronic financial instruments such as bonds, mutual funds, and debt securities, among others. This enables you to track and monitor all of your investments under a single roof.

Things to Remember while Opening a Demat Account

Before you go ahead and open a Demat account with a depository participant, you need to keep in mind certain essential pointers. Here are some things to remember before opening a Demat account.

Things to remember while opening demat account

A trading account is necessary for buying and selling shares in the stock market. Without it, there isn’t much use for a Demat account, except to hold your financial assets. Therefore, it is a wise idea to link both these accounts when you’re opening a Demat account. Alternatively, you could also opt for a depository participant like India Infoline, who offers both Trading and Demat accounts under one roof.

Ensure you're aware of all the Demat account charges:

Before submitting your Demat account opening form, always read through the statement of fees and charges. You could also compare them with other depository participants to ensure that you’re getting a good deal. Being aware of the charges upfront ensures that you are not caught unawares once you’ve begun trading.

Fill in your details correctly:

Remember to double check the details in your Demat account opening form before submitting it. This way, you can make sure that there aren’t any mistakes or fields left unfilled. Errors like these could lead to your application getting rejected. To ensure that your details are all correct, you could also enlist the help of a third person to verify your form before submitting it.

File your nomination:

Most people tend to miss this step while opening a Demat account. It’s not a good idea to put off filing a nominee, because you might tend to forget to do it in the future altogether. Having a nominee for your Demat account is critical, since it makes the process of transmission of shares much easier in the future.

Tips to Choose the Best Demat Account for Your Requirement

When it comes to choosing the right Demat account for you, your needs and requirements play a significant role in influencing your choice. Here are some points that you should consider when you’re opening a Demat account.

Type of depository participant:

Primarily, there are two different types of depository participants - discount stockbrokers and full-service stockbrokers. A discount stockbroker generally does not provide any other services apart from share trading and trading in the derivatives segment. On the other hand, a full-service stockbroker like India Infoline offers plenty of additional services such as mutual fund investments and investment in IPOs. The depository participant that you choose can shape your stock market experience significantly.

Fees and Demat account charges:

The fees and charges that DPs charge vary widely from one to another. Therefore, it’s always a good idea to thoroughly read through the fees and charges section before signing up with a depository participant for opening a Demat account. This will prevent you from getting caught unawares with hidden charges or fees at a later point in time.

Customer support:

Customer support is another important metric that you can use to choose the best Demat account. Your depository participant should possess a robust customer support mechanism to help resolve queries and issues. When things go out of control, you should be able to bank on your DP to help bring things back on track as soon as possible.

Trading technology:

Before signing up with a depository participant, you also need to evaluate the trading technology used by them. In order to conduct your trades in a smooth and seamless manner, it is essential to have a user interface that is clean, clutter-free, easy to understand, and user-friendly.

Features:

Not all depository participants offer the same set of features. Therefore, take a look at the features and benefits offered by various DPs before choosing the right one for your trading requirements. Some of the must-have features for quick and effective trading include:

  • Real-time stock feeds
  • Bid and ask spreads
  • The ability to customize watchlists
  • Quick analysis on stocks and companies
  • Details of your portfolio

Things to Note:

What is ISIN number?

ISIN (International Securities Identification Number) is a unique 12-digit alpha-numeric identification code that is used to identify specific securities. (E.g. INE214T01019).

How to find ISIN number?

One could find the details related to the ISIN number of securities on the website of National Securities Depository Ltd and Central Depository Services (India) Ltd.

Power of attorney (PoA)

  • A Power of Attorney authorizes some other person to operate your DP account on your behalf. You could authorize any individual to exercise PoA rights after submitting it to the DP.
  • You have the option to grant PoA in favour of your broker and/or DP to operate your account, i.e. make transactions in your bank and DP account and buy or sell shares on your behalf. However, it is advised to carefully read and understand all the clauses of the PoA before signing it.
  • PoA is not a mandatory facility and thus, purely optional. No stockbroker or DP can deny services to you if you refuse to execute it. You can revoke a PoA at any time.

Other Features Of Demat Account

Consolidation: If you want to consolidate various folios of a particular company into a single folio, you can forward the physical certificates along with the letter signed by you to the RSTA of the company.

Account freezing: You have the option of freezing your account, any specific security, or even a particular number of securities for any given period of time.

Account types: Just like a bank account, you can open a demat account in single/joint names/multiple accounts. But in case of a minor account, a guardian should be appointed for operating the account.

Why India Infoline?

To truly make the most of your access to the stock market, you require a depository participant that offers state-of-the-art features and dependable support. India Infoline excels in these areas, which is why you’ll be glad to choose us. By opening a Demat account with IIFL, you stand to gain in more ways than one. Here’s a glimpse at how an IIFL Demat account can benefit you.

  • We charge no fees for opening a Demat account.
  • The annual Demat account charges for maintaining your account are also nil for the first year.
  • You also stand to gain back up to Rs. 10,000 of your brokerage as cashback.
  • Through a single Demat account on the IIFL platform, you can trade in a variety of instruments and options like equities, derivatives, IPOs, mutual funds, and commodities, among others.

And that’s not all. In addition to the advantages that are specific to the IIFL Demat account, you also get to enjoy a variety of other benefits when you opt for India Infoline’s trading solutions. Here are more reasons why IIFL is the best choice for you.

  • You have our dedicated support team at your disposal.
  • We offer daily and weekly reports customized for you.
  • Our analytical tools help you understand the financial markets better.
  • With TTWeb, our trader terminal, you can view, evaluate, and perform trades at incredible speeds.
  • Our knowledge portal is backed by an award-winning research team.
  • The IIFL Markets App comes with a user-friendly interface and enables you to execute trades and watch the markets from anywhere, at any time.

India Infoline Brokerage Plans & Charges

India Infoline offers a variety of brokerage plans for traders and investors of different kinds.

Variable Brokerage Plan (VBP)

When you opt for the variable brokerage plan, you’ll need to pay brokerage depending on your trading volume. The brokerage slab to be levied for your current trading day depends on the trading volume you achieved in each segment during the previous 20 trading days. This includes the current trading day.

The brokerage rates are applied differently for the cash, futures, and options segments. Visit our brokerage plan section for further details.

Flat Brokerage Plan (FBP)

This plan allows you to enjoy a fixed brokerage rate depending on the segment you’re trading in. The brokerage rates in the flat brokerage plan for the intraday, delivery, futures, and options segments are tabulated below.

Main Features of variable and flat brokerage plans

The variable and flat brokerage plans have some defining features that you need to be aware of, so you can make the right choice. These features are listed here.

  • In addition to the brokerage charged, you shall be liable to pay GST at 18%, STT, and other statutory charges as applicable.
  • You can also make use of our call center services at a nominal rate of Rs. 50 per call. GST shall also be levied on this charge.
  • Physical delivery of contract notes and bills shall be subject to a document handling charge of Rs. 50 plus GST. Email delivery is done free of charge.
  • For delivery trades in the cash segment, the minimum aggregate brokerage is set at Rs. 25 per day, in addition to GST thereon.

Closure of Demat Account

A demat account can be closed as easily as it is opened. To close a demat account, you will have to submit a request form signed by all the holders (in case of multiple holders). You will have to transfer all the holdings of the demat account before closure. The DP will not process the closure application if any Dematerialisation requests are pending.

Conclusion: Opening a DEMAT account is a simple, speedy and smooth process. By keeping in mind the set of aforementioned factors and details, you, too, can open a DEMAT account at IIFL in a completely hassle-free manner.

Open Demat Account at IIFL