Anyone who is familiar with the process of stock market trading has definitely heard the term Demat Account more than once and knows what it means. But then there are also individuals who are very much interested in trading in stocks but are unaware of the process and the term. Demat Account or Dematerialised account is in many ways just like your bank account. It is an account that is used to hold all your shares and securities in an electronic format. In earlier times, shares, bonds and mutual funds were only traded in physical form. The advent of the Demat account changed everything. It is now a very convenient way to trade in the stock market without the process becoming time consuming and one that involves a lot of paperwork.
The process of opening a new Demat account is not difficult at all. It is a short process where you will have to submit a few documents required for opening Demat Account. We will get to the documents later. First, let us see how to open a Demat Account. It involves a few simple steps that you need to follow.
- Contact a Depository Partner (DP) that is registered with the SEBI.
- You will have to fill an account opening form.
- Submit your KYC documents for verification along with the filled application form.
- Sign an agreement with all the terms and conditions for opening a new account.
- Once the verification is complete and the application is processed, you will be provided with a Demat account number and you can then start trading in the share market using your newly opened Demat account.
Now that you know the process, let us get to the documents required for opening Demat Account. Here is a list of documents required for the completion of the process.
- Proof of Income:
Following documents can be submitted as proof of income-
- A copy of Income Tax Return Acknowledgement Slip that has been submitted to the Income Tax department while tax filing.
- Annual statement of accounts which are authorised by a practicing Chartered Accountant.
- Salary slip of the current month.
- Latest statement of bank accounts with the income history for the last six months.
- Documents that provide ownership of assets through self-declaration.
- A statement of Demat Account holdings with an eligible Depository Participant.
- Proof of Identity:
Following documents can be submitted as your identity proof-
- Your PAN Card with a valid photograph.
- Aadhaar card / driving license / Voter ID card / Passport.
- Any Identity card with the applicant’s photograph which is issued by State/ Central Government and its subsidiary Departments, Public Sector Undertakings, Regulatory or Statutory Authorities, Public Financial Institutions, Scheduled Commercial Banks, Credit/Debit cards issued by Banks and University affiliated Colleges.
- Proof of Address:
Following documents can be submitted as proof of address-
- Voters Identity Card or Passport or Ration Card or Registered Lease/Sale Agreement of Residence or Flat Maintenance bill or Driving License or a copy of your Insurance papers.
- Utility bills like gas/electricity bill or landline telephone bill with valid date during submission.
- Bank Passbook which is not older than three months.
- Self-declaration of a new address given by judges of the High Court and Supreme Court.
- Address proof which is issued by the bank managers of Scheduled Co-Operative Bank or Scheduled Commercial Banks or Multinational Foreign Banks, Notary public or Gazetted Officer, Member of Legislative Assembly or the Member of Parliament.
- Any Identity card with the applicant’s photograph which is issued by State/ Central Government and its subsidiary Departments, Public Sector Undertakings, Regulatory or Statutory Authorities, Public Financial Institutions, Scheduled Commercial Banks, Credit/Debit cards issued by Banks and University affiliated Colleges.
- Address proof that is given in the name of the spouse.
One of the biggest advantages of having a Demat account is that it involves low risks. The possibility of theft, losses and damages are almost eliminated by the use of the Demat account. It is also cost effective. And now that you know the process and documents required to open a Demat account, it is about time you get one.
