How to Open Demat Account
How To Open Demat Account: Know About The Basics
If you are interested in investing in stocks then you need to have a demat account along with the bank account and our trade account. A demat account basically allows the investors to hold all of their shares in the electronic format and the stocks remain in a dematerialized form in the demat account. Dematerialisation refers to the process of converting the physical shares into the electronic format. A demat account number is therefore a pre-requisite if you were to enable all the electronic settlements of the trades. Therefore, a demat account functions very much similar to a bank account where one holds all of their money and its respective entries are in the passbook.
It is therefore important that you know how to open demat account, since having a demat account has so many advantages.
How To Open Demat Account: A Step By Step Guide
- In order to open your demat account you would have to approach a depository participant or a DP who is basically an agent of depository and fill up the account opening form. All the list of the depository participant that are available in the website of the depositories are NSDL (National Securities Depository Ltd) and CSDL (Central Securities Depository Ltd).
- Besides the account opening form you would have to enclose photocopies of all the documentaries like your address proof and your documentary proof.
- You would then have to sign an agreement with the depository participant in the depository prescribed standard format. This allows for you to have all the details and the rights of the investors and the depository participant. You are of course entitled to the copy of the agreement and the schedule of the charges for future references.
- The DP will then open your account and henceforth give your account number for your demat account. This account number is also called the beneficial owner identification number or the BO ID. The purchases and the investments in the securities will therefore be credited into your account. If you were to sell your securities then your demat account gets credited.
You can have multiple number of demat accounts if that is your wish. You can also choose the depository participant according to your conveniences and you are under no compulsion to open a Depository participant account with the help of your stock broker. Therefore, these are the steps anyone will tell you if you were to ask them how to open demat account.