You cannot just start trading in the share market. For this, you need to fulfill some norms and you have to abide by them as well. So the first step is buying the shares. However, in order to buy the shares, you need to have a Demat account opened.
The working of Demat account
CSDL and NSDL are the two depositaries in India. And these two institutions have your Demat accounts. As the central depository holds the detail of your shareholding. Then there is the Unique ID for a Demat account. Each Demat account has this unique number which acts as its identification number. With the aid of this number, the shares and companies will be able to identify you and hence deposit the shares in your account. Then there are the Depository participants which acts as a link between the central depository and the investor. The Depository participants can be financial institution or brokers or even the banks. Only these depository participants can offer the Demat services to Indian investors. With the aid of the portfolio holding, you can check the detail of your account.
The opening of Demat account
- First and foremost you need to select a DP which is the Depository Participant. After selecting the DP you need to fill an account opening form. This you need to submit with the photocopy of PAN Card, copies of the required documents and passport size photo. You need to carry the original documents for verification as well.
- After that, there is an in-person verification.
- Post in-person verification you DP provides you with your account number and client ID. With the aid of the details, you can easily access your Demat account online.
- You need to pay annual fees on your Demat account.
- One important aspect of the Demat account is that you do not require any number of shares as the minimum balance to be maintained.
Documents required for the Demat account
You will require the following documents for the opening of the Demat account:-
- Identity proof- The following list of inculcates the identity proof, PAN Card, Voter’s ID, drivers’ license, passport, IT returns, Bank attestation, telephone or electricity bills or the ID cards with the photo of the applicant. The issuer of these can be Central or State Government and its departments, statutory or regulatory authorities, scheduled commercial banks, colleges affiliated to universities, professional bodies public sector undertakings and so on.
- Address Proof- The Ration card, passport, Voter ID card, bank statement, telephone or electricity bills, identity card where the issuer of the address is central or state government, public sector undertakings, public financial institutions, colleges affiliated to universities, statutory or regulatory authorities etc.
Nonetheless, the opening of the Demat account is a hassle-free procedure. However, you have to ensure that at the time of verification you bring with you the original documents as well. After the formation of your Demat account, you get information automatically.