How to Open a Demat Account?

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  • 16 May 2024
How to Open a Demat Account?

Key Highlights:

  • A Demat account holds your securities in an electronic format
  • Visit a broker’s official website, click on the open demat account tab, provide the relevant details and documents, and e-sign to open an account
  • Check the broker’s reputation, fee, platform’s UI, and security before opening your demat account

Opening a demat account is integral to stock market investing. A demat account holds your securities in a dematerialised format and keeps them secure. The question, however, is how to open this all-important account. This blog lists the step-by-step procedure for opening a demat account. Let's begin.

Steps to open a demat account

Thanks to digitalisation, opening a demat account online has become very easy. The process is simple and convenient. While the specifics may differ across brokers, here are the common steps to open a demat account online:

  • Choose a reliable broker

This is the first step to open a demat account. Look for a broker with a robust track record.

  • Visit the broker's official website

After you choose your broker, visit the official portal. Today, all brokers have official websites. Visit your broker's portal and look for the open demat account option.

  • Fill out the demat account opening form

Fill out the account opening form. You need to provide your name, phone number, email ID, address, PAN card details, etc. You will receive a one-time password on your registered mobile ID. Input the OTP to move forward.

  • Add bank details and upload the relevant documents

It's important to enter your bank details correctly and upload the right KYC documents. These documents, which include identity and address proof along with bank details and PAN card, are a mandatory requirement. You can use your Aadhaar Card, voter card, passport, driving license, etc, as your identity and address proof.

  • E-sign and submit

After filling out the form, you'll need to electronically sign your application. This is a secure way to submit your application. Once you've done this, submit it to create your demat account. Your broker will then validate your application, and upon successful validation, you'll receive your demat account number and login credentials.

Documents required to open a demat account

The documents required to open a demat account are minimal and easy to provide. You need to provide the following documents:

  • PAN card
  • Identity proof, which could be your PAN card, Aadhaar card, voter card, driving licence, etc
  • Address proof, which could be Aadhaar card, passport, voter ID card, driving licence, etc
  • Cancelled cheque
  • Passport size photo
  • Bank statement or copy of passbook
  • IT return or pay slip if you are interested in the derivative or currency market

Charges associated with opening a demat account

The various charges associated with opening a demat account are as follows:

  • Account opening fee

You need to pay a certain fee to your stockbroker when opening your demat account.

  • Annual maintenance charges

It's a recurring fee you need to pay your broker to maintain your demat account.

  • Dematerialisation charges

You need to pay this charge if you convert a physical share certificate into a digital form.

  • Transaction charges

When you purchase or sell shares, your broker will deduct a small amount from the total transaction value. Some brokers may charge a flat fee, irrespective of the total transaction value.

Along with these, various other charges come into play at different times, such as pledging charges and unpledging charges. You need to pay the former while pledging securities to avail yourself of trading limits, while you need to pay the latter when unpledging securities.

Need for opening a demat account

While a Demat account is mandatory to invest in stock markets, several other reasons make it important. These are:

  • Safety of securities

In their earlier physical avatar, shares were vulnerable to theft or misplacement. As a demat account holds them in an electronic format, they are much safer.

  • Anytime access

As all your securities are in one place, you can access them whenever needed from anywhere.

  • Can hold multiple securities

With a demat account, you can hold several securities in one place, which facilitates tracking. You can also access them anywhere and anytime.

  • Auto credit of dividends

If you are eligible to receive dividends, they are automatically credited to your demat account.

Important things to keep in mind while opening a demat account

Now that you know how to open a demat account, you need to keep certain important things in mind while opening it. These include:

  • Safety and easy-to-use interface

Check the safety measures implemented by your broker. Ensure your chosen broker offers the highest levels of safety so that you don't fall victim to online fraud. Also, ensure your chosen broking platform has an easy-to-use interface for quick navigation.

  • Fees and charges

Find out about the relevant brokerage charges. Opt for a broker offering the most cost-effective charges. That said, it shouldn't be the only guiding factor. Analyse the service quality and read online reviews to understand the standard of services offered.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.

FAQs on how to open a demat account

You do not need to pay anything to open a Demat account. However, you need to pay account maintenance charges to your broker to maintain the account.

Yes, you can have two or more Demat accounts.

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