The switch to electronic traders has proven to be a blessing to the ordinary investors as it has made share market investing more transparent, secure, and easier. Today, it is possible to invest with a few taps, on your phone while traditionally it was even get started with investing. In the internet age, opening a demat account is one of the primary prerequisites to participate in online share trading. And fortunately, the online demat account opening process is very convenient, such that you can get started with it, right now, as long as you have a smartphone with an internet connection. However, let us first learn about the significance of the account before proceeding to know how to open one.
What Purpose Does a Demat Account Serve?
To simplify its function, let us draw a comparison between a demat account and a savings account, one which you would open with your bank. A savings account lets you store your money in the bank, so it remains safe. Then, as per your needs you can deposit or withdraw money in and out of your savings account.
A demat account accomplishes a similar task, but, instead of cash, it electronically stores the shares you purchase in the stock market. So, when you buy shares of publicly traded firms listed on the stock exchange, they get credited and stored in your demat account. And until you decide to sell them, those shares will stay safe in your demat account. Shares, mutual funds, exchange-traded funds, debt instruments, and other securities can all be stored in a demat account.
Opening a Demat Account
Demat account services are offered by the depositories—the NSDL and the CDSL.
National Depository Services is referred to as NSDL, and Central Depository Services Limited is referred to as CDSL. The depositories are analogous to banks, but unlike a bank, you cannot knock at the door of the depository to open a demat account if you are a retail investor. Instead, you approach an authorised member of the depository called the depository participant. The depository participants are stockbrokers licensed to provide demat account opening services. The stock broker also provides investors with a trading platform or trading app.
Guide to Open a Demat Account
You now know that you have to approach a depository participant to open a demat account. However, since the depository participant also provides other facilities like the stock investment app, you will need to do some research on your part. That is because unlike demat accounts which are actually provided by the depository through the depository participant , features like the stock investment app are designed by the depository participant. So the stock investment app and facilities of one broker may be catered more to your preferences than others.
So, to have the best stock investment app and the best features, you must pick a leading broker that has a wide reach along with advanced technology infrastructure to provide quality services. After picking, you broker head to their website or download their app and follow the points in the guide mentioned below.
1. Verify your mobile number
You will see a prompt to create a demat account on the depository participant’s website. Similarly, if you are not logged in of the app, you can log in or open a demat account. Opt for the latter. Next, you enter your mobile number in the appropriate space. An OTP (one-time password) will be sent to you via SMS to confirm your request to open a demat account.
2. Fill in your personal details
You must enter in your personal information in the following step, like your PAN details and DOB. You next provide some other personal information like your nominal details. name, address, and occupation. Bank details like the IFSC code and your account number are also required so that your accounts can be linked.
3. Upload your documents
You must upload your photograph, for which you can take a new selfie or upload a valid format of a pre-existing photograph. Similarly, you provide digital copies of other documents like your PAN card and driver’s licence as identity proof and address proof. It is also compulsory to upload income proof documents like your salary slip, if you opt for derivatives trading.
Select “e-Sign & Submit form,” after you finish with the document submission step. Your broker then will review and verify your application, and provide you your demat account login information via email.
The process should hardly take time and the leading brokers give you your demat credentials within a day’s time. So, follow this guide, and you will have the best stock investment app for your needs. Then, you can use the app and start investing in securities.