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How to Open A Demat Account?

An important step to understand in dematerialization is how to open a demat account. Dmat account opening involves some basic steps and if all your documents are in place then your demat account will be opened in a couple of days. Here are some very important steps that you need to keep in mind while opening a demat account.

Step 1: Identify your DP to open a demat account…

You can make your choice of DP based on features offered by the DP, the demat charges involved, proximity to your home or office etc. Normally, your broker will open your Trading-cum-Demat account. From a logistical point of view, it is always better to have your trading account and demat account with the same broker. This will make your demat process a lot quicker, especially when it comes to issuing debit instruction slips (DIS) for the sale of shares.

Step 2: Documentation and procedure of opening a demat account…

Two basic documents that are essential for opening a demat account are your proof of identity and your proof of residence. Even before these requirements, your Income Tax PAN card is a must for opening a demat account. Brokers accept a variety of documents as your proof of identify including passport, Aadhar card, elector voting card, pension card etc. For your proof of address, you can submit your passport if updated, latest landline telephone bill, property tax assessment, income tax assessment, credit card bill, electricity bill etc. All these documents must be submitted as a self-attested photocopy and supported by originals for verification.

Step 3: Signing and executing the DP agreement …

Once you have submitted all the relevant documents, the next step is to sign and execute the DP agreement. Each DP will have its own agreement format which is broadly defined by SEBI. There are multiple signatures that you will have to affix and it is a long list of rights and obligations of the demat account holder. It is advisable that you read the fine print in detail because, more often than not, the devil lies in the details. The agreement will also provide a schedule of charges and you are required to go through in detail. It is essential that you read the fine print of the contract and get answers to your questions from the DP.

Step 4: Actual DP account opening…

Once the documents are all submitted and the agreement is executed properly, the DP will take a couple of day’s time to verify the documents and get the compliance approval. Once the compliance approvals have been received your account will be opened. The DP will then allot you a Beneficial Ownership code (BO) which will be your account number. Your full DP account number will be a combination of your DP id and your BO code. Your DP code must be mentioned in the same manner at the time of applying for the IPO.

Step 5: Signing a power of attorney (POA) for online debits and credits to demat…

This is the last step. Normally, when you sell shares from your demat account you are required to give your debit instruction slip (DIS) to the broker on the same day. Otherwise it could go into auction. But this becomes a hassle for regular traders. To overcome that you can execute a Power of Attorney (POA) in favour of your broker and from that point your DP account will be automatically debited when you sell shares.

Digital demat account opening using e-KYC…

Let us also understand how to open demat account online. Brokers are now permitting authorization and opening of your demat account using Aadhar Card. You just need to ensure that your Aadhar card is mapped to your bank account and the mobile number you are giving for the Demat account is the same as the one you have given for your Aadhar. The entire authorization (via OTP sent to your mobile)and account opening can be done through Aadhar authentication with only your PAN card copy and a cancelled cheque to be scanned and uploaded online. As a last step, you are still required to do a second level of verification. This can either be done by video camera fitted on your PC or through an in-person-verification (IVP) at the nearest customer point of the DP.

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"Prevent Unauthorized transactions in your Trading/Demat Account --> Update your mobile numbers/email IDs with your stock brokers/Depository Participant. Receive alerts/information of your transaction/all debit and other important transactions in your Trading/ Demat Account directly from Exchange/CDSL at the end of the day .......... Issued in the interest of investors." | "KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary." | "No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorize your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account." |"Investment in Securities Market/Commodity Market is subject to Market Risk. | RGESS investors kindly download New Retail Investor Certificate from link - https://www.cdslindia.com/investors/rgessverification.aspx | Dear Investor kindly update Aadhar Number with your demat account, contact your nearest branch."
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