Demat Account – Documents and Eligibility Criteria for Demat and Trading Account

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Thinking about trading or investing in the stock market? If yes, then you will surely require a trading and demat account. This blog will guide you about the eligibility criteria to open a demat and trading account. Here we will also discuss the required documents to open a demat and trading account.

What is Deamat Account ?

A demat account is more like a bank account. You have to get a few documents ready to open a trading and demat account. Opening a trading and demat account is the first step of starting trading and investing in the stock market.

A demat account keeps the shares in digital mode and decreases the overall risk of theft, loss etc which is often linked with physical shares. After demat account you will need a trading account which will allow you to transact in the share market and will help you to sell or buy orders during online trading.

Are you Eligible to Open a Trading and Demat Account?

To open a trading and demat account you can approach the SEBI and any bank or stockbroker which will be an exchange registered entity. Before taking a step forward, it is important to know the eligibility criteria to open a demat and trading account which is mentioned below:

  • You need to be an Indian citizen residing in India
  • You should be above 18 years of age
  • You should have a PAN CARD
  • You require address document included (Aadhar, passport, Voter ID, Driving license, and a utility bill not more than 3 months old)

Now you know about the eligibility criteria to open a demat and trading account. It is also important for you to note down the list of documents which are required to open a demat and trading account.

Documents which are required to open trading and demat account

  1. PAN CARD- You will require a PAN (Permanent Account Number) which is an identification number assigned to every taxpayer in India. It is mandatory to get your trading and demat account open. Also make sure that your PAN card will have a clear photo and signature of yours.
  2. PHOTO- You will also require a passport size photograph.
  3. ADDRESS PROOF- It is important to submit any address proof document which include driving license, Voter ID, Aadhar Card, Passport, utility bill (not more than 3 months old), or last three months bank statement.
  4. SIGNATURE ON A WHITE PAPER- You will also require a picture of your signature on a white and clean paper. The signature should match with the one on your PAN card.
  5. BANK PROOF- After this, you will require a Bank proof to link your trading and demat account with that bank account. This will ensure the smooth transaction between your bank account and trading account. Cancelled cheque, 6-month bank statement, passbook, are some of the documents which you can submit as the bank proof. Make sure that the document you are going to submit will have a clearly visible IFSC code and Bank Account number.
  6. INCOME PROOF- You need to show an income proof if you want to trade in options and futures. Documents which you can submit as income proof are as follow:
  • Last 6-month bank statement
  • 3-month salary slip
  • ITR statement
  • Net-worth certificate
  • Demat holding statement or holding report

This was all about the documents required and eligibility criteria to open a demat and trading account. You are required to fulfil the above-mentioned eligibility criteria and to keep the documents ready. This will take less than 15 minutes to open a demat and trading account.

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Process of opening a demat account and trading account

Let’s briefly discuss the process of opening a demat and trading account in brief. The steps to open a Demat account are as follow:

  1. Select a depository participant
  2. Submit the demat account opening form
  3. Fulfil the KYC norms
  4. Complete the verification process
  5. Sign all the required agreement copies
  6. Also get your BO ID number

How to Open a Demat Account ?

  1. Select a registered firm or broker
  2. Comparing brokerage rate and services provided will be beneficial
  3. Also get in touch with the selected broker to open the trading account
  4. Duly fill the account opening and KYC form
  5. Complete the application verification process
  6. Get the trading account details
  7. You are now ready to place your buy/sell order

Benefits of Opening a Demat Account

For investing in the share market, you will require a demat account. Besides this, there are other major benefits of having a demat account which include:

  • Convenience: It is difficult to manage, maintain, and store the physical share certificates. This can be risky and you might lose or damage your certificates. Opening a demat account will keep you safe from such situations.
  • Safety: Condition of forged or fake certificates can occur in case of physical share certifications. A demat account keeps the record of shares which you have in your account are genuine or not.
  • Accessibility: All the processing done on a demat account is online and electronic. This lets you access or manage the account any time and from anywhere.
  • Multiple securities: Through demat accounts you can also hold financial instruments like mutual funds, bonds, and debt securities. Thus, a demat account doesn’t limit you till the equity share market but opens a gateway to access multiple securities.
  • Lower charges: In case of physical shares, you need to pay the stamp duty and handling charges. A demat account also eliminates these additional charges.

Conclusion            

Opening trading and demat accounts is beneficial in many ways. It helps to make trading and investing in the stock market an easy process. You just need to follow the right procedure by keeping the right documents in hand.

How Chart Analysis will help you?

At Chart Analysis, Mr. Umesh Sharma guides you about the right tactics of trading and investing in the stock market. Here we offer you many efficient and effective courses which are designed to develop one’s knowledge and skills of trading in the stock market.

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