Skip to main content

How to open a demat account


A demat or 'dematerialised' account holds shares in electronic form, thus saving you the bother of holding shares in paper form. Possessing a demat account is now a prerequisite for stock market investments.


C. Rajalakshmi

Planning to put your money in the IPOs that are coming up? Want to invest in stocks? Then you would have to certainly open a demat account. A demat or 'dematerialised' account holds shares in electronic form, thus saving you the bother of holding shares in paper form. Possessing a demat account is now a prerequisite for stock market investments.

Demat services are provided by banks, financial institutions and stock broking houses. The broking houses in such cases also act as DPs (depository participants) intermediating between the depositories — CDSL or NSDL and the investor. To open a demat account, you have to make an application to a DP and submit required documents. Once you have a demat account to your name, you can open a trading account with a broker of your choice.

The shares bought and sold by you will be reflected in your demat account. Any previously held physical share can also be dematerialised and transferred to the account.

The DP, at regular intervals, would provide you with an account statement showing the balance of shares in your demat account and transactions during a period. The following steps would help you open a demat account:

Look out for a DP

There are several institutions that offer DP services. You have two options. Either you choose a bank/financial institution or a stock broker who could provide you the DP services as well. The factors that guide your selection should be the charges and locational convenience. The fees charged for DP services differ across the industry. Though the rates change, the charges normally go under the following heads:

Account opening fee

Annual maintenance fee

Transaction fee

Besides the above, depository participants also charge service tax as applicable. A bank or other DP may sometimes waive the initial account opening fees. If you choose a bank where you have been holding your savings account for long, then much of the paper work would get simpler and documentation will not take much time, as you are already known to the banker.

Get the documents in place

For opening a demat account one needs to provide a set of documents to the agent. They are:

Duly completed account opening form and passport size photos;

A copy of PAN card as proof of identity;

Personalised cheque/Copy of the bank passbook

A copy of passport/voter ID/ ration card as a proof of address

Signing of the DP-investor agreement.

On giving the above papers, the agent would complete the other formalities with the depository and facilitate opening of the account. You would then be given a unique account number (BO ID- Beneficiary Owner Identity), which would serve as a reference number for all further transactions. After that you, must also collect delivery instruction (DI) slips from the DP. A DI slip has to be filled and sent to the DP on every delivery (sale of shares) you make. DI slip is an instruction to the DP to debit your account and credit the broker's account with the specific stock.

Take note that the DI instruction has to reach the DP the very next day after the sale, failing which the securities won't reach the broker and hence the exchange. This could result in auction of the security. Suppose the exchange is able to procure those shares only at a higher price, then the resultant loss has to be borne by you, as investor. However, you could escape this irksome process of sending DIs, if you have your demat account as well with your stockbroker and give him a standing instruction (POA-Power of Attorney) for delivery of stocks that you sell.

So, this is it. Once you narrow down on a DP and get the documents ready, opening a demat account is as simple a process as that.

Popular posts from this blog

Bio-fuel has top investors powered up

23RD ,JUNE India's fortune-hunters believe their new-found love for biofuel will pay off. India's well-known investors who are known for their Midas touch have spotted an opportunity in bio-fuel, betting big on ethanol, bio-mass and even bio-fuel equipment makers in India and other parts of the globe. Billionaires Rakesh Jhunjhunwala, C Sivasankaran, Vinod Khosla, founder of Sun Microsystems, and Nemish Shah, the media-shy joint partner of Enam Financial Services, are investing in bio-fuel makers quietly, expecting that bio-fuel will have a big play in the coming years as the world looks for a viable alternative to the fast depleting oil reserves. Jhunjhunwala, who is known for his ability to spot a multi-bagger at a very early stage, recently invested in Hyderabad-based bio-fuel firm Nandan Biometrics.He is also a 10 per cent stakeholder in Praj Industries, which is a bio-fuel technology provider…

up to 8,500% return in 5 years! Investors made a killing in these 30 smallcap stocks

U By Rahul Oberoi, ETMarkets.com | Updated: Dec 01, 2017, 04.06 PM IST Post a Comment
Efficiency pays in the long run. Among the top smallcap plays on Dalal Street, 30 companies with stable return on equity (RoE) and return on capital employed (RoCE) have surged up to 8,500 per cent over the past five years.

All these companies had a debt-to-equity ratio of less than 1 and have been maintaining RoE and RoCE of over 20 per cent since 2012-13.

Avanti Feeds emerged the chart topper, with an 8,527 per cent gain to Rs 2,596.60 as of November 28 from Rs 30.10 ..


ovember 28 from Rs 30.10 on November 27, 2012. The company’s return on equity for FY17, FY16, FY15, FY14 and FY13 stood at 42.65 per cent, 46.21 per cent, 52.41 per cent, 45.79 per cent and 27.60 per cent, respectively. Avanti also managed to achieve a return on capital employed of over 50 per cent in last four years. Its RoCE stood at 28.59 per cent inRoE measures net income earned for every rupee of shareholder funds, while…

5 dark-horse picks

Kwadrat/shutterstock.com Kwadrat/shutterstock.com
If you are a conservative investor, using the mutual fund route is the best way to invest in stocks. But if you are game for some excitement, you might want to dabble directly in stocks, especially small-cap stocks. Stocks that are smaller in size, in terms of market capitalisation, carry higher risk. The reasons are — one, lower traded volume increases price volatility, two, information is usually scarce on these companies, three, business risk is higher since many of these companies are dependent on a single product and four, governance risk is also higher in these stocks. That said, small-cap stocks have the capacity to deliver far greater returns when compared to large-cap stocks. Sample this: there were 16 stocks with market cap more than ₹50,000 crore in January 2009. These stocks delivered an average return of 138 per cent in the last eight years but 4 out of every 10 stocks in this group delivered negative returns. On the ot…