Demat accounts came to exist in the country in the year 1997. Before this, shares and stocks were traded and issued in paper format. The advent and spread of computers and technology ensured that securities and shares are kept in a dematerialized format electronically. Thus, through a demat account, you can sell, buy, and transact easily without needing any paperwork. However, what you need for opening a demat account is the support of a registered stock broker. So, if you have already zeroed in on a stock broker, here are a few more details about how to open a demat and trading account.
Benefits of opting for a demat account
The multiple benefits of demat accounts speak of its growing popularity among the investors. The top two benefits of opening a demat account have been listed below.
Zero risk factor: Dealing with physical certificates comes with its own sets of problems. You might end up losing such valuable pieces of paperwork. Besides, forgery detection is not easy and it is better for you to get all the papers done electronically. Papers and inks both erode over time and thus the paper loses its quality.
Zero need for paperwork: When you have decided to use a demat account for buying and selling in the share market, you are transferring all the certificates in a digital form. Thus, the transactions are naturally less troublesome and really hassle-free. When you are trading in shares, there is no requirement for you to hand over the certificates to a buyer and seller. There is absolutely zero paperwork involved after opening the account.
The ways of opening a demat account
There are four basic steps to opening a demat account. They are as follows,
- Fill up the account form for opening your account
- Submit the documents that are asked for
- Go in for in-person verification if necessary
- After the process is done, you get to have a unique account number or ID
After filling up the form, you will receive a call from their end within a few working days. The call is made to understand the following points:
- To check if you have all the valid proof
- To know your location so that they can send in their representative.
Submit all the copies of the documents to the representative sent to collect it from you in-person. This step also completes the important in-person verification needed for opening a demat account. The demat account number and client ID will be sent to you via email and also through post. Opening the demat account is really simple and the whole process takes not more than a couple of days.
The bottom line
The process mentioned above for opening a demat account is a generalized one based on what a majority of platforms follow. The trading platform you select might have a slightly different process than what is mentioned here. However, regardless of the stock broker you choose, opening your account is always simple and easy.