Dematerialisation is the transfer of physical share certificates into the mode of electronic format. The share holding in such a format simplifies the task of retention, transfer, and keeping shares. Before the initiation of dematerialisation, people had to hold paper certificates which were prone to loss, damage, or forgery. Dematerialisation has cut these risks almost entirely.
A Demat Account: What is it?
A demat account or the dematerialised account is one through which the investor can hold shares or other securities in electronic model form. It makes the buying, selling, and transfer of securities. The requirement for physical documents for settling transactions is eliminated with a demat account; thus, reducing the hassle caused by large paperwork.
Types of Demat Accounts:
Regular Demat Account – For Indian residents wishing to invest in Indian stock markets.
Repatriable Demat Account – For Non-Resident Indians (NRIs) who want to invest in the Indian markets and be able to transfer funds abroad.
The Non-Repatriable Demat Account- Caters to NRIs who wish to invest in India with no added options to transfer funds abroad.
Advantages of Demat Accounts
Secure storage of securities in electronic form
Easier settlement of trades
Simplified portfolio management
Faster securities transferStep 7: Get Your Demat Account DetailsFaster securities transfer
Mitigation of theft, forgery, or damage risks
Online access to holdings and transaction history
A Step-By-Step Guide to Online Demat Account Creation for First-Time Investors
Demat account opening has now become a digitally first process. Hence, here is some structured help on how to create a Demat account online.
Step 1: Selecting a Depository Participant
A depository participant is an agent of the central depositories (NSDL or CDSL) rendering demat services to investors. Many of the banks, stock brokers, or financial institutions register themselves as DPs. Choose one as per their service offerings, brokerage charges, and online platform usability.
Step 2: Go to the DP’s Website
Having chosen a DP, go to their official website. Look for the “Open Demat Account” or “Get Started” section.
Step 3: Complete Land Fill Online Application Form
Provide personal information:
Name as per PAN Card
Mobile number
Email ID
PAN number
Date of birth
Bank account details
Always ensure these details are matching according to your offer documents.
Step 4: Upload Documents
Upload scanned or clear photo copies of the following documents:
PAN Card
Aadhaar Card or other government-accepted address proof
Passport-size photograph
Canceled cheque or bank statement
Some DPs will also require proof of income if you want to trade in derivatives.
Step 5: KYC Process
Some DPs may require income proof if trading in derivatives is planned. Indian law mandates completion of KYC, which is conducted online through a video call. You may have to show the original documents to the officer in the video call along with answering a couple of questions.
Step 6: E-sale the Documents
For any online DP that you will possess or will install with reference to a submitted application on behalf of the e-sign link that would be sent through a mobile number linked to your Aadhaar, a one-time password will be received by you, entering that OTP would solidify your e-signing process.
Step 7: Get Your Demat Account Details
With completion of all the above-mentioned steps with all documents in approval, the system would activate your demat account and send you your demat account number with other login credentials by e-mail.
Points to Remember for a First-time Investor
Link your PAN with Aadhar to avoid any delays.
Provide a valid mobile number and e-mail ID for any sort of communication.
Compare the various options available with respect to annual maintenance charges and transaction fees before settling on a DP.
Create a strong password, and make sure to enable two-factor authentication for security of your account.
Have a keen understanding about market practices and monitor your holdings on a regular basis.
Conclusion
To invest in the financial markets, familiarize yourself with dematerialization and the functioning of a demat account. With the introduction of online modes, creating a Demat account has become a simple process. Following this structured step-by-step guide for creating a demat account online for first-time investors brings clarity and confidence to the start of their investment journey.
