Demat – What it is?
If you are thinking about how to invest in the stock market, the first thing you should have is a demat account. Dematerialization account is an account to buy and sell shares. The shares bought and sold are in electronic form. According to SEBI (Securities & Exchange Commission) regulator of the stock market, it is mandatory for all listed shares to be settled in demat mode.
Process of opening a demat account
A demat account can be opened in banks, brokerage firms and financial institutions. Basically a dematerialization account can be opened with any registered depository participant (DP). In order to open a dematerialization account, one has to follow these steps –
• An account opening application form should be filled
• Signing an agreement with the depository participant
• Provide all the necessary documents like identity proof, address proof, pan card copy, a cheque. SEBI has made the submission of pan card mandatory.
The DP will allocate a Beneficial Ownership identification to quote while making transactions. The charges of opening a dematerialization account and maintaining it varies from DP to DP.
Once your DP account is activated, you have to open a trading account with any of the brokerage firms. There are many brokerage firms with whom you can open a demat account like ICICI , India bulls, HDFC Securities, Aditya Birla Money, Kotak Securities, Motilal Oswal Securities, LKP Securities etc. You can also open demat account with banks like ICICI Bank, HDFC bank. Most of the banks provide this service.