A journey of thousand miles must begin with a single step. The secret to a rich life is to have more beginnings.
So, if you have decided to enter the stock market, or if you have decided to do the Intraday trading that would be the good decision taken by you. Though everyone says that, stock market is risky and unpredictable; it’s definitely the best investment option. After deciding the stock exchange, where you have to trade, as well as the securities which you would like to trade, you probably have to open a Demat a/c.
Demat stands for Dematerialization. In this account the shares and securities will be held electronically instead of holding it in a physical form. It is safe and convenient way to hold securities. Immediate transfer of securities can be done. No stamp duty is levied on transfer of securities held in Demat form. Immediate credits in case of any allotment in bonus, rights issues and IPO’S.
Having said so many things aboutDemat, the question arises as to how to open a Demat account.
Opening a Demat account:
First an investor has to approach depository participant and fill up an account opening form. Depository participant is an intermediary between the investor and the depository. A DP may be bank, broker, financial institution etc. Each DP is assigned a unique id number known as DP-ID.
Along with the account opening form, other documents should be produced which can serve as proof of identity and proof of address as specified as SEBI.
Documents required for opening Demat account:
1. Prescribed application form, DP agreement, Tariff sheet duly signed.
2. Passport size photo of self and of nominee.
3. Proof of identity-Pan card(original to be produced for verification)
4. Bank pass book/ration card/Passport/voter id card/Driving license(original to be produced for verification)
5. Cancelled cheque leaf(proof of bank account details)
Then the investor has to sign an agreement with the DP, which details rights and duties of investor and DP. DP will provide the investor with a copy of the agreement and schedule of charges. The DP will open the account in the system and give an account number, which is called BOID (Beneficiary owner Identification Number)
1. Account opening charges- Many of the DP’s don’t charge.
2. Annual account maintenance charges.
3. Custodian fee- Depending upon number of securities.
4. Transaction fee- Charged on buying or selling of securities.