The late 1990s was a period of significant and lasting changes in the Indian securities market, the most prominent amongst which was the introduction of dematerialised accounts or demat accounts.
Since then, demat accounts have been central to the process of investing in the securities market and safely holding assets in a demat form. In this article, we shall discuss how to create a demat account online in India, and the various benefits of demat accounts.
What is a Demat Account
Let us begin by briefly defining a demat account. The concept of dematerialisation revolves around the transfer and storage of securities in a digital form (a non physical form).
A demat account is a digital vault where the securities purchased from the market get stored in a demat form. Linked with a trading account, a demat account functions as an essential cog in the market trading mechanism.
How to Create a Demat Account
If you are wondering how to create demat account in India, you can do so by following a simple process. You can create a demat account and trading account online, and start investing in the market.
Before starting your demat account application process, you must keep certain documents handy; these include your Permanent Account Number (PAN) card, valid proof of identity, proof of address, proof of income, and latest passport size photographs. Here are the steps you can follow to create a demat account online.
- Select a depository participant registered with NSDL or CDSL, and visit their official website.
- Fill a demat account opening form at the selected DP’s website.
- Submit the form along with the requisite documents.
- Complete the process of In-person Verification online.
- Receive your demat account credentials after the successful verification of documents and the opening of your demat account.
Why Do You Need a Demat Account
A demat account is required to hold market-linked assets in an electronic form. You can store a wide range of assets in your demat account, including shares, mutual funds, bonds, and debentures.
Furthermore, you can apply for Initial Public Offerings through your demat account and have the allotted shares credited to the account (if you get allotment post the closure of the issue). Demat accounts have made the process of investing in the market simpler, safer, more accessible, and highly transparent.
Prominent Benefits of a Demat Account
There are many benefits of demat account, prominent amongst which are as follows:
1. Seamless Transfer Of Securities Purchased From The Market
With a demat account linked to your trading account, you can seamlessly carry out purchase and sale orders in the securities market. Once the orders for delivery transactions have been executed, the requisite securities shall be debited from or credited to your demat account.
2. Safe And Hassle-Free Storage Of Securities
One of the most important benefits of a demat account is the safe and cost-effective holding of market-linked assets. Once you have created a demat account and linked it with a trading account, your securities purchased from the market shall be safely stored in your demat account. There is no danger of theft or loss of security certificates.
3. Easy Access To Your Investment Portfolio
You can access your demat account holdings at any point in time by logging in to the account. The high degree of visibility and control that modern-day demat accounts offer can be instrumental in timely investment decisions.
4. Ability To Diversify Investments
Another key benefit of a demat account is that you can store various types of market-linked assets in it. Not only can you safely hold shares in your demat account, but also mutual funds, bonds, etc. With one demat account, you can invest in a wide array of assets across sectors.
5. Nomination Facility
You can add a nominee to your demat account and be assured of the safe transfer of your demat holdings to the selected beneficiary in the event of your passing. Should you need to change the nominee in your demat account at a later stage, you can do so by filling a form and submitting it to your DP.
The Bottomline
We hope this guide on how to create a demat account is useful to you. It is pivotal to assess and compare various demat account offerings before selecting a demat account for yourself. This way, you can ensure the selection of a demat account that carries the required benefits and is feasible to you.
