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Introduction

Demat account means dematerialization account. This term is often used in the world of business and investing. It is so crucial for an investor to hold an account to invest in stocks. Interestingly, Demat has become extremely popular in recent years. The growth in the number of it’s holders has been largely driven by a dramatic shift in the savings habits of Indians from traditional fixed deposits to new options like stocks and shares.

If you are interested in the stock market and want to invest in stocks, the first step is to open a Demat account. Irrespective of your end goal, it is a prerequisite to carry out all stock market transactions. This article explains how to open a Demat and trading account.

 

What is a Demat account?

This account means a dematerialization account. Having a Demat makes it easy for an investor to hold shares and securities in electronic form. Specifically, this aims to convert share certificates from physical to electronic form, ultimately providing greater access to real holders.

 

List of Crucial Documents Required for Opening a Demat Account

To create opening a Demat easy and hassle-free, you should keep ready the important documents that you should submit while opening an account. Below is a list of required documents.

 

  • Valid ID with your photo like Aadhaar Card, PAN Card, Voter ID, License, etc.
  • Address certificate or proof of residence, e.g., registered rental agreement, driver’s license, passport, landline bill, electricity bill, apartment maintenance bill (if necessary), copy of insurance, gas bill, etc.
  • Bank passbook or statement as proof of your bank account (not older than 6 months after receiving the documents).
  • Your most recent salary or income tax returns (mandatory in the FX and Derivatives segment). This is your proof of income.

Note- 

  1. Aadhar card must be linked with mobile number, and number should be running at the time of opening Demat account.
  2. Aadhar card should be linked with Digi Locker app.

Opening an account to Start Stock Investment

Opening this account is the initial step in an investor’s journey. However, you need a bank account, a Demat, and trading to start trading. This is simply a depository used to hold securities during this. A merchant account is required for real transactions. This account allows you to invest in a wide range of investment vehicles such as stocks, commodities, derivatives, and electronic gold.

If you find it difficult to manage three accounts for trading, you can choose a three-in-one account that facilitates smooth trading. Use three accounts together to reduce the time it takes to switch accounts, which can cause you to miss a good business opportunity.

 

Please note:

  • Account maintenance fees is 0 and other tax charges on trade are explained on the Gill Broking website. This helps the investor to compare different development partnerships according to their costs.
  • Linking a Demat account with the trading account is important because a trading account is an important tool in stock trading.

 

What is the significance of a Demat account?

 

Demat accounts are used to invest in investments such as stocks, bonds, debentures, mutual funds, unit trusts, and even government securities. Having a Demat account is very important as it makes it easy for the investor to hold shares and securities in electronic form. It also facilitates and encourages people to take financial risks by investing in stocks.

Open free Demat account in India with Gill Broking by clicking here.

 

 

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Table of Contents

• Beware of fixed/guaranteed/regular returns/ capital protection schemes. Brokers or their authorized persons or any of their associates are not authorized to offer fixed/guaranteed/regular returns/ capital protection on your investment or authorized to enter into any loan agreement with you to pay interest on the funds offered by you. Please note that in case of default of a member claim for funds or securities given to the broker under any arrangement/ agreement of indicative return will not be accepted by the relevant Committee of the Exchange as per the approved norms.
• Ensure that pay-out of funds/securities is received in your account within 1 working day from the date of pay-out.
• Be careful while executing the PoA (Power of Attorney) – specify all the rights that the stock broker can exercise and timeframe for which PoA is valid. It may be noted that PoA is not a mandatory requirement as per SEBI / Exchanges.
• Register for online applications viz Speed-e and Easiest provided by Depositories for online delivery of securities as an alternative to PoA.

• Do not keep funds idle with the Stock Broker. Please note that your stock broker has to return the credit balance lying with them, within three working days in case you have not done any transaction within last 30 calendar days. Please note that in case of default of a Member, claim for funds and securities, without any transaction on the exchange will not be accepted by the relevant Committee of the Exchange as per the approved norms.

• Check the frequency of accounts settlement opted for. If you have opted for running account, please ensure that your broker settles your account and, in any case, not later than once in 90 days (or 30 days if you have opted for 30 days settlement). In case of declaration of trading member as defaulter, the claims of clients against such defaulter member would be subject to norms for eligibility of claims for compensation from IPF to the clients of the defaulter member. These norms are available on Exchange website at following link: NSE, MCX

• Brokers are not permitted to accept transfer of securities as margin. Securities offered as margin/ collateral MUST remain in the account of the client and can be pledged to the broker only by way of ‘margin pledge’, created in the Depository system. Clients are not permitted to place any securities with the broker or associate of the broker or authorized person of the broker for any reason. Broker can take securities belonging to clients only for settlement of securities sold by the client.

• Always keep your contact details viz. Mobile number/Email ID updated with the stock broker. Email and mobile number is mandatory and you must provide the same to your broker for updation in Exchange records. You must immediately take up the matter with Stock Broker/Exchange if you are not receiving the messages from Exchange/Depositories regularly.

• Don’t ignore any emails/SMSs received from the Exchange for trades done by you. Verify the same with the Contract notes/Statement of accounts received from your broker and report discrepancy, if any, to your broker in writing immediately and if the Stock Broker does not respond, please take this up with the Exchange/Depositories forthwith.

• Check messages sent by Exchanges on a weekly basis regarding funds and securities balances reported by the trading member, compare it with the weekly statement of account sent by broker and immediately raise a concern to the exchange if you notice a discrepancy.

• Please do not transfer funds, for the purposes of trading to anyone, including an authorized person or an associate of the broker, other than a SEBI registered Stock broker.

• Do not deal with unregistered intermediaries (who are not registered with SEBI/Exchanges).

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