Just like bank account is for money, demat is for shares.Demat account is the account which holds certificates of all the financial instruments that an investor owns. Demat is necessary to trade in the stock market.
How does demat work ?
NSDL and CDSL the two depositories hold all the demat accounts.Each demat account have unique number so that they can be identified easily. With the help of this number trade can be done on the exchanges.The Depository participant acts as the intermediary between the depository and investor.
Procedure to open demat account
The first step in opening a demat account is selection of depository participant with whom demat account is to be opened.
STEP 2— Fill up the account opening form and submit it along with the necessary documents and a passport size photograph.
STEP 3– A member or staff of the depository participant would contact for confirming the details provided by the applicant in the application form.
STEP 4– After the application is verified and processed the applicant will be given Client ID which can be used to access the demat account by the applicant.
STEP 5– Payment of annual maintenance fees and transaction fees by the applicant to the depository participant.
DOCUMENTS REQUIRED FOR DEMAT ACCOUNT
Applicant has to furnish copy of proof of identity and proof of address for opening a demat account.For this PAN card, voter’s ID, passport, driver’s license, bank attestation, IT returns, electricity bill, telephone bill, ID cards with applicant’s photo issued by the central or state government is allowed.Also original documents for verification may also be needed.
PROCEDURE FOR DEMAT ACCOUNT
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