How to open a demat account?

Updated: Monday, February 11, 2013, 13:54 [IST]

It's mandatory to open a demat account, as otherwise you cannot sell shares and other securities like debentures and bonds. Opening of a demat account also ensures that you need not pay stamp duty, while the chances of theft of your securities are zero.

Also, the transfer or shares and securities is instantaneous. It's not too difficult to open a demat account and the process is very simple, as long as you have your documents ready. Here is how you can go about opening an account.

Visit one of the depository participants

Visit one of the depository participants listed by the National Securities Depository Ltd or the Central Depository. Most of the broking firms and banks offer facilities to open a demat account.

Documents needed

You would need documents pertaining to your identity, date of birth and residence proof. PAN card, passport, driving license, utility bill and election card are valid proofs.

Agreement to be executed

Before opening the demat account, an investor has to execute an agreement on a stamp paper to be provided by the depository participant, which defines the rights and obligations of both, the investor and the DP.

PAN card is mandatory

A PAN card is mandatory while opening a demat account, following a guideline by the Securities and Exchange Board of India.

BO ID

On opening a demat account, a unique BO ID (Beneficial Owner Identification) Number is allotted, which should be quoted in all future transactions. This is used to transfer shares and securities into your account.