Is It Compulsory to Open a Demat Account in India?

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It's never compulsory to do anything. But, if you do not, then you have to bear the consequences of your indecision.

So, it is the case with opening a demat account for buying and selling in shares. For starters, if you do not have a demat account in India, you cannot buy and sell shares through the recognised stock exchanges. Shares have to compulsory be bought and sold in the demat form only.

Also, if you want to apply for shares in an Initial Public Offering (IPO) you may have to apply in the demat form only.

Is It Compulsory to Open a Demat Account in India?
According to The Securities and Exchange Board of India (SEBI) regulations all public issues of size in excess of Rs.10 crore, are to made compulsorily in the demat mode.

Now, most of the public issues are over and above the size of Rs 10 crore and one cannot think of an IPO below this size.

Thus, if an individual wants to apply for a public issue that is being made demat mode, he has to have a demat account.

How to open a demat account?

To open a demat account you have to approach a broking firm, which will open a broking and trading account and you can begin buying and selling shares. There are certain documents and compliance that you have to undergo which the broking firm will explain to you in detail. Address proof, ID proof and other documents are required before you can open an account.

Make sure you look for various charges like account opening charges, broking charges and other charges before deciding on the broking firm where you want to open an account.

Also read 5 broking firms that offer free demat and or free trading account in India

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Read more about: demat account
Story first published: Tuesday, October 21, 2014, 10:54 [IST]
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