Introduction
If you want to put money into the stock market, the initial step will be to open a Demat account; however, you must first meet the eligibility requirements and provide the required documentation.
Demat accounts keep shares in digital form, removing the danger of loss, theft, forgery, and other issues that come with physical share certificates. Because shares are traded in a digital format, a Demat account is required. To trade in the stock market, you’ll need a trading account in addition to a Demat account. During online trading, a trading account is used to place buy and sell orders.
Eligibility Criteria
You can open a trading and Demat account with the SEBI or any bank or stockbroker that is an exchange-registered firm. Before proceeding, it is necessary to understand the following qualifying criteria for opening a Demat and trading account:
- You must be an Indian citizen who resides in India.
- You must be over the age of 18
- You must have a PAN CARD
- You must submit an address document (Aadhar, passport, Voter ID, Driving license, and a utility bill not more than 3 months old)
As you know you know the requirements for opening a Demat and trading account. It’s also essential to keep track of your eligibility in terms of documentation, as these are the most basic prerequisites for opening a Demat and trading account.
- PAN Card
A valid PAN Card is mandatory.
- Trading Account
To purchase and sell shares from your Demat Account, you’ll need a functional Trading Account. However, if you merely intend to retain the shares or assets and not sell them, you can have a Demat Account without a Trading Account. Even in the case of an initial public offering (IPO), a Demat Account is required to store the shares. It is not necessary to have a trading account to participate in this game.
- Bank Account Proof
To open a Demat Account, you must have a valid bank account. A canceled check, a bank passbook, or the most recent 6-month bank statement can all be used as bank verification.
- Miscellaneous
To finish the paperwork, you’ll need your passport photo and a matching signature on white paper from your PAN card.
Summing Up
Before Demat, the securities investment procedure was extremely time-consuming and involved a lot of paperwork. Managing all of the paper securities before 1996 was both expensive and time-consuming. There were also risks involved, such as theft and physical damage.
Demat accounts have made trading more accessible and less time-consuming in general. Most significantly, it improves the safety and security of buying and selling stocks. However, understanding your requirements and objectives before opening a Demat account is a wise approach.