Technology has changed our lives completely. Even the stock market has been changed a lot with the help of technology. In the year 1875, the BSE that is the Bombay Stock Exchange was introduced with Open Outcry Floor Trading Exchange. The traders would keep standing on the floor and call out the prices of the shares for selling or buying.
The, the money used to be exchanged for receipts of shares which are called certificates. Due to this a lot of paperwork used to be accumulated. Even settlements of the trading agreements used to take a lot of time because of a need to offer the certificates of shares.
What is share market (Trading Account)?
A Demat account is exactly what a bank account means to your savings. In simple terms, it’s an account which holds the shares in a dematerialized or electronic form. Just like your bank account, the Demat-account holds a certificate of all your financial commodities like debentures, shared, Govt. securities, Exchange Trade Funds, etc. Without a Demat account you can’t trade in stock market.
How to open a Demat Account
Step 1– Select a DP (Depository participant)
Step 2– Fill up the Account opening form and then submit it along with a copy of all the necessary documents and one passport size photograph. You might even need a copy of your PAN Card. You will also have to carry your original documents for the purpose of verification.
You will be given a copy of all the rules/regulations, terms of agreement and charges which you need to incur.
During the whole process, an in person verification would also be conducted. A member from the staff of the DP office will get in touch with you for checking all the details offered by you in the form.
Once your application has been processed, you will be given an Account Number or ID. You may use the details for accessing your account.
Being a Demat Account holder, you will have to pay a fee for annual maintenance for maintaining the account. The fee differs from one service provider to the other. While some of the DPs charge flat fees on each transaction, others charge a fee to transaction value.
Minimum shares- A Demat Account may be opened with nil balance also. It doesn’t need a minimum balance to be maintained.
Documents required for opening a Demat account
You will have to submit a few documents for opening a Demat account. These include:
- A proof of your identity – for proof of identity you can give your PAN card, passport, Voter’s ID, Driving license, IT return, electricity bill, etc.
- Proof of address – Passport, ration card, Voter’s ID card, driving license, passbook of the bank, bank statement, electricity bill, license agreement for sale, etc.
It is very easy to open a Demat Account. You just need to fill the Demat Request Form with right details and submit it with the actual share receipt.
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