Thinking of investing in the stock market? Well, there are a variety of ways to pull this off. Yet you need to know the right way to invest to gain maximum returns. Thus, in this blog, Market Miinds, one of the leading financial solution agencies in Kolkata, will let you know the need to create Demat account. Remember, it’s the essential gateway to trading and investing in the digital age.
What Exactly is a Demat Account?
The term “Demat” is short for Dematerialised account. Simply put, a Demat account is your digital locker for holding financial securities. In the past, when you bought shares, you received a physical paper certificate. However, a Demat account replaces all that paperwork by holding your investments like shares, bonds, mutual funds, and ETFs in an electronic format.
Which means you can eliminate the hassle of multiple documents, as well as reduce the risk of losing important documents. There are also other benefits to create demat account, which we will explore below:
| Primary Function | Stores securities electronically (the locker). | Executes buy and sell orders on the stock exchange (the transaction tool). |
| Feature | Demat Account | Trading Account |
| In India | Maintained by Depositories (NSDL or CDSL) through a Depository Participant (DP). | Maintained by the Broker (like IIFL). |
Why is it Necessary to Create Demat Account?
Since the Securities and Exchange Board of India (SEBI) made it mandatory to hold and trade listed securities electronically, having a Demat account is a prerequisite for most stock market activities, including applying for an IPO. To be clearer, you are legally required to open demat account, whether you open open demat account online or a free demat account with no annual charges. Only then can you buy or sell shares on stock exchanges like NSE or BSE.
As mentioned before, a demat account acts as a safe for all your documents and eliminates risks associated with physical documents, such as loss, theft, forgery, or damage. On the other hand, it also reduces the hassle of paperwork and ensures your holdings are easily accessible and traceable. Moreover, you can also get instant transfer of shares during buying or selling, as well as speeding up settlement cycles and reducing delays in receiving securities or payments.
Furthermore, if you want access to a vast range of investments, a demat account is the way to go. Because, demat account can hold not just stocks, but also mutual funds, bonds, ETFs, government securities, and more. Plus, the existence of such an account will simplify portfolio management by consolidating all your investments in one place.
Lastly, the greatest benefit of a demat account is that it reduces transaction costs by eliminating stamp duty on the transfer of securities. Thus, it will make your corporate actions like dividends, bonuses, and rights issues seamless and automatic.
Create Demat Account and Seamlessly Invest with IIFL Capital
IIFL Capital is one of the leading Depository Participants (DPs) in India. They typically offer a 2-in-1 account (Demat + Trading) for a smooth investing experience. But first, you need to know how to open your best demat account with us. As Market Miinds is an authorised partner, we will guide you through the process of the steps for opening a demat account.
How to Open Your Demat Account
Opening an account with IIFL is quick and paperless, especially if your Aadhaar card is linked to your current mobile number (for e-Sign). The process involves a few easy steps that will enable you to create demat account safely. Visit our authorised partner link and click on the “Open Account” button.
In case you have run into an issue while following the steps to create demat account. You can schedule a one-to-one meeting with Market Miinds to discuss about this process. Furthermore, if you want a full analysis of your financial health as well. We take 360° care of all your financial needs.
Essential Documents to Keep Ready When Opening a Demat Account
While the process is mostly paperless, you should have digital copies of these documents ready. There are many steps that you will need to take to look for your document to get the credentials right. Therefore, whenever you are sitting to create demat account, make sure you keep all the documents within arm’s reach. To make things easy for you, we have created a list of documents that you will need during the process.
| Document Category | Required Documents (Any one copy) |
|---|---|
| Identity Proof (POI) | PAN Card (Mandatory), Voter’s ID, Passport. |
| Address Proof (POA) | Aadhaar Card, Passport, Voter’s ID, Latest Utility Bill (Electricity, Gas, etc.). |
| Bank Proof | Cancelled Cheque leaf or Latest Bank Statement. |
| Income Proof (For F&O/Commodity) | Last 6-month Bank Statement, Latest Salary Slip, ITR Acknowledgement, or Form-16. |
How Much Demat Account Cost?
Well, the good news is, if you are a new user, you can get access to a free demat account. Moreover, you can also have your broker waive the Annual Maintenance Charge (AMC) for the first year. Furthermore, they also offer many plans that offer zero AMC. However, in case it is not the case, the AMC is usually pretty low-cost, around ₹300/year.
Moreover, the transaction cost you bear is around ₹10 – ₹25 per transaction, which is charged when you sell shares; buying is usually free. Lastly, the custodian fee is usually charged by anyone these days. However, if you are an active trader, a free account will not do you any good; after all, regular plans hover around ₹300 per year maximum!
Concluding with Quick Tips
At Market Miinds, we like to provide you with more than you expect. Thus, here are all the additional tips that you need to keep in mind when you are about to create demat account! First, although account opening is often free, be sure to check for Annual Maintenance Charges (AMC) and transaction fees levied by the DP.
On the other hand, you should always complete the nomination process to ensure a smooth transfer of assets to your nominee in case of an unforeseen event. Therefore, opening a Demat account is your first significant step toward building wealth through the stock market. So, get started with IIFL and good luck with your new financial journey!
FAQs
- Is a Demat account mandatory for investing in all financial instruments?
- No. A Demat account is mandatory for holding listed shares (equity), ETFs, bonds, and applying for IPOs in India. It is not mandatory to invest in Mutual Funds through regular/direct plans, though many investors choose to hold their mutual fund units in Demat form for consolidation and convenience.
- What is the difference between IIFL Capital, IIFL Gold Loan, and IIFL Finance?
- They are part of the same group but have different focuses. IIFL Gold Loan is a secured loan where you pledge your gold jewellery to IIFL Finance to get funds for personal or business needs. IIFL Finance primarily deals with loans (like gold, business, and home loans). IIFL Capital is often focused on wealth and asset management services.
- Can I open a Demat account with IIFL even if I already have one with another broker?
- Yes, you can have multiple Demat accounts with different Depository Participants (DPs) like IIFL. However, you can only hold one Demat account under the Basic Services Demat Account (BSDA) category across all DPs. Be aware that each account may have its own Annual Maintenance Charges (AMC).
