Opening a Free Demat Account Online – What, Why, and How?

Gone are the days when trading used to happen Offline. With the ever-growing technology and internet facilities, everything has started coming online and so is the case with trading. We all know that the first step towards buying a share is having a Demat account. Let’s understand how to create this account for free, online.

A Demat account means that the paper version of the stocks or shares, mutual funds, bonds, derivatives, etc has been de-materialized and converted to Electronic form. This ensures the safety of the shares. Nobody can steal them as they are in electronic form. They take less space, are easier to handle, and can be bought or sold sitting anywhere in the world since the facility is now Online.

A bank account and a Demat Account are very similar. The only difference is that in this account we store or deposit shares, mutual funds, bonds, etc. A Trading account is used to trade that is, buy or sell the shares. Money from the bank account is transferred to a trading account to purchase or clear the position of the stocks. A trading account acts as the interface between you and the bank account.

Opening a Demat account involves many charges such as maintenance, security fee, and of course for opening the account. These charges might make you lose interest in keeping the account if you are not keen on trading the stock regularly. This problem gets resolved by opening a free Demat account.

The account opening procedure for a free Demat account is simple.

• Decide which bank, brokerage firm, or financial institution can be your DP or depository participant. DP stores all the bonds, stocks, shares, and mutual funds with it.

• Click on the new Demat account on it.

• Fill in the compulsory details like name address, mobile number.

• Upload KYC details like address proof, identity proof, etc.

• An In-Person verification is done by the bank by getting access to the Webcam.

• Bank or the firm provides you with the rules and regulations of the bank regarding the account.

• You need to link your mobile number to your Adhar card to E-sign the form.

• Your DP will send your unique Client ID. You are ready to access your Demat account by creating the password.

The procedure of opening a trading account is exactly similar. You just have to choose the option of Trading instead of Demat.

A Demat account is essential if you want to hold the shares even for a single night. A trading account doesn’t hold the shares. It is a medium of transaction. You can buy or sell through it. So, if you want to get involved actively in buying and selling rather than just holding the position, you must create a trading account as well alongside a Demat account.