Documents required to open a free Demat account in India
The trading process in the Indian stock market has grown and evolved significantly over the past two decades. The NSDL (National Securities Depository Limited) and the CDSL (Central Depository Services Limited) are the two major depositories in the country that have played a significant role in bringing this revolutionary change. The NSDL brought the concept of “Dematerialisation” which implies converting physical share certificates into electronic forms. To execute this process, Demat Accounts are used.
There are many financial institutions, banks, and non-banking entities that play the role of Depository Participants (DPs) to provide the facility of Demat Accounts. These entities are affiliated with the NSDL and the CDSL. Out of these, there are many DPs who offer the service of free Demat Accounts. To open one for online trading, click on this link- https://www.indiainfoline.com/open-demat-account.
What Is A Free Demat Account?
A Free Demat Account is one that has zero account opening cost. Yes, the Depository Participants charge absolutely no fee for opening the account. In fact, there are few renowned DPs who do not even charge any AMC (Account Maintenance Charge) for the first year. This enables an investor to start online trading and store all his shares certificates in the electronic form.
All the free Demat Accounts are centrally registered with the two major depositories while the services of the account are provided by the DPs. Thus, features of the account may differ from one another depending upon the DP one chooses.
What Are The Documents Required For Account Opening?
There are three types of Demat Accounts –
- Regular Accounts- These are for the Indian citizens who reside in the country.
- Repatriable Accounts- These are for NRIs (Non-Resident Indians) who wish to convert their funds into other countries’ currencies.
- Non-Repatriable Accounts- These are also for NRIs but the funds of these accounts are non-repatriable.
So, the documents required for opening a free Demat Account for those who are eligible for regular accounts differ from those of the other two.
Documents Required For Regular Demat Accounts
The following documents are required for opening a free Demat Account:
Any document of the investor which is registered with the Government of India can be produced to the Depository Participant as an identity proof. Few common examples are:
- PAN (Permanent Account Number) card with a proper and valid photograph.
- Any of the investor’s documents which has a UID (Unique Identification Number) like Aadhaar Card, driving license, voter ID card.
- Ration card can also be used if it has a clear photograph
- Any other identity card which is issued by any of the government authorized bodies like ICSI (The Institute of Company Secretaries of India), ICAI (The Institute of Chartered Accountants of India), ICWAI (The Institute of Cost & Works Accountants of India), Bar Council, PSUs (Public Sector Undertakings), any department of the state or central government.
Any legal document that contains the address of the investor and is officially acceptable should be used for this purpose.
- The investor can use his passport, ration card, voter ID card, Aadhaar card, etc.
- Any sale agreement or registered lease document of the residence.
- Utility bills like electricity bill, gas bill, landline telephone bill, apartment maintenance slip, etc.
- Any address proof produced by governments bodies like commercial banks, multinational foreign banks, co-operative banks, etc.
- Any identity card issued by a state or central government.
For opening a free Demat Account an investor must also produce a document that contains proof of his income.
- Salary slip generated by the investor’s current employer or form 16.
- A photocopy of the investor’s ITR (Income Tax Return) of the current year.
- If an investor already has a Demat Account with some other Depository Participant, then he can produce the statement of his shareholdings in that account.
- A statement of the bank account that is in working condition and holds a record of at least six months.
Along with the above-mentioned proofs, one also needs to provide the following items which are compulsory.
- A passport-size photograph that has been recently clicked.
- A canceled cheque or photocopy of passbook as proof for the bank account.
Additional List of Documents For NRIs
Along with the documents mentioned above, an NRI investor will need to produce the following proofs as well for opening a free Demat account.
- Address proof of the foreign residence which is compulsory in case of both Repatriable Demat Account and Non-Repatriable Demat Account.
- A photocopy of the PIS (Portfolio Investment Scheme) letter which is issued by the Reserve Bank of India.
- A copy of the investor’s NRE (Non-Resident External) or NRO (Non-Resident Ordinary) savings account which is required depending upon the type of account.
Who Are Authorised To Attest The Documents?
Some of the documents need to be attested in order to complete the free Demat Account opening process successfully. For the citizens of India who reside in the country, the authorized government bodies can be any manager of the investor’s commercial bank, any gazetted officer, or the notary public. The investors can consult their concerned Depository Participant for any clarifications if needed.
For the NRIs, the rules are a bit different. They would need to get their documents attested from any judge of Indian courts, any court magistrate, authorized officials of overseas branches of any commercial bank that is registered in India, any officer of the Indian Embassy, etc. In case of any queries or difficulties, one should take help from his DP because every entity has its own defined rules and regulations.
The benefits of a free Demat Account are meant for simplifying the trading process in the stock market. With the help of this account, an investor can easily store his shareholding certificates safely. It also makes it more accessible than it was earlier when everything was done manually by the brokers. There is no doubt that the concept of “Dematerialization” has changed the face of share trading in India. From college students to working and established individuals, everyone can reap the benefits of Demat accounts very easily.