Investing in the stock market opens up lots of opportunities for you. It is a good way to grow your wealth over a while. These days, a small investor may also trade stocks. The Demat account was introduced in 1996. It made it possible to trade securities online. Online trading reduced the fear of theft and forgeries. Now, everyone in India must have a Demat account to trade in the share market.
However, there are certain criteria that an individual must meet to open a Demat account in India. These rules have been laid down by the Securities and Exchange Board of India (SEBI) which is the market regulator which overlooks the functioning of the Indian securities market. This blog shall discuss all the eligibility criteria to open Demat account. However, let’s first take a quick look at what are Demat accounts.
What is a Demat Account?
Demat Account is an online platform that allows investors to hold various types of financial securities. Demat accounts have grown in popularity among investors due to the convenience and safety it provides. One can store a broad range of assets in a single account. In addition, some Demat accounts offer useful services to suit the needs of all kinds of investors.
A Demat account is perfect for individuals who wish to trade in the stock market but don’t want to avoid paperwork. Many Indian banks and brokerage firms provide Demat account services. With just a few documents and identification verification, you may open a Demat account in a matter of minutes.
Eligibility Criteria for opening a Demat Account
You can open a Demat Account with a stockbroker having a due license. Here are the criteria you should meet to open your Demat account.
Age
Anyone who is 18 years or above is eligible to open a Demat account. However, minors may also open Demat accounts in India. The parents or an appointed guardian may open the Demat account on behalf of a minor. However, the minor won’t be able to make any trades through this account until he is 18 years of age.
PAN Card
A valid PAN card is required to open Demat accounts. You must mention the PAN number in the account opening form.
Identity and Address Proof
To open your Demat account, you must have a valid identity and address proof. Investors may use any of the documents issued by an authorised government agency or authority. These include a PAN card, Aadhaar card, passport, driver’s licence, voter ID card, recent utility bills or bank account statement.
Proof of Bank Account
You must have a working bank account to open a Demat account. Either a recent six-month bank statement, a cancelled cheque or a bank passbook can be submitted as bank proof.
Proof of Income
Some brokers may ask for proof of your income, especially to trade certain types of securities. Individuals may provide the most recent income tax return (ITR) statement or salary slips as their income proof.
Miscellaneous Requirements
You’ll need your passport photo and a white paper signature that matches the one on your PAN card.
These are the minimum eligibility criteria set by the Securities and Exchange Board of India (SEBI). It is the share market regulator in India. You can open a Demat account if you meet all these requirements and provide the relevant documents. At times, some brokers may have additional requirements. They may have certain terms and conditions or ask for other specific documents. Here’s a complete list of documents you can provide your broker.
Documents Required to Open Demat Account
To open a Demat account in India, one should submit the following documents.
- Proof of identity: PAN card, Aadhaar card, passport, driving license, voter ID, or NREGA job card.
- Proof of address: Utility bill, bank statement, rent agreement, passport, or driving license
- Photographs: Generally, two passport-size photographs are required.
- Bank account proof: A cancelled cheque, bank statement, or passbook
- Income proof: Salary slips, income tax returns, or bank statements.
Conclusion
To open a Demat account, an individual must meet certain eligibility conditions. Generally, they must be at least 18 years of age and have the relevant identity, address proof, and a bank account. By meeting the eligibility requirements investors can participate in the financial markets with Demat accounts. Nowadays, one may download a Demat app to open his Demat account. They can reach out to a reliable brokerage firm offering a hassle-free account opening facility. You may go with reputed financial institutions like BlinkX that offer a convenient account opening with minimal document
