If you are planning to start investing in the stock market, the first step in your investment and trading journey is to open a demat account. In this account, all your securities (stocks, bonds, mutual funds, etc.) are stored in a single, integrated electronic format. New investors need to understand the necessary conditions and eligibility criteria for opening a demat account, as it comes with its terms and conditions.
Who is Eligible to Open a Demat Account?
According to Groww, individual retail investors who are 18 years or older can open a demat account. Minors with a PAN card can also open a demat account, but it must be under the supervision of a guardian. In addition, non-resident Indians (NRIs), Hindu Undivided Families (HUFs), partnership firms, limited liability partnerships (LLPs), public and private limited companies, trusts, and societies are also eligible to open demat accounts.
Benefits of a Demat Account
- No Physical Paperwork – A demat account removes the need for physical documents, making it easier to track investments.
- Automatic Updates – It updates details like stock splits, bonus issues, and rights shares automatically.
- Easy Online Trading – A demat account allows seamless online trading of shares.
Types of Demat Accounts
- Regular Demat Account – For Indian residents.
- Repatriable Demat Account – For Non-Resident Indians (NRIs) who want to transfer funds abroad.
- Non-Repatriable Demat Account – For NRIs, the funds cannot be transferred abroad.
Required Documents for Opening a Demat Account
For All Investors:
- PAN card (mandatory)
- Aadhaar card
- Voter ID
- Driving License
- Passport
- Ration Card
- Utility Bill (Electricity, Water, Gas, or Telephone)
- Bank Account Statement or Passbook
- Salary Slip/Form 16
- Copy of ITR Receipt
- Cancelled cheque or Bank Passbook for bank account proof
For NRIs:
- Portfolio Investment Scheme (PIS) Permission Letter from the Reserve Bank of India
- The Demat account must be linked to an NRE/NRO bank account.
For Companies:
- Certificate of Incorporation
- Memorandum of Association (MOA)
- Articles of Association (AOA)
Other Supporting Documents:
- Bank Account Statement (last 6 months)
- Demat Holdings Details
- Net-worth Certificate Copy