How to Open a Demat and Trading Account Online: 5 Simple Steps

Are you ready to dive into stock trading? Opening a Demat and trading account is your first step to becoming a smart investor!

Topic Covered

• Introduction to Demat and Trading Accounts

• Why You Need a Demat and Trading Account

• Eligibility Criteria for Opening a Demat and Trading Account

• Step-by-Step Guide to Opening a Demat and Trading Account

• Top 5 Brokers for Opening Demat and Trading Accounts online

• Conclusion

• FAQs

Introduction to Demat and Trading Accounts

A Demat account is like a digital locker that holds your shares and securities in an electronic format.
It eliminates the need for physical share certificates, making the process of buying, selling, and managing your investments more efficient and secure.
On the other hand, a trading account is used to place buy or sell orders in the stock market.

Why You Need a Demat and Trading Account

Just like you need a bank account to store money, you need a Demat and trading account to store and trade shares in the stock market.
Demat Account works like a digital locker to keep your shares safe. You don’t need to handle physical share certificates.
Trading Account helps you to buy and sell shares in the stock market.
These simplify the process of buying, selling, and managing your investments.
Provide you the facility to invest and trade in stocks, bonds, mutual funds, and ETFs easily.

Eligibility Criteria for Opening a Demat and Trading Account

Age: You must be at least 18 years old. Minors can also open an account with a guardian’s support.
Documents: Valid PAN card and Aadhar card are mandatory to open a Demat and trading account in the stock market.
Bank Account: All nationalized banks are acceptable for opening a Demat and trading account. If your bank is not a nationalized bank, please check the list of acceptable banks provided by SEBI (Securities and Exchange Board of India) here: SEBI Approved Banks List.
Residency: Both Indians and non-resident Indians (NRIs) can open accounts.
Address Proof: Proof of residence, such as an Aadhar card, utility bill, bank statement, or rent agreement, is required.
Income Proof: Some brokers may require income proof for trading in derivatives such as F&O (Futures and Options). You can submit a bank account statement, salary slip, or ITR return for income verification.

Step-by-Step Guide to Opening a Demat and Trading Account

1. Choose a Broker
• Research and select a broker that meets your trading needs. Consider factors such as brokerage charges, trading platform features, and customer service.

2. Visit the Broker’s Website
• Go to the official website of the chosen broker and find the option to open a new account. Most brokers will have a prominent “Open Account” button or link on their homepage.

3. Sign Up or Register
• Click on the “Open Account” button and sign up using your mobile number and email address. You may need to create a username and password for your account.

4. Fill Out the Application Form
Provide your personal information, including:
• Full Name
• Date of Birth
• Address
• Contact Details (mobile number and email address)
• Bank Account Information (account number and IFSC code)
• PAN Card Details

5. Upload Required Documents
• Submit scanned copies or clear photos of the following documents:
• PAN Card: Mandatory for all financial transactions in the stock market.
• Aadhaar Card: For identity verification (alternatively, you can use a passport, voter ID, or driver’s license).
• Bank Account Proof: A cancelled cheque or bank statement.
• Photograph: A recent passport-sized photograph.
(Note: Even though the process is online, a passport-sized photograph is required for the completion of KYC documentation and to maintain records. This photo is typically uploaded digitally or using selfie camera).

6. Complete KYC Verification
• Aadhaar-based e-KYC: If you have an Aadhaar card linked to your mobile number, you can complete the KYC verification process online using an OTP sent to your registered mobile number.
• In-Person Verification (IPV): Some brokers may require a short video call to verify your identity.

7. E-Sign the Application
• Use the Aadhaar OTP to electronically sign the application form. This ensures a paperless and hassle-free process.

8. Track Your Application
• After submitting your application, you will receive an acknowledgment receipt with a reference number. Use this reference number to track the status of your application.

9. Account Activation
• Once your documents are verified, your Demat and trading account will be activated. You will receive your login credentials and account details via email and SMS.

Top 5 Brokers for Opening Demat and Trading Accounts online

1. Zerodha
• Visit the Zerodha website or download the app from the Play Store and click on ‘Sign Up’.
• Provide your mobile number and verify with an OTP.
• Fill in your personal details and upload the required documents.
• Complete the e-sign process using Aadhar.
• Account activation usually takes 24-48 hours.

2. Upstox
• Go to the Upstox website or download the app from the Play Store and click on ‘Open Account’.
• Enter your mobile number and verify with an OTP.
• Fill out your details and upload KYC documents.
• Complete the Aadhar e-sign process.
• Your account will be activated within 24-48 hours.

3. ICICI Direct
• Visit the ICICI Direct website or download the app from the Play Store and click on ‘Open an Account’.
• Provide your contact information and submit the form.
• A representative will contact you for document collection, or you can upload them online.
• Once verified, your account will be active in a few days.

4. Angel Broking
• Go to Angel Broking’s website or download the app from the Play Store and click on ‘Open an Account’.
• Enter your mobile number for OTP verification.
• Fill in the required details and upload KYC documents.
• Complete the e-sign process using Aadhar.
• Account activation takes 24-48 hours.

5. HDFC Securities
• Visit the HDFC Securities website or download the app from the Play Store and select ‘Open Account’.
• Fill in your personal information and upload KYC documents.
• Schedule a call for in-person verification or complete it online.
• Your account will be activated within a few days.

Conclusion

Opening a Demat and trading account online is a seamless process that opens the door to the exciting world of stock trading. By following these steps and choosing the right broker, you’ll be well on your way to becoming a successful investor!

What is the difference between a Demat account and a trading account?

A Demat account holds your shares and securities in an electronic format, similar to a digital locker. A trading account, on the other hand, is used to place buy or sell orders in the stock market. Both accounts work together to facilitate seamless stock trading.

What documents are required to open a Demat and trading account?

You will need a PAN card, Aadhaar card (or another form of ID such as a passport or driver’s license), a cancelled cheque or bank statement for bank account proof, and a recent passport-sized photograph. Some brokers may also require income proof for trading in derivatives.

How long does it take to open and activate a Demat and trading account?

The process typically takes 24-48 hours after the submission and verification of all required documents. Some brokers may take a few days, especially if in-person verification is required.

Is it possible to open a joint Demat account?

Yes, you can open a joint Demat account with up to three holders. All account holders must submit the required documents, such as identity proof, address proof, and PAN card. The account operates based on the collective instructions of all holders, ensuring shared control and decision-making. This is ideal for families or partners managing investments together, offering transparency and joint management of securities.

Can minors open a Demat and trading account?

Yes, minors can open a Demat account with the assistance of a guardian. The guardian will operate the account until the minor reaches the age of 18, at which point the account can be transferred to the minor’s name.

Is it safe to open a Demat and trading account online?

Yes, opening a Demat and trading account online is safe, as long as you choose a reputable and trustworthy broker. Most brokers use secure, encrypted platforms to safeguard your personal and financial information from unauthorized access. It is crucial to ensure that the broker is registered with the Securities and Exchange Board of India (SEBI) and adheres to all regulatory guidelines. This ensures that your investments are protected, and the broker operates transparently and legally within the Indian financial system.

Can I open multiple Demat accounts?

Yes, you can open multiple Demat accounts with different brokers, allowing you to diversify your investments and take advantage of various brokerage services. However, you cannot open more than one Demat account with the same broker, as each investor is allowed only one Demat account per broker to maintain compliance with regulatory guidelines and ensure proper management of securities.

How can I transfer shares from one Demat account to another?

To transfer shares between Demat accounts , log into your trading platform and go to the “Demat to Demat Transfer” section. Enter the target Demat account number and ISIN of the shares you wish to transfer. Select the shares and specify the quantity, then authenticate the transfer using methods like OTP verification. Once confirmed, submit the request, and the shares will be transferred to the designated account. This process works smoothly when both accounts are with the same depository participant (DP); otherwise, you will need a physical Delivery Instruction Slip (DIS).