Eligibility for a Demat Account: Who Can Open One and How to Get Started? 

In 1996, the Security and Exchange Board of India (SEBI) introduced Demat accounts to streamline the transaction of securities among investors. Previously, the only option was to purchase paper or physical shares, which often involved lengthy processes and posed risks of theft or loss.

This account allows you to hold securities electronically, making it easier and faster than the traditional method.  According to recent data published by CDSL and NSDL, a total of 3.7 crores of Demat accounts were opened in FY24.  

In this blog, we will guide you on who can open a Demat account, the documents required and how to open one. Let us get started.

Understanding Demat Account

A Demat account (short for Dematerialised account) provides a secure, convenient, and hassle-free digital way to hold a variety of financial securities, including stocks, bonds, mutual funds, ETFs, government securities, and more.

For investors, a Demat account simplifies portfolio management by eliminating the need for physical share certificates. This digital system makes buying, selling, and transferring securities quicker and more efficient. From 31st March 2019, as per SEBI’s mandate, holding securities in a Demat account has become a requirement for conducting transactions on any Indian stock exchange.

CDSL and NSDL are India’s two main depositories and they provide Demat account-related services through stockbrokers and depository participants (DP). 

Who Is Eligible to Open a Demat Account in India? 

Let us see who can open a Demat account in India:

• Individual Investors:

• • Residents: Any Indian resident above 18 years of age is eligible to open a Demat account with a valid PAN card and KYC (Know Your Customer) requirements.
  • Minors: To open a Demat account for a minor, the parents or guardians must open and manage the account until the minor reaches adulthood.

• Non-Resident Indians (NRIs):

NRIs are eligible to open Demat accounts to invest in the Indian stock markets. They must follow the guidelines set by the Foreign Exchange Management Act (FEMA) to comply with Indian financial regulations.

• Trusts and Corporates:

Companies can Open Demat Account to effectively manage and hold their investments in shares and securities.

• Hindu Undivided Families (HUFs):

A Demat account can be opened in the name of a HUF, with the Karta (head of the family) overseeing the account. This enables the HUF to collectively invest and manage its financial assets.

List of Documents for Opening a Demat Account 

To open a Demat account, you need certain documents during the account opening process. Here is a summary:

Proof of Identity

• PAN Card 
• Photo ID issued by a state or central government body

Proof of Address

• Aadhaar Card
• Voter ID

Proof of Bank Account

• Latest bank account statement 
• Cancelled cheque 

Proof of Income (For trading in derivatives like Futures and Options)

• Income Tax Return (ITR) acknowledgement slip
• Bank statement (Last 6 months)
• Latest salary slip

Steps for Opening a Demat Account

Following are the most essential steps you must follow to open a new Demat account in India:

• Choose a Depository Participant (DP): Select a trusted DP like Torus Digital, based on its reputation and the services it offers.

• Fill in Personal Information: Complete the online account opening form with the required details, such as your name, ID card information, and PAN card..

• Provide Bank Details: Enter your bank account information, including account number, type, and IFSC code.

• Upload Documents: Submit your photo, proof of identity, and address documents.

• Complete In-person Verification: Verify your identity by clicking a photo and submitting it.

• Digital Signature (E-sign): Use your Aadhaar-linked mobile number to digitally sign your application for a secure, paperless process and submit your form.

Summing Up

By now, you should have a clear understanding of Demat account eligibility. If you carefully follow these guidelines, you can easily open your new Demat account. Depending on your stock broker, there may be some account opening or annual maintenance charges (AMC) or both applicable to your Demat account.

At Torus Digital, you can open a Demat account with zero account opening fees and applicable annual maintenance charges. Open your Demat account with us today!

At Torus Digital, you can open a Demat account with zero account opening fees and applicable annual maintenance charges. Open your Demat account with us today and manage it easily through our Demat account app.