The A-Z Beginner's guide to opening a new DEMAT account

The A-Z Beginner’s guide to opening a new DEMAT account without an Aadhar card

Demat account- What is it and how to open it

A Demat account is a necessary account that can hold financial securities in a digital form and trade in the share market. Demat is the short form of dematerialization account and makes the process of holding investments such as below digitised;

This ensures the eradication of the hassles of physically managing and maintaining of paper official documents and shares. As a result of the introduction of internet trading, a rising number of Indian earning class are gaining better access to financial markets and the ability to invest their own money in these markets has also been upgraded by manifolds. As compared to the past years, there is no longer a need to deal with the difficulties of holding original(paper) certifications and going through lengthy paperwork.

Anyone who finances in the stock market needs a Demat, a trading account, and a bank account. By definition, A Demat account is an account in which shares and securities are kept safely in an electronic form. It dispenses holding securities in physical or document form. Demat stands for “dematerialization,” which is the act of moving physical securities like share certificates into an electronic version. Demat accounts are used to store digital assets.

Demat account is a mandatory requirement to trade in shares, bonds, and Exchange-Traded Funds (ETFs). Many reputed brokerage houses provide free Demat account opening to trade seamlessly in the Indian stock market.

Although stockbrokers open Demat accounts, they are maintained by depository institutions such as the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Once you buy shares, the shares get stored in your Demat account. Similarly, they get debited from the same account when you sell shares.

You can store your securities, such as stock certificates, in an electronic version through the use of a Demat account, which is an online account. A Demat account is a current solution to the age-old challenge of storing and managing securities in a secure and controlled environment. Since Demat accounts are online, they may be quickly linked to trading and bank accounts by their owners.

Here is a curated in-depth analysis to help you in opening a new Demat account without the need for an Aadharcard:

The only document needed for every Demat account application is a PAN card, further, we will see why Pancard is the only single document that is essential in opening a new Demat account.

Aadhaar cards were previously made necessary to purchase and sell shares by the Securities and Exchange Board of India in the calendar year 2017. After a long time, the situation was reconsidered in 2018. Currently, it is not required to link Aadhaar card to demat, trading, or bank accounts. So, you can now open an account without an aadhaar card. So, if you want to register for a brand new Demat account right now but do not possess an Aadhaar card, you can open it. Many websites like Upstox allow users to sign up for a new Demat account, for beginners, this is a sure-shot way for getting started. Also if you are wondering whether one can open a Demat account without a PANcard no. You cannot open a new Demat account without the Pan card.

On April 27th, 2007, the Securities and Exchange Board (SEBI) issued a notice which reads that submitting your Pancard is mandated when opening a new Demat account regardless of the objective or the trading size. Due to this circular, you will need to keep your Pan Card handy while opening a new Demat account for trading and transacting purposes. You need to possess your original Pan card while opening a Demat account. In addition to this, you will need to upload a self-attested copy of your PAN card. By now, we have understood that we need to produce some government/official documents in order to kickstart our investment journey. The documents you may need are,

Bank cheques/ Bank statements as proof
Address proof
PAN card

Before creating a Demat account, you must ensure you’ve got a valid PAN card on hand. Holding stocks in a Demat account has made trading much more convenient for everyone since moving away from physical certificates was implemented. Investing in the financial market of your choice is made easier with the help of Demat accounts, which are linked to both trading and bank accounts.

An additional benefit of having your securities held in a Demat account is protected from theft and unlawful theft or unlawful access. Their accessibility to your securities at any time is possible by the fact that they are available online and it is more secure. A further advantage of electronic safety of securities is that they are immune to the hazards associated with forging certificates, unlike physical paperwork.

What are the alternatives if you do not have an Aadhar card?

If you do not possess an Aadhar card, you can still open a Demat account. Similar to how a PAN card is required to establish a bank account, the Aadhar card was a mandatory document. Making the Aadhaar number necessary whenever an investor intends to register a Demat Account is one of the major reasons to combat carrying out any sort of financial evasions and tax treason.

The Aadhaar card is a critical unique identification that the Indian government has authenticated. Furthermore, as it is a recognized identification and address proof document, it can prevent misuse of funds and corruption due to its legitimacy and uniqueness. In addition to that, it is required that your Aadhar card be linked to your mobile phone number to finish the KYC{Know your customer} process efficiently.

The process for transferring shares to a Demat account:

A Demat account is essentially a storage locker for all your investments. You can store shares, bonds, government securities, mutual funds, insurance policies and ETFs in it. The highlight of a Demat account is that it makes the process of managing your investments much easier. You don’t have to lose your sleep about holding on to physical certificates or relevant documents, as all of this information will be stored electronically in your account.

You can also buy and sell investments directly through your Demat account, which makes it a highly sought and convenient option for investors. When it comes to the types of investments that can be held in a Demat account, there are pretty much no restrictions. You can hold any type of investment that is available in the financial market.

To summarise, we learned:

Opening a Demat account in India is a simple process that only requires a few key documents. Once your account is open, you can begin investing in stocks and bonds through various methods, making it easy to grow your wealth over time.
A Demat account is a current solution to the age-old challenge of storing and managing securities in a secure and controlled environment. Since Demat accounts are online, they may be quickly linked to trading and bank accounts, which allow them to function such that of an expedient means of conducting financial transactions.
It is possible to create a brand new Demat account without an Aadhar card. Few companies like Upstox are providing easy verification in new user account creations.
E-IPV is a quick-paced, and hassle-free process as compared to its traditional method.

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References:

Zerodha

Investopedia

Money Merchant Guide

https://bajajcapital.com/research/investorindia.aspx

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