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About Demat Account
Demat account is a dematerialized account that stores all your shares and other securities such as exchange traded funds, bonds, debentures, futures and options, mutual funds, Initial Public Offer (IPO) etc. It is similar to a bank savings account that holds your money. However, instead of money, a demat account holds your investments electronically. Since you cannot store your shares in physical form, the demat account dematerializes it for you and converts it into electronic form.
Eligibility Criteria for Demat Account Opening
Here are the eligibility criteria for opening a demat account:
There is no specific age limit to invest in the stock market. However, you must be at least 18 years of age to open a demat account. Students above 18 years can open their own account. Those under the age of 18 can ask a parent or guardian to open it for themselves.
You must be a citizen of India to open a regular demat account. If you are a Non-Resident Indian (NRI), you can use other types of demat accounts, such as repatriable or non-repatriable demat accounts.
You must have a valid PAN card to open a demat account.
You must have proof of identity or address, such as Aadhar Card, Driving License, Passport, Ration Card etc.
– Brokers may ask for proof of your net worth, such as bank statement, income tax return (ITR) statement, income certificate etc. to process your application.
Can a student open a demat account?
Yes, a student can open a demat account. But there are some terms and conditions that students need to know. They are as follows:
Students above 18 years of age can open both demat and trading accounts. However, like all stock market traders, they need a valid PAN card to be eligible for trading.
Students (minors) below the age of 18 years can open demat accounts, but they cannot open trading accounts, and hence such students cannot buy and sell stock market securities.
Minors cannot enter into any trade due to the Indian Contract Act of 1872 which prohibits minors from entering into any contract. Since share trading involves – a contract between the broker and the client, minors are not allowed to open a trading account.
Demat accounts can be opened in the name of minor child only by natural guardian(s) or court appointed guardians.
How to Open Demat Account?
Identify and contact a Depository Participant (DP). A DP is an intermediary associated with the Central Depository – CDSL and NSDL in India. The DP can be a bank or a stockbroking firm.
Fill out the account opening form. Along with the application form, submit your KYC (Know Your Customer) documents. These include – passport size photograph, PAN card, proof of identity and proof of residential address.
DP verifies your documents and opens your account by allotting Beneficiary ID (Demat Account Number). The merged DP ID and Beneficiary ID becomes your unique Demat account number.
Benefits of opening a demat account
You are not required to store the securities you purchased in physical form.
It’s more convenient and involves minimal paperwork
Demat accounts eliminate the risk of theft and fraud associated with exchanging physical stock certificates.
Execution of business transactions and settlements has also been simplified.
Demat accounts have revolutionized stock market investing. As a student, the sooner you start your investment journey, the more significant are the benefits.
A demat account can allow students to start their own financial journal in investments from an early age. It can make you financially disciplined and offer you a head start in life, taking you one step closer to your goals. Stock market investing does not require a huge amount and can be started with a small amount. Moreover, with minimal fees and a simple account opening process, most of the students can easily open a demat account without any hassle. So, instead of waiting to start investing when you start your career, start as a student and get your Demat account today!
frequently Asked question:
1. How can I open a Demat account as a student?
If you are above 18 years of age and have a valid PAN card, you can go ahead and open a Demat account for yourself by contacting a Depository Participant (DP). You will be asked to fill in the account opening form and submit your KYC (Know Your Customer) documents. DP will verify your documents and open your account. You will get a Demat Account Number after the process is completed.
If you are under the age of 18, you can request your parent or guardian to do so for you.
2. Can an 18 Year old boy open a demat account?
Yes, a boy of 18 years can open a demat account. However, you will need a valid PAN card to complete the KYC for the account.
3. Can students invest in stocks?
Yes, students can invest in shares of other companies. There is no minimum age to invest in the stock market, and both minors and adults can buy and sell stocks.
4. What is the minimum age for opening a demat account?
The minimum age to open a demat account is 18 years. However, minors below the age of 18 years can also open their account and buy and sell stocks through their parents or guardians.
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