Just the thought of trying to open an account is stressful for many people. After all, before digitization happened, opening accounts in India used to be an elaborate and time-consuming affair. However, following the move to digital modes and the introduction of dematerialization in the 1990s, a gradual transformation has taken place. Today, anybody with an internet-connected device can trade and invest in the stock market provided they have a Demat account. Moreover, the process of the Demat account opening has become extremely simple.
Wave goodbye to extensive procedures and paperwork. For the Demat account opening, you no longer need to carry five to six documentary proofs to complete the Know Your Customer (KYC) process. All you need is your Aadhaar card. That is because the Aadhaar card serves as documentary proof for various information such as your identity, age, address, and other details. Demat account opening with an Aadhaar card is a quicker, smoother, more hassle-free process. To make things easier, here is a rundown of how it works.
What is the Aadhaar card?
Each Aadhaar card provides a unique identification number comprising 12 random digits. The card is issued free of cost by the Unique Identification Authority of India (UIDAI) to Indian residents. When you apply for an Aadhaar card, the UIDAI will first collect your biometric details—they take your fingerprints and conduct an iris scan. They also gather information such as your residential address and date of birth.
Advantages of Aadhaar card
The Aadhar card is an important document that offers several benefits. Here are some of them:
- KYC is a breeze when you have an Aadhaar card. There is no need to scan and upload or hand over physical copies of various KYC documents. Simply provide a copy of your Aadhaar card. In many cases, it suffices to enter just your Aadhaar card details.
- With the Aadhaar card, you can easily and conveniently e-verify your income tax returns (ITR).
- Have an Employee Provident Fund (EPF) account? Link your Universal Account Number (UAN) with your Aadhaar card for faster processing of partial withdrawal requests.
What is a Demat account?
A Demat account holds your shares and securities in dematerialized form. This means the certificates are stored digitally. You can use a Demat account to hold not only shares but also exchange-traded funds, mutual fund units, government securities, and other kinds of assets. You can view your entire portfolio in a single place.
Importance of Demat account
Effective from April 2019, the Securities and Exchange Board of India (SEBI) has ruled that physical shares can be sold or transferred only after they have been dematerialized. In effect, if you hold any physical stock certificates, you will need to get a Demat account to dematerialize them. Moreover, if you wish to participate in the stock markets, keep in mind that only dematerialized securities can be bought or sold. If you do not already have a Demat account, kick-start the Demat account opening process with a registered depository participant (DP).
Ease of Demat account opening
The introduction of the Aadhaar card has simplified the process of opening a Demat account. Here is a rundown of the documents needed for Demat account opening:
- Identity proof
- Residential proof
- Income proof
- A canceled bank cheque
- PAN card
The Aadhaar card serves as proof of both identity and address. Besides, the Demat account opening process takes just a few minutes when you use the e-KYC facility and your Aadhaar card. Before you start, check that your Aadhaar card is linked with your updated mobile number and email address. Here is a step-by-step guide to the Demat account opening process:
- Visit the website of the DP of your choice and click on ‘Open a Demat account’.
- Fill in the relevant details on the account opening form.
- A one-time password (OTP) will be sent to your mobile number for verification.
- You will be asked to upload further documentation such as income proof.
- In-person verification will take place through a video session with an official from the DP.
- Once you attach an e-signature, you will receive an OTP on your registered mobile number.
- A unique client code (UCC) will be sent to you on completion of the e-KYC process.
As you can see, the Aadhaar card cuts down on so many of the stressors linked to opening a Demat account. It reduces paperwork requirements and there is no need to visit the DP’s office in person. You can apply for a Demat account and complete the verification online, from anywhere.
However, before you embark on the Demat account opening process, do some research on potential DPS. It may help to open an account with a large broker like Kotak Securities that offers multiple investments and trading platforms. Think about whether you plan to invest in mutual funds or trade directly on the stock exchange. Look into the associated charges. Check out the services on offer. Once you have all the information in place, log on to the internet, whip out your Aadhaar card, and submit your application.