As you may be already aware, demat account is mandatory if you plan to transact in Indian stock market. The demat account can be opened with any of your stock broker of your choice.
Before 2017, all the demat account usually used to open by sending the filled account opening forms. The account opening forms were given by the stock broker and it was as per the format prescribed by stock exchanges such as NSE or BSE.
But post 2017, demat account can also be opened online sitting at home without filling any forms and visiting any broker office. This is called online account opening. Then what is the difference between online and offline account opening and is there any advantage over other? let us check out that in this article.
Offline demat account opening:
Offline demat account opening refers to filling out the forms and sending it to broker office along with supplementary documents like Proof of Identity (POI) and Proof of Address (POA).
It is mainly suitable for the elderly people who normally not that tech savvy. They prefer to fill the forms and sign over it and keep the xerox copy of the filled form along with them.
But it has many disadvantages as well. Biggest drawback of offline demat account opening is that there is higher chances of making mistakes while filling the form. This results in rejection of the forms and one has to correct it and resend it.
Many times people loose interest because of send the forms to and fro and leave the idea of opening the demat account to later date.
Another problem is that, there is possible that account gets opened but becaue of human limitation, any small unnoticable error gets into account information which can create problem in later stages.
Online demat account opening:
Online method of opening the demat account has become most popular way in recent times , particularly post Covid – 19 pandemic. In online method, account can be opened without visiting or filling any physical forms. It has become easier, only requirement being ones Adhhaar number should be linked with his/her mobile number.
All the documents like PAN, Address and Identity proofs and bank proofs can be uploaded online itself. The broker with verify the documents and open the account. You may also be required to do In Person Verification (IPV) using the mobile or desktop web camera. It is the mandatory steps as per SEBI.
The chances of mistakes while opening the demat account online minimal because the software catches the mismatches which might have gone unnoticed in offline method by the account opening executive.
Another major benefit is the duration required to open the account. In offline method usually takes more than one week because the forms has to reach the broker office through courier/post.
But in online method the account is usually opened in 24 hours.
There is also chance of loss of filled forms in transit due to various reasons. All these can be avoided using online method.
Final Thoughts:
Enabling the opening of the demat account online in India has provided many advantages. Infact it is the main reason for opening of the lakhs of demat account during the lockdown. Many people who has lot of free time were searching for the various ways of earning online and stock market became one of the best avenues for them.
Many social media influencers also promoted online investing and trading. It has helped growing the stock market expose to Indians otherwise who mar mainly into fixed deposits and real estates.
If you are thinking to open a demat account, i suggest you to prefer the online method and almost all the major stock brokers of India are offering online account opening.