An Initial Public Offering, popularly called an IPO, is that window of excitement through which investors can buy shares of any company which wants to become a part of the public. A great opportunity with potentially high returns on investment opens only with a Demat account. It is a facility that allows one to hold your share electronically and it applies to the stock trading markets.
Opening a Demat Account for IPOs: A Step-by-Step Guide
- Select a Depository Participant (DP)
One may approach a Depository Participant (DP) to open a Demat account. The same DP can also be the bank, stockbroker, or an online trading site. For most people, the DP acts as an intermediary between your account and the depositories, where the shares are kept electronically.
- Gathering all the Necessities
Opening a Demat account requires the following documents-
Identity proof: Copy of Aadhaar card, PAN card, or passport.
These include:
Utility bills, Aadhaar card, or bank statement as address proof
Bank account information with a cancelled cheque or a bank statement
Passport photograph- two to three in number Mostly all your documents need to be recent and you have to present them.
- Application Form Fill up
Once you have chosen your preferred DP, and then fill out the application form provided. Most DPs nowadays offer the facility to open online accounts, which have become far quicker and effortless.
- Verification Process
Soon after you have submitted your application, the documents you have uploaded will be verified within a few days. In some platforms, a representative from DP may contact you, requiring in-person verification, but most platforms offer e-verification, making it easier and much faster to complete the process.
- Get Your Demat Account Details
Once you have been approved, your Demat account number, also known as the BO ID, will be issued, and you can apply for various IPOs and undertake other stock market activities with this number.
How to Submit an IPO Application through Your Demat Account
Now that you have your Demat account open, you can apply to any IPO. Here is how you can do that:
- Check the IPO Listing: Find out the upcoming IPOs on the portal of the stock exchanges or through your DP’s platform.
- Apply to the IPO: Most of the DPs have an online portal where you can directly apply for the IPO. You just need to search for the IPO, select the number of shares, and complete your application form.
- Waiting for Allotment: After the IPO gets closed, the company would then allot shares to the applicants. If you get an allotment, then the shares will be credited to your Demat account.
Why Open a Demat Account?
One of the reasons the Demat account is almost compulsory simply to access IPOs is that you need to have all your securities, including equities such as stocks, and mutual funds among other types of securities. Holding investment in a Demat account is a safer electronic form of securities investment which can be retrieved anytime securely.
Conclusion
Opening a Demat account is not a difficult process as long as you refer to the steps outlined above. Be it an absolute newbie in investments or awaiting that IPO, getting a Demat account has been placed on the cards. That is where platforms like 5paisa step into the scene – simply open Demat account and get on with your investment journey.
