Demat Account Basics: Step-by-Step Guide to Opening and IPO Allotment

In the realm of investments, a demat account is a necessary tool for holding and trading securities in electronic form. With stocks and initial public offerings (IPOs) gaining popularity day by day, it has become important that we learn how to open demat account as well as navigate through IPO allotment. The aim of this write-up is to provide an understanding on what demat accounts are all about; steps required in opening one and lastly the process involved in IPO allotment.

What is a Demat Account?

Also known as “dematerialized account”, these types of accounts hold your securities such as shares, bonds, government securities (gilts), mutual funds units etc., not physically but electronically. Thus, no certificates are issued or updated anymore which makes buying/selling/transferring them more efficient & safe.

Benefits of Having a Demat Account

Safety: It minimizes risks associated with theft/loss/damage etc., common when dealing with physical certificates.

Convenience: Easy transferability between different investors’ accounts through various means like off-market transfers using delivery instruction slips (DIS).

No Paperwork Involved : Managing investments becomes simpler because there’s no need for paperwork like filling forms each time you want to sell/buy units.

Automatic Updates: Dividends credited into the linked bank account while bonuses & interest payments get directly posted on related transaction statements.

How To Open A Demat Account – Step By Step Guide

This is simple! Here’s how:

Choose Your Depository Participant (DP): NSDL & CDSL are two main depositories in India. They don’t deal directly with investors hence use intermediaries called “Depository Participants” who may be banks or stockbrokers among others. Ensure you select DP offering quality services at reasonable rates plus having user-friendly interfaces/platforms.

Fill Account Opening Form: Download or collect demat account opening forms from DP’s offices (physical copies) or websites (soft copies).

Submit Required Documents: Along with filled forms, attach following documents:

KYC (Know Your Customer) form

Proof of Identity (POI): PAN Card, Aadhar Card, Passport or Driving License etc.

Proof of Address (POA): Utility Bill like electricity bill and telephone bill; Passport; Aadhar card; Bank statement not older than 3 months old among others.

Passport Size Photographs: Attach latest colour passport size photos on each form where applicable/required.

PAN Card Copy: This is mandatory for Indian citizens/residents who wish to open a demat account in India. Foreigners may need alternative identification documents as authorized by SEBI rules/regulations.

In Person Verification (IPV): Some DPs may require this step which can be done online via video call or offline at their designated offices.

Sign The Agreement: Go through terms & conditions carefully before signing an agreement between you and your chosen DP.

Bidding: During an IPO bidding period, investors place their bids. The price band for the initial public offering is set by the company and bids can be placed within this range.

IPO Closes and Allotment: After the bidding period ends, final issue price is determined by the company in consultation with underwriters and basis of allotment. Usually if the IPO is oversubscribed then allotments are made on a pro-rata basis.

Allotment status: Investors can check their application number or PAN through the register’s website or DP’s platform to know about IPO allotment status.

Credit of Shares: Shares allotted to you will be credited into your Demat account. If not allotted, funds will be refunded to your bank account.

Tips to Increase Chances of IPO Allotment

Apply Through Multiple Applications: Applying through different accounts in family members’ names can increase chances of getting an allotment.

Choose Cut-Off Price: Opting for cut-off price during application increases chances of allotment as it indicates that you are ready to accept shares at final issue price.

Avoid Large Bids: Bidding for a smaller number of shares may increase chances of getting an allotment especially in heavily oversubscribed IPOs.


Understanding how a Demat account works and knowing about the IPO process can be very helpful for any investor who wants to take part in stock market trading. Learning how to open one’s own Demat Account enables efficient management of investments while comprehending what happens during IPO Allotments allows taking advantage from new investing possibilities. This guide gives you confidence through its steps so that you may successfully follow them, thus starting off well on your journey as an investor too!

Dealing with securities in dematerialized accounts (Demat) however requires monitoring latest trends alongside making wise choices if such undertakings shall yield positive results that meet personal interests over time. Get started today by setting up your own Demat Account and explore the wide range of opportunities that are available in stock market investment.

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