Kindly appreciate opening a demat account is not a compulsory thing. However if you want to buy a company's shares from open market or invest in other securities you have to open a demat account.
Here I would also like to tell you about a trading account. If you want to do regular buying and selling of stock you must have a trading account along with a demat account. In demat account you can only hold shares and other securities in fungible form. However if you want to start trading of securities you are also required to open a trading account.
Procedure for opening of a trading account
There are lots of private and government Depository Participants (DP's) are available across the country providing demat facility. Like SBI, PBB, ICICI, HDFC to name a few. Almost all the private and nationalized banks are offering demat facility. You can open your demat account with anyone of these Depository Participants (DP's).
You must be having following proofs to open a demat account:
1. Your Identity proof like passport, ration card, driving licence, PAN card
2. Your address proof like passport, ration card, driving licence
3. A valid copy of your PAN Card.
Kindly note PAN Card is must to open a demat account.
For opening of demat account you have to pay fix annual charge to the DP. Annual Charges may be from 500 to 800 and may differ from DP to DP.
There are basically 2 depositories holding the records of all the demat accounts across India. These are National securities depositories Limited (NSDL) and Central depository's securities Limited (CDSL). All the Depository Participants are registered with NSDL and CDSL.
Once you fill the demat account opening form and submit the same with your selected DP, you will be provided with Unique Client Id and DP Id with one week (In most of the cases).
I would recommend the demat service of HDFC bank as their online demat system is very user friendly.
I hope the above information would be of some help. If you have any other doubt let me know.
Company Secretary and Compliance Officer