What is Demat Account?

Demat account, also known as dematerialized account is best be defined as a treasure house where you can store your shares and securities in an electronic format. In the age of online trading, gone are the days when you had to trade on an outcry floor and receive certificates physically after a month or two. Now, you can trade online and receive the trading certificates soon in your demat account. Demat account is a single storehouse for all your buying and selling equities such as shares, bonds, mutual funds, government securities and much more.

 

Two depositories in India, NSDL and CDSL provide you with an online demat account opening service through intermediaries, depository participants and stock broking companies. The charges of the demat accounts vary from broker to broker, the type of account, and the terms and conditions of the broker.

What Is Dematerialization?

Dematerialization is a process by which you can convert physical share certificates into an electronic form that is easy to store, handle,
and access from all around the world.

 

Difference Between Demat Account And Trading Account

online trading at lowest brokerage

As you notice in this infographics, trading account is the centre point used for buying and selling equities in the stock market. When an investor purchases a share by using the trading account, the money gets transferred from the linked bank account to the trading account so that the trading is done successfully. Once the trading is done, the shares get transferred to the demat account as it is a storehouse for all the investments.

When an investor sells a share, the share is taken from the demat account and sold in the exchange. Once sold, you receive the money in return, which you can transfer from the trading account to the linked bank account.

How To Open A Demat Account?

Below mentioned are the demat account opening procedure. Read them carefully and follow while opening a demat account online.

 

  • Step 1 : Find out the brokers over the internet who can help you to open a demat account online. You can also ask your friends and relatives if they know any broker or have worked with in recent times.
  • Step 2 : Fill up a form for opening a demat account online and submit the photocopies of some documents for your address and identity proof.
  • Step 3 : The broker will review the form and documents and then open an account within 2 - 3 working days if satisfied, along with a Beneficial Owner Identification Number (BOIN).

Documents Required For Opening A Demat Account

Benefits of having a Demat Account

Lower Risks: Physical securities are usually prone to theft, damage and loss. In addition, bad deliveries and fake securities pose further risks. But demat account eliminates all these problems and give the opportunity for secured holdings of certificates in an electronic format.

Easy holding: Moreover, maintaining physical certificates is a tedious job, which can be easily curbed with an online demat account opening. Demat account holders can conveniently hold and track all their investments through a single account.

Odd lots: Earlier, during the time of physical certificates, buying and selling equities was only possible in specified quantities. The convenience of dealing with odds became possible only with demat accounts that eliminate the limitations of the quantities of stocks to be traded.

Reduce costs: Demat accounts eliminate the costs of stamp duty, handling charges, and other expenses attached with physical securities. Moreover, there are end numbers of lowest brokerage online brokers that offer online trading at lowest brokerage for enticing more and more investors to their trading platforms. Contact them and open a demat account at a minimal cost.