What is a Demat Account?
A Demat (Dematerialised) Account lets you hold shares and securities in electronic form. When you trade online, the shares you buy are stored in your Demat account, making trading easy and secure.
Why Do You Need a Demat Account?
- Electronic Storage: Holds stocks, bonds, mutual funds, and ETFs electronically.
- Trading: Required for buying and selling securities.
- Safety: Eliminates risks of loss, theft, or damage to physical share certificates.
- Ownership Transfer: Makes transferring securities simple.
- Easy Monitoring: Tracks investments in real-time.
- Reduced Paperwork: No need for physical documents.
Types of Securities Held in a Demat Account
- Shares
- Bonds
- E-gold
- Government securities
- IPOs
- ETFs
- Mutual funds
- Non-convertible debentures
Demat Account Opening Process
You need a bank account, a Demat account, and a trading account to start trading. The Demat account holds securities, and the trading account facilitates transactions.
Key Elements of a Demat Account
- Depository: Two main ones in India are CDSL and NSDL.
- Depository Participant (DP): Acts as an intermediary between you and the depository.
- Investor: The account holder.
- Unique ID: A 16-digit number for your account.
How to Open a Demat Account Online
- Visit your chosen DP’s website.
- Fill out a form with your name, phone number, and city.
- Enter OTPs sent to your phone and email.
- Provide PAN details, bank account details, and KYC information.
- Upload a selfie and signature.
- Complete verification via e-Sign.
- Your Demat account is now open! You’ll receive account details via email and SMS.
How to Open a Demat Account Offline
- Select a DP: Compare services and choose the best one for you.
- Fill Out the Application: Provide personal, bank, and nominee details along with KYC documents.
- Verification: The DP will verify your documents and conduct an in-person verification.
- Approval: Once verified, your account will be opened and you’ll receive your account number.
Facilities Available with a Demat Account
- Investment Transfer: Transfer securities easily.
- Dematerialisation: Convert physical certificates to electronic form.
- Collateral for Loan: Use securities as collateral for loans.
- Corporate Actions: Automatically updates for stock splits, bonuses, etc.
- Account Freeze: Can freeze the account to prevent unauthorized transactions.
- E-facility (eDIS): Enables swift transactions with electronic slips.
Benefits of a Demat Account
- Convenient and time-saving transactions.
- No paperwork.
- Safe from theft and damage.
- Single platform for debt and equity instruments.
- Automated updates for corporate actions.
- No stamp duty on electronic transactions.
- Easy transfer of shares.
Transferring Shares Between DPs
- Intra-Depository Transfer: Within the same depository.
- Inter-Depository Transfer: Between different depositories.
- Fill out and submit a Delivery Instruction Slip (DIS).
Demat vs. Trading Account
- Demat Account: Holds securities.
- Trading Account: Facilitates buying and selling of securities.
Types of Demat Accounts
- Regular Demat Account: For residents of India.
- Repatriable Demat Account: For NRIs with NRE accounts, allows international fund transfers.
- Non-repatriable Demat Account: For NRIs with NRO accounts, no international fund transfers.
Things to Remember
- Link your Demat and trading accounts.
- Be aware of charges.
- Ensure correct information in the application.
- Add a nominee to your account.
- Stay vigilant for fraudulent activities.
Ready to start? Head to your preferred DP’s website and open your Demat account in just a few minutes!
