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Demat Account – Meaning, Account Opening Process, Charges, Features, and Benefits

After the demolition of the outcry system in the Indian stock market, the dematerialization (DEMAT) system came into existence. Dematerialization means converting physical certificates into electronic or digital form. This process requires demat accounts. A demat account makes investing in the stock market convenient and fastens the process of financial trades. 

Demat Account

Here is the post explaining its features, benefits and the procedure to open Demat account online

Demat Account 

A dematerialisation account, popular as a demat account, is used to hold and transfer the financial securities of an investor electronically or digitally. Demat Account is the most important and first requirement to enter the stock market as a person cannot trade or invest in stock market if they don’t have a demat account.

In India, there are two authorities to provide dematerialisation services – National Securities Depository Limited and Central Depository Services Limited. They are providing demat services through Depository Participants (DP).

A Demat account is the digital storage to keep your financial securities, such as shares, mutual fund units, etc. in the dematerialized form. The securities will be debited from the Demat account or credited in the Demat account on any buying or selling transaction of financial securities.

Demat Account Features 

  1. It’s an online account to complete the process of financial trades electronically. 
  2. It’s online storage to hold a number of financial securities in digital form. 
  3. It’s an account that allows instant transfer of shares without a long waiting period. Shares will be reflected in your account once it’s transferred.
  4. The Demat account gives access to monitor all your financial securities in one place from any corner of the world. 
  5. The account is used to dematerialize the old physical shares if someone has shares in the paper form. 

Benefits of Demat Account 

1. Lowers The Cost of Investing 

Online investors need not pay a heavy cost of investing in the stock market. They are not even required to pay fees separately to hold different types of securities. It is the single storage to hold all your financial securities. 

2. Safety and Security 

Demat Account is a safe and secure way to hold financial securities. There reduces the chance of theft, damage like in the case of physical certificates, delay in deliveries, fake deliveries, forgery etc. Each and every transaction is monitored by the Central depositories, stock exchanges and apex market regulator SEBI (Securities Exchange Board of India). 

3. Secured Login 

The demat account holder is the only person who can log in to his/her demat account and monitor all the financial Securities that he/she owns. 

4. The Solution to Odd Lots  

An investor is allowed to buy even a single share through demat accounts. It has solved the issue of odd lots to buy shares. 

5. Basic Services Demat Account 

If you are a small investor and have limited capital to invest i.e. maximum Rs.2 lakhs, you can open a BSDA that allows investing at a very much lower cost. It does not involve normal demat account charges.

6. Automatic Personal Details 

Whenever you buy stocks of a company, they will require your personal details. You do not need to submit your details every time. It will be fetched automatically from your demat account.

7. Automatic Credit of Corporate Benefits 

In the event of a company merger, bonus issue, consolidation etc, your benefits will be credited to your demat account automatically. 

8. Investing In The Comfort Of Your Home 

You do not need to rush to stock exchanges to place an order to buy or sell securities. You can make investments just by instructing your Depository. 

Demat Account Opening Process 

It is an easy online process to open a demat account. You can open your demat account in 10-15 minutes.

Step 1: Visit any SEBI registered stockbroker’s website and open the Demat Account Opening Form. 

Step 2: Fill in your personal details like Name, PAN number, phone number and email ID. 

Step 3: Upload copies of your documents in the jpeg format. 

  • Your PAN card 
  • Income Proof 
  • ID proof 
  • Address Proof 
  • A canceled cheque 
  • Passport size photo 
  • Signature 

Step 4: Submit the form. It will be verified by the DP. 

Step 5: In-person verification process will be completed through a video call. 

Step 6: Once the verification process is completed, Your Demat account details along with your trading account will be sent to you through email and by courier at your registered address. 

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