Demat Account means What ?
IF You Willing To Open Demat Account
We all know about savings accounts with banks. It allows easy access to our funds while offering security from theft and mishandling. A Demat account does the same for investors. Nowadays, the Demat account is a prerequisite for stock investment.
Demat Account is an account that is used to hold shares and securities in electronic format. The full form of Demat account is a dematerialised account. The purpose of opening a Demat account is to hold shares that have been bought or dematerialised (converted from physical to electronic shares), thus making share trading easy for the users during online trading.
In India, depositories such as NSDL and CDSL provide Free Demat account services. Intermediaries, depository participants or stockbrokers - like Angel One - facilitate these services. Each intermediary may have Demat account charges that vary as per volume held in the account, type of subscription, and terms and conditions between a depository and a stockbroker.
What is Demat account?
A Demat Account or Dematerialised Account provides the facility of holding shares and securities in an electronic format. During online trading, shares are bought and held in a Demat Account, thus, facilitating easy trade for the users. A Demat Account holds all the investments an individual makes in shares, government securities, exchange-traded funds, bonds and mutual funds in one place.
Demat enabled the digitisation process of the Indian stock trading market and enforced better governance by SEBI. In addition, the Demat account reduced the risks of storing, theft, damage, and malpractices by storing securities in electronic format. It was first introduced in 1996 by NSE. Initially, the account opening process was manual, and it took investors several days to get it activated. Today, one can open a Demat account online in 5 mins. The end-to-end digital process has contributed to popularising Demat, which skyrocketed in the pandemic.
What is dematerialisation?
Dematerialisation is the process of converting the physical share certificates into electronic form, which is a lot easier to maintain and is accessible from anywhere throughout the world. An investor who wants to trade online needs to open a Demat with a Depository Participant (DP). The purpose of dematerialisation is to eliminate the need for the investor to hold physical share certificates and facilitating a seamless tracking and monitoring of holdings.
Earlier, the share certificate issuance process was time-consuming and cumbersome, which Demat has helped transform by speeding the entire process and storing security certificates in digital format. Once your Demat account is active, you can convert paper certificates into digital format by submitting all your physical securities along with a Dematerialisation Request Form (DRF). Also, remember to deface each physical certificate by mentioning ‘ Surrendered for Dematerialisation’ on it. You will receive an acknowledgement slip when you surrender your share certificates.
importance of Demat account
A Demat account provides a digitally secure and convenient way of holding shares and securities. It eliminates theft, forgery, loss and damage of physical certificates. With a Demat account, you can transfer securities immediately. Once the trade is approved, the shares are digitally transferred to your account. Moreover, in case events like stock bonuses, mergers, etc., you get shares automatically into your account. Your Demat account information regarding these activities is available online by simply logging into the website. You can trade on-the-go using your smartphone or desktop. So, you needn’t visit the stock exchange to transact. You also enjoy the benefit of reduced transaction costs because there is no stamp duty involved with the transfer of shares. These features and benefits of a Demat account encourage a larger trade volume by investors, thus increasing the potential for lucrative returns.
Demat account has made it easier to handle stocks. The Indian exchanges now follow the settlement cycle of T+2 days facilitated by the Demat account. You pay the seller on the second business day when you buy shares following the settlement cycle, and your Demat account gets automatically credited with the purchased securities. Demat account has made the process of security trading seamless and hassle-free.
Benefits of Demat account
Seamless and fast transfer of shares
Facilitates digitally secured storing of securities
Eliminates theft, forgery, loss and damage of security certificates
Easy tracking of trading activities
All-time access
Allows to add beneficiaries
Automatic credit of bonus stocks, rights issues, split shares
How does a Demat Account work?
Trading through a Demat account is similar to the procedure of physical trading, except that a Demat account is electronic. You begin trading by placing an order through your online trading account. For this purpose, it is necessary to link both trading and Demat accounts. Once an order is placed, the exchange will process the order. Demat account details the market price of shares and the availability of shares is verified before the final processing of the order. On completion of the processing, shares are then reflected in your statement of holdings. When a shareholder wishes to sell shares, a delivery instruction note has to be provided with details of the stock. Shares are then debited from the account and the equivalent cash value is credited to the trading account.
Having a Demat account is compulsory per the Depository Act passed in 1996. To facilitate it, the National Securities Depository Limited (NSDL) was formed in 1996. And, the Central Depository Services Limited (CDSL) became the second such institution three years later. Together the two agencies are the custodian of all the electronic securities held by investors. They offer the Demat account opening service through various depository participants, like Angel One. Both agencies and their partner brokers are registered with SEBI.
Sevaral categories of demat accounts
1, ICICI Direct Markets
ICICIdirect Market app is one of the best apps for trading in India which provides superlative trading experience for traders and investors. On just one swipe investors can sell or buy stocks.
2, Paytm Money Demat Account
Paytm Money offers stock trading account and Demat account services. It offers a fixed, flat-fee brokerage plan to its customers.
3, lifl
IIFL is one of the leading player in the broking industry with more than a million accounts being opened since inception. The company provides execution, advisory, and research service across products like equity, F&O, Commodity & Currency, Mutual Funds. IIFL is also one of the top distributors of AIF, PMS and Mutual Funds.Wondering how to become a stockbroker? Think no more! Read the eligibility criteria and apply today.
4, Bajaj Securities
Bajaj Financial Securities Limited (BFSL) is a 100% subsidiary of Bajaj Finance Limited. We offer a wide spectrum of Capital Market Solutions covering Equities, Mutual funds, Corporate deposits, Bonds, Insurance, Loans & Distribution offering to Corporates, High-net-worth individuals and families. Bajaj Financial Securities Limited is a registered member of NSE & BSE for Equities & Derivative Segment and a depository participant with CDSL & NSDL.
5, Sharekhan
Back your direct stock buying and Mutual Fund investment decisions with our 20 years of unique research backed by Sharekhan Research philosophy. One of the pioneers of online trading in India brings you reliable online platforms built by traders who code .Guidance, careful monitoring and service because you will not always have the time to stay on top of your investments.
6, SBI Securities
We are happy to bring forward a new sbi securities website. With responsive design and simple navigation, our new website is bound to offer you a seamless investing experience. Here, we consistently strive to make investments more manageable, more accessible and more interactive.
We believe in generating value through a highly customer-centric approach. We intend to stay connected through various touchpoints, and maximise your returns with portfolio restructuring to help you achieve your financial goals.
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7, Yes Securities Demat Account
Yes Securities, a wholly-owned subsidiary of YES BANK is one of the leading financial advisors in India. offering 3-in-1 Advantage with Yes Bank Savings & Demat Account and Yes Securities Investment Account at one go.
8, ET Money
ET Money is one of india's highest-rated apps for Mutual Fund Investment in Direct Mutual Funds & one place for all other Personal Finance Management needs. Customers can invest, track & manage their mutual fund investments in zero commission Direct Mutual Funds, and earn guaranteed interest rates from fixed deposits.
9, Bonanza Demat Account
Bigul is a smart investing platform designed to help customers with a better investment with its expert research edge . Inde-Trader program is an initiative from Bigul's end to promote Knowledge and Independency in the journey of Trading and Investing. It aims to equip you with modern-day trading strategies and platforms like Algorithmic Trading and make trading easier for customers with Zero Brokerage charges and unlimited trades.
10, m,Stock Demat Account
m.Stock is one of the leading brokers in India & it is the one-stop solution for all your financial needs. when you open an m,Stock Zero Brokerage account , you pay zero brokerage for all your trades(intraday, delivery), across product( equity, F&O, commodities, currencies, mutual funds, ETFs) for life.
11, Edelweiss Demat Account
The Edelweiss Group is one of India's leading diversified financial services companies providing a broad range of financial products and services . This is dedicated to empower their customers/clients to gain from market opportunities and to build their wealth.
12, Kotak Cherry Demat Account
Kotak cherry is a one-stop platform for all types of investments like Mutual Funds, Stocks, Gold, NPS, Bonds, deposits and more with a few clicks built to help customer to invest like a pro.
