It can be challenging to manage your finances including equity or debt. But there depositary act of 1996 has made it easier for everyone to manage the financial securities and a click of a button. Instead of getting physical copies of shares or other securities a demat account allows you to make the most of online trading platform when you can hold your financial security on a standardized electronic system.
The Government of India had announced the arrangements for a demat account in the year 1996 in order to grow and keep up with the progressing times where the developed countries were already offering electronic/digital trading platforms to minimize fraud and improve market efficiency.
As per the Securities Exchange board of India demat account is compulsory for anyone trading in the financial securities. A demat account is a prerequisite when it comes to investing in the stock market and if you are a new investor having some queries regarding the demat account you can read ahead and get all your queries solved will stop
What do you need to know about a demat account?
A demat account stands for a dematerialized account that means that your shares bonds and stocks besides other financial securities are available in electronic form instead of material or hard copy form. A demand account can hold shares stocks bonds gold government securities IPOs and mutual funds. You can think of a demat account as any other bank account that shows a credit balance is debit transaction history and to account and track your finances digitally.
There is no lower limit to the value of holdings you need to have to maintain the account. It is acceptable even if you have zero funds when you open the demat account or even during the entire time you keep the account.
Opening an account to start the stock market investment
Opening a demat account is a first step towards starting your investor journey but to start trading will need a bank account. But a trading account is mandatory. A demat account is just an account where you deposit the securities and hold them for the time you trade. A trading account is important to make real transactions. You can invest in our range of investment tools including commodities stocks and derivatives with a trading account.
You can go for three in one account that facilitates seamless trading if you think handling 3 different accounts for trading is a hassle for you. When you use the 3 in one account, you can save a lot of time which earlier used to get wasted in switching between accounts.
Benefits of opening a demat account online
There are several benefits of opening a demat account.
When you open a demat account you can make transaction as for your convenience making it convenient and time saving. The best part is that you don’t have to go through any long paperwork or documentation to register a transaction.
With the team at account there is no risk of forging, delays or theft of original copies of share certificates as these shares and stocks are stored in an electronic form. You also have an all in one integrated platform which holds all your financial instruments such as debt and equity.
Automated credits made to be registered under the mat account in case of splits bonus mergers considerations etc. There is no need for multiple communication as all the stakeholders will be informed of any transaction through electronic alerts such as SMS, mail etc. thereby removing the need to get in touch with the trader, investor or the company.
All the changes related to the addresses are also updated with the every company invested in the investors with depositary participant. Even a single share can be sold or bought unlike earlier days when stocks were transacted in lots. There are no stamp duty costs now which were otherwise associated with physical securities which led to a significant reduction in the cost of trading.
How to open a demat account?
Once you know the features, benefits and functioning of a demat account you might be interested in opening a demat account.
Firstly you need to choose a depositary participant. Once you’ve compared the services and the benefits of other depository participants who can finalize the most suitable depositary participant for your needs.
You need to fill out the application form for opening a new demon account besides this and you have to submit a list of KYC documents including identity proof pan card address proof and bank details besides personal details.
You have to go through a verification process where you will be given a list of rules and regulations to ensure legal and ethical trading well while you can clear all your queries regarding holding a demat account and the different purposes it serves.
The depositary participant will also conduct an in person verification of you and your KYC documents. You have to pay the necessary fee associated with the opening argument account and the fee depends on the existing policy of the depository participant.
Once your documents are approved and verified the final formalities are completed your demat account will be opened. You will also be given a unique identification number for your demat account.
You can visit the official website of the chosen depositary participant and fill out the simple lead form asking your name phone number and city of the residence. You will get an OTP on your registered mobile number.
When you enter the OTP to get the next form you have to fill your KYC details. Once you complete these simple steps your demat account will now be open.