The share market of India has progressed a lot in past few decades. The dematerialization has brought revolution in dealing in various securities. What many people do not know is that demat is actually an acronym for dematerialization. As the name suggests, a demat account is kept to keep various forms of securities (shares, bonds, and mutual funds) in an electronic form, instead of physical certificates. This account has the same relation to the securities which any bank has to the money of its customers. Therefore, the purpose is the same- safeguarding of the resources. The transfer of shares in exchange for money is facilitated easily due to a demat account.
Features of the account
- Importance: The first thing in online trading is the possession of a demat account, in addition to a user’s bank account. As mentioned above, demat account stores the details of trading and when linked to the bank account will result in the easy flow of money, reducing hassle. Without a Best Demat Account, online trading is not possible.
- Safety: The massive popularity and acceptance by the masses underline the fact that demat accounts protect all the sensitive information. The physical certificates are difficult to maintain and protect, and this account ensures all this without breaking a sweat.
- Multi-tasking: Other than the transfer of money, one can easily store multiple online trading accounts under one demat account. There is not at all need to go through the opening procedure again and again when one can keep separate investments under one tab.
- Convenience: Some people visit their stockbroker for their market decisions, while others choose to perform trading over the internet themselves. A single demat account will serve both purposes, which makes them useful.
- Nomination: A customers can nominate someone else to gain the reigns of their demat account, another point which makes it similar to a typical bank account.
- Cost-effective: The fees of stamp duties and other expenditures are eliminated because of the whole process in digital. A lot of money and time is saved because of this facility.
The procedure of opening a demat account
To kick-start online trading, a demat account is essential. For opening this type of account, clients must possess the following documents:
- Bank statement (of the last 3 months)
- Address Proof
- Color photos of the account holder, two in number
- Bank crossed Cheque
- KYC details
- Aadhar Card
A user needs to contact the depository participant for the submission of these documents and fill-up a form. The terms and charges for the demat account will be told to the client for its opening and maintenance. After an in-person meeting with the depository participant, the verification process will be initiated, and after its success, the customer will be given the details of their account. There are two types of demat accounts- basic services and regular. The user must consult an expert and choose one of the two for their future purposes.