We all have a bank account, be it current or savings. Maybe you hold multiple bank account. If you are an entrepreneur or a business person, you might be quite interested in stock market. So, where do you invest them? Ever heard of a Demat account? It is quite similar to a bank account. Just like how a bank account safely secures your money, a Demat account holds your securities in the form of bonds, debentures and shares. If you wish to buy shares from the stock market, you first need to have a Demat account in place.
What is a Demat account?
It is an electronic account where all your securities are held, like an alternative to all your physical certificates. If you want to sell and buy stocks, you should have a Demat Account with a Depository Participant (DP). Now, who are depository participants? They are organisations who provide electronic services for a Demat account. They also facilitate transactions.
At present two organisations are registered under Securities and Exchange Board of India (SEBI), National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
What are the benefits of having a Demat account?
1) The transaction cost is less as you do not have to pay stamp duty
2) Convenient and fast settlement of electronic settlements
3) Reduced paperwork concerning transferring of securities
4) Risks such as theft and fake certificates are eliminated
5) Can sell any number of shares
6) Can invest through your Demat account online
Note: The DPs do not charge a fee for opening a Demat account. Some provide refundable charges while some have fixed fees.
Prior to opening a Demat account, you need to fulfil the KYC norms. The following documents will be required from your end for completing KYC:
1) ID proof – Passport, PAN card, Voter ID and Aadhaar card
2) Residence proof – Ration card, bank statement, utility bills, driving license
3) Your bank account number
How to open a Demat account?
1) Choose your depository participant
2) Fill the Demat Account application
3) Submit the related documents
4) The DP will conduct verification process personally
5) You will be given an account number/ID by the DP
6) You can also open Demat account online through the DP’s portal
Remember, you can open multiple Demat accounts on the same name with different/same DP.
There are two types of Demat accounts:
1) Basic Services Demat Account (BSDA): These accounts are designed for small investors. The investors do not hold values/securities beyond a few lakh. Thus, the maintenance charge of this account is lower annually. This service was introduced in 2012.
2) Regular Demat Account: Compared to BSDA, these accounts can incorporate higher values/securities. The charges are also higher to that of BSDA. However, it offers many services and is convenient to use.
Along with opening Demat account online, ensure you open a trading account as well to conduct buying and selling of shares. If you do not have any of these, go to your bank manager and open one now.
What is a Demat account?
It is an electronic account where all your securities are held, like an alternative to all your physical certificates. If you want to sell and buy stocks, you should have a Demat Account with a Depository Participant (DP). Now, who are depository participants? They are organisations who provide electronic services for a Demat account. They also facilitate transactions.
At present two organisations are registered under Securities and Exchange Board of India (SEBI), National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
What are the benefits of having a Demat account?
1) The transaction cost is less as you do not have to pay stamp duty
2) Convenient and fast settlement of electronic settlements
3) Reduced paperwork concerning transferring of securities
4) Risks such as theft and fake certificates are eliminated
5) Can sell any number of shares
6) Can invest through your Demat account online
Note: The DPs do not charge a fee for opening a Demat account. Some provide refundable charges while some have fixed fees.
Prior to opening a Demat account, you need to fulfil the KYC norms. The following documents will be required from your end for completing KYC:
1) ID proof – Passport, PAN card, Voter ID and Aadhaar card
2) Residence proof – Ration card, bank statement, utility bills, driving license
3) Your bank account number
How to open a Demat account?
1) Choose your depository participant
2) Fill the Demat Account application
3) Submit the related documents
4) The DP will conduct verification process personally
5) You will be given an account number/ID by the DP
6) You can also open Demat account online through the DP’s portal
Remember, you can open multiple Demat accounts on the same name with different/same DP.
There are two types of Demat accounts:
1) Basic Services Demat Account (BSDA): These accounts are designed for small investors. The investors do not hold values/securities beyond a few lakh. Thus, the maintenance charge of this account is lower annually. This service was introduced in 2012.
2) Regular Demat Account: Compared to BSDA, these accounts can incorporate higher values/securities. The charges are also higher to that of BSDA. However, it offers many services and is convenient to use.
Along with opening Demat account online, ensure you open a trading account as well to conduct buying and selling of shares. If you do not have any of these, go to your bank manager and open one now.
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