We all hold multiple bank accounts, be it savings or current or salaried account. And if you are an entrepreneur or business person, you might be interested in Demat account. They act like a DigiLocker. Just like how a DigiLocker saves all your essential physical documents safely, a Demat account manages your assets (bonds, debentures, shares, etc.) If you are someone who purchases shares from the market frequently, then you should open Demat account right away.
What is a Demat account?
A Demat Account’s functions are similar to a DigiLocker. Now, if you want to buy or sell your stocks, you should have a Demat account with a Depository Participant (DP). Who are these entities? Just like the Indian government operates DigiLockers, the DPs manage your Demat account. Unlike a DigiLocker, the depositories facilitate transactions, though.
At the moment, three entities are handling the Demat accounts in India: Securities and Exchange Board of India (SEBI), National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
How to open Demat account?
You cannot directly open an account through CDSL. You have to open Demat account through a DP of CDSL. Following are the steps to open one:
1) You must first choose a DP based on your budget and convenience
2) You have to fill a Demat account application form along with the following documents:
- Age and address proofs
- Bank account details
- PAN card
3) Prior to opening your account, you have to sign an agreement that includes the rights and obligations of both, the DP and you
4) Upon opening Demat account, you will receive a beneficial owner identification number that should be used for future transactions
5) You will also be allotted a unique Demat account number that ensures debit/credit of securities
Note: You can open Demat account can be maintained even with a nil balance
What are the benefits of owning a Demat account?
1) You do not have to pay stamp duty, which in turn reduces your transaction cost
2) Convenient and instant electronic settlements
3) Less paperwork concerning transferring of securities
4) The chances of fake certificates and theft get reduced
5) Can sell n number of shares
6) You can also invest via your Demat account, courtesy internet
Remember to open a trading account as well when you open Demat account to conduct buying and selling of shares. Go to your closest bank and get one now!
What is a Demat account?
A Demat Account’s functions are similar to a DigiLocker. Now, if you want to buy or sell your stocks, you should have a Demat account with a Depository Participant (DP). Who are these entities? Just like the Indian government operates DigiLockers, the DPs manage your Demat account. Unlike a DigiLocker, the depositories facilitate transactions, though.
At the moment, three entities are handling the Demat accounts in India: Securities and Exchange Board of India (SEBI), National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
How to open Demat account?
You cannot directly open an account through CDSL. You have to open Demat account through a DP of CDSL. Following are the steps to open one:
1) You must first choose a DP based on your budget and convenience
2) You have to fill a Demat account application form along with the following documents:
- Age and address proofs
- Bank account details
- PAN card
3) Prior to opening your account, you have to sign an agreement that includes the rights and obligations of both, the DP and you
4) Upon opening Demat account, you will receive a beneficial owner identification number that should be used for future transactions
5) You will also be allotted a unique Demat account number that ensures debit/credit of securities
Note: You can open Demat account can be maintained even with a nil balance
What are the benefits of owning a Demat account?
1) You do not have to pay stamp duty, which in turn reduces your transaction cost
2) Convenient and instant electronic settlements
3) Less paperwork concerning transferring of securities
4) The chances of fake certificates and theft get reduced
5) Can sell n number of shares
6) You can also invest via your Demat account, courtesy internet
Remember to open a trading account as well when you open Demat account to conduct buying and selling of shares. Go to your closest bank and get one now!
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