A demat account stands for a dematerialized account and is the equity equivalent of your bank account. Your bank account is responsible for keeping and holding on to your savings, similarly, a demat account is responsible for holding your shares. However, before opening a demat account you need to take a few important factors into consideration, which are-
1. The reliability of your demat account platform
Almost all brokers these days provide you with access to your respective demat account through a single platform. Your credits and debits to your bank account and demat account along with the funding of your bank account take place very smoothly. Make sure that your demat services have a very strong technology platform which will ensure that the entire process takes place without a hitch. Generally, when you sell your shares, the demat trading account is debited the very next day and if you buy shares, then the account is credited within 2 days from the date of the transaction.
2. Smooth custody, broking, and banking
If your broker is a bank then all the three crucial activities of custody, broking and banking can function seamlessly. In case your custody and broking are impeccable and if you transfer money through UPI, NEFT, RTGS or any other authorized payment getaways, then you will not face any kind of hassles. However, keep in mind that many brokers charge a nominal amount for using an authorized payment getaway, so it is a better option for you to use UPI/ RTGS/ NEFT. Hence, the smoother these three activities work fewer chances are there for you to experience administrative issues.
3. Trading and demand are with the same broker
Before opening a demat account, make sure that your broker has a legitimate demat license so that he can open a trading-cum-demat account for you in one go. Next, you need to provide him with your debit instruction slip (DIS) on time, once you sell off your shares. In case you do not give him the DIS on time, it can lead to losses and bad deliveries. That is why it is better when your depository participant (DP) and broker are the same since it makes the entire process easier and more convenient. You can just go for online demat services and trading, and provide your broker with a power of attorney who will credit the account during purchase and debit at the time of sale. This will save you from a lot of hassles and extra responsibilities.
Selling shares can bring in a lot of money in your pocket but you will have to be very careful about handling and saving them. Along with your savings account, having demat trading account is always considered a smart decision. It always ensures that your shares are in a safe and secure place and which you can utilize whenever you deem fit.
1. The reliability of your demat account platform
Almost all brokers these days provide you with access to your respective demat account through a single platform. Your credits and debits to your bank account and demat account along with the funding of your bank account take place very smoothly. Make sure that your demat services have a very strong technology platform which will ensure that the entire process takes place without a hitch. Generally, when you sell your shares, the demat trading account is debited the very next day and if you buy shares, then the account is credited within 2 days from the date of the transaction.
2. Smooth custody, broking, and banking
If your broker is a bank then all the three crucial activities of custody, broking and banking can function seamlessly. In case your custody and broking are impeccable and if you transfer money through UPI, NEFT, RTGS or any other authorized payment getaways, then you will not face any kind of hassles. However, keep in mind that many brokers charge a nominal amount for using an authorized payment getaway, so it is a better option for you to use UPI/ RTGS/ NEFT. Hence, the smoother these three activities work fewer chances are there for you to experience administrative issues.
3. Trading and demand are with the same broker
Before opening a demat account, make sure that your broker has a legitimate demat license so that he can open a trading-cum-demat account for you in one go. Next, you need to provide him with your debit instruction slip (DIS) on time, once you sell off your shares. In case you do not give him the DIS on time, it can lead to losses and bad deliveries. That is why it is better when your depository participant (DP) and broker are the same since it makes the entire process easier and more convenient. You can just go for online demat services and trading, and provide your broker with a power of attorney who will credit the account during purchase and debit at the time of sale. This will save you from a lot of hassles and extra responsibilities.
Selling shares can bring in a lot of money in your pocket but you will have to be very careful about handling and saving them. Along with your savings account, having demat trading account is always considered a smart decision. It always ensures that your shares are in a safe and secure place and which you can utilize whenever you deem fit.
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