You must have heard about demat account but do you know how useful it is, what are its benefits etc. Maybe not but in this article we are going to know on this topic what is the use of demat account and what are its benefits. Or there may be damage, so if you want to know its complete information, then definitely read the article till the end.
What is Demat Account?
A demat or dematerialized account is an electronic account that has the facility to hold shares and securities. This type of account can be easily used to invest government securities, shares, ETFs, mutual funds in electric form. In India, this facility is provided by the National Security Depository Limited (NSDL).
A regular demat account is required for investors entering the stock market, demat account is also used for share trading.
What are the types of Demat accounts?
Regular Demat Account-
This account is for Indian investors and traders who live in the country and invest in the stock market here.
These demat accounts can be opened on a depository with a registered broker, the shares purchased are kept in digital form in this account.
Repatriable Demat Account-
This account belongs to Non Regiment Indians (NRIs), from this Non Regiment Indians invest in stock markets. Traders transfer funds abroad through this account, but can invest in it only, those who have (NRE) bank account Should be.
In this, a joint holder can also open an account provided he should be a citizen of India.
Non-regiment Indians should also have a copy of passport, PAN card, visa, foreign address of the country where they reside, passport size photograph, FEMA declaration, and a rejected cheque of NRE, NRO account to open an account.
non repatriable account
Fund transfer is also done in this account but other countries cannot transfer, NRO bank account is also required in this account, but it must have NRO account both in India and abroad.
how to open demat account or demat account opening process
To open it, PAN card, bank account number, identity card, address proof documents are necessary. The process of opening a demat account is as follows –
- First of all go to the broker’s website then fill the account opening form on the day I have to fill your name, address, PAN card, bank details and select the most suitable brokerage plan.
- Scanned copies of documents like Aadhar card, PAN card, canceled check have to be uploaded, and passport size photograph of the investor, and scanned signature are also to be uploaded.
- After filling this form, you are signed up using the Aadhar verification process through OTP, after which your account is opened, now you can transfer funds in it, you can also do trending.
Benefits of Demat Account
- The transfer of shares is done automatically without manual intervention of any person.
- There is no problem of loss and theft of share certificate.
- The trust of foreign investors in the Indian markets and stock market increases so that they are able to invest more and more in India which is very important for the development of our India.
- Before the demat account, traders or investors needed to send the shares to the registrar of the company to get the ownership of the purchased shares.
- You can also use your demat account to invest in segments like Mutual Funds, Gold ETFs.
- Presently there is no Odd-Lot problem (less than 100 shares) Now you can buy even one share.
- Trending has become very easy, now you can do online trending from your laptop, mobile, without the help of any broker.
- Transfer of shares from one account to another has also become easy.
- Nominee can also be added.
- Now closing this account can also be done online.
Disadvantages of Demat Account
annual maintenance cost
A demat account holder has to pay Annual Maintenance Charges (AMC). Even if you own a share, you still have to pay a fee, which sometimes exceeds the share.
Currently trending has become completely electronic, to trend in stock market, you should have good knowledge of computer. If you do not have this knowledge then there can be problem for you. How to trade It is necessary to have technical knowledge to check your demat account from time to time.
Frequency of share trading
Due to the dematerialization of shares, the trending in the stock market can be done with just one click, so that you can often check the value of your stock online. This was not possible when the shares were physically available, as a result of which the frequency of investing for the long term is lost and the trader starts trending higher.
The solution to this is that you do trending by taking some time.
Additional Contrast –
The Depository Participant has to keep additions at various levels to complete the process of demat settlement.
Regular inspection of stock broker
A demat account holder has to undergo regular inspections.
If you also want to open a demat account, then we have listed some of the apps below, through which you can open your demat account and invest in shares.
We hope that you will invest and earn a lot of money only after taking complete knowledge of share market. And to get more information related to the share market, read the rest of our articles as well so that you can get complete information about it and be helpful in investing. Our other articles related to share market –
What information did we get from this article?
There are two sides to every coin, there is good in every thing, and there is also drawback of demat account, it has its advantages as well as disadvantages.
Hope this post was helpful for you. and hope you are now What is Demat Account? How to open it? Advantages and Disadvantages of Demat Account Would have known We appreciate your suggestions and contributions. Do let us know by commenting in the comment box below to give your suggestions. thank you!
Where to open demat account?
If you want to open demat account then you can open your demat account with UPSTOX, ZERODHA
What is the use of demat account?
There is facility to hold shares and securities.
What are the types of demat accounts?
There are mainly 3 types of demat accounts – regular demat account, repatriable demat account and non-repayable demat account.