Once you open a Demat Account, you can get rid of the trouble of physical possession of investments by dematerializing the same. The Demat account holds Shares, Exchange traded funds, Mutual Fund Units, Bonds etc. at one place in an electronic format. The process of sale, purchase and transfer of shares etc becomes significantly easier and the risks associated with paper certificates are mitigated.
In order to open a demat account; you have to select a Depository Participant (DP). Most of the Banks, Broking houses and financial institutions provide DP services. The list of DPs can be checked on the websites of depositories: CDSL www.cdslindia.com NSDL nsdl.co.in
You have to open Demat account. For opening an account you have to fill an account opening form and provide copies of relevant documents along with a passport size photograph. PAN card is a mandatory document. All original documents are also required for verification.
You will then be provided with the rules and regulations, terms and conditions and schedule of demat charges levied.
There will also be in-person verification, where the DP staff would meet the client (resident Indian) in person, check the details in the account opening form & verify the same.
Post this, the demat account will be opened and you will be given a demat account number. With this number you can access your account online.Click here to get the details of the charges.
You have to provide address proof, identity proof, passport size photograph and the account opening form.
Address proof documents: Aadhaar Card, Driving license, Electricity bill etc.
Identity proof documents: PAN card, Voter's ID, Passport, Aadhaar Card etc.
There are two Depositories in India namely, the CDSL and NSDL. They hold all the demat accounts. The Depository holds your shares on your behalf.
Access to the Depository is provided by the Depository Participants (DPs). They act as the intermediary between the Depository and the investor. DPs could be banks, brokers or financial institutions that are empowered to offer demat services. You can open a demat account or a Beneficial Owner (BO) accounts with a DP, who will provide you a unique access to the Depository.
Each demat account has a unique number for identification purposes. This is the number you need to provide for transactions. The number will help the Exchanges and companies to identify your investments in your account.
The demat account displays all your securities. So, whenever you check your account, you can see your portfolio holding and its details.
Benefits of Demat Account
Single Account to hold all Investments
Demat account is not just for shares but also for Mutual Funds, IPOs, ETFs etc.
Easy to hold & transfer
Dematerialized format is a safe way to hold securities and receive corporate action entitlements like dividend etc.
Freeze or lock accounts
Keep your accounts frozen or locked for the desired span of time to avoid any debits in that period.
No Delivery Risks
Dematerialization has eliminated delivery risk, reduced the paperwork and time involved.
Role of Demat Account in Buying/Selling of Shares
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