If you have been a student of economics or commerce or are interested in the share market, then you must have heard the name of Demat Account. The stock market has been in the news many times due to negative reasons, such as because of the share scam. In which the accused Harshad Mehta was punished. There was a time when the process of sharing shares was a bit complicated. The paperwork was also lengthy and time consuming, but now it has become easier to buy, sell, store shares since the process is digitized. This has become possible through Demat Account.
Do you know what is Demat Account after all? Even if you don’t know, there is no need to worry. Today through this post we will tell you what is Demat Account? Why is this account needed? What are its advantages or disadvantages? So let’s start the first step with the answer to the question of what is Demat Account.
What Is Demat Account
As you must be clear from the name that this is also an account. The word Demat is derived from Dematerialized. Its literal meaning is immaterial. That is, it is a non-material account. Just as you keep money in a bank account, in the same way you keep shares in a demat account. Just like we can transact through our bank account, in the same way we can buy and sell shares through our demat account. In other words, you can understand it like this that there is a facility to keep shares digitally i.e. electronically in Demat Account. With this, there is no fear of their being stolen or lost.
Work has become very convenient with Demat Account. Earlier this process was difficult. Whenever any shares were bought, the company used to send documents related to those shares, which was proof that you had invested in the shares. This process was a bit difficult, due to which people avoided investing in shares.
But since the Demat Account, the process of buying and selling shares has become easier. As soon as you buy shared. After some time they start showing in your demat account . And similarly when you sell shares, its money comes to your account in no time. Until recently, this work was being done through computers. But now since Android mobile phones have come. Since then Demat Account can be operated through mobile phones as well.
Just like you need a password to operate your normal account. Similarly, you also need a password to operate your Demat Account. Apart from this, you also need a password for transactions in it.
These institutions look after the Demat Account –
The institutions on which the responsibility of looking after the Demat Account in their country are two institutions are NSDL and CSDL. The full form of NSDL is – National securities depositary limited while CSDL is called – Central securities depositary limited. Most of the banks in our country work like their depositary paricipent ie DP. Their number is more than 500. In other words, they are also called agents.
These agent banks and institutions provide the facility of opening a demat account to those investing in shares. These include online trading, brokerage and share investment companies such as zerodha, sharekhan, motilal oswal and so on.
What are the documents required to open Demat Account?
You need the same documents to open your Demat Account, which should be there for opening a bank account. For example your address proof, your id proof, your 2 photographs and your pan card. Friends, let us tell you here that without your PAN card, your demat account will not be opened. This is most important. You should also have a canceled check or savings bank passbook.
The documents that can be submitted as identity proof or address proof for opening a demat account are as follows-
- Pan card
- Voter ID
- Driving license
- Electricity bill
- Telephone bill
- ID card (Identity card issued by the central or state government)
You have to pay a fee at the time of opening the Demat Account, apart from this, an annual fee has to be paid to maintain the account. Apart from this, you also have to pay a fee for transactions related to shares. Sometimes it is determined on the number of shares. Fee is charged on every transaction. It is a different matter that these days many banks are offering the facility of opening Demat Account to their customers by taking very low fees or even at just 0 fee (with some conditions).
How to open Demat Account? Where and how to open Demat account –
- If you also want to open your Demat Account, then you can open it with any DP i.e. bank. These days many private banks are also offering the facility of opening demat account at zero fee. If you want, you can also take advantage of the online facility being provided by these banks. for this you
- Go to the website of the concerned bank and click on the option of open your Demat Account.
- On clicking, an application form will open in front of you. In this, you have to fill the details of name, email ID, 10 digit mobile phone number, city.
- After this you will be asked to fill a captcha code.
- After that you click on submit option
- After this you will be contacted by your DP i.e. bank.
- After this you have to submit your documents
- After doing this, your in person verification will be done, for which your DP i.e. will be asked by calling you on behalf of the bank.
- After the process is completed, you will be provided with your account number and customer ID.
- After this you can start trading, investing in shares through your Demat Account.
What are the benefits of Demat Account –
Its biggest advantage is that shares are stored electronically through Demat Account. In this way, the possibility of their being lost or stolen is completely eliminated. With this, there is no possibility of fraud in the documents related to shares, as the need to keep the documents is eliminated. Whereas if this is not the case, there is a possibility of fraud in the case of documents related to the shares.
Apart from this, many times it also happens that you forget to keep the paper somewhere or there is a possibility of losing them. Having a Demat account removes this worry. Shares keep a safe store in one place in it. There is also a big advantage that with the passage of time, the paper gets destroyed, while there is a permanent, digital record of the transaction through Demat Account. Certificates also live together.
Another biggest advantage is that it has become very convenient in share trading. This process now takes very less time. It is also very easy to keep an eye on online trading and stay updated with the stock market trends. Also it has become easy to take quick decisions to buy, sell shares. Earlier this process used to take a lot of time. These demat accounts are opened only in compliance with the guidelines of SEBI i.e. Securities and Exchange Board of India. As we have already mentioned, these accounts are monitored by NSDL and CSDL.
Benefits Of Demat Account
It is not that the only benefits of Demat Account are the benefits. Its no harm or problem. It also has many disadvantages of its own. The biggest thing is that in this you have to pay an annual fee. Whether you have any share in your Demat Account or not. Or why not have only one share. In such a situation, it happens many times that you have to pay more account maintenance fee than the value of the share.
Apart from this, the work of your broker has to be constantly monitored to see if he is doing any illegal transaction. Apart from this, if you have never done a lot of work on computer or mobile then you will face difficulty. For this also you need skills.
No Limit of Minimum Shares in Demat Account –
By now you must have definitely understood from this information related to Demat Account that if you also want to deal in shares or want to join the buying, selling of shares, then you will have to create a Demat Account. How many shares do you want to hold in this demat account of yours? Its decision will be your own, because no limit has been set on how many minimum shares can be kept in this account. In such a situation, you can store shares according to your pocket and convenience and sell them when you see a better value. You can earn your money. And if simply put, you can increase your income sitting at home.
So friends, this was the details related to demat account, which you want to know. Let us also tell you that as financial literacy has increased. By the way, such people have become aware about share market trading. Therefore, the number of demat account holders has also increased. Now that thinking about the share market has also changed. In which people were hesitant to invest in this market because of the uncertainties. He felt at risk in it.
Demat Account FAQ
What are Demat Accounts?
The account used to buy and sell shares in the share market is called Demat Account. In this demat account we keep our shares.
Can I open Demat Account in SBI Bank?
Yes, if you want to open your demat account in State Bank of India, then you can open your demat account by visiting SBI Bank website.
Can I open a demat account in any bank?
Yes, you can open the Demat account by visiting the official website of any bank bank.
What are the documents required to open a demat account?
To open a demat account, you must have documents like Aadhar Card, Voter ID, Ration Card, Electricity Bill etc.
In how many days demat account is opened?
Demat account can be opened online by visiting the bank’s website, this account gets opened between 10 to 15 days.