Dematerialized Account, popularly known as Demat Account, is a safe and convenient way of holding securities(equity and debt instruments both). For investing in the country’s stock markets, the very first step is to open a demat account. This is something you would require in case you wish online sale and purchase of securities such as stocks, mutual funds etc. in the Indian stock Market. An investor can hold his securities either physically or electronically. Demat account helps investors to keep their securities electronically.
Demat account services are provided by stock broking house, which includes several banks and financial institutions. The stock broking companies also act as depository participants (DPs) that is, as intermediaries between the investor and the depositories such as CDSL or NSDL. In simple words, Depository is an entity which hold your electronic securities on your behalf as banks holds funds and Depository Participants, act as agents of depository with whome you have your depository account.
Benefits Of Demat Account
- Safe and convenient way of holding securities
- No stamp duty on securities transfer required
- It eliminates the risks related to physical stock certificates like forgery, thefts etc.
- It results in significant reduction in paperwork and transaction costs
- Securities can be transferred at an instruction immediately.
- Investor can purchase and sale even a single share through a demat account
- Pledging of securities in a short period of time
- Any change in address or bank account details can be electronically intimated to all companies in which investor holds any securities, without having to inform each of them separately.
- Shares or dividends arising out of transactions would automatically credited into the demat account of the investor.
How To Open a Demat Account?
To start trading electronically you need to open a demat account with a registered DP of your choice. You have to approach the DP (They are like bank branches), to open your demat account.
- Choose a DP
- Fill up an demat account opening form provided by DP, and sign an agreement with DP in a standard format prescribed by the depository which details rights and duties of investor and DP.
- DP provides the investor with a copy of the agreement and schedule of charges for his future reference.
- DP opens the account and provides the investor with a unique account number, also known as Beneficiary Owner Identification Number (BO ID).
Documents to be attached
- Passport size photographs
- Proof of residence – Photocopy of any one of Photo Driving License / Passport copy / Electricity bill / Telephone bill etc.
- Proof of identity – Photocopy of any one of Passport copy / Photo Driving License / Voters ID Card / PAN Card etc.
- PAN card
Visit the link below to find the list of Registered DPs