All Important Information Related To Demat Account
Investing in the stock market was a lengthy procedure when there was no demat account. All the trade settlements were done in the form of paperwork. Also, holding shares in physical form carried a lot of risks.
With the introduction of the demat account, the shares and securities can be held in electronic format and at a single place. Therefore, most problems that were present in the physical form of holding shares and securities is no more present with the advent of demat account. In this article you will learn about the demat account information and its various concepts.
Let us begin by understanding what is demat account.
What Is Demat Account?
Demat account or dematerialised account holds your shares and securities in an electronic form. It is very similar to a bank account that holds your money. With a demat account, you can have access to your multiple investments at a single place. Demat account can hold the investment in equities, government securities, exchange-traded funds, mutual funds, bonds, etc.
Let us now learn the process of opening a demat account.
Process of Opening Demat Account
The process of demat account opening is as follows:
- Select the depository participant with whom you want to open the demat account.
- Fill the demat account opening form and submit the mandatory documents. The documents copy that you must submit include identity proof, address proof, PAN card, Aadhaar card, passport size photographs, bank statement, income statement and any other statement required by the depository participant.
- Now the depository participant will give you the agreement copy of rules and regulations. This agreement copy defines the duties of the investor and the depository participant. It also contains the schedule of charges that investor would need to pay.
- In this step, the depository participant shall send his employee to carry out in-person verification. This is done to ensure that the details provided by you in the account opening form are correct.
- After the successful processing of the application, the depository participant shall give you a client ID and demat account number. The client ID can be used to access the demat account online.
After following the above steps, you can start trading or investing in the Indian financial market using your demat account. Let us now learn about the benefits of demat account
Benefits of Demat Account
- Easy to Hold
Demat account holds shares and securities in electronic form with no involvement of paperwork. Therefore, there is no storage risk involved. The depository participant is responsible for safeguarding and maintaining the demat account. You can even nominate your kin and easily transfer securities to them using the demat account.
- Automatic Updates
Demat account automatically updates itself whenever a new transaction is carried out. There is no requirement to give your details again and again when the transaction is done through the depository participant.
- Odd Lot Solution
When the transactions were done without demat account i.e. in physical form, the shares could only be purchased or sold in fixed lot sizes. Now with the demat account, you can purchase or sell any quantity of shares. There is no longer the problem of odd lots.
- Cost Reduction
Demat account has drastically reduced the cost as there is no longer the requirement to pay stamp duty for securities. This has substantially reduced the cost of an investor.
- No Delivery Risk
Demat account holds your shares and securities in electronic form and there is no risk of wrong delivery of securities, theft or fake shares.
The above mentioned are a few of the benefits of a demat account. Whether you are a beginner or a seasoned investor, you can consider opening a demat account with Kotak Securities. Their experts and professionals will help you at each level of investing and make the task simpler for you.