Primarily, to hold shares and securities electronically a Demat account is used. The concept of the Demat account was first initiated as another way to the certificate of the physical share in 1996. It not only helps in making a share trading easily and quickly but also helps to eliminate all the problems and risks associated with the certificate of the physical share. Furthermore, you must possess a Demat account if you are looking forward to investment in the share market.
What is the Demat account?
The Demat account in other words is also called a dematerialized account. It is used in dematerializing or converting into an electronic format from physical shares. Account of Demat is used for holding securities and shares of the companies that are publicly traded in electronic form. The Demat account enables you to hold a vast category of investments for instance equity shares, mutual bonds, bonds, government securities, and mutual funds.
Like any bank account, your Demat account is even debited or credited every time of buying or selling any share of a particular company. It is not only useful in eliminating extra paperwork, but even the procedure of your share trading is streamlined. The two organizations that are supposed to maintain every Demat accounts are:
1. NSDL (National Security Depository Limited)
2. CDSL (Central Depository Services Limited)
Features of Demat account:
A Demat account enables you to enjoy several special features. Only by opening a Demat account can you experience the full potential of a Demat account. Features of Demat accounts include:
t enables you to pledge all the securities that your Demat account provides you and you can use them in the form of collateral to secure a loan from financial institutions.
It enables you to send slips of instruction electronically to the depository participant. It makes your work less cumbersome and also catalyzes the entire process.
you are also allowed to freeze your Demat account for a particular duration. However, you can only use this facility when your account holds shares of a particular number.
Transferring shares using the Demat account becomes extremely easy. Only the thing required to send is a DIS (Delivery Instruction Slip), duly signed for transferring your shares to the participants of your depository.
Benefits of quick transfer
Demat accounts offer benefits of swift transfer like issues of bonus of shares, interest, dividend, stock splits, and refunds.
Benefits of Demat account:
With the many indispensable sections of the stock market, and along with the special and unique features provided the best Demat accounts also come with several benefits which are:
– Swift deliveries and settlements
– Eliminate paperwork
– Increases market participation and volume of share trading
– Easy and quick communication with your investors
– Increase the confidence of your investors and builds trust
How to open a Demat account?
The process of opening a Demat account is pretty straightforward. If you are interested in opening one, you can use the following step-by-step guidelines:
– Selecting a DP or Depository Participant
– Submission of an opening form of Demat account
– Fulfilling your KYCnorms- you will require scanned copies of your documents like address proof, income proof, identify proof, and statement of your bank account.
– Clearing your verification process
– The signing of your agreement copies
– Get BO ID number
How does a Demat account function?
If you are looking forward to buying some stocks from the stock market then having an account for trading is mandatory. The Demat account is responsible for holding the stock or shares bought via a trading account. Hence, to realize a Demat account’s full potential it becomes imperative to get your trading account linked with your Demat account. The below-given process will exactly show you the working process of the Demat account:
– When you want to book an order then say a ‘buy’ order, this ‘buy’ request is further forwarded to the stock exchange by your participant of depository
– The stock exchange matches your request to ‘buy’ with the same request of ‘sell’ and then to the clearance houses an order is sent
– The trade is further settled by clearance houses by debiting a particular number of the shares within the Demat account of the seller and thereby it is credited to your Demat account.
How to add nominee in Demat account?
Even though you opened an online account, you can not add your Demat account nominee You then might wonder how to add nominee in Demat account. To add someone as a nominee for Demat account, a physical signature is mandatory. Therefore, you either have to fill the form of nomination or you can even courier to the address of the head office. By choosing either way you’ll be able to add a nominee for Demat account. When your Demat account nominee will be added, a similar nomination will even be applicable for holding your coin, that is, your mutual fund.
Switching a nominee for Demat account:
While wondering how to add a nominee for Demat account, you must also think very thoroughly while choosing a nominee of your Demat account, as you have to go through a few complications while replacing your Demat account nominee such as:
– After you have chosen a nominee and even nominated a person while switching that particular nominee you will have to pay charges of Rs. 25+18% GST.
– You even have to provide the nomination form’s hard copies along with the form of account modification.
Opening your Demat account is a quick, convenient, and hassle-free process. Just by focusing on the set of above-mentioned details, you, too, can easily have access to your Demat account and enjoy the unique features and benefits that come along with it. Having a Demat account will help you carry your work smoothly and will even lessen your burden.
With the help of Angel One, you can easily open your Demat account and start trading within 5 minutes. You can also visit the official website of Angel One to clear any queries you have with your Demat account.