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What is a Demat Account?

Demat Account or Dematerialisation Account is used to electronically store your investments like Shares, Mutual Funds, ETFs, Bonds, Government securities etc without any paperwork.

Initially, stocks and shares used to be exchanged via physical receipts called certificates. This included lengthy paperwork and took up a lot of time. To counter this and to take advantage of an electronic trading platform which was gaining traction in West and the Asian Markets, the process of dematerialisation (demat) of shares was initiated in 1996. Physical share certificates were converted into electronic form securities of equivalent number and price and were credited to the investor's demat account. Thus, the advent of trading commenced this way.

Advantages of Opening a Demat Account

  • Convenience: Users can now trade for different investment options such as shares, stocks, index and gold, bonds, Government securities, initial public offerings(IPOs), Exchange traded funds (ETFs), non-convertible debentures(NCDs), mutual funds, etc which are traded on Indian exchanges (BSE/NSE) via a single Demat account with zero paperwork.
  • Restrictions with Offline Trading: SEBI has permitted trading of upto 500 shares in physical form, as includes an excessive inconvenience of maintenance and tracking.
  • Auto Sync: All the transactions done via Demat Account are automatically reflected in real time.
  • Security: Investors need not worry about the safety of the physical share holdings or any frauds that might happen in offline trading.
  • Accessibility: Investors can track and access their portfolios in real time with just a few clicks.
  • Zero Balance Account Opening: Investors can open a Demat account with Zero balance.

Common Terms of a Demat Account

While using a Demat Account, you will come across the below terms often:

  • Depository: At present, two depositories are registered with SEBI (i) CDSL - Central Depository of Securities Ltd. (ii) NSDL - National Depository of Securities Ltd. These depositories hold your demat account on your behalf. The work is similar to that of a bank.
  • Depository Participant(s)(DP):All investors deal with the depository (CDSL/NSDL) through an agent. Financial institutions, scheduled commercial banks, foreign banks having operations in India approved by RBI (Reserve bank of India), stock brokers, clearing corporations or houses, state financial corporations, NBFCs, share transfer agent, etc., which comply with the conditions proposed by SEBI can be registered as a DP. Banking services can be availed through a branch; similarly depository services can be availed via a DP.
  • Portfolio Holding:The demat account enables you to view your portfolio holdings of investments every time a transaction is undertaken. Since it is an automated process every purchase and sale is recorded with the minutest details of price, date of purchase or date of purchase, quantity etc.
  • Unique ID:Every single demat account has a unique verification identity number. This is used during transactions to aid the companies to identify and credit the securities in the specific investor's account. It is a unique 16 digit number, the first eight digits are the DP id, and the last 8 are the Client Id ( investor account).

Trading Options via Angel One Demat Account:

Stock Investments: Buy/sell Stocks of listed companies in Indian stock exchanges (BSE/NSE)

Intraday Trading: Buy/ sell stocks of listed companies with Intraday trading and enjoy short term investment returns

IPO: Bid for your favourite brands/ companies in their initial public offerings

Mutual Funds: Invest in Mutual funds managed by renowned fund managers

Futures & Options: Invest in Futures & Options. Leverage market volatility with Futures or enjoy a no obligation deal with options

Currency Trading: Invest in different currencies via Currency trading or Forex trading

Commodity Trading: Invest in commodity exchanges like MCX, NCDEX, NMCE, and ACE.

Margin Trading: Enjoy upto 5x margin with Angel One Demat Account

ETF: Buy/sell Exchange Traded Funds with Angel One

How to Open Demat Account with Angel One

Demat Account Opening is an easy process with these simple steps :

  • Step 1: Submit your personal details like Name, Mobile, Current City and verify mobile number via OTP
  • Step 2: Choose a Depository Participant (DP) to open the account with. A beneficial owner (BO ) account is opened with the depository.
  • Step 3: Complete eKYC and upload the supporting documentation copies of proof of address, proof of identity, proof of income etc. PAN card is mandatory to open the account.
  • Step 4: You will be provided with a copy of the rules and regulations as well as the necessary charges to be paid to your DP. An in-person verification will be conducted by a representative of the DP to confirm all the details and documentation provided by the investor.
  • Step 5: Once approved and documentation is submitted, your Demat account is opened and operational.

Facilities Offered by a Demat Account

Demat account opening offers a wide range of facilities for the investor. Let us look at a few of them below:

  • Transfer of Investments: A demat account aids the transfer of shares of an investor. By filling in a Delivery Instruction Slip ( DIS ) with all the relevant investor specifics, it enables an effortless transfer of shares. However, it is not only limited to shares, but various investments or security holding can also be transferred through such an account.
  • Dematerialisation and Rematerialisation: A demat account assists the conversion of securities into different formats easily. By instructing your DP (depository participant) for dematerialisation, to carry out the formalities to convert the physical share certificate into an electronic form. On the other hand, the investor can get their electronic security holding converted back to the physical form via the process of Rematerialization, wherein an RRF - Remat Request form is to be filled in by the DP.
  • Loan Facility: the securities held in the account can provide the investors with their exact and detailed holding to enable them to apply for a loan from a bank or financial institution. The securities can be provided as collateral towards the loan.
  • Corporate Actions: Such accounts assist the investor in tracking and maintaining their securities. This is specifically required to monitor split of any equity shares, bonus issues or any other action taken by the companies for their shareholders. These are directly updated in the account.
  • Freezing your demat account: Investors are provided with the option to freeze their accounts for a specific period or as per requirement. At times this is undertaken to prevent unexpected activities in the account. However, to avail this facility a particular amount of shares should be present in the investor's account.
  • Speed E- facility: NSDL has provided an electronic facility for their investors to complete a transaction through the submission of an e-slip which is then sent to their DP.

Angel One services provide all of the above mentioned demat facilities to their investors and more convenient and easy methods for trading.

Things to know before opening a Demat account

The current online account opening process has made it really simple to open Demat account. In fact, in the current system, you don't even have to visit the broker's office for account opening. You can simply fill in the electronic form, update mobile number and email id, and complete KYC compliance with a preferred DP and get a Demat account open under an hour. But as an informed investor, you must be aware of the following.

Documents needed for Demat: You need a list of documents to complete the KYC process. It includes:

  • Identification Proof:
    • Voter Identity Card
    • Aadhaar Card
    • PAN Card with photograph
    • Passport
    • Driving Licence
    • College Identity cards
  • Address proof:
    • Latest electricity/ telephone/ post-paid cell phone/ gas pipeline/ water bill
    • Bank account statement
    • Land Receipt
    • Ration Card
  • Bank account details

You will get a list of documents required for account opening from the DP. Make sure you provide the correct documents to avoid your application getting rejected.

Charges: There is an array of fees collected by the broker, ranging from taxes levied by SEBI to operational fees. Charges are a crucial metric to select the right broking house since these are additional costs you would need to bear along with capital fund investment.

Linking Demat: You need a trading account, linked to your Demat, to carry out trading. You can have trading and Demat accounts with separate broking houses. But it adds to the process requirement of transferring scrips from one account to another and transaction time. For faster and more seamless transactions, you may open both the accounts with the same broker.

File nomination: Registering nominee to your Demat saves a lot of time and hassle in the future. It is an important step that we often ignore. However, we suggest naming a nominee for your account while opening the Demat.

Additional Features Of Demat Account

These are some of the additional benefits you can enjoy with a Demat account.

Consolidation: It is possible to consolidate different portfolios of the same company to create a new portfolio. You can forward the physical certificates with a letter duly signed seeking consolidation to the RSTA of the company.

Account types: Demat account can take different forms, just like a bank account. You can open a joint Demat account, or in the name of a corporation, multiple accounts, and even in the name of a minor. However, a minor's Demat account will need a guardian to operate the account.

Transaction Charges: Opening a Demat account comes with its fair share of charges which would involve an annual maintenance fee, a transaction fee or commission for every transaction carried out by the DP. Additionally, depending on the DP a fee may be charged for dematerialisation of the shares. But on the brighter side, there are no mandates to sustain a minimum balance. Such accounts can be opened without holding any securities.

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    It has been a great experience to be associated with such brokers who value their client's money and provide expert and first hand advice to their clientele. Undoubtedly one of the best Capital Market Advisory service.

  • Paresh A Sharma

    Angel One has an easy-to-use web portal and mobile app. Also, I congratulate Angel One for their excellent feedback system, great training system and an ethical and enthusiastic team of dealers. I would like to thank Team Angel One and wish them, great future as an organisation.

  • Dr. Gajankumar K Agrawal

    I congratulate the Angel One team for great service and follow up. I am pretty satisfied with the app as well as tele-assistance provided. I got good advisory in both Mutual Fund and stocks. Overall, My trading experience with Angel has been quite good.

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  • Sayam S. Jain

    My experience is good with Angel One & specially relationship managers appointed by Angel are very quick, responsive & hardworking. I am happy to observe that Angel One has a good Research team as recommendations most of the time give good returns.

FAQs

What are the types of demat account?
  • Regular Demat account- Traders who reside in India use this type of account.
  • Repatriable Demat account - This account is useful to the Non-Resident Indians as it allows fund transfers abroad. It requires an associated NRE bank account.
  • Non- Repatriable Demat account - This account, too, is for the Non-Resident Indians. However, in this case, funds cannot be transferred abroad, and this account requires an associated NRO bank account.
What are the charges for opening an account? Is it free?

Yes, the Demat account opening is free of cost. However, there a few additional charges.

  • An Annual Maintenance Charge or AMC. Pay Rs 0 during the first year and after that, only Rs 20 per month + taxes.
  • A one-time charge of Rs. 50/- for POA + taxes
  • Rs. 36/- for KRA along with applicable service taxes.

To know more about free Demat and trading account opening, click here.

What are document requires for Demat Account opening?

Account opening with Angel One is a 100% paperless process. Following are the documents that are required for opening an account.

Proof of Identity Documents

  • Pancard
  • Passport
  • Voter ID
  • Driving License

Proof of Address Documents

  • Passport
  • Voter ID
  • Registered Lease or Sale Agreement
  • Driving License
  • Utility Bills
  • Bank Passbook
What are the Types of Account that I can Open?
  • Demat Account - An account where you can hold securities in an electronic form, from which credit and debit of securities take place.
  • Trading Account - An account which you can use for buying and selling the securities held in electronic format in the stock market.
  • Demat + Trading Account - An account where you can hold securities in an electronic format and can be bought or sold in the stock market.
Who can open a Demat Account?

Any individual who is a resident of India with the required proof of identification, proof of address, proof of income can open a demat account to purchase and sell securities and other instruments through the stock exchanges in India.

What are the features & benefits of demat account?
  • Less paperwork since securities held in electronic form & no hassle for the customer.
  • Secure and convenient way to keep track of shares
  • Quick transfer of shares
  • Easy holding no storage risk – Unlike paper certificates dematerialized stocks and shares can’t be stolen or damage or forged.
Can an NRI Open Demat Account?

Yes, an NRI can open a demat account; however, rules of FEMA – Foreign Exchange Management Act will be applicable.

As per Reserve Bank of India (RBI), an NRI can only own up to 5 % of the paid – up capital in an Indian registered company. An NRI can invest in IPOs – Initial Public Offers, however, it is based on a repatriable basis using the NRE demat funds through their NRE (Non-Resident External) Rupee bank account. Nevertheless, if the NRI invests on a non-repatriable basis, then their NRO (Non-Resident Ordinary) Rupee account and NRO demat account will be operated.

Through the PINS – Portfolio Investment Scheme an NRI is permitted to transact in shares and mutual funds through their account in India.

Is nomination facility available in Demat Account?

Yes, nomination facility is available in demat account.

It is advisable for all individual beneficial owners to avail of this facility. Resident Individuals, NRIs presently having or opening new accounts either singly or jointly can appoint a nominee. If the account is held jointly all the joint account holders are required to sign the nomination form. The nomination can be changed or updated as and when required. However, Non-individuals including society, Karta of Hindu Undivided Family, Trust, corporate body or holder of power of attorney cannot nominate.

Can I open multiple demat accounts?

Yes, multiple demat accounts can be opened by an investor. An investor can open more than one account in the same name with the same DP as well as with various other DPs. However, for all accounts, the investor is required to strictly comply with the KYC regulations and provide Proof of Identity, Proof of Address and other documentation proofs as stipulated by SEBI. The PAN card of the investor is mandatory and is required to be furnished at the time of setting up the account.

Can Demat Account be open jointly?

Yes, a demat account can be opened jointly. However, a demat account can have a maximum of three account holders that is one main holder and two joint account holders

Can Demat Account be transferred?

Yes, a demat account can be transferred from one DP to another DP. The investor is required to submit the transfer or closure request to his DP in the prescribed form. The said DP would transfer all the securities and investments presently in the account as per the investor’s instructions to the new DP account.

Is demat account compulsory to apply for an IPO in India?

An investor is given the option to apply for and obtain the shares of an IPO in physical form. However, it is suitable to apply for an IPO through the demat form since the shares issued  through an IPO are tradeable only in form

Do I require a demat account for SIP?

No, a demat account is mainly for the transaction of shares on the stock exchange. Mutual fund investments of any kind including SIP can be carried out directly by the investor or through a bank or financial institution.

What are the types of securities one can hold in a Demat account?

Demat account stands for the dematerialised account used for holding any form of financial securities in electronic format. Investors use a Demat account to hold equity shares, bonds, debentures, mutual funds, ETFs, government securities, and more. It facilitates managing and monitoring all financial securities in one place and quickens the buying and selling process.

Can I hold mutual funds in a Demat account?

Mutual fund investors have the option to transfer MF units to a Demat account. It simplifies the process of managing all financial securities in one place.

Investors can apply to convert mutual fund units into Demat format by availing a conversion request form from the broker or depository (CDSL or NSDL)

Can we withdraw money from the Demat account?

Demat account, as such, doesn’t hold money. If you have linked your bank account with the Demat, then the sales proceeds of an asset from the Demat account will be credited directly to your bank account.

Can I apply for IPOs using a Demat Account?

To receive delivery of IPO shares a Demat account is a prerequisite.

Investors can open a Demat account by submitting PAN, Aadhaar, Address and Identity proof, along with bank account details.

Since the whole process has become digital, one can open and activate a Demat account within 24 hours. Don’t miss an opportunity to apply for the best IPO offers. Get an Angel One Demat account today!

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