Demat Account is an account that is used to hold shares and securities in electronic format. The full form of Demat account is a dematerialised account. The purpose of opening a Demat account is to hold shares that have been bought or dematerialised (converted from physical to electronic shares), thus making share trading easy for the users during online trading.
In India, depositories such as NSDL and CDSL provide Free Demat account services. Intermediaries, depository participants or stockbrokers—like Angel Broking—facilitate these services. Each intermediary may have account charges that vary as per volume held in the account, type of subscription, and terms and conditions between a depository and a stockbroker.
What is Demat account?
A Demat Account or Dematerialised Account provides the facility of holding shares and securities in an electronic format. During online trading, shares are bought and held in a Account, thus, facilitating easy trade for the users. It holds all the investments an individual makes in shares, government securities, exchange-traded funds, bonds and mutual funds in one place.
If you need any type of loan you can apply
What is dematerialisation?
Dematerialisation is the process of converting the physical share certificates into electronic form, which is a lot easier to maintain and is accessible from anywhere throughout the world. An investor who wants to trade online needs to open a Demat with a Depository Participant (DP). The purpose of dematerialisation is to eliminate the need for the investor to hold physical share certificates and facilitate a seamless tracking and monitoring of holdings.
Importance of Demat account
A Demat account provides a digitally secure and convenient way of holding shares and securities. It eliminates theft, forgery, loss and damage of physical certificates. With a Demat account, you can transfer securities immediately. Once the trade is approved, the shares are digitally transferred to your account. Moreover, in case events like stock bonuses, mergers, etc., you get shares automatically into your account. Your Demat account information regarding these activities is available online by simply logging into the website. You can trade on-the-go using your smartphone or desktop. So, you needn’t visit the stock exchange to transact. You also enjoy the benefit of reduced transaction costs because there is no stamp duty involved with the transfer of shares. These features and benefits of a Demat account encourage a larger trade volume by investors, thus increasing the potential for lucrative returns.
How does a Demat Account work?
Trading through a Demat account is similar to the procedure of physical trading, except that a Demat account is electronic. You begin trading by placing an order through your online trading account. For this purpose, it is necessary to link both trading and Demat accounts. Once an order is placed, the exchange will process the order. details the market price of shares and the availability of shares is verified before the final processing of the order. On completion of the processing, shares are then reflected in your statement of holdings. When a shareholder wishes to sell shares, a delivery instruction note has to be provided with details of the stock. Shares are then debited from the account and the equivalent cash value is credited to the trading account.
Types of Demat account
There are two types of Demat accounts—Repatriable Demat account and Non-repatriable account. Repatriable funds are deposited in a separate bank account known as the Non-Resident External Account (NRE account). Repatriable funds are those funds which can be transferred abroad. The investments made from these funds are maintained in a The Repatriable holds the investments made from repatriable funds. On the other hand, non-repatriable funds (funds which cannot be taken/transferred abroad) are deposited in a different bank account known as the Non Resident Ordinary Account (NRO account).The Non-repatriable holds the investments made from non-repatriable funds. Money can easily be transferred from an NRE to an NRO account. However, once the transfer is made, the repatriability is lost and the money cannot be transferred back to the NRE account.
Benefits of opening a Demat Account with Angel Broking
Angel Broking is one of the most renowned stockbroking houses in India. The Angel Group is a member of the Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and the two leading Commodity Exchanges in the country: NCDEX & MCX. Angel Broking is also registered as a Depository Participant with CDSL. Here are some benefits of opening a Demat with Angel Broking:
- Invest Easily & Earn Better
- Gain access to the award-winning Angel Broking App – Trade, learn, and stay updated on the go. The app gives you latest news, research reports, and real-time updates on your fingertips. It also offers Portfolio Health Check to help you maintain an ace portfolio
- Get a better chance of earning higher returns with ARQ
- Fastest account opening process – Start trading in 1 hour
- Highly secure & speedy financial transactions
In addition to the advantages outlined above, you can learn more about the benefits of online share trading in India with Angel Broking. Understanding the Benefits of Home Loan Balance Transfer
FAQs
What is the use of a demat account?
A is useful because it eliminates the need for physical certificates, reduces the risk of theft, loss, or damage, enables quick and easy share transfers, simplifies the settlement process, and allows you to access and manage your holdings from anywhere.
How to open a demat account?
To open a you need to choose a depository participant (DP), which is an agent of a depository that holds your securities. You can choose a bank, a brokerage firm, or a non-banking financial institution as your DP. You need to fill an account opening form, provide your identity and address proof, sign an agreement with the DP, and get a unique client ID and password.
What are the charges for a demat account?
The charges for a demat account may vary depending on the DP you choose, but they generally include account opening fees, annual maintenance fees, transaction fees, dematerialization fees, and rematerialization fees. Some DPs may offer zero account opening fees or waive off some charges for a limited period.
What are the benefits of a demat account?
A demat account offers several benefits, such as:
- It allows you to invest in various financial instruments, such as equity, mutual funds, bonds, gold ETFs, etc.
- It saves you from the hassle of paperwork, stamp duty, handling charges, etc.
- It ensures the safety and security of your securities from fraud, forgery, or misuse.
- It gives you the option of pledging your securities as collateral for loans.
- It facilitates the automatic transfer of dividends, interest, and other corporate benefits to your account.
