The First Condition for Entering The investment Market is That The Person Concerned Must Open a Demat Account.
The investment market continues to rise and fall. Never this stock, never that bond. A seasoned investment expert always keeps an eye on the market. But the first condition to enter the investment market is that the person concerned must open a demat account.
Demat account is an acronym for Dematerialized Account. It is an account that retains financial security (equity or debt) in electronic form and form. These demat accounts are maintained in India by two depository companies, National Securities Depository Limited and Central Depository Services Limited.
Access to these accounts requires an Internet password and a transaction password. The securities can then be transferred or purchased. When the transaction is confirmed and completed, the purchase and sale of securities in demat account is done automatically.
India has adopted demat account for electronic storage, where shares and securities are presented and maintained electronically. In this way the problems related to paper share are eliminated in an instant. It also helps reduce share transfer time.
How to open a Demat Account
First you need to decide on the Depository Participant (DP). After that you have to submit an account opening form, KYC form which has been duly filled. Along with that you have to submit PAN card, proof of residence, ID proof and a passport size photo. Original copy of all must be taken for verification. An agreement must then be signed, stating all the rules, regulations and rights relating to a demat account. Remember, these documents or information need to be read very carefully and questions need to be asked without hesitation to dispel all doubts.
When it is submitted to the DP, it will be signed by an authorized person and a copy will be given to the person concerned. When an account is opened, A unique client ID can be obtained from DP. It helps you access online demat account with other details. The DP will also provide a slip of instructions, which must be used while enjoying depository services such as transfers, purchases, etc.
Keep in mind that a demat account does not require any ‘minimum balance’ of shares or financial securities. In addition, multiple demat accounts can be kept attached to a single pan. Although the same DP cannot be used in that case.
How to Open a Demat Account Online
Requests to open a demat account with any DP can also be made online. But the website of the selected DP needs to be checked first. After that click on ‘Open Demat Account’ tab and submit name, e-mail id, mobile number, one time password (OTP), place of residence etc. This type of account can also be easily opened online by following the next few steps in this way.
How does a demat account work?
There are four things involved in working with a demat account.
Central Depository: National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) are two depositories in India that maintain all demat accounts. These depositories hold all the information of your share certificates and other financial instruments like a bank.
Unique Identification Number: Each demat account is assigned a unique identification number or a UID. This number is used for online trading purposes. This number helps companies and stock exchanges identify you and credit shares to your account.
Depository Participants: Depository Participants or DPs provide information to the Central Depository and act as an intermediary between the Central Depository and the investor is a DP. It can be a bank, a broker or a financial institution authorized to provide demat services. To gain access to the UID in the central depository you need to open a demat account with a DP or an account of a beneficial owner.
Portfolio Details: Whenever you access your demat account you will see all the details of your portfolio. These details are automatically updated after each transaction, whether purchased or sold whatever.
What are the Benefits of demat account?
A demat account is required for any investment in the stock market. It is extremely convenient and easy to operate. This allows for paperless transactions. Nomination requirements for all your investments in a single nominee can also be easily met through this account. Not only that, but an investor can get a detailed analysis and useful stock-related recommendations from economist analysts. As well as using the high-tech trading services and platforms offered by multiple stock brokers, trading can be completed in just a few minutes through this account.
