Demat Account In India
For The Last Few Years, The Trend In The Minds Of The Indian People Regarding The Share Market Is Increasing, Millions Of Demat Accounts Are Being Opened Every Month. To Get More Returns, All The Investors Now Want To Try Their Hand In The Stock Market Along With Fixed Deposits.
If You Want To Take Your First Step in The Stock Market Then You Will Need A Demat Account. Yes, Just As There Are Requirements To Open A Savings Account To Deposit Money In A Bank, Similarly A Demat Account Has To Be Opened To Buy Shares Of A Company.
If You Do Not Have Any Information About Demat Account, Then You Can Rest Assured That After Reading This Article, All The Questions Related To Demat Account Will Go Away From Your Mind.
Because, Today We Will Know That What Is Demat Account, How To Open Demat Account, What Is The Relation Of Trading Account With Demat Account, Which Broker Should Open Demat Account, Etc.
What is Demat Account
Just As We Have To Open A Savings Account in The Bank To Deposit Money Or Do Transactions, Similarly It Is Necessary To Open A Demat Account To Buy Or Sell A Share Of Any Company, Where The Shares Of The Company Will Be Deposited in Digital Form.
To Understand This Even Better, We Have To Know Why The Need For A Demat Account Arose?
Before The Introduction Of Demat Account, Investors Had To Trade Or Invest In Physical Form, For This The Person Who Wanted To Sell The Shares Had To Go To The Stock Exchange With The Papers And Certificates Of The Purchased Shares.
And The Person Who Wanted To Buy Shares Would Also Have To Physically Go To The Stock Exchange With The Money Or Both The Persons Would Go To A Broker And The Broker Would Trade On Their Behalf in The Stock Exchange.
First of all, The Bid Of The Seller’s Share Was Made In Any Stock Exchange (NSE, BSE), After That The Share Was Bought Or Sold At The Price Agreed Upon By Both The Seller And The Buyer.
This Process Of Buying And Selling Shares Used To Be Very Long; It Used To Consume A Lot of Time And A Lot Of Paperwork Had To Be Done, In Addition To This The Investor And Trader Had To Physically Go To The Stock Exchange To Trade.
Due To All These Flaws, For The First Time In 1996, The Demat Account Was Started By The National Stock Exchange. After Which It Became Very Easy For Common Investors To Buy In The Stock Market.
Because, Due To The Advent Of Demat Account, The Paper Work Which Had To Be Done Earlier To Buy The Shares Is No Longer required, after buying the shares, the physical Certificates And Documents Which Were Received By The Company Without Any Reason, Are Now Deposited In The Demat Account In Electronic Form, No Need To Go To Stock Exchange, Investing And Trading Can Be Done Easily From Your Mobile Sitting at Home.
Many People Do Not Understand The Difference Between A Demat Account And A Trading Account. If You Also Do Not Know About It, Then Let Me Tell You,
Demat Account Means Dematerialisation Account it is Called Dematerialisation Account i.e. The Account Which Does Not Need To Keep The Shares in Physical Form.
Whenever You Buy Shares Of A Company, it is Stored In Your Demat Account And Your Money Is Stored In Your Trading Account.
Let Us Understand This With An Example; Suppose Ram Has X Company’s Share In His Demat Account And He Wants To Sell It, And Shyam Wants To Buy That X Company’s Share For Which He Has Money In His Trading Account.
When Ram Will Sell His Shares, Then The Shares Will Be Deducted From Ram’s Demat Account And Will Come To Shyam’s Demat Account And The Amount Of Shares That Shyam Has Bought Will Be Deducted From Shyam’s Trading Account And Deposited in Ram’s Trading Account.
Now You Must Have Come To Know What Is Demat Account, What Is The Difference Between Demat And Trading Account. Shares Are Stored In The Demat Account And Money In The Trading Account. All These Processes Involve Linking Of Your Bank Account With Your Demat Or Trading Account.
Let Me Tell You, The Shares That Ram Has Sold To Shyam Will Appear In Shyam’s Demat Account Immediately, But Actually it Takes T+2 Trading Sessions To Exchange The Shares, I.e. If Sold On Monday, Then on Wednesday. Will Actually Get The Share.
And The Amount Of Money Sold in Ram Will Be Received After T+1 Trading Session i.e. If Sold On Monday Then Money Will Be Received On Tuesday (Earlier it was T+2 now it is T+1).
With This, Let Us Tell You, The Facility Of Opening A Demat Account In India is Provided by National Securities Depository Limited and Central Depository Services Limited. Once The Demat Account Is Activated, The Shares Held In Both These Depositories Are Bought Through The Depository Participant.
Instead Of Taking 2 Days For The Exchange of Shares, Insme Insme Depositories, Depository Participants, Stock Exchanges, etc. are involved, so it Takes Two Days To Complete The Entire Process.
Types of Demat Account
You Must Have Come To Know That Demat Account Kya Hota Hai, Now Let Us Know What Are The Types Of Demat account. There Are Mainly Three Types Of Demat Accounts.
Regular Demat Account: This Type Of Demat Account Is For Indians. Any Indian Can Open A Regular Demat Account And Can Link Any Of His Savings Bank Account With It.
Repatriable Demat Account
Such Demat Account Is For NRIs Who Reside Abroad. An NRE Bank Account Has To Be Linked With Such an Account And Money Can Be Transferred Abroad.
Non-repatriable Demat Account
This Type Of Demat Account Is Also For NRI but Money Cannot Be Transferred Abroad And NRO Bank Account Has To Be Linked With It.
Benefits of Demat Account
After Knowing What Is Demat Account And How Many Types Of Demat Accounts Are There, Now Let Us Know What Are The Benefits Of Having A Demat Account:
- No Need To Do Any Physical Work, No Need To Go To Brokerage House, Bank Or Any Financial Institution. All Work Is Done Online Electronic Form Sitting At Home.
- No Need To Go Anywhere And Do Any Paper Work Physically, Form Filling, KYC, Etc. Are All Done Online.
- The Certificate Which You Used To Get Without Any Documents After Buying The Shares is Now Safe In Your Demat Account in Electronic Format.
- Settlement Between Buyer And Seller Is Done in Very Less Time.
- By Opening A Demat Account, There is No Fear Of Theft, Loss, Burning, Etc. Without Certificates, All The Documents Would Be Saved In The Demat Account.
Documents Required To Open Demat Account
Just As Some Documents Are Required For Opening A Bank Account, Similarly The Following Documents Are Required For Opening A Demat Account.
- PAN Card
- Aadhaar Card linked with Mobile Number
- Savings Bank Account
- Mobile Number
- Email ID
Which Broker Should I Open A Demat Account With?
After Knowing What is Demat Account, Now Let Us Know Which Broker Should Open A Demat Account. There Are Thousands Of Brokers in India Who Tell You That They Are SEBI Registered Brokers. This Does Not Mean That all SEBI Registered Brokers Will Be Good, They Are Not.
Before opening a Demat account With Any Broker, You Should Take Stock Of Some Things About It, Which We Have Told Further.
How Much Is The Reputation And Credibility of The Stock Broker, How Are People’s Reviews About That Broker.
Demat Account Opening Charges Vary From Broker To Broker, Some Brokers Open Demat Account For * 0 While Some Brokers Charge * 500-* 1000.
Before Opening A Demat Account With Any Broker, It Must Be Ascertained How Much Is Its Maintenance Charge. Because, Some Brokers Take Up To 2700- 1000 as Annual Maintenance Charge. Therefore, Check The Maintenance Charges For The Demat Account.
Brokerage Charge Ie Whenever You Buy Or Sell Shares, Some Percentage Brokerage Charge Has To Be Paid On Top Of That. Few Years Back The Brokerage Charges Were Very High But Now With The Advent Of The Accounted Brokers This Charge Has Come Down A Lot.
Now There Are Some Discount Brokers Who do Not Charge Brokerage. You Should Open A Demat Or Trading Account With A Broker Whose Brokerage Charges Are The Least.
Apart From All These Points, There Are Many Other Things Which Should Be Kept In Mind While Opening A Demat Account, Which We Will Talk About Some Other Time.
Read This: What is UPI ?
How To Open Demat Account
Demat Account Can Be Opened Through Both Offline And Online Mode. To Open An Offline Account, The SEBI Registrar Will Have To Approach A Depository Participant With All The Documents Mentioned Above; For This, You Can Contact With The Bank or Any Financial Institution.
There You Have To Fill The Form For Opening a Demat Account And All Your Documents like; identity card, address proof, PAN Card, Bank Account Details Have To Be Submitted By Adding Xerox Copy.
After That All The Documents Will Be Verified And Finally Your KYC Will Be Completed By An Official. A Few Days Later The Demat Account Becomes Active For Buying And Selling Shares.
But If You Open Demat Account Online Then You Will Not Need To Go Anywhere, You Will Be Able To Open Demat Account Sitting At Home With The Help Of Your Mobile or Computer Almost Free Of Cost By Connecting With Any Discounted Broker.
In Today’s Article, We Have Told Step By Step About How To Open Demat Account in GROWW, And My Demat Account Is Also With GROWW, in This You Do Not Have To Pay Any Charge To Open Demat Account, Demat Account In Absolutely Fee Gets Opened.
Follow The Steps Below To Open A Demat And Trading Account With Groww. And if You Create An Account By Going Through This Link, Then You Will Also Get A Bonus of 100.
Download Groww: First of all, Download The Groww App By Clicking Here, Which Has Been Downloaded By About 2.1 Crore People To Start Their Investment Journey.
Verify Email ID: First of all You Have To Verify Your Email ID, for This Enter Whatever Email ID You Want To Associate With Your Demat Account.
After That An OTP Will Come On Your Email ID, By Entering Which Click on VERIFY EMAIL ID And Verify Your Email ID.
Set Password: Now You Will Be Asked To Set A Password, Set A Strong Password Of Your Choice And Click On NEXT To Go To The Next Page.
Verify Mobile Number: Now You Have To Do Mobile Number Verification; For This, Enter Your Mobile Number And Click on SEND OTP. Now an OTP Will Come On The Mobile Number, Which Has To Be Entered To Complete The Verification.
Verify PAN Card: To Verify The PAN Card, You Have To Enter Your PAN Number, As Soon As You Enter Your Name, If The Name Is Correct Then Proceed By Clicking on CONFIRM, Otherwise Wrong Name? Enter the PAN Number Again By Clicking On Re-enter PAN.
Select Date of Birth: After Verification Of Pan Card, Date Of Birth of The Candidate Is Asked, Select Your Date And Click On NEXT.
Select Your Gender: Now You Have To Select Your Gender, If You Are Male Then Select Male, if You Are Female Then Select Female, Otherwise If You Have Any Other Gender Then Select Other And Proceed Further.
Select Marital Status: If You Are Married Then Married Otherwise Single Then Select Single And Go To The Next Page.
Select Occupation: Select Whatever You Do. As; If You Do Any Government Job, Then Go Ahead By Choosing Government Service, if You Study, Then Student, if You Do Business, Etc.
Your Income: Collect The Amount That You Earn.
Trading Experience: If You Have Any Experience In Trading, Then Select The Number Of Days You Have Been Trading.
Details Required To Finish Verify KYC: In This Section, Enter Your Mother’s And Father’s Name And Click On NEXT.
Select Nominee: If Something Happens To You, Only The Nominee Selected By You Will Get All The Facilities. That’s Why You Have To Click On NEXT By Filling The Name, Date Of Birth, Their Relationship With You, Etc. Of Those Whom You Want To Keep As Nominee.
Add Your Bank Account: Select The Bank Account With Which You Want To Link Your Demat Account, After That Your Branch Will Appear As Soon As You Enter The Ifsc Code, Select It.
Now Enter Your Account Number And Click on VERIFY BANK, As Soon As You Click, 1 Will Be Deposited In Your Bank Account For Verification. It Takes 20-25 Seconds To Complete The Process. If The Bank Details Are Correct Then The Automatic Verification Will Be Completed.
RECORD FACE WITH CODE: In This Page A Code Will Be Displayed And CAMERA Button Will Be Displayed And By Clicking On The Camera You Will Have To Record A Video Of 5 Seconds In Which The Code Will Either Be Spoken By Your Mouth Or Seen in Your Fingers.
Upload PAN Card: Now You Have To Upload The Photocopy Of Your PAN Card. Keep In Mind, Your Photo And Signature Should Be Clear In The PAN Card.
Aadhaar E-Sign: In This Part Also You Have To Complete The Process Of Aadhaar E-Sign. For This, Click On PROCEED TO AADHAAR ESIGN. Now The Account Opening Form Will Appear in Front Of You And The Sign Now Button Will Appear, Click On It.
As Soon As You Click, The Form Will Automatically Fill Up And An OTP Will Come On Your Mobile Number, After Which Your Demat Account Will Be Opened.
But it Will Take Some Time To Activate The Demat Account. Accounts Are Usually Activated Within 1-2 Days, The Date On Which The Demat Account Will Be Activated Will Be Visible On The Page Of The App.
Once The Account Is Activated, You Can Start Your Investment Journey Right From The Comfort Of Your Home.
Demat Account Charges
Bar Brokers Charge Demat Account Fees On Their Own. Full Service Brokers Charge The Most But Do Not Provide Any Special Services. That’s Why Today Most Of The Investors Are Joining With Discount Broker.
Some Discount Brokers Charge *500 to 700 for Opening A Demat Account, And Some Open A Demat Account Absolutely Free.
Conclusion
In Today’s Article, We Have Come To Know What is Demat Account, What Are The Documents Required To Open Demat Account, How To Open Demat Account, With Which Broker To Open Demat Account, How Much Is Demat Account Fee, Etc.
We Always Try That Our Readers Get All The Information In One Place, They Don’t Have To Search Again On The Internet Or Go To Another Blog.
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How many demat accounts can I maintain at a time?
You Can Have More Than One Demat Account Just Like a Bank Account. But You Can Open Only Three Accounts In A Company.
Can I Transfer My Demat Account To Someone Else?
No, You Cannot Transfer Your Demat Account To Any Other Person, But You Can Give Your Shares To Any Other Person or Transfer Them To His Account, But For All This, That Person Also Needs To Have A Demat Account.
