Demat Account:Know Everything About It

The Securities and Exchange Board of India (SEBI) has it mandatory for all share traders to hold a Demat account. If you are a novice to Demat accounts, here is your complete guide to it.

What is Demat Account?

Demat is an abbreviated form of Dematerialised. A Demat account is basically an online account to hold the shares. You can hold your shares, mutual funds, government securities, IPOs, bonds and debentures in a digital format instead of physical form in a Demat account.

Benefits of Demat Account

Demat account has numerous advantages:

Quick and hassle-free transfers of shares
Lower cost of share transfers as there is no handling or stamp duty charges
Elimination of risks of theft, forgery, postal delays, forgery, and loss, usually associated with physical shares
Ease of digital pledging to access loan against securities
Makes odd lot share trading possible
Easy online tracking of share transfers

Types of Demat Accounts

There are mainly three types of Demat accounts:

Regular Demat Account

Resident Indians can open this account.

Repatriable Demat Account

This Demat account is for Non-Resident Indians (NRI) which allows transfer of money abroad. However, one needs to open a Non-Resident External (NRE) account in addition.

Non-Repatriable Demat Account

This is also for the NRIs but funds cannot be transferred abroad. You need to open a Non-Resident Ordinary (NRO) account in addition.

How to Open a Demat Account?

You can open multiple Demat accounts in a few easy steps:

Choose a Depository Participant (DP)

Choose a credible stock broker to open your Demat account.

Complete the Account Opening Formalities

Fill the account opening form and submit Proof of identity, Proof of Address, Bank proof, photo and signature, do an in-person verification and e-sig nwith Aadhar.