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.
- Get the Demat Account
After your application is approved, you will get a 16-digit unique identification number for your Demat account along with login details.
Source:- https://www.klasikoa.net/demat-account-everything-you-should-know-about-it/
