THINGS YOU NEED TO KNOW ABOUT DEMAT ACCOUNT

Standard

Managing large amount of money, by the large companies and government is known as finance. Various kinds of account are present in the financial market and Demat account is the major one.

What Is Demat Account?

A unique kind of deposit where in one can store and maintain investors details in an electronic format are known as the Demat Account.

India is having depositories like the NSDL (National Securities Depository Limited) and CSDL (Central Depository Services Limited) to have proper transfer of the securities.

Need For Demat Account:

Opening the Demat account is the major component of the online trading. After recession in 2009, Indian economy is having an upward movement to a great extent. Income of the people, standard of living of the people has increased considerably. Due to high salaries, people like to venture into the stock and share markets. Demat account is a unique form where in, investment can be handled by small investors in a logical manner.

How to Open A Demat Account:

In order to open a Demat Account, you must follow certain steps given below as follows:

  • You need to get in-touch with the registered Depository Participant.
  • Please fill up the account opening form.
  • Submit all the relevant documents with 4 passport size photographs.
  • Carry the original documents for verification.
  • One must pay some annual maintenance fees for maintaining the account.
  • You can open the Demat account with limited balance of the shares.
  • You need not have any balance in your account to open a Demat Account

Why Demat Account With Banks?

A good Demat account can be opened with various banks in India and features will be:

  • Low Fees.
  • Email Statement.
  • Accessing Demat Accounts through mobiles and internet.
  • Valuation of Account Statements.
  • Online Execution of Various Transactions.
  • Free charges for any transactions done.
  • Free alerts on your mobiles phone through SMS.

Various Documents Required For Opening A Demat Account:

Various documents are required to open a Demat account and they are:

Proof Of Identity:  Various documents are required for opening Demat Account. Documents like the PAN card, Passport, Driver’s License, Income Tax Returns, Mobile and telephone bills and the ID card where one works, whether government and private establishments are working must be produced.

Address Proof:  You would require various kinds of address like the Voter ID, Ration Card, Bank Passbooks/Statements, Xerox copies of electricity bills; House rental agreements must be deposited.

Components Of The Demat Accounts:

Some of the major components of Demat Accounts are as follows:

  • Investors
  • Depository
  • NSDL (National Securities Depository Ltd)
  • CDSIL (Central Depository Of Security India Limited)
  • Depository Participant
  • Issuing Company

Benefits of Demat Accounts in India:

Some of the benefits of Demat Accounts in India are given below as follows:

  • Easy and Convenient.
  • Transfer of Securities is very easy.
  • No stamp duty involved in the transfer of securities.
  • Zero restrictions on various transactions.
  • You will receive bonus share and it gets divided automatically.
  • Ideal for gold exchange traded fund, mutual fund, shares, and debentures as well.
  • Good for people to keep track of their investments.
  • Reduces the cost.
  • Interest on loans against Demat shares are lesser compared to physical shares.
  • Reduces the risk of the bad deliveries.

Disadvantages of Demat Accounts In India:

Some of the major disadvantages of the Demat Accounts in India are as follows:

  • You need to be expert in various financial products.
  • Trading in securities will become uncontrolled.
  • Investors will find the process too complicated, creating great fear of investment.
  • You need to be too sharp to monitor market fluctuations and make sure that trading does not affect investors.
  • Various rules/acts need to be adhered to in using Demat Accounts like the Depository Acts, Regulations Acts and others.

So, one can say that Demat Account are fast picking up in India and people are slowly getting interested in this form of account.

For More Information

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