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Monday, January 10, 2022 • Güncelleme Tarihi :

A Step By Step Guide To Open Your First Demat Account.

What is a Demat Account? How to open a Demat account? In this article, we will look at the important aspects of the stock market by understanding the Demat account and its related process. 

A stock market is a place where everyone needs to get practical experience, no matter how much theoretical knowledge. Knowledge is essential and necessary. But it is equally important to gain practical experience and learn from one's own experience. 

As per SEBI regulations, opening a Demat account is a must to get started in the stock market.

What is a Demat Account?

Let us understand what exactly is a Demat account and how to open a Demat account in layman's language. It is similar to a savings account in a bank. However, anyone can hold or transfer shares or stocks in this account. It is a digital form of the account. A Demat account is the short form of Dematerialized Account. The process of Dematerialization can be understood as the method of converting or representing physical shares and securities in digital format. With the help of the Demat account, one can easily trade in the stock market.

Selection of Demat Account

Investors generally get confused about how to choose the best Demat account. A Demat account offered by any brokerage firm should always be selected based on parameters such as ease of opening the Demat account, software and user interface provided by the brokerage firm, trading cost, and brokerage, minimum annual maintenance charges where we To trade easily.

How to open a Demat account?

The process of opening a Demat account is usually very simple. You have to fill a Demat account opening form online, then enter required personal contact details, upload required documents, and fill in some required details. Once the e-verification process is complete, the Demat account is ready for the customers to start trading and investing.

Documents required to open a Demat account

PAN Card, Voter ID, Passport, Drivers License, Income Tax Returns, Electricity Bill, Ration Card, Telephone Landline Bill, Bank Passbook. All of these documents are necessary for the need for proof of your identity and proof of your place of residence. Proof of Identity - For this, any person can use a PAN card, Voter ID, Passport, Driver's license, Income tax return, Electricity bill, Telephone bill, etc. Government-issued ID cards with the applicant's photograph may also be eligible, among others. Proof of your place of residence – For this one can use a Ration Card, Passport, Voter ID Card, Driving License, Bank Passbook or Bank Statement, etc. Attested copies of electricity bills, telephone bills (residence), identity cards, or a document with a government-issued address are also accepted.

Benefits of Demat Account

There are many benefits of the Demat account which make it quite popular. Demat accounts save a lot of time for the traders. Within a short period, shares can be transferred, bought, or sold. A Demat account allows you to hold various securities like mutual funds, equities, shares, bonds in a single basket. It provides convenience to the investors. Moreover, with a Demat account, all orders and shares are secured in one place and investors do not have to worry about the safety of the shares which was earlier in the case of the physical form of shares.

Some Important Procedures Related to Demat Account

There are certain rules and procedures related to Demat account that every investor needs to know about. Some of the relevant terminologies of Demat account are depository, depository participant, rematerialisation, freezing, defrosting, and Demat account closure. To understand these things, let us take an example here. There is a place X where electronic securities are kept, it is known as depository. It facilitates online buying and selling of securities and maintains a comprehensive record of holdings. Y is an investor. And there is an entity Z called Depository Participant which is the authorized body which acts as the link between X,Y and Z which provides the facility of Demat account to the investors. In simple words, brokerage houses work as Depository Participants.

Rematerialization is just the opposite process of Dematerialization which we have understood above. Here electronic holdings are translated back into physical certificates. Freezing and defrosting are temporary processes. Freezing a Demat account means suspending the transaction for some time due to certain reasons. And deferring the Demat account means activation of the suspended account. This is done as per the instructions or requests of the account holders. Closure of Demat account is permanent deactivation of Demat account. If an investor thinks of closing the Demat account, which can be done after clearing all the due or negative balance in the account. All these processes are carried out in a systematic manner.

Demat account and trading account

There exists another account called trading account which acts as a bridge between your Demat account and bank account which allows you to actually trade in the market. It is necessary to open it with Demat account. There is a thin line of difference between a Demat account and a trading account. On the one hand, the Demat account is used for holding shares and recording the purchase and sale of shares. On the other hand, the trading account enables the person to do buy or sell transactions really easily. With both these accounts open, investors can easily get started with investing and trading as per their need and convenience.

How to transfer shares from Demat account?

Many a times, investors decide to transfer their shares from one Demat account to another account for some reason.

Wrap Up