Hello Readers !! Here we are going to discuss about how to find the best demat account in India.
Opening A Demat Account
Demat account, also known as Dematerialised Account, is generally used to hold shares and securities that you might have bought in an electronic format. Any person who wants to trade online in India should have a Demat Account.
Just like a your savings account, your Demat account also comes with an account number, allocated by the stock broker, using which, you can both buy and sell shares and stocks. Just like you have a password for your online banking, Demat account also has a password, using which you can log into the system to make necessary stock purchases or to sell the existing ones. All the data pertaining to your purchases and sales is thoroughly encrypted and hence, highly secured. It is necessary to choose a best demat account in India which suits all your needs and become pocket friendly to you.
Demat account activities are governed by regulatory bodies such as NSDL and CDSL through intermediaries such as depository participants and stock brokers. Fee for opening a Demat account varies from stock broker to stock broker and from bank to bank.We have listed some best demat account in India at the end of this topic .
Advantages of a Demat Account
- It is the most secured and effortless way of purchasing, selling as well as holding your securities
- Using this account, you can buy or sell shares almost instantly
- With this account, there are no stamp duty implications or any other obligations as far as moving your securities is concerned
- It holds all your securities in electronic format and is much safer compared to shares bought on paper
- It makes moving your securities a hassle free one, as there is no paper work involved
- There is certain fee structure in place for all the transactions done
- Whether you want to sell a single share or the whole lot, it’s entirely up to you. No questions asked whatsoever
- You can use your Demat account to perform both equity, as well as debt investments. There is no need to maintain two separate accounts for each of them.
- Using a Demat account, a shareholder can perform all of his/her transactions seamlessly from anywhere in the world
- Amount is credited into the shareholder’s account as soon as a sale is done
- With Demat account, there is no risk of your shares being burned down in a fire accident or you being robbed of your shares during a bank robbery, because they are stored safely and securely in the most sophisticated servers
- It also lessens the costs involved during the purchase or sale of your securities compared the costs incurred while doing them physically
- It avoids all the risks and complications that are generally attached to physical shares certificate
- With Demat account, your risk of running into forgery related fraud can be erased entirely
- Since the shareholders with a Demat account buy or sell their securities online, they can avoid paying stamp duties, which are otherwise an integral part in case of paper shares
Why Need A Demat Account To Trade?
As per SEBI (Securities and Exchange Board of India), traders can no more buy securities in the form of certificates at exchanges. This directive has made it mandatory that any person who wants to trade in India should have a Demat account.
How does a Demat Account work?
Buying Process: Whenever you want buy some shares or securities offline, your bank or the broker with whom you have a Demat account can it for you on your behalf. All you need to do is place an order. Once the purchasing process is complete, your Demat account is credited with shares and you can now see them on your holdings statement. On the other hand, if you have purchased shares online, you can find them reflecting in your account online. In general, shares are credited into your account after three business days, i.e., trading day plus two days after that.
Selling Process: Similarly, when you want to sell your shares offline, all you need to do is leave an instruction also known as ‘delivery note,’ to your bank or the broker with whom you have a Demat account. In this note, you need to mention the details of the stock you want to sell. Once you are done with this, your Demat account is debited with the number shares you want to sell, and then is credited with the amount equivalent to the shares sold.
Who are Depository Participants (DPs) ?
The bank or the brokers with whom you hold your Demat account are known as depository participants. These participants are registered members with either or both depositories present in India, National Securities Depositories Limited (NSDL) and Central Depository Services Limited (CDSL). It is only through these depositories that shares are be held by depository participants. A list of DPs available in India can be found at NSDL or CDSL.
Here it should be noted that brokers can only act as depository participants and your account with them can only be used for buying or selling shares. On the other hand, if you open a Demat account with a bank, it will not only act as your depository participant, but it can also provide you with an account for saving your money as well as performing other financial transactions apart from just Demat and trading.
How To Open A Best Demat Account in India?
The following information will help you understand how to open a Demat account, what are the documents required, how personal verification is done, and importance of nominee.
- Select A DP: Once you have decided to open a Demat account, you need to select the DP with whom you want to operate the account. Remember that the charges for account opening, account maintenance, buying and selling shares, closing an account and transferring your shares may differ from DP to DP. So please go through the terms and conditions of the DP before opening an account with them.
- Submit Your Documents: In most cases, along with account opening and KYC (Know Your Customer) forms, you will need to submit passport size photographs, your Permanent Account Number (PAN), proof of identity and proof of address.
- Proof of Identity
- Voters ID
- IT Returns
- Bank Statement
- Electricity Bill
- Passport Copy
- Driving License, etc.
- Proof of Address
- Any of the above except ‘IT returns’
- Ration Card
- Telephone bill(landline)
- Sale deed or lease agreement
- Address documents attested by Supreme Court or High Court Judges, etc.
While filling in the application form, you will be asked to nominate a person, who, in case of your demise, will take charge of your shares and securities. You can change your nominee at any time by filling the form again, if need be.
- Verification: After you have submitted all the required documents, an in-person verification may be conducted by your DP. At this point of time, you will have to produce the originals of the photocopies you have submitted while opening the account for verification purposes.
- Get BOID: Once you are done with the verification process, your DP will allot you a unique account identification number known as Beneficiary Owner Identity (BOID) number. Moving ahead, you will be using this account number to access your account as well perform any transaction.
It is suggested that you open your trading account in tandem with Demat account if you want to start buying and selling shares immediately. No further documents are required to open a trading account. You can open both Demat and trading account with your DP at the same time.
Best Demat Account in India
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Some Other Demat Account Providers in India.
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