Introduced in the year 1996, demat accounts have enabled investors around the country to buy multiple shares without any involvement of physical labour. This has made the entire process of investing, monitoring and holding stocks, faster, easier and cost-effective. All thanks to internet, demat accounts now function like any bank account, where the account holder deposits money and the entries are made in the books.
But, what is a demat account?
The term “Demat” stands for “de-materialised”. Such accounts allow investors to hold their shares in an electronic form. For instance, if you hold a demat account, you’ll be provided with a demat number that enables you to make transactions, which will be recorded in an electronic format. The best part is that you can open a demat account with zero balance.
What are the Advantages of a Demat Account?
If you are planning to buy or sell shares in the future, it is mandatory to open a demat account in India. Besides this, it allows you to understand and meet customer guidelines and includes a number of benefits too. Some of them are as follows:
- No chance of theft and robbery as the shares are held in electronic form.
- Unlike before, today demat account allows its investors to transfer shares immediately.
- Investors are not required to buy share transfer stamps and stick them on the certificates.
- Demat account has enabled account holders to sell as low as one share.
- It also allows you to have a joint holder or add a nominee.
- A single demat account is enough to hold most of your financial instruments.
- Shares and bonus can be credited instantly.
- Demat accounts are fuss-free, simple and can also be lucrative.
- You can access your demat account via computer, smart-phones or any other smart devices.
Where Can I Open A Demat Account?
Now, if all these advantages have piqued your interest in opening a demat account, it leads us to the next big question – where?
Well, there are two main depositories in India that can help you in demat account opening. One is the National Securities Depository Limited (NSDL) and the second is Central Depository Services Limited (CDSL). Both these depositories are registered with the Securities Exchange Board of India (SEBI) that gives them the authority to hold securities or investments on behalf on an investor.
But, in order to open an account, you have to go through Depository Participants like banks, financial institutions or even stock broking companies.
Once you have successfully opened a demat account, you will have to quote it whenever you make to make an investment. You may also be required to fill a Know-Your-Customer (KYC) form, the first time you make any kind of transaction, but after this, the whole affair is quite breezy.
So, without further ado, go ahead an open a demat account and begin a journey of a thousand miles with a small step, right here, right now!