Business Finance

Understanding Everything About Demat Account

Understanding Everything About Demat Account
Written by Medhaavi Mishra

A Demat Account functions similarly to a bank account for your electronic share certificates and other securities. Earlier the shares were allocated on papers but after the dematerialisation happened the shares were allocated through the Demat account. Let’s know more about how to open Demat account and what documents are required for the same:

What can a Demat account hold?

It helps to streamline the process of stock trading by removing superfluous paperwork. You can hold a number of investments in an easy manner when you have a Demat account. 

Documents necessary to start a Demat account

You’ll need a few papers to make the process of creating a Demat account as simple as possible. Below is a list of documents that must be submitted.

  • Photo identification is required. Aadhaar card, PAN card, voter ID card, driving license, and so on.
  • Proof of residency – lease agreements, driver’s licenses, passports, landline phone bills, energy bills, apartment maintenance bills (if applicable), copy insurance, gas bills, and so forth.
  • The bank’s passbook
  • Paystubs or taxes as proof of income (mandatory for the currency and derivatives segment)

Demat account features

Many valuable features are available when you establish a Demat account.

  • Transferring your shares is as simple as sending a legally signed Delivery Instruction Slip (DIS) to your depository participant.
  • Loan collateral: You can use the securities you have in your Demat account as collateral for a loan from a financial institution.
  • Temporary freeze: You can put your Demat account on hold for a set period of time. This function, however, is usually only available if you have a certain amount of shares in your account.
  • Benefits like dividends, bonus shares, stock splits, interest, and refunds may all be transferred quickly with the best Demat accounts.
  • NSDL’s speed e-facility allows you to electronically deliver instruction slips to your depository participant. This not only speeds up the procedure but also makes it easier.
  • Maintaining physical certificates is inconvenient and dangerous. Opening a Demat account allows you to digitise your certificates, making them easier to keep and more secure.
  • Demat accounts may be accessed from anywhere using any digital device, such as laptops, mobile phones, or other smart devices because they are totally digital.

Different types of Demat account

Let’s look at the many sorts of Demat Accounts now that we know what they are. There are three primary types:

  • Regular Demat Account: This is for nationals of India who live in the country.
  • Non-Repatriable Demat Account: If you are an NRI and you want to invest in the shares then you need to have a Demat account of this type.  It must also be connected to an NRO bank account. 
  • Repatriable account: Non-resident Indians can also invest the money in the country with the help of a Demat account. All they need to do is to open a Repatriable account. 

Conclusion This is all you need to know about what is a Demat account. Once you have understood everything it is now safe to start trading.

About the author

Medhaavi Mishra