Demat account is most likely a bank account for your share trades and other securities maintained in an electronic platform. Insurance and ETFs are much easier with demat accounts.
For trading in the share market and holding financial securities in a digital form, a demat account is very much mandatory. This can be called a dematerialized account. It helps keep the investment records on the right track, which makes shares, bonds, and mutual funds in one place, an exchange-traded fund.
Is the Demat account safe to use?
It’s safe to open a Demat account online. This is highly secured. Demat account has depository governs which are- national securities depository Limited (NSDL) and central depository services (CDSL); they will alert you through message, email, and notifications for every transaction of your Demat account.
It is necessary to go through your transactions carefully. Hence, it is safe to open a Demat account because it precludes the risk of tampering, loss of forgery, and physical share.
Importance of a Demat account: –
Nowadays, is everything going to be digitized, then why not your Demat account. So here are some points why a Demat account is needed.
- Transactions of shares are very quick with a Demat account and also safe.
- In digital mode, it is easy to protect your shares with proper security.
- It prevents forgery, damage, theft, and loss of physical certificates.
Can two Demat accounts be run?
It is legally acceptable to have more than one Demat account. In your name, you can open numerous accounts. It is very simple to open a Demat account online.
But with a depository participant (DP) or a broker, you can open only one Demat account. If you wish to open more than one Demat account, you can do it with another broker or depository participant.
With one depository participant, one cannot run multiple Demat accounts.
How to start a Demat account: –
To open a demat account, firstly, you should start with reaching a stockbroker. After that, you need a complete online account form, which will be paperless and take 15 minutes to fill up. Here are some methods for opening a demat account-
- Open the account opening form
- Enter your details of name, email id, phone number, address, PAN card, and other details about you
- Add the bank details of yours
- For identity proof and address, upload the KYC documents.
- Do an in-person verification by recording a short clip of yours.
- Do E-sign on the form through an Aadhar linked phone number.
- After these steps, you will get an information message regarding your account opening and your login details.
Types of Demat Account: –
After knowing some details about the demat account, let’s look for the types of demat accounts. Those are-
Repatriable demat account:
These demat accounts are for non-resident Indians (NRI), transferring the money abroad through an Indian account. These types of accounts need to link with the NRE account.
Non-repatriable demat accounts:
This is also for NRIs banking. But with this demat account, fund transfer abroad is not feasible. And this type of demat account should be linked with the NRO account.
Regular demat account:
This demat accounts for Indian citizens who belong to this country.
Demat account details:
After opening a demat account, look at the DP details –
- Demat account number, which is known as beneficiary id with the mix of 16 characters (under CDSL)
- DP id is a part of the demat account given to depository participants.
- POA number is a part of the power of attorney authorization, where the investor gives authorization to a stockbroker to run
the account as per provided instructions.
These days, in a digital world, you need to know the proper use of every digitized thing. No paperwork has been involved recently; physical certificates are not being issued. So, if you want to buy shares of the company, you will get a digital form for entry, and you can use your demat account safely to buy or exchange shares and others.
With a demat account, you can relax. There will be no harm to your accounts. For every trader and investor, it is essential to have a demat account. Other than that, you can’t survive on this electronic platform.