If you often imagine what is Demat account, you can think of it as a savings account that can be used to hold stocks, mutual funds, government bonds, and other financial instruments instead of money. On purchasing shares they get credited into a Demat account and when you sell them, they get debited from it. It is referred to as a Demat account since it holds securities in Dematerialized form.
The securities of all the Demat accounts are held by CDSL (Central Depository Services Limited) and NSDL (National Securities Depository Limited). You will have to complete the account opening procedure with the help of a depository partner i.e. DP who is registered with either of these depository organizations.
How to open a Demat account?
Follow these steps to open a Demat account online:
- Step 1: Fill-up and submit an application form the website of a DP that you have chosen to manage your Demat account.
- Step 2: Along with the form, you will also need to submit the soft copies of essential documents like PAN Card, AADHAAR Card, cancelled cheque, salary slip, etc.
- Step 3: After that, an in-person verification is done after which you will get your Demat account number. Many brokers facilitate the account opening process for both Demat and trading accounts simultaneously for the convenience of their customers.
What are the benefits of having a Demat account?
A Demat account stores your securities in digital form. This means that you don’t have to worry about the storage of your stocks and other securities that would be an issue if your securities and share certificates were in physical form. The other benefits of having a Demat account is as follows:
Time saving – Since the buying, selling, and transferring of securities and funds are done online with the help of a Demat account, it is less time consuming.
Hassle-free access – You can access a Demat account easily from your home, office, or anywhere as most brokers provide an app for accessing your Demat account.
Easy monitoring – As the Demat account is mostly available in an app form, you can monitor your stocks and other securities easily.
Where should you open a Demat account from?
Discount and full-service brokers are the two types of brokers. A discount broker merely follows the instructions (buy/sell) of his client whereas a full-service broker provides additional services like research reports, advisory services, analyzing tools, etc. apart from trading on the behalf of his client.
Full-service brokers charge a percentage of every trade as a commission whereas the services of a discount broker are much affordable due to the flat brokerage fee charged.
A brokerage firm like BFSL will charge a flat charge for each trade irrespective of the trade volume. Its Demat account charges and other fees like AMC (Annual Maintenance Charges), etc. are also minimal. Moreover, it offers a wide range of solutions like equity trading (both intraday and delivery), mutual funds, derivatives trading, spread financing, and MTFs (Margin Traded Funds) along with a flat brokerage charge.
With Bajaj Financial Securities Limited (BFSL) trading account and Demat account, you also get a modern trading platform with distinct subscription plans for beginners and experts.
Is a stockbroker or DP needed to trade in stocks?
A stockbroker is any individual or organization who is registered with the Stock Exchange of India. Stockbrokers have the license to take part in the trading process on behalf of their clients and receive a small fee in exchange of their services.
As many complex processes are involved in the securities market, a stockbroker is needed for enjoying a smooth experience while buying, selling, transferring, and settling stocks.