A Demat account is an account operated by an individual or a group of investors to hold financial securities, stocks and options in electronic form. Stock markets in India are regulated by authorised signatory bodies. Demat accounts are maintained by two depository organisations, National Securities Depository Limited and Central Depository Services Limited.
You must know what is trading account and how to apply for demat account for availing their benefits.
Benefits of Demat Account
- Demat account is anytime accessible, easy and convenient way to hold stocks.
- Securities are safer than hard copy paper-shares.
- Digital securities close the gaps of risks associated with physical certificates such as bad delivery, fake securities, forgery, corrigendum, delays, thefts etc.
- Reduced cost of operation.
- No additional paperwork required for transfer of securities.
- Almost negligible transaction cost.
Let us check simple procedure of demat account that any citizen of India can easily apply.
Step-wise Process to Open Demat Account
- Checklist and Guidelines for documents: A brief checklist on acceptable documents as proofs 2 to be submitted and conditions thereto and guidelines for filling the Account opening form.
- Know Your Client KYC Form: Government mandated KYC form. For filling individual’s details necessary for opening trading and Demat Account of the individual.
- DP – Client Agreement: Prescribed by Depository to provide basic rights and obligations of the individual and Depository Participant. Required even if Demat account is opened by same bank or an investment company.
- Authorisation for receiving transaction: Required for issuance of Monthly/ quarterly demat statement through Internet account statement at the individual’s registered e-mail id.
- Terms and Conditions cum Registration: This is prescribed by Depository. Required to receive SMS form for receiving SMS Alerts from NSDL alerts for the transactions executed in the demat account directly from the Depository.
- Availing of VAS SMS Alert facility: Subscription by the individual for value added services including receipt of updates on stock prices & margin/ ledger balance of individual on their registered mobile number.
- Authorisation for receipt of Documents: Required for issuance of Statement of Account in Digital Mode and other documents on the individual’s registered e-mail id.
- Mutual Fund Service System facility and BSE StAR Mutual Fund: Required if the individual wants to avail Mutual Fund Service System facility & BSE StAR MUTUAL FUND provided by NSE & BSE respectively.
- Fees and Charges: Details of fees and other charges applicable to individual’s trading and Demat account.
- The digital application ends with Individual’s final approval.
After following simple steps given above you can open demat account in 5 minutes. Everything is done digitally so you can open demat account to invest in India from anywhere. Avail share market courses online free to update your knowledge about stock market investments in India.