Documents Required
Be ready with the following documents required to open a Demat account:
- ID Proof
- Address Proof
- Aadhar Card
- Passport-size Photos
- PAN Card
- Income Proof
- 6 Months Latest Bank Statement
- Cancelled Cheque with Signature
Benefits Of Having A Demat Account
- No Paperwork
- Stock Dividends & Benefits
- Loan Against Securities
- Easy Access
- Freezing Demat Account
Types of Demat Account
- Regular Demat Account
- Repatriable Demat Account
- Non-Repatriable Demat Account
- Basic Services Demat Account (BSDA)
Demat Account
You do not need a physical account to transfer your share certificates if you have a Demat (Dematerialized) Account. It acts as a one-stop digital solution to keep track of mutual funds, bonds, funds, stocks, investor's holdings, and other securities in stocks.
In short, a Demat Account works like a bank account in the Money Market. However, the difference is that stocks and shares are credited to your Demat account after you purchase them. Just link your bank account to your Demat account for stock trading to reduce transaction time and cost.
Table of Contents
Benefits Of Having A Demat Account
No Paperwork
Demat Account Opening can be a boon if you do not want to stack paper certificates because it stores their information electronically. It means reducing human errors, forgery, delays, and theft. You may quickly access all your investments within a few steps through net banking.
Stock Dividends & Benefits
Your refunds, interest, and dividends will be automatically transferred to your Demat Account. Similarly, you will get additional shares in the name of the bonus issue according to your current holding.
Loan Against Securities
You will get a loan against the value of securities. You will have your shares in your account, but they will be possessed by the lender until you repay the loan.
Easy Access
You may access your account from anywhere any time, using your favourite smart digital device.
Freezing Demat Account
You may ask your broker to freeze your Demat account until further notice. Thus, you won’t be able to perform transactions using your account, and the same can be applied to certain account securities.
Types of Demat Account
Regular Demat Account
A Regular Demat Account is the most commonly used and recommended Demat account for residents of India. In this case, you will be charged for the volume held in your account, type subscribed, and other terms and conditions. It is convenient because it does not include other charges and restrictions on selling shares.
Repatriable Demat Account
A Repatriable Demat Account helps Non-Residents of India (NRIs) to have a Demat Account and invest in the Indian share market from anywhere around the globe. However, these NRIs should link their Repatriable Demat Accounts to the Non-Resident External (NRE) bank accounts. Here, the NRIs can transfer their funds abroad.
Non-Repatriable Demat Account
An NRI can also use a Non-Repatriable Demat Account that comes with a few restrictions. For instance, the account holder cannot convert the investments into foreign currency. They can only transfer interests after tax deductions and an initial investment amount.
Basic Services Demat Account (BSDA)
A Basic Services Demat Account (BSDA) exists for those who cannot regularly invest in stocks. Thus, it offers convenient trading and cost-effectiveness. It was introduced by the Securities and Exchange Board of India (SEBI) in 2012 for investors with smaller portfolios.
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FAQs:
1. Is It Ok If I Keep My Demat Account Empty?
Answer : Yes, a Demat account does not have a minimum balance requirement. Thus, you may keep it empty.
2. What Are Other Demat Account Details I Should Keep an Eye On?
Answer : You must keep an eye on the Demat Account Number (or Beneficiary ID), the DP ID and the POA Number.
3. What Proofs Do I Need to Open a Demat Account?
Answer : You must be ready with your address, income and identity proof.
4. Can I Sell or Purchase Shares Without a Demat Account?
Answer : A Demat Account is mandatory to purchase or sell shares in India. Besides that, you should have an active trading account and a brokerage house.